As Recording Revenues Shrink, Artists Shift Accordingly

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Recording labels are diversifying into related revenue streams like merchandising, advertising, and touring.

Artists, on the other hand, have always viewed the market from a broader perspective.  Still, it remains unclear just what role – if any – recorded assets will play in future artist revenue streams.

The question is important for artists at every level.  Superstars are experiencing lowered recorded sales volumes, and many are experimenting heavily.  Prince for example, has been using his albums as bait for bigger revenue opportunities, most recently by brokering a paid inclusion deal with the London-based Mail on Sunday.   The  unorthodox covermount concept yielded sales of more than three million.

Others are concentrating on bigger revenue sources like touring, a move that shifts the emphasis away from the studio and onto the road.  “Where you really make your money is out on tour,” said Jonathan Potter, executive director of the Digital Media Association (DiMA) during a recent discussion at the Digital Music Forum in Los Angeles.  “The record is the presale for the concert – Bruce is making his money when you pay $400 for a concert ticket.”

For smaller artists, the question is framed a bit differently.  Music fans are used to free stuff, especially when it comes to unfamiliar content.  In that light, recording assets are better as promotional tools, and lures towards other revenue generators.  “If I develop five ways around the music to make money, then if I eventually get paid for the music itself, then I just found a sixth,” said Timmy Grins, cofounder and vice president of Content at OnLog.com.

Story by editor Paul Resnikoff in Los Angeles.