The Music Business in 2011: Licensing to Take Over?

I recently participated in a very interesting discussion about the future of the music industry on a LinkedIn.com forum (props to Ja War for kick-starting the discussion). Below I share with you some of my ideas about the future of the music business.

The record deal that rapper Drake landed with Cash Money/Young Money/Universal is a great example of the seismic shift happening in the music industry. In his deal Drake retains the publishing rights to his songs and only pays 25% of his music sales to his labels as a “distribution fee.”

drake

In essence, Drake hired his record labels to distribute and promote his music. As long as artists can find and connect with a fan base, engage that fan base on a regular basis, and feed that fan base with music and other products that they have expressed a desire to purchase, success in the indie music sector is limitless.

Digital mixtapes will explode in popularity and they will most likely crossover from primarily rap music to R&B, rock, and pop once everyone catches on to the immense marketing potential of mixtapes online.

The significance of free in music promotion isn’t going away so artists should seriously consider giving out free digital music as a prelude to their retail music offerings. Drake and Lil Wayne are two artists who can attest to the marketing power of distributing free mixtapes.

I advise indie artists to do as much research as possible about web 2.0 tools for marketing, fan engagement, and direct-to-fan sales. Using these tools in your career is the best way to leverage the Internet in building and monetizing a fan base.

Virtual live performance is likely to play a big role in the live music industry in the future. I would like to see more indie musicians take advantage of this arena. It will be interesting to watch the innovations that will unfold.

Here’s an insightful discussion forum comment from Michael that I agree with:

“The music industry will need to market the ‘music experience’. Live performances, licensing (advertising, performance, streaming, etc…), and merchandising (non-music products) will offer greater revenue opportunities.

The dollars saved on manufacturing can then be better spent marketing to specific customer niches. Narrowing the marketing efforts to more clearly defined (more receptive) market segments will be far more cost effective than chasing hits.”

Like Michael suggests, niche markets will be crucial. Massive mainstream success (think: the Beatles, Michael Jackson, Britney Spears…) is going the way of the dodo bird. Music fans/consumers are splintering off into various niches with razor-sharp taste preferences. As a result, exploiting niche markets will soon become the norm in the music business.

In 2011, music licensing revenues will out-perform physical and digital retail sales and become one of the biggest sources of revenue in the music business. If you’ve never considered it before then now would be a good time to start thinking about becoming a music publisher. Publishing is where the money is, trust me.

What are your thoughts about the future of the music business?

About the author:

Dexter Bryant Jr. (d.BRYJ) is a dance/rock producer and electro-urban singer/songwriter. Dexter writes articles, reports, and e-books to educate entrepreneurs and indie musicians on music marketing, new media, and e-business. Dexter provides music business and marketing consulting services through DbryJ Music Media Group. Read Dexter’s music business blog The Hit Music Academy at http://hitmusicacademy.wordpress.com

5 thoughts on “The Music Business in 2011: Licensing to Take Over?

  1. Pingback: The Music Business in 2011: Licensing to Take Over?

  2. “Music fans/consumers are splintering off into various niches with razor-sharp taste preferences.”

    I have to disagree. If anything, people’s tastes are broadening wider than ever. Cross-over appeal is huge! There are hard core fans in every genre that try to be purists, but as far as popular music goes, you should not assume your audience is going to be crowded into a corner somewhere and now you’ve got to find that corner to get heard.

    The Music Business in 2011: Licensing to Take Over?

    Posted in General, General. Written by Dexter Bryant Jr. on October 13th, 2009

    I recently participated in a very interesting discussion about the future of the music industry on a LinkedIn.com forum (props to Ja War for kick-starting the discussion). Below I share with you some of my ideas about the future of the music business.

    The record deal that rapper Drake landed with Cash Money/Young Money/Universal is a great example of the seismic shift happening in the music industry. In his deal Drake retains the publishing rights to his songs and only pays 25% of his music sales to his labels as a “distribution fee.”

    drake

    In essence, Drake hired his record labels to distribute and promote his music. As long as artists can find and connect with a fan base, engage that fan base on a regular basis, and feed that fan base with music and other products that they have expressed a desire to purchase, success in the indie music sector is limitless.

    Digital mixtapes will explode in popularity and they will most likely crossover from primarily rap music to R&B, rock, and pop once everyone catches on to the immense marketing potential of mixtapes online.

    The significance of free in music promotion isn’t going away so artists should seriously consider giving out free digital music as a prelude to their retail music offerings. Drake and Lil Wayne are two artists who can attest to the marketing power of distributing free mixtapes.

    I advise indie artists to do as much research as possible about web 2.0 tools for marketing, fan engagement, and direct-to-fan sales. Using these tools in your career is the best way to leverage the Internet in building and monetizing a fan base.

    Virtual live performance is likely to play a big role in the live music industry in the future. I would like to see more indie musicians take advantage of this arena. It will be interesting to watch the innovations that will unfold.

    Here’s an insightful discussion forum comment from Michael that I agree with:

    “The music industry will need to market the ‘music experience’. Live performances, licensing (advertising, performance, streaming, etc…), and merchandising (non-music products) will offer greater revenue opportunities.

    The dollars saved on manufacturing can then be better spent marketing to specific customer niches. Narrowing the marketing efforts to more clearly defined (more receptive) market segments will be far more cost effective than chasing hits.”

    “Massive mainstream success (think: the Beatles, Michael Jackson, Britney Spears…) is going the way of the dodo bird.”

    This is hard to say. I think it was widely thought to be the case after the Beatles’ break-up, then MJ, then Madonna, then Britney…for better or worse, there will always be huge mainstream pop success stories. Consolidated radio playlists actually are helping this unfortunately eventuality.

  3. Roymond I agree that cross over appeal is huge but I think its for different reasons than in the past. Because there are so many niches, bands who successfully combine multiple niches into their style will potentially appeal to all of the various niches included in their music. So for instance, if a band is country rock/psychedelic blues, they could appeal to country fans, classic rock fans, psychedelic rock fans, and blues fans. That could be a huge audience!

    Thanks for your comments Roymond :)

  4. I think this is a great topic and discussion. As a member of the studio community – my taste in music is more based on production quality than style, but that’s a niche too.

    I’m with Dexter – whether you’re talking about music or sneakers, people know what they like…at least for the next 24 hours. Of course, it will change, but when they go online and search for stuff, it’s imperative that artists (especially) know more about who their listeners are, and what they want…

    It isn’t just about the style of music you play, it’s about the style of fan you attract (or want to attract) – and I think it’s totally possible to anticipate the profile of your potential fans, and to meet them half-way. They are already transparent – broadcasting their preferences – all you have to do is listen and respond.

    – Will
    SoundOps Mastering
    “THIS IS YOUR MUSIC”

  5. I’m right with you Will — figuring out who your fans are down to a T is an important part of establishing a fanbase and building a connection with them. So far this is the profile I’ve created for my potential fans:

    Gen Y hippies
    young adults + youth
    above average interest in music
    eclectic taste in music
    “s’mores” (social media “whores”)
    tech-savvy
    live music enthusiasts
    avid supporters of non-mainstream music and artists
    digital music consumers (legal and unauthorized downloads)

    Of course I still have to test out what I think I know about my fans and continue learning as much as I can about them but knowing what I do already is helping me develop strategies to reach these fans.

    Thanks for your comments Will :)

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