Wednesday, January 10, 2007

What’s That Sound? THWAP goes the long tail! – Part I

Nielsen’s numbers for 2006 music sales are out and to quote the article that summarized the report RIAA, “can’t stem the bleeding.” Given my last post I don’t find that all too interesting. What I do find interesting is the shift in the kinds of music being sold. What seems to be happening is that the big artists are selling less and small artists are selling more.

Hindsight is 80/20
For a long time in the video-on-demand industry I tried to convince people that the vaunted “80/20” rule of retail – that 80% of the sales come from only 20% of the SKUs - was an artifact of limited inventory selection. You see, my first job in that industry was to figure out how to maximize the effective use of digital storage. I think the facts are starting to bear out my earlier argument. Most people in the industry believed that the 80/20 rule would hold true when users had tens of thousands of titles to choose from. I don’t think I had any particularly bright insight since in my eyes Amazon had already disproved the 80/20 myth, but, as they say, hindsight is ….

It’s Catch 22, All Over Again
If you read my blog regularly, the exercise of “putting on your RIAA” cap is getting a little worn so today I’ll just cut to the chase. If you’re a label trying to figure out whether to invest marketing dollars into your favorite talent, you’ve got a real catch-22 on your hands. 1) Invest more dollars and possibly not get as much money back because the stars don’t sell as many copies; or, 2) Spread out your money on more artists with the knowledge that you may not be spending enough to move the needle of public opinion on any one artist.

Unfortunately for the music industry the option of “don’t spend at all” doesn’t make sense because “sampling” hasn’t found a better form of expression. That last sentence might have sounded like gobbletygook and I think it deserves its own post – stay tuned for Part II.

No comments: