Much has been made of the plight of the 4 major record labels. I'd like to add a small bit of insight from a recent project we did at Aderra.
I had the fortune to be able to sell an exclusive USB flash drive to a national U.S. retail chain for one of our existing clients. The retailer was excited to have this USB in stores on the album release date an immediately placed an order for 4000 copies with an expected re-order before Christmas. Now I know that 4000 copies is not huge Taylor Swift style numbers but not a bad guarantee for first week sales (with no returns by the way...). Seemed like a "Win" for all involved, retailer had an exclusive, I got to help a great client and the label gets to move a few records, right?
The label didn't like the fact that we asked for some bonus content like a live show. Their response "We can't sell a live show!" Um, we've been on tour with this artist for two years and are currently selling live shows on the web at this very second. And sending checks to the label each quarter.
Then they objected saying that "fans won't buy music on USBs". Um, we've sold about $500,000 in USBs for this same artist alone this year.
So I cut a check for $26,000 and offered to give it to them. "We need more money for this deal".
Now anyone who happened to read the business section of a newspaper in the past couple of years may have noticed that these large record companies are teetering on the brink of bankruptcy. I am well aware that my little offer of $26k wasn't going to bring them back from the brink but they were willing to let the deal completely die unless I added another $1000 dollars. They preferred no money to some money.
That's a key indicator.
I can only surmise that shareholders would rage if they knew that this was going on. And it is not an isolated incident. We continually are in conversation with record label folks as we launch tours with their artists. They can never seem to grasp that I am handing them fistfulls of cash that they would never have seen.
I am not sure how this particular deal I have described will play out.And I want to be clear, not everyone at a record label is a bonehead. We work with great, inventive, intelligent folks who "get it". It's the few who are either oblivious, arrogant or ignorant that make those businesses no longer viable.