Record Label Marketing This page intentionally left blank Record Label Marketing Second Edition Tom Hutchison Amy Macy Paul Allen AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Focal Press is an imprint of Elsevier Focal Press is an imprint of Elsevier 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA Linacre House, Jordan Hill, Oxford OX2 8DP, UK This book is printed on acid-free paper. Copyright © 2010 by Thomas Hutchison, Amy Macy, and Paul Allen. Published by Elsevier, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone: ( ϩ 44) 1865 843830, fax: ( ϩ 44) 1865 853333, E-mail: permissions@ elsevier.com . You may also complete your request online via the Elsevier homepage (http:// elsevier.com ), by selecting “ Support & Contact ” then “ Copyright and Permission ” and then “ Obtaining Permissions. ” Library of Congress Cataloging-in-Publication Data Hutchison, Thomas W. (Thomas William) Record label marketing / Tom Hutchison, Amy Macy, Paul Allen. – 2nd ed. p. cm. Includes bibliographical references and index. ISBN 978-0-240-81238-0 (pbk. : alk. paper) 1.Music trade. 2. Sound recordings – Marketing. 3. Sound recording industry. I. Macy, Amy. II. Allen, Paul. III. Title. ML3790.H985 2009 780.68’8 – dc22 2009025114 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN : 978-0-240-81238-0 For information on all Focal Press publications visit our Web site at www.elsevierdirect.com Printed in the United States 09 10 11 9 8 7 6 5 4 3 2 1 Contents Acknowledgements xi CHAPTER 1 Marketing Concepts and Defi nitions ....................................1 Selling recorded music ................................................................1 What is marketing? .....................................................................2 The marketing mix ......................................................................3 Marketing strategy ....................................................................16 Glossary ...................................................................................18 Bibliography .............................................................................20 CHAPTER 2 Markets, Market Segmentation, and Consumer Behavior .....21 Target markets ..........................................................................21 Market segmentation .................................................................22 Market segments ......................................................................24 Consumer behavior and purchasing decisions ..............................33 Needs and motives ...................................................................36 Converting browsers to buyers ....................................................38 Glossary ...................................................................................38 Bibliography .............................................................................39 CHAPTER 3 The U.S. Industry Numbers ..............................................41 Sales trends .............................................................................41 Music genre trends ...................................................................47 Demographic trends ..................................................................49 Format – confi guration ..............................................................52 Outlets ....................................................................................54 Market share of the majors ........................................................56 Catalog sales ............................................................................59 Industry concentration ..............................................................61 Conclusions .............................................................................61 Glossary ...................................................................................62 Bibliography .............................................................................63 v vi Contents CHAPTER 4 Marketing Research .........................................................65 What is marketing research? ......................................................65 Research validity ......................................................................73 Confi dence level and margin of error ...........................................73 The application of research principles .........................................74 The use of syndicated research ..................................................86 Conclusion ...............................................................................89 Glossary ...................................................................................90 Bibliography .............................................................................91 CHAPTER 5 Record Label Operations ..................................................93 Label operations .......................................................................93 Getting started as an artist.........................................................94 Business affairs ........................................................................94 A&R ........................................................................................95 Artist development/relations .......................................................96 Creative services .......................................................................97 Publicity ..................................................................................97 Radio promotion .......................................................................98 Sales and marketing .................................................................98 New media ...............................................................................99 Independent labels .................................................................100 Bibliography ...........................................................................104 CHAPTER 6 The Profi t and Loss Statement........................................105 Profi tability … or the lack thereof! ............................................105 Recording costs ......................................................................109 Marketing costs ......................................................................109 Contribution to overhead .........................................................112 Ways at looking at project effi ciency and effectiveness ...............112 SoundScan and sell off ...........................................................113 As a predictor equation ...........................................................115 Breakeven point ......................................................................115 A look at real P&L statements ..................................................122 Glossary .................................................................................122 CHAPTER 7 SoundScan and the Music Business ...............................125 Technology and the music business ..........................................125 SoundScan ............................................................................125 A look at the data ...................................................................129 Marketing reports ....................................................................138 A look at SoundScan title reports (Alicia Keys/as I am) ...............146 A deeper look at SoundScan ....................................................156 Contents vii CHAPTER 8 How Radio Works ..........................................................167 Radio ....................................................................................167 The businesses .......................................................................168 The radio broadcasting industry................................................169 The radio station staffi ng .........................................................170 Radio audiences .....................................................................171 Radio on the go ......................................................................172 Radio formats .........................................................................173 What is important to programmers ............................................176 Ratings research .....................................................................176 Radio programming research ....................................................180 Getting airplay ........................................................................181 HD radio ................................................................................181 Satellite radio .........................................................................182 Internet radio .........................................................................183 Glossary .................................................................................183 Bibliography ...........................................................................183 Bibliography ...........................................................................185