In 2011, I was a senior at the University of Washington's Foster School of Business. My college experience is a story of its own, but by senior year I knew Corporate America wasn't for me.
There were a few of us who were especially interested in music business, and one of our professors gave us the option to write a research paper for credits in place of one of our classes. (Sidebar: One of those people was Daniel Matson, the drummer of The Home Team; another was Anthony Ghazel, also a drummer for many touring bands and inventor of Rock Locks.)
My topic of choice? The evolution of marketing in the music industry.
By this point, I had been running my music blog full time for 6 years, and I knew every way to illegally download music undetected. I was constantly analyzing music from pop to rock to hip hop and especially sensitive to all forms of product placement after specializing in marketing.
The glaring issue of illegal downloading taking money from artists made my topic a simple decision.
My main regret is not using the source I found that cited $10/month as the future of what someone might pay for a subscription service. I was on the precipice of predicting the streaming world we live in today. Damn. Maybe next time.
Full disclosure: There are some things in this paper that I got wrong, but there are tidbits that hint towards the future we are living in today. Plus it's kind of cool to read something I wrote when I was 22 and not think it totally sucks. Also still pleased with myself for naming it after Underoath's first album.
Without further ado, straight from the brain of 22-year-old me:
The Changing of Times: Marketing, Social Media, and the Music Industry
The proliferation of the Internet shook the very foundation the music industry was built upon. No longer are record labels blindly signing bands, fronting money for production and music videos, then sitting in wait while the money pours in. The introduction of file-sharing websites such as Napster and Limewire, as well as the prevalence social media websites such as Facebook, Twitter, and Myspace, has permanently changed the profit model of the music industry. Record labels are finally restructuring and becoming more integrated marketing firms, and artists are signing into 360 deals more frequently in order for labels to realize a bigger piece of their clients’ revenues. The profit model of the industry has shifted drastically toward an advertising-based structure, and the artists and labels that do not readjust to fit this model will not survive. There are some websites, such as Kickstarter.com, that have proven to be successful in helping artists raise funds on a small scale, but in an industry that is moving almost entirely to a digital format, social media and advertising are the clear winners.
Background: Napster, the RIAA, and the Industry’s Shift to Digital
According to an interview with Columbia University’s Jun Mhoon, there have been many recent “paradigm shifts in music distribution.” Among these paradigm shifts are the following:
- People do not want physical copies of music anymore. CEOs may have argued otherwise, but physical album sales have been on the decline since 1999 and do not show signs of improving (Mhoon).
- Record labels, in their current form, are becoming ineffective. Entrepreneurs unfamiliar with the current model of the music business should be working on more sustainable marketing-based solutions (Mhoon).
The rise and fall of peer-to-peer file sharing applications such as Napster and LimeWire have been under watchful eye for the past decade. The federal government did everything in its power to attempt to regulate users, from shutting down these sites to using the Recording Industry Association of America (RIAA) as an avenue for filing lawsuits against Internet Service Providers and individual listeners for thousands of dollars per song downloaded. Napster argued that it was simply allowing users to share files within its networks, but the RIAA fought back, saying the application could have been legitimate had it not “facilitated the piracy of music on an unprecedented scale” (Furgason 159). The RIAA successfully shut down Napster in 2000, unsuccessfully attempted to educate the public about the harms of illegal downloading, then started suing individual listeners in 2003 (159).
In 2007, after four years of scare tactics and expensive lawsuits, EMI (one of the “Big Four” of the major record labels), began cutting funding to the RIAA (Bangeman). The ineffectiveness of the association’s strategy was made further evident in 2008, when its actions were proving to be detrimental to the clients it represented (Moseley 311). Will Moseley of the Berkeley Technology Law Journal explains:
“The RIAA had announced the end of its campaign against individual infringers [in 2008], after finding that it proved costly, ineffective, and harmful to its clients' public images. The RIAA's attorneys spent years developing a strategy for establishing peer-to-peer copyright infringement liability, only to find that the drawbacks of using it outweighed its benefits” (311-312).
Cary Sherman, senior vice president of the RIAA’s general counsel, observed that “litigation is not a business strategy,” and the RIAA settled its final two individual cases in 2009 (Fergason 160, Moseley 311). The association continues to issue cease and desist letters to copyright infringers found on file-sharing websites such as BitTorrent, but legal action is no longer pursued (see: Appendix).
One empirical study shows that the decline of CD sales since the late 1990’s can largely be attributed to the Internet, but the results “indicate that illegal downloading is not the only culprit” (JSS 308). Other factors include the sale of vinyl singles and the “widespread updating of individual’s multimedia formats” from cassette to compact disc in the 1990’s (JSS 308). The study notes the impossibility of tracking illegal downloads and testing their effects on CD sales, but “this black market activity has been blamed for much of the decline” (JSS 308). Interestingly, the study notes that this type of behavior is inevitable in the information age:
“There is more music than ever available and the communication age we live in makes it extremely easy to search for and find a plethora of different types of music. The obvious fact that there is something missing from the model that is contributing to the decrease in CD sales makes illegal downloading a very likely suspect. Furthermore, the existence of structural changes in the music around the time of Napster’s height of popularity makes an even stronger case for the RIAA’s belief that illegal downloading has been swallowing up profits from the industry” (JSS 308).
The “something missing” mentioned above was the ability to download music legally. Record companies felt that the “digital revolution” of music occurred over a very short period of time, but in reality the “music industry’s infrastructure and institutional legislation protecting the rights of the artists lagged far behind the innovative changes taking place” (JSS 304). Record label executives refused to recognize the industry’s shift toward using the Internet as a means of promotion and distribution, and they suffered for it in the end. It is for this reason that Mhoon suggests that there is a very large need for entrepreneurial minds in the music (and entertainment) industry—and those entering the field may be better off with a background in a field other than music in an attempt to take the industry in a more innovative direction (Mhoon).
Contrary to what the RIAA has enforced, not all aspects of illegal downloading are detrimental to artists. There are many that “claim that the availability of free music on applications such as Napster and KaZaa, among others, has actually helped the music industry by exposing individuals to artists they might not have otherwise become aware of” (JSS 304). This idea has been taken a step further in recent years by big-name artists such as Radiohead, who implemented a “pay what you want” method for their 2007 release “In Rainbows.” The results of this experiment were astonishing; while most who downloaded the album did not pay, “it still generated more money before it was physically released (on December 31) than the total money generated by sales of the band's previous album, 2003's ‘Hail To The Thief'” (NME). Of course, Radiohead’s success does not guarantee the success of all bands choosing to implement this method, as they are an established band with a highly dedicated following. However, a “pay what you want” method allows smaller artists to share their music—legitimately—with people who may not listen to unknown artists otherwise. BandCamp has an option for its members to implement a “pay what you want” system, as well as the ability to offer free downloads.
The entertainment industry is notorious for resisting changes in technology. Even with the proven success of cassette tapes and compact discs, executives continued to resist the transition to an entirely digital format (149). Furgason posits:
“Historically the standard practice of mass media industries was to resist advancements in technologies that might impact their traditional business models. Although history had repeatedly shown that new technologies inevitably bring opportunities and create new markets, the recording industry's attitude towards new technology remained hostile” (149).
The “Stages in Media Institution Responses to New Technologies” suggested by Napoli (1998), outlines four stages of “responses to technological advancements: complacency, resistance, differentiation and diversification” (149). Labels largely ignored the digital revolution until CD sales began to fall, indicating a complacent approach (155). Once executives realized that changes were taking place in the industry that were out of label control, the RIAA stepped in and attempted to regulate Internet-users who were found to be sharing copyrighted material by issuing cease-and-desist letters and pursuing legal action (156).
Once record labels realized the necessity of transitioning to a digital system, many began offering music downloads on a subscription-based system. This proved to be ineffective for two reasons: Listeners had to be aware of the labels (and subsidiaries) their favorite artists were on in order to listen to their music (usually necessitating multiple subscriptions), and, in general, people want to own the music they listen to (161, 164). Finally, after much trial-and-error, the music industry reached the diversification step, but the original developments were made from a company outside the industry: Apple Computers.
While labels were working on a largely unsuccessful subscription-based structure, Apple was hard at work building the largest music store on the Internet today: iTunes. Launched in April 2003, the instant success of iTunes indicated that people were still willing to buy music; the ideal model for doing so had simply changed. Within its first week of operations, the Apple iTunes Music Store “sold an unprecedented one-million downloads. Sales passed the two-million mark within iTunes' first sixteen days of business” (Furgason 165). Before the introduction of the iTunes store, customers had to visit multiple sources to access their favorite music. Now it can all be accessed from one convenient location. Some record companies initially expressed skepticism toward the iTunes model, but most realized that “by not offering up some songs on iTunes or the digital domain, you were basically holding up a big sign that said "KaZaa, this way"' (165). Furgason asserts:
“The overall message to the major recording labels from Apple's success was that the recording industry must fully embrace a radical change in the promotion, marketing, and distribution of records by integrating fully digital technology and distribution outlets that allow for portability by consumers” (165).
Apple pioneered the model of third-party music sales, but record labels soon began granting licenses to many other outside agencies as well. By utilizing this strategy, there became an “endless array of legal online destinations for consumers” (165). In an attempt to raise awareness of the affordability of music, labels have issued many more licenses, and companies from Amazon.com to Starbucks now offer digital music downloads (165). While record companies realize a smaller percentage of profits by allowing third-party companies to become part of the distribution process, this is a highly effective way to expose people to new music while implicitly encouraging legal downloading.
Musicians stay on par with technological advancements—especially those involving the Internet and social media—and record companies that fail to keep up will not likely survive. As noted previously, labels are notorious for being slow-adapters to change. This is partially because of stubborn CEOs who believe they can continue to realize profits with an outdated business model (Mhoon). While the music-making process is beginning to embrace a more DIY system, record companies are beginning to realize that this change is affecting their business as well. The existence of inexpensive computers and advanced production software such as ProTools and GarageBand allow artists to create high quality recordings without ever stepping foot inside a professional studio (Draper 137). Mhoon cites a specific artist, Nikki Giovani, who recorded an entire album on GarageBand (a pre-installed program on Apple computers) and was nominated for a Grammy in 2006 (Mhoon). This is a very real example of the direction the music industry is headed—it does not cost tens of thousands of dollars to record an album anymore. Mhoon asserts that “the business, both from the audio recording standpoint, as well as the business of music and entertainment have totally changed,” and record labels will become moot unless they can find a way to adapt their business strategies to a structure that is more open to advancements in technology. (Mhoon). The labels and executives that are still around are the ones who realized this earlier. Some were not so lucky. Jun Mhoon mentions that the “CEO at Epic and Columbia didn’t have a computer on his desk and he was the chairman of Sony Records—and he no longer has a job.”
The customer is still listening to music as much—if not more—than ever, but the product itself is becoming part of a free market. This means that entrepreneurs in the industry need to discover new markets to tap into. Mhoon suggests that those entering the music business must be “versed in the advertising business,” because advertising is the way music is going to make money (Mhoon). “Internet technologies have enabled a participatory culture which is transforming value systems and opening new pathways for autonomous creativity and innovation. In this ‘web 2.0’ phenomenon, social networks continue to define the information society and, in turn, redefine music career opportunities quite differently from traditional preconceptions” (Draper 137). This is the primary reason why Mhoon suggests that newcomers to the music industry should not have a background in music; at this point in time, current business strategies are not working.
The Social Media Movement: The Rise of MySpace, Twitter, and Facebook
Myspace.com was first introduced in 2003, and it quickly became the world’s most popular social networking website—especially amongst musicians (Wilkonson 2311). In 2008, Facebook—which does not have a specific target market despite the fact that it began as a networking tool for college students—surpassed MySpace in popularity, but MySpace continues to have “a focus on music that makes it particularly attractive to a teen audience” (2311). In early 2011, MySpace announced a layoff of half its workforce, “[solidifying its] image as a hopelessly sinking ship” (Bruno), but the site remains most popular avenue for musicians to showcase their music:
“It has an embedded music player on home pages, special profiles for musicians, and no restrictions on members connecting with musicians. It also runs promotional events such as sponsored music competitions sells music, and naturally allows a kind of personal connection with bands for followers that might be too young to see them perform live” (Wilkinson).
Despite skepticism toward the site’s future success, there are still two areas where MySpace is the dominant player, making it even more difficult for artists to commit to another platform: Search Engine Optimization and the website’s URL ubiquity. Caren Kelleher explains the power of the MySpace URL:
“The myspace.com/bandname URL is a common convention most bands adhere to and more consumers recognize. Chances are good that the piano man at your neighborhood bar has a MySpace page, as do the world's most successful acts. While combining a number of APIs and widgets on an artist's homepage can achieve the same functionality of MySpace, few have the potential to achieve the URL ubiquity that MySpace has. And so, we're sort of stuck with MySpace Music, whether we like it or not” (Kelleher).
While the MySpace URL still holds staying power, the recent round of layoffs rendered the future of the company uncertain. Where will artists migrate if MySpace is unable to create and implement a more sustainable business strategy? With over 600 million users, the obvious choice seems to be Facebook. According to Saskmusic’s Derek Bachman, Facebook “is changing the way bands and artists present themselves through Fan Pages, Groups, and Events. Twitter is the easiest method to send direct updates, such as tour cancellations or changes while on the road” (Foley 44). Unfortunately, Facebook is not as readily equipped as MySpace when it comes to helping artists build their own pages, as they have yet to create “a centralized music strategy” (Bruno). Artists do not have the flexibility of creating an account and immediately uploading music. In its current form, Facebook:
“Primarily makes its platform available to third-party developers to do whatever they like with it. But to artist teams that want to utilize Facebook like they do Myspace, Facebook can seem like a fragmented set of music-related tools and services that make for a disjointed experience” (Bruno).
Further, Caren Kelleher, head of business development at Songkick, is “weary about sending [music] fans to Facebook since it can change privacy policies, tab layouts and other settings with little or no notice” (Kelleher). There are other sites like BandCamp and SoundCloud, where artists can upload and sell music, but even still “Facebook is emerging as the clear winner” (Bruno). Artists naturally want to establish a presence in areas where they can reach the greatest amount of people, and Facebook should be the most obvious choice. Even if artists are obligated to use a third-party platform to post music through the site, the ability to connect with fans in such a seamless and instant manner should be enough to convince anyone of the value of the site.
Another growing trend in the industry is the use of Twitter in conjunction with Facebook. Twitter is an easy-to-use micro-blogging website where people can post 140-character-or-less updates on anything they desire. Some celebrities—Britney Spears included—have a team of people updating their feeds for them, but a vast majority of others run their Twitter pages completely on their own (twitter.com). Many celebrities have accrued millions of followers, and, as of March 2011, Lady Gaga, Justin Bieber, and Britney Spears are the three most-followed individuals on Twitter. President Barack Obama only holds position four. However, artists do not need millions of Twitter followers to make a difference. Canadian electronic artist Joel Zimmerman, AKA Deadmau5, was “Tweeting during his performance at the Winter Olympics 2010, warning people not to come to his show because the line was six blocks long and security was not allowing anyone else in” (Foley 44). This creates a very intimate relationship between artist and fan, and it is proving to be very effective; Deadmau5’s constant involvement on social media has lead him to accumulate 2.5 million fans on Facebook and 250,000 followers on Twitter.
Social media helps to facilitate a two-way conversation between an artist and his or her fans. A savvy social media user will never ask for something and give nothing in return. “This is why responding to messages and offering free downloads and contests are so vital - they create an equal, yin-yang relationship with fans” (Foley 43). Teenage pop superstar, Justin Bieber, is a perfect example of how to effectively utilize social media to connect with fans.
Using Social Media as a Means of Artist Discovery and Support: The Case of Justin Bieber
The surging popularity of user-submitted media-sharing websites such as YouTube is making superstardom possible for anyone—even no-name teenagers from small Canadian towns. Case in point: Justin Bieber, who has been filming reels and putting them on the Internet since he was 13 years old. Four years later, and he is arguably one of the biggest names in popular music. But Bieber did not start as a child star on Nickelodeon or the Disney Channel like many other teen stars; his career blossomed because of his YouTube channel (Parker 39). Bieber’s videos “garnered thousands of hits, eyeballs, unique visitors, one of whom was the Atlanta hip-hop manager Scooter Braun,” who tracked Bieber to his hometown in Ontario, Canada and flew him to Atlanta to sign a production contract with Usher (39).
Braun’s initial management strategy for Justin Bieber was fairly straightforward: Record videos without an introduction so when viewers stumble upon his page they think they are discovering something new. This gave his fans a sense of “ownership,” and Bieber was able to accrue 50 million views on YouTube before instigating a bidding war between Usher and Justin Timberlake’s record labels (Hempp). Usher eventually won Bieber over, signing the young teen to the Island Records/Deff Jam team. Braun continues to push Bieber to update his Twitter as much as possible, calling his 2.5 million followers a “digital street team” (Hempp). In its first week out, Bieber’s album “My World 2.0” sold 283,000 copies, and his video for the song “Baby” has 480 million plus views on YouTube (Hempp). In essence, through “retweets” on Twitter, the sharing feature on Facebook, and the ability to embed YouTube and share videos, Justin Bieber’s fans promote his music (and his persona) for him. All he has to do is make sure his fans know he is paying attention.
Justin Bieber’s story is a best-case-scenario example of the power of social media, but other artists are taking full advantage as well. Seattle-based electro-pop duo Go Periscope uses Twitter to urge fans to get involved, promising to answer any fan questions for the “next twenty minutes” (March 4th, 2011, 8:57 PM). The duo uses their social media prowess to connect with fans, and they even use their Twitter page to run giveaways and contests (March 2nd, 2011, 1:50 PM). With over 10,000 Twitter and Facebook followers, Go Periscope have been selected to participate in a contest run by Rolling Stone where fans can use Twitter, Facebook, and RollingStone.com to vote for their favorite act to be on the cover of Rolling Stone Magazine (rollingstone.com). On the other side of the country, Florida-based pop-rock band There For Tomorrow are another group who are very involved with their social conversation—so much so that they spend a significant amount of time answering fan questions and use a hash-tag (Twitter’s keyword system) every time they talk about their fans, AKA the “#TFTFamily” (Feb. 28th, 2011, 9:33PM). Justin Bieber, Go Periscope, and There For Tomorrow are only a few examples of artists who use social media to connect with their fans on a personal level—and they can do it all while gazing at a computer screen.
While social media provides an array of benefits to most artists, the rise of the information age and social media may also threaten bands that, ironically, were able to market themselves because of their mystique. Bands such as Led Zeppelin, who refused to do interviews or divulge any personal information, “may become a rare species because of a fan base always demanding and prying for more information” (Foley 44). This is not the case for all modern musicians—even the publicist of the glitch-electronic group Crystal Castles mentioned that the group rarely agrees to do interviews. In a world full of information, consumers find this lack of information intriguing. Crystal Castles are able to market themselves by being virtually unavailable to the public eye, which is not something the music industry sees very often anymore (Fitzpatrick). Regardless, fan will undoubtedly continue “demanding and prying for more information;” it’s up to the artists to keep their lives under wraps (Foley 45).
Social media is clearly the dominant marketing technique of today, but how much information is too much? Dave Carroll, an independent musician who created a series of YouTube videos singing songs about how United Airlines after the airline mistreated and broke his acoustic guitar, explains the delicate balance between being involved in social media and simply updating to make noise:
"’You have to be smart about it and selective with getting the news out there, otherwise, it could just becomes noise.’ While social networking is beneficial for artists, in providing an opportunity for everyone to have their own voice, [there ends up being a lot of noise]…the Internet is crawling with artists dying to get their music heard. This creates a problem where fans and industry professionals are forced to cut through the noise and risk your message being lost in the mix. Creativity…is what catches people's attention — not knowing what you ate for lunch” (Foley 45).
Social media certainly provides a portal for people to speak their mind like never before, but the users with the most followers typically have meaningful things to say; otherwise people would choose not to follow them to avoid the noise.
The prevalence of social media has spawned the creation of a new Billboard chart: The Sound Index. The Sound Index compiles information from the “web, online communities, and social networks,” all while keeping track of the “most important” demographic: teens (Bhagwan, Grandison, Gruhl 64). The previous system of using Nielson ratings and Broadcast Rating Systems was incomplete and often left out key demographic information (65), while the new Sound Index is more web-conscious, factoring in “plays, downloads, sales, and comments from a multitude of online communities and social networks” (66). Researchers are hopeful that the new Index will “inspire future software products and research projects to harness the wisdom of the crowds” (70). This is one of many steps music companies have taken to further integrate themselves into the social media conversation, and music marketers will be able to use this information to better determine which social media strategies are successful without simply relying on album sales.
If executed properly, Facebook, Twitter, and even MySpace are effective ways for artists of all sizes to garner exposure, but exposure does not always translate to revenue. Labels and artists and becoming more creative in their strategies, and, as Columbia’s Jun Mhoon predicted, new types of companies are emerging to facilitate the process.
Social Media is King; Now Where is the Money?
Currently, many artists and labels are realizing profits are through what is commonly referred to as the “360 deal.” In a 360 deal, “artists share not just revenue from their album sales but concert, merchandise and other earnings with their label in exchange for more comprehensive career support” (Leeds). The idea, born mostly out of desperation from tanking record labels, gives artists more time to develop before being pushed to create radio singles. Hayley Williams, lead singer for the Fueled by Ramen/Atlantic Records band Paramore, expresses positive feelings toward the 360 deal, stating that the band was “given all the time in the world, and all the support we could ever ask for, to basically do nothing but play shows… Without the 360 deal…I don’t know that we would’ve been given that lenience” (Leeds 1). From the label’s perspective, however, “the real potential of a 360-style pact does not emerge unless an act is popular long enough to attract either loyal fans who reliably buy tickets, or attention from business partners who might help market spinoffs like a fragrance or sneaker line” (2). Mhoon comments on relationship changes in the industry:
“There is an enormous responsibility on the record industry to create a new relationship with the artist. One of management, publisher, merchandiser, mother and father. Again, they are not used to that. They’re used to being the Fuhrer and controlling everything, and it can’t be like that anymore. Record companies have to realize that they need to become marketing media companies. Because of their history and methodology of doing business, it’s going to be hard” (Mhoon).
In the case of Paramore, Williams turned down a sneaker endorsement because the company did not want to feature the rest of her band, and both she and the label missed out on profits in the end (2). A decade ago Atlantic probably would have forced her into the deal, but now the label likely realizes that the only way Paramore is going to continue producing hit records is if there is no conflict within the band—which the endorsement would have likely caused. As long as a harmonious relationship remains between the artist and the label, 360 deals are highly beneficial to both parties—and this phenomenon is beginning to translate to live music as well. In 2007, Live Nation signed a 10-year, $120 million, deal signed with Madonna (Waddell).
An area that has increasingly seen more and more branded sponsorship is the music video market. Recent videos from pop stars such as Lady Gaga, Britney Spears, and Ke$ha all feature brands—both familiar and unfamiliar—such as Wonder Bread, PlentyOfFish.com, Sony, and countless others (YouTube.com). And the trend is only on the rise. The Kluger Agency, founded by 24-year-old entrepreneur Adam Kluger, is one company that has fully taken advantage of this new market for product placement in music videos. Artists have been paying tribute to their favorite brands for years (think: Janice Joplin and why the lord won’t buy her a Mercedes-Benz), but it’s only been the past few years where the brands are paying to be involved in music. Kluger’s story is a perfect illustration of the newness of this phenomenon:
“By April 2009, Kluger landed a Drank placement in the video for Sugar by Flo Rida. At the shoot, Kluger met Elric "E-Class" Prince, the chief executive of Poe Boy, Flo Rida's label. Prince had just received an object lesson in the power of product placement. The previous summer, Flo Rida had a smash hit, Low, which mentions Apple Bottom Jeans, Reebok, Cadillac, Remy Martin and Hennessy cognacs, and Patron tequila. Another hit, Forever, by R&B singer Chris Brown, had the line "Double your pleasure, double your fun," the old Wrigley's Doublemint gum jingle. Crucial difference: Brown had a multimillion-dollar endorsement deal with Wrigley; Flo Rida recited his favorite consumer goods gratis. "Never again," says Prince” (Plambeck).
While Kluger does not disclose the exact amount of money made per product placement, his clients say the fees “typically run between $40,000 and $250,000 per placement, depending on the artist,” with Kluger realizing a commission of 23% for each (Helm). Weaving a brand name into song lyrics costs significantly more: $500,000 and higher (Helm). In March 2011, pop star Britney Spears released a video for the song Hold It Against Me on Sony records, for which the Kruger Agency sold a placement for plentyoffish.com that “was the only paid placement in the video” (Elliott). Other featured products included Sony, Makeup Forever, and Britney Spears’ own perfume, but they were not paid.
Unsigned artists are increasingly turning to their fans for financial support for projects—from funding music videos to re-releasing older albums on new formats such as vinyl. The aforementioned Macklemore used Kickstarter.com to raise funds to produce and direct a new music video, and the $10,000 goal was met (and exceeded) in a matter of weeks. By the third week, 423 people had donated, garnering a grand total of $18,269. With Kickstarter.com, donors are offered incentives to increase their donation. Using Macklemore’s project as an example, people donating $10 received “a digital download of the completed ‘WINGS’ music video in high definition and the song,” while those donating $500 or more received “a personal phone call from Macklemore saying thanks from all of us! Also receive a signed hard copy of the Macklemore and Ryan Lewis full-length album upon release, a signed "WINGS" postcard, a digital download of the completed music video in high definition and the song” (Kickstarter.com). Artists like Macklemore, who utilize social media to connect with fans, can be highly successful with programs like Kickstarter—all it takes is a call to action.
The Internet and social media have played significant roles in the change of the music industry’s business structure. Record companies are binding artists into contracts known as 360 deals, and the industry is honing in on becoming more integrated with advancements in technology and the Internet. Social media websites like MySpace, Facebook and Twitter have changed the way both artists and labels communicate with fans, and the profit model of the industry is shifting toward an advertising-based structure. While there is still some concern about how record companies are going to continue generating revenue in the future, integrating into full-service marketing firms will undoubtedly help tremendously.
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