The Times is a Great Textbook

Yesterday, and again today, The New York Times published a great article on the music business. Both are instructive for us.

Yesterday's article; The Once and Future Prince, describes how Prince has been able to maintain financial success even as the music business has tanked. Read the article but here are some quotes:

• "Prince’s priorities are obvious. The main one is getting his music to an audience, whether it’s purchased or not. “Prince’s only aim is to get music direct to those that want to hear it,” his spokesman said when announcing that The Mail would include the CD...Prince is confident that his listeners will support him, if not through CD sales then at shows or through other deals."
• "How much he makes from his various efforts is a closely guarded secret. But he’s not dependent on royalties trickling in from retail album sales after being filtered through major-label accounting procedures. Instead someone — a sponsor, a newspaper, a promoter — pays him upfront, making disc sales less important. "

Prince has recognized that the value of recorded music lies in the time spent listening to it, not in the sale of it. Certainly, as an elite artist it is easier for Prince to obtain corporate deals than 99.9% of all other artists trying to make it, but these odds are really no worse than the odds of getting a major label deal.

Today's article; Oops!...They Did it Again, describes the revival of the Zomba Label Group. The company has a new group of successful artists such as T-Pain, but has been able to remain profitable as CD sales tanked, unlike almost every other recorded music company.

A key to their success has been keeping costs low:

• "With the right songs, he added, the label can generate a profit even without a gold album. When the rap newcomer Huey released his first album last month, for example, it sold fewer than 29,000 copies the first week. But Huey’s hit single, “Pop, Lock & Drop It,” had already turned into a radio hit, fueling sales of more than two million downloads and ring tones, the latter typically costing as much as $2.50 each. By keeping costs low, the label was already in the black when the album reached shops, Zomba executives said."

In any industry the low-cost producer of substitutable goods will always win (whether recorded music is substitutable is open to debate but I would argue that it is, sicne listeners have virtually unlimited choice in what to spend their time listening to). It seems like the recorded music business is just beginning to learn this fundamental principle of business.

The lessons that these articles describe are important elements of the development of the recorded music business as it becomes a classic medium - like radio, TV and the Internet - one that is large and supported by advertising.