That is the question on every business owner’s mind, including us at TAP.
- The UK consumer market has recently suffered high profile casualties like Woolworths and Zavvi, with even Tesco reporting sharp falls in its share price (down nearly 10% compared to December 2008). Some record companies have also had to scale back their businesses and make redundancies, including Sony BMG (UK), which closed its offices in Thames Valley, leading to the loss of over 62 staff.
- The industry has suffered tremendous damage and instability during recent months. We’re seeing why record companies need to focus on providing consumers with services that will enable them to spend money rather than putting them off.
- The whole industry is still in a state of shock at these figures, but it’s about time we started looking ahead and working out how the business will move forward over the next year.
- Listening to music requires effort for many people these days, whether downloading music illegally or listening to CD quality streaming music on the internet. For many people, buying a track online is not an attractive proposition unless it’s cheaper than usual or comes with some bonus material.
- Many record companies are now recognizing this issue and are changing how they market their products accordingly. Sony BMG has launched its “You Own” campaign in response to the challenging market. The idea is to encourage customers who may have illegally downloaded tracks to purchase legal copies by offering various deals and free extra content, including videos.
- According to Peter DeCaprio, another issue that record companies need to address is their pricing strategy for new releases. In January 2009, Time Inc’s music arm Interred cope Geffen A &M pulled some of its latest releases from iTunes and asked retailers to do the same, including Lady GaGa’s new album “Fame” and Alesha Dixon’s first release “The Boy Does Nothing”.
- In January 2009, we saw Universal Music choosing not to make its music available on iTunes until 28 days after departure. It’s a case of “if you can’t beat them, join them”, and the company is also launching its download service. This is a smart move for Universal, as it can still make money from releasing tracks through iTunes and provides consumers with an incentive to buy the physical CD in stores.
- Our personal opinion is that using digital distribution services like iTunes, AmazonMP3, and 7digital is a good way of helping customers tries new music and encouraging them to buy.
- However, we also believe that record companies need to make it easier for consumers to purchase their products in physical stores if they want to compete with illegal downloading. These days, consumers demand instant access to products, which means that record companies need to be more flexible regarding release dates.
- We’re working with some great indie labels at the moment, including the Warp Label Group, which is releasing tracks on different days in both physical and digital stores, recognizing that consumers’ demands are changing all the time.
- The biggest challenge for TAP has always been to get people to buy music. We have a strong foundation in place with our retail partners, including HMV and Tesco, who see download services as the future of music distribution.
- Tesco has just announced that it will be selling 1 million downloads every week from the Top 40 chart to Christmas, which will help boost industry sales by around £15 million.
- Retailers are also offering customers more choices when purchasing their music. HMV has launched its “Download Your Album” service, allowing customers to have a physical copy of an album posted out immediately after purchase. They can then choose to download the remaining tracks later if they wish.
- This is an excellent way of allowing consumers to experiment with new music and discover artists that may not be playing on the radio at the moment.
- When I look back to our first five years in business, I think we’ve done pretty well, despite the difficulties we’ve faced over this period. We now have over 1,000 digital and physical retail partners, and we’ve reached number one in the iTunes download chart.
- But there’s plenty of room for improvement too. We need to be more flexible regarding pricing, and we also need to encourage consumers to buy music online by offering a more comprehensive range of deals than just selling individual tracks.
Conclusion by Peter DeCaprio:
So far, Sony BMG has launched its “You Own” campaign in direct response to the challenging market. The idea is to encourage customers who may have illegally downloaded tracks to purchase legal copies by offering various deals and free extra content, including videos.
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