Comm 209 Final Exam
Disruption of traditional distribution model
1. New modes of production 2. New managerial processes 3. Opening of new markets 4. Sourcing of new materials 5. Sector-wide industrial reform and reorganization
Advertising Holding Companies
Have ad conglomerates - offer diversification Ex. Advertise differently in various countries for global brands Large holding companies buy up smaller agencies → Consolidation bc of internet Buying data-centric startups to keep them relevant M&A activity and the pursuit of scale/scope; growth strategies financed by capital markets Disruption by digital, data analytics, and direct-to-consumer trends
Luck and discovery Lil Nas X
He got a beat from soundcloud and made the lyrics and started posting memes for months until the song caught on. Eventually influencers asked to use it and posted on Tik Tok and the rest was history. The beat producer and lil Nas hadn't met when the song was made. "Because small differences in talent can generate large differences in economic rewards, and talent is often hard to judge and predict, luck also plays a significant role in determining winners in superstar markets."
Streaming gives multicultural genres enhanced market power
Hip-hop LatinX K-Pop
Concert pricing and "Block party economics"
Historically, concert tickets were underpaid compared to what supply and demand would bear ('rock and roll socialism')....Concert prices have increased especially rapidly relative to inflation since the late 1990s. commercial events tend to go through a phase where they are more like a social gathering initially, and then over time...they transform to become more of a market, with prices determined by the forces of supply and demand If an event turns into an impersonal market too quickly, it risks losing its allure and destroying the goose that has the potential of laying the golden egg
Online
Strengths: interactivity, immediacy, easy to change advertisement, high information content possible, strong targeting ability Weaknesses: low market penetration, low response rates
Magazines
Strengths: target audience selectively, excellent reproduction, long lifespan for advertisement, high information content possible Weaknesses: low overall market penetration, long lead time for ad changes
Price-discrimination
When a band of business has a unique product to sell, and if it can restrict the resale of that product, it can greatly increase its revenue and profit by charging a higher price to customers who are willing to pay less. Refers to any practive used to segment customers and charge a higher price to some than to others. Radiohead's "In Rainbows" (2007) - with voluntary pricing; a harbinger for new music distribution methods. Taylor Swift's "Reputation" (2017) - delays the release of her new records on streaming services until after she sells albums to her most devoted fans.
Controlled circulation
supported by advertising; publishers decide who gets the magazine (usually trade magazines)
Amazon
"...downloaded audio [books have] become the fastest growing format, with U.S. sales growing 29% in 2017 compared with the year before...Much of the growth of the audio market has been driven by Audible, an online subscription business acquired by Amazon in 2008." "The brick-and-mortar bookstore chains...are...struggling to compete with a type of company that barely existed in the 1990s, the online-only bookseller, especially Amazon." Amazon is using its data-analytics expertise to branch out into brick-and-mortar ventures of its own. The power of digital platforms and data analytics Physical entitites' economies of scale interrupted by the economies of scale of digital players (Netflix, Amazon) Digital scale matters more than physical scale Moving into retail
Clustering in "superstar cities"
"...intangible-intensive businesses tend to cluster in thriving cities. This not only concentrates opportunity, but raises property values, spreading wealth to those who own these properties.
Necessity of copyright protection:
"...the total volume of music produced actually increased, rather than decreased," after the introduction of Napster. "Music copyright protection is overrated because musicians would continue to create high-quality music even absent copyright protection." (p. 211-212) 1.Fairness 2.Artistic credit 3.Creative control
Alan Kreuger
"Although it is possible that music will become more of a niche market someday, this has not happened yet...the music industry has become even more unequal than ever..." (p. 93) "The top 0.1 percent of artists accounted for more than half of all album sales in 2017. Song streams and downloads are similarly lopsided." (p. 83) "The driver of this rise in inequality is the rapid increase in ticket prices for the superstar perform" (p.83-84)
Music Streaming Services - From durable goods/ownership model to a service/leasing model
"As recently as 2008, two-thirds of the revenue from recorded music came from the sale of physical products (mainly CDs)...Today streaming accounts for two-thirds of recorded music revenue, and physical products and digital downloads each accounts for about 15 percent.
Elizabeth Billington vs. Beyonce
"Because [Elizabeth] Billington and other outstanding singers could not reach a large audience a large audience, they lacked the scale required to become superstars...The ability to record and replay musical performances has enabled today's top artists, those most in demand, to dominate the music business." (Billington unable to reach scale unlike Beyonce)
C. Delores Tucker vs. Tupac/Time Warner/Interscope
"In the mid-1990s, civil rights activist C. Delores Tucker launched a highly visible campaign to clean up rap music. Her protests resulted in Time Warner getting rid of Interscope Records."
Sherwin Rosen
"The Economics of Superstars," 1981 Technological disruptions reward disproportionate power to a few players in any given market Two factors necessary in creating superstar economies: 1.Unique levels of talent and style - i.e. being an "imperfect substitute" 2.Market scale - technologically-driven globalization
Digital advertising duopoly - Google + Facebook
"The U.S. digital ad market grew by nearly $12 billion last year, with Google and Facebook collecting 77 cents of each new dollar spent, according to eMarketer." (WSJ, July 19, 2017) *57% of all online ad spending in the U.S. More brands pulling programmatic ad buying in-house
The U.S. economy as a superstar market
"The driver of this rise in inequality is the rapid increase in ticket prices for the superstar performers...Touring has become more of a superstar market over the last forty years, with a rising share of revenue tilted to the top performers" The Pollstar data indicate that the top 5 percent of performers earn almost six times as much revenue as the bottom 95 percent combined—a superstar market if ever there was one. "The Internet has, to some extent, changed the process by which superstars become superstars...But it has not leveled the distribution of income or enabled a large number of musicians to earn a middle-class living...even in the Age of the Internet, a handful of artists remain much, much more popular than everyone else. " At the very top of the income scale, technological changes that increased scalability have clearly intensified superstar effect "In a ranking of 378 metropolitan areas...40% of the new jobs generated [between 210-2017] went to the top 20 places, along with a similar share of the additional wages.."
Ideological/moral debates within Black America
"The rise of gangsta rap in the late 1980s raised more concerns about violent or sexually explicit lyrics in censored and uncensored albums." June 5, 1993 - The Reverend Calvin Butts, of Abyssinian Baptist Church of Harlem kicked off a campaign protest against 'gansta rap' by steamrolling CD's and cassettes of artists such as 2 Live Crew, Scarface, NWA, and Tupac. "Video Music Box Special: Censorship? Rap Under Attack" - a debate on rap music and censorship that was hosted by Ralph McDaniels and broadcast live from WNYC-TV in New York on June 30, 1993.
Rising income/wealth inequality in the Information Age (1979-present)
"The superstar firms tend to employ higher-paid and more highly educated workers, and they often outsource jobs for lower-paid workers, such as those in janitorial, cafeteria, and security positions. In the old days a janitor had a contract, the company had a relationship with the company so they had the potential to move up and develop and become an executive. This came from looking at employees as long term assets Today that isn't seen. Janitors are subcontracted, no ability to move up. Outsourcing is coming for white collar jobs
Streaming services and artist experiments with new windows
"To become profitable, Spotify will have to control costs, raise monthly subscription fees...without losing subscribers, or generate additional revenue from creating complementary products." (p. 200) "This raises the question of whether Spotify can be sustainable as a stand-alone company."
Tyga's new Columbia/Sony deal
(signed deal to have better global reach) In early October, the formerly independent rapper Tyga announced a new multi-million dollar record deal with Columbia Records, a division of Sony Music. The desire for global reach was his main consideration for the partnership. "[Sony] definitely understand[s] the global brand...I have a lot of fans worldwide — in places I've never been like South America, and in places I have been like Asia and Europe. They can help bring that to a larger scale. Doing it independently, you don't really have those teams to help worldwide. Sony, if you look at the history from what they've done from Pharrell to Beyonce to Adele — then you look at Lil Nas X, one of their new artists that's blown up this year — they've done a lot for artists globally, for their brand. That's why I wanted to partner up with them."
Business to Business Magazines/Trade Magazines
- Focuses on topics related to a particular occupation, profession or industry, published by private firm or business association examples: automotive, banking, building, ceramics, computers - Often focus on web and digital spaces using paper as a secondary product. Sometimes allow free access and charge for more in depth studies
Consumer Magazines
- For the general public in their private and non-business lives, readers buy and consume products and services that are sold through retail outlets as advertised in magazines - Subscription based on newsstands and racks - Have apps and websites
Recording industry revenue streams
-Recording sales (pre-internet); -Streaming (digital) -Songwriting/publishing -Live performances -Sync licenses = allows the licensee to synchronize ("sync") music with some kind of visual media output (film, television shows, advertisements, video games, accompanying website music, movie trailers, etc.) -Merchandise
A handful of large book publishers still dominate
1. "...the big publishers [also] enjoy lucrative economies of scale, working their backlists and using their buying power to cut production and warehousing costs." 2. Toby Mundy, former CEO of UK publisher Atlantic Books: "'The big publishers can gear their businesses in such a way that the cost of all their operations are covered by the profits from the backlist, allowing them to run their new books programme more like a spread bet.' If one of those bets pays off, the profits go straight to the bottom line." 3. "This is not an advantage enjoyed by smaller and midsized players. While technology has enabled an energetic sector of entrepreneurial independents...the lack of backlist scale—and their reduced bargaining power with retailers—limits profitability." Economies of Scale: Fixed cost benefits to bigness Backlist of IP
Advertising's importance to traditional media business efficacy
1. "Advertising is designed to spur consumption of specific goods and services." (p. 139) 2. Media businesses are designed to create and serve an audience - whether mass, or narrowly-targeted. 3. Advertisers and media creators/distributors find mutual benefit from the pursuit of profit-minded self-interest. Provides primary revenue stream If media could survive without ad support, they would be more willing to experience with controversial content. Edgy material in purely subscription-oriented (not ad-oritend) Mostly, advertisers do not like controversial content
The Music Copyright Act of 1831
1. "Copyright assigns a legal right to allow authors to exclude others from using their original work for a period of time." 2. "The goal of copyright law is to grant a temporary monopoly to creators so they have a financial incentive to create new music, books, or other works." (p. 207) 3. The music copyright system: a.Determines the rights that must be secured to use music b.Sets royalty rates c.Collects and distributes payments to rights holders
Disruption by digital, data analytics, and direct-to-consumer trends
1. Brands questioning advertising return-on-investment (ROI) -Cutting budgets 2. Rise of consulting companies (ex., Deloitte, Accenture, IBM, etc.) 3. Online advertising (growth in, migration of consumer attention) Many big advertisers are slashing their marketing budgets as they question ad agencies' ability to generate real ROI. As advertising becomes more data-driven, global consultancies are buying up agencies and reshaping the brand marketing world. There were 100 agency-related deals worth a collective $4.6 billion in sales in the first qtr of 2018, only 14% of which was driven by agency holding companies."
Types of magazines (i.e., b2b, consumer, i.e., b2c; etc.)
1. Business and Trade→ Business of Fashion, Architectural Record 2. Consumer→ TIME, Nat Geo, The New Yorker 3. Literary Reviews and Academic Journals 4. Newsletters 5. Comic Books
Musical formats
1. Edison - 1877 - Edison invents the phonograph and makes the first audio recording: Mary Had a Little Lamb 2. Berliner- 1887 to 1906 - patents the gramophone; begins transition to recordings on vinyl discs (records) 3. Commercial radio - 1920s 4.Vinyl LPs and 45s - 1940s - 1950s 5. Audiotape: cassettes and 8-track tape; Sony Walkman - gives musicians more freedom in creating music, 1960s - audiotape tech enables music portability 6. Compact Disc (CD)- 1980s 7. MP3s 8. Online streaming - 2001: Apple introduced the iPod and iTunes creating digital download market
Dawn and explosive growth of streaming services
1. Label profitability returns! 2. Streaming gives multicultural genres enhanced market power 3. Spotify playlists and music discovery; "the new radio" 4. YouTube + SoundCloud + Spotify launch careers 5. Artificial Intelligence (AI), Machine Learning (ML) and A&R as an increasingly data-driven endeavor
Music and Recording Industry
1. Popular music is a small industry, less than 0.2% of workforce. 2. "Less than $1 of every $1000 in the U.S. economy is spent on music." (p. 27) Alan Krueger 3. "Americans spend over five times more on cigarettes than they do on music." 4. "Americans spend 50 percent more on health clubs...than on music." (p. 28-29) 5. Music represented just 2% of the media/entertainment market (which includes music, totals a $2.2 trillion industry)
Risk Management
1. Prepublication research 2. Author track records 3. Advances on royalties -A payment of money before the book is published that the publisher anticipates will earn through royalties on the book. -Offering an advance can help a publisher compete in the battle over rights to an attractive and highly-anticipated project.
Organizational chart/structure for a typical magazine
1. Publisher -Editorial Department --Editor in Chief -Art & Design Department --Creative Director -Production & Manufacturing -Advertising -Circulation department -Business administration
Market segments/readership
1. Segmentation: Portions of a magazines readership that an advertiser wants to reach. -Demographics: (gender, income, location, etc.) -Psychographics: (life-style, personality traits, etc.) 2. Advertisers can only pay for segments of the readership 3. High costs of segmentation -Small and large circulation titles
Music streaming services
1. Transforming music from a durable goods/ownership market to a service/leasing market o"...from an à la carte menu to an all-you-can-eat buffet." (p. 189) 2. Streaming shifted consumer preference from pirate music sites and established payment for convenience. 3. Interactive vs. non-interactive ex) Spotify (Interactive) vs Pandora (non-interactive) 4. Ad-supported vs. subscription-based "Royalty payments per song are greater for music streamed via subscriber services than in free ad-supported services..." 5. Spotify's long-term business challenges
Historically, musicians needed at least three things in order to have a chance at a "successful" release:
1. access to financing to record and manufacture 2. access to the major promotion channels -- especially commercial radio -- but also big music industry magazines like Rolling Stone and Spin, as well as video mechanisms like variety programs, late-night talk, and MTV and BET. 3. access to the distribution channels that would get your CD into retail outlets, especially the big chain stores like Tower, Borders, HMV
Society of European Stage Authors and Composers (SESAC)
1. for-profit organization, making them a slightly different player in the market 2. take a partnership approach with their affiliates in order to improve their financial outcomes 3. not subject to the consent decree, so they license in a free market; this enables them to achieve better outcomes
Copyright Act of 1909
1. grants copyright protection to originally published works 2. granted protection for a work for a period of 28 years 3. grants the author a right to renew the protection for another 28 years 4. provides for compulsory mechanical license to allow anyone to make a mechanical reproduction of a musical composition without the consent of the copyright owner
Size of U.S. industry
1. total net revenue of over $25 billion in 2018 2. 2.71 billion units sold 3. sales in adult nonfiction and children's young adult categories have experienced the most growth
Growing publisher risk aversion in face of competitive pressures
A 2018 survey by the UK Authors' Licensing and Copyright Society (ALCS) shows that the majority of writers have seen their advances stagnate or fall, and "an increasing number of authors no longer get any advance at all." "Authors who receive low advances are forced to look elsewhere for their income while writing—in a day job, from personal wealth," or via subsidization by a higher income-earning member of the household...Unless more authors can make an independent living from their writing, it is hard to see how a more diverse literature can thrive." "As advances diminish as a source of income, rights associated with books have become increasingly lucrative, reflecting the growing appetite for books in audio and screen formats...opening up new revenue streams for writers..." Advances diminishing, or vanishing entirely Further squeezing diversity among authors Echoes of V. Woolf and the need for " A room of one's own" Multimedia screen options become a new and lucrative author revenue stream Media conglomerates and presold titles
Magazines and ethics: "advertorials"/content marketing/i.e., "blurred editorial lines"
A. Controversial to be giving brands/ advertisers the ability to tell stories/ share insights using the same publishing tools as the editorial staff -sometimes the consumers can't tell the difference
Paid circulation magazines
A. Supported by charging readers for single copies or subscriptions (mostly consumer magazines) B. Fierce competition for advertising -Media kits: database that tell potential advertisers attractive key facts about their readers
The American Society of Composers, Authors, and Publishers (ASCAP)
American non-profit organization that protects its members' musical copyrights by monitoring public performances of their music
Magazines and/as brands
Americans of all ages read magazines, especially younger adults ESPN The Magazine has highest reach 106.76 million in June, 2019 Then People, WebMD, Allrecipes,... An increasingly important way that a major magazine company tries to keep advertisers and get new ones is to position every title not just as paper-bound reading material but as a personality—a brand —with which readers want to engage in many areas of their lives.
Rock as top-grossing live music genre
Among last year's 25 top-grossing music tours, more than half of them were rock."
Low barriers to entry
Around 100 of these publishers had 500+ employees. Around 1,600 had only between one and four employees. 1. Long tail of small ventures -Fifty Shades blockbuster success -African-American "street lit"/"urban fiction" -"street lit," like these titles authored by Harlem's K'wan Foye, represents another booming area of independent/DIY book publishing.
1998 Copyright Term Extension Act - form of rent seeking
Attempt to extract greater compensation without creating additional value for society. Expend resources to obtain a larger slice of the pie, while doing nothing to increase the size of the pie.
Music as a "winner take all" market
Bandwagon effects The tendency for... "people's beliefs, knowledge, and behavior [to be] influenced by the beliefs, knowledge, and behavior of their associates... "
Media mix and media planning
Brand image - tv, magazine, internet, outdoor advertising Immediate sales - newspapers, free distribution sheets, direct mail. Individual advertisers serve different wants and needs at different times.
Traditional recording industry structure
Brittany Spears and NSYNC were at the peak of this boom - NSYNC launched an album on March 21, 2000 and sold 2.4 million units that week, 11 million by year-end Function of record labels 1. Talent discovery (A&R) -Madonna was signed after legendary scout Seymour Stein heard her demo and called a meeting at his hospital bed. Lily Allen was among the first artists to use the internet to build a following on the music website MySpace -annual global spend on A&R is $2.8 billion 2. Finance for recording and production 3. Promotion -Radio payola 4. Distribution -Major recording distributors (Universal, Sony, Warner) -Record stores -Mail order clubs A recording contract gave musicians access to money and promotion and distribution at the cost of almost always signing over their copyrights
Cost per thousand/Cost per mil (CPMs)
Cost of advertising rises/circulation but that cost per thousand persons as measured in milline rate declines to a point and then rises. Reveals that advertisers' ability to achieve the greatest cost efficiency occurs in a relatively small area to the right of the point at which advertising rates and cost per thousand cross but before cost per thousand rises. For media w/specialized audiences, advertisers are willing to pay higher cost per thousand available in mass media because the media are able to deliver audiences w/specific characteristics that the advertising may be targeting. CPM: Each media (traditional v. digital) has own virtues/drawbacks Cost/return ratio -- Ask CPM about views/purchase -- higher number = more reward for $$$
Convergence and Schumpeterian "creative destruction" in music
Digital Studios have made recording more affordable More promotion channels, many free Internet and satellite radio - amplification of reach Social networking sites for fan engagement More universal access to distribution Lower barriers to entry for digital distribution channels (Youtube)
Steve Jobs, Apple to the rescue!
Digital downloads iTunes iPod
1998 Copyright Term Extension Act
Extended copyright protection for new works from the life of the author plus fifty years to the life of the author plus seventy years. (AKA - the Sonny Bono Act; "the Mickey Mouse Protection Act") Arguably a form of "rent-seeking." Extended the copyright term for works created after 1923 that were still under copyright protection. =Mickey Mouse Protection Act-delayed Mickey Mouse's entry into the public domain until 2024. Term extension in existing works provides no additional incentive to create new works and iposes several kinds of additional costs. Little evidence that copyright term extensions produce beneficial effects.
Business consolidation, monopoly, and "superstar companies/firms"
F.A.A.N.G. - Facebook Amazon Apple Netflix Google
Merchandise
Fans buy merch because they want to memorialize the event. Artists use merch it to create brand identity and loyalty, and source of income.
Disruptive impact of convergence
From Ad-based to more balanced revenue mix 1. Many of today's top tech. giants are taking away ad. revenue -Google, FB and Amazon take up 62% of US ad. revenue 2. Moving to subscription-driven and consumer-based -Paywall= the norm 3. More of an emphasis on the magazine's brand, journalists, culture, reach and values -The real value is the content not the format 4. Other rising forms of revenue: Events, Licensing, Affiliates, Consumer Data
Book publishing supply chain
From acquisition to distribution Publisher similar to A&R Exec - hearing pitches from agents about new works Contracting: Acquisition editor contracts agents' talents to form a relationship with the publisher Book Development: Editorial project manager Production Manager: Proofreading, construction of book Published Book: Goes out to distributors
Paretol principle (80/20 rule) vs Long tail
Hollywood Movies: refuse to adapt long tail - all about big blockbusters Long tail: growing tail and finding mechanisms to keep reaching audiences down the tail to make it viable EX: long tail are the bands in the end of the tail with small following with good music, so create app called bandcamp so these bands can distribute their music. Cultural production not economic remuneration Short tail: big famous bands - where money is made 2017: 0.1% of artists accounted for more than half of all album sales
Williams v. Gaye - "Blurred Lines" (2013) vs. "Got to Give It Up" (1977)
Illustrates the difficulty of determining copyright to a song, and the stakes involved. "When I listen to 'Blurred Lines' and 'Got to Give It Up' with my untrained ears, I don't hear enough similarities to conclude that Williams plagiarized Marvin Gaye...It is an understatement to say that the lines between legitimate inspiration and illegal copyright infringement are blurred. " Legal case was confined to the composition, not the recorded performance, the similarities are even less apparent if you strip out the rhythmic cowbell tones and falsetto sining that both songs have in common. Williams lost because he was inspired by the feel and groove of Gaye's music.
Barnes & Noble restructuring
In June 2019, Elliott Management agreed to buy Barnes & Noble in a $683m deal that appointed James Daunt as CEO.
Digital Books
In early part of 21st century, major book publishers believed they needed to get involved w/ digital books after initial growth, ebooks appear to have plateaued
Advertising Purposes
Increase revenue Promote sales by inducing consumers to purchase product Provide information about attributes and availability of products and additional uses Position products and services to establish or to change perceptions about a product or to establish and maintain brand preferences.
Disintermediation of record labels' market power
Peer-to-peer (P2P) file sharing services Convergence and Schumpeterian "creative destruction" in music
Online advertising
Internet-based advertising is a "gale of creative destruction" sweeping across the advertising and media landscape. 1. Digital advertising duopoly - Google + Facebook 2. More brands pulling programmatic ad buying in-house 3. Fragmentation of mass audiences 4. Interactivity, targeting, data (also: privacy) 5. Perceived benefits versus concerns 6. Search advertising 7. Search engine optimization 8. Targeted advertising via social media 9. Disintermediation
Katy Perry, "Dark Horse" vs. Flame "Joyful Noise"
Jury: Katy Perry's 'Dark Horse' copied Christian rap song (July/Aug, 2019)
Music spillover effects
Monetary A. Music festivals' additive impact on regional economies 1. E.g., Coachella reaped $805 million in profits Non-monetary A. Externalities that can be positive, or negative B. Massive emotional connections; substantial positive externalities 1. Music & revolutionary movements; music and social causes; music and cultural production 2. Music and/as "bearing witness" to the human condition; e.g., Voyager Mars expedition's Golden Disc 3. Music and cognitive therapy -Music transcends its economic value...because of the powerful emotional connection it creates with listeners." -music has the ability to rejuvenate lives, reinvent cities, break down barriers, rally resistance, and give rise to revolutions -linspire(s) social activism and political movements." The spread between the music industry's relatively small revenue base and its outsized cultural impact is striking.
P2P services, YouTube and problem of "free riding"
Music is a non-rivalrous good - one person's consumption of it does not diminish another person's opportunity to consume the good. The problem of "free riding" the consumption of non-rivalrous goods.
Music and Capitalism
Music is bound up with buying & selling; markets. "Total expenditure on music—including concert tickets, streaming fees, record sales, and royalties—were $18.3 billion in the United States in 2017." -without a sustainable business model for making money, the music industry would cease to exist
Production costs
One reason that ticket costs have been rising rapidly...is that production costs [for live shows] have risen rapidly. The rise in costs is mainly because staging and production for live entertainment have become more complex. Audiences empext pyrotechnics, advances videos, etc. Festivals control costs because the stage setup is used for multiple artists performances which is why festivals have become so popular. They're more cost effective
Owned, earned, paid media
Owned: Channel a brand controls Websites, Blog, +: Control, cost, niche audience -: People don't trust (obv. biased), takes time to scale One's own websites, blogs, Twitter/IG account, where the brand has control of content Earned: When customers become the channel Buzz, going viral +: Most credible, key role in most sales, transparent -: No control, can be negative, scale, hard to measure Media whose content the brand has no control over; audience talking about the grand (blogs, posts, positive or negative) Paid: Brand pays to leverage a channel Display ads, paid search, sponsorships +: In demand, immediacy, scale, control -: Clutter, poor credibility, declining response rates Invest $ and time to feature one's brand (Google AdWords, sponsored content)
Sources of income for magazine
Paywall Events Licensing Affiliates Technology Consumer data
Procter & Gamble (P&G)
Proctor & Gamble is the world's largest advertiser. The company spent more than $7 billion on advertising in 2017. Specialize in beauty care, household care, and health and well-being care. Tide, Ivory, Duracell, Pampers
Spotify playlists and music discovery; "the new radio"
Rap Caviar: most influential playlist
Tipper Gore and the Parents Music Resource Center (PMRC)
Record industry protests against the "Filthy 15" by Tipper Gore and the Parents Music Resource Center (PMRC) in the 1980s. Judas Priest, "Eat Me Alive" (1984) - Explicit Lyrics: "Groan in the pleasure zone/Gasping from the heat ... /I'm gonna force you at gunpoint/To eat me alive ... /Squealing in passion as the rod steel injects." "Some recording firms have resorted to distributing two versions of an album, one with safer, censored lyrics and the original one that the musicians intended to distribute." Parental Advisory labels
Label profitability returns!
Revenue from CD sales Revenue from licensing deals
lIntellectual property protection and Article I of the U.S. Constitution
Section 8, Clause 8, gives Congress the right to private property "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
Economics research
Sherwin Rosen Alfred Marshall
YouTube + SoundCloud + Spotify launch careers
Souljah Boy Chance the Rapper Post Malone - from soundcloud to success Lil Nas X Saweetie Ingrid Michaelson (via MySpace) Billie Eilish
TV Strengths and Weaknesses
Strengths: Broad coverage, ability to repeat messages, highly visual, good for image development Weaknesses: market targeting limitations, ignored messages, advertising clutter, limited information content possible, high cost
Newspapers
Strengths: Target market coverage, ability to change size and type of advertisements, high frequency, cost advantages, high information content possible Weaknesses: Advertising clutter, audiences read quickly, reproduction quality limited, short lifespan
Radio
Strengths: ability to target local markets, formats attracts different audiences, audience uses in mobile situations, rapid ability to change message, low cost Weaknesses: narrow audiences, audience instability, ease of station change, limited information content possible
Different types of media/audiences; pros/cons of each for advertisers
Television, cable systems, and consumer magazines are highly dependent upon national advertisers, whereas radio stations and newspapers are highly dependent upon local advertisers. Differences in sources of advertising income affect levels of competition experienced for advertising expenditures at local and national level.s
Convergence's disruptive impact on book publishing supply chain
The existential challenge presented by convergence for book publishers, like Barnes & Noble, "[involves] figuring out how to compete in a digital world in which paper is only one way to deliver the information in books."
Multimedia screen options become a new and lucrative author revenue stream
The largest media conglomerates frequently pursue synergies between the IP-assets of their book and entertainment content publishing assets. Presold titles and transmedia strategies
Alfred Marshall
The most influential economist of his generation How new developments in communications technology were growing the income gap between superstar businessmen and everyone else.
Single scale copies
The number of copies of a magazine sold not by subscription, but one issue at a time. make up only a small percentage of the magazine sold. The majority of magazines are distributed via subscriptions
Business models/financing - Circulation
The number of units of the magazine sold or distributed free to individuals in one publishing cycle.
Performing rights organizations (ASCAP, BMI, SESAC)
They collect publishing royalties (performance royalties) for the PUBLIC PERFORMANCE of musical works as stipulated by the U.S. Copyright Act. This includes fees paid by radio stations, businesses, restaurants, concert venues, bars, nightclubs, sports arenas, bowling alleys, malls and shopping centers, amusement parks, colleges & universities, etc. for performing music in the public (within the confines of their establishment). These monies are paid to ASCAP, BMI and SESAC for a blanket public performance license that grants the licensee (the business) permission to allow music to be performed in their environment (this includes music over speakers and music performed live by an artist). The license fees paid to ASCAP, BMI and SESAC are passed on to the copyright owners in the musical works (song) — PUBLISHERS (50%) and SONGWRITERS (50%) — as performance royalties for musical works.
Debates over music's non-beneficial external effects
Tipper Gore and the Parents Music Resource Center (PMRC)
Napster Documentary
Took off in 1999 when Sean Parker and Shawn Fanning released it on college campuses Peer to peer file sharing network for recorded music, started the slow decline of the recorded music industry because CD distribution in stores was expensive and digital downloads were free. This started a legal battle in 2000 which led to Napster ultimately being shut down in 2001 from court orders "A flurry of other downloading services took its place" - record stores were shutting down despite the recording industry suing nearly 20,000 people for downloading music illegally Steve Jobs started the iTunes store and record companies had no choice but to do business with him. Recording industry (sort of) boomed, now declining due to Spotify & other streaming sites Music artists are now making a small fraction of what they used to and tour to earn (close to) the difference
Neutrality as a principle of U.S. commercial policy - George Washington's Farewell address, 1796
US commercial policy- neither favoring nor disfavoring one technology or company over another Current U.S. policy authorizes much lower royalty payments for airing music on terrestrial radio broadcasts.
Rock and Roll socialism - tickets used to be underpriced for fans
Used to be thought of as a social gathering but now its a market business but fans need to feel that block party dynamics Ticketmaster puts a service fee and assumes the role of villian to get the better price for concerts for artists Merch is huge portion of revenue
Borders Books bankruptcy (2011)
When the large bookstore chain Borders declared for bankruptcy in 2011, it was a powerful "indication of the precarious health of brick-and-mortar retailers." (p. 212) I taught my son how to ride a bike in the vacant parking lot of an abandoned Borders bookshop in 2010.
Convergence & Music's "Long Tail"
YouTube + SoundCloud launch careers Spotify Discover -"Although it is possible that music will become more of a niche market someday, this has not happened yet...the music industry has become even more unequal than ever..."
Subscription
a long term order for a magazine that is paid for in advance, for a predetermined period of time or # of issues
BMI
collects license fees on behalf of songwriters, composers, and music publishers and distributes them as royalties to those members whose works have been performed
Custom magazines
created for a company to impress into specific audience (consumer magazines)
Verified Fan
designed to separate actual, human fans from bots and scalpers. Fans register ahead of time, and those who are verified and selected receive a code that unlocks the opportunity to purchase tickets. The system aims to thwart bad actors in the secondary ticket market.
Types of advertisers
differing needs/strategies/geographic scope Nike, Visa, Target → Depending what they need, have own specific media-buying and planning Scale+scope affects, too (national, regional, local) 1. National advertisers are typically producers of brand-name consumer products or large national retailers. 2. Large and mid-sized regional and local advertisers that tend to be retail establishments such as department and grocery stores, and dealers, and real estate firms that are intent on reaching regional and local audiences. 3. Small advertisers - small stores. local market area. 4. nonbusiness = church, organizations, individuals. [Consumer staples] "How companies advertise varies depending upon the price and frequency of purchase for a given product." [Durable goods] "How companies advertise varies depending upon the price and frequency of purchase for a given product." "Because of the different needs of these advertisers, and because different media provide different types of access to audiences, media firms get varying portions of their advertising revenue from the different types of advertisers." "Media differ in their abilities to serve the wants and needs of advertisers because of differences in their characteristics, their relationships with audiences, and the way they are used by both audiences and advertisers." "As a result, advertising agencies...spend a great deal of time determining which media and mix of media are best for reaching the audiences that are intended to respond to clients' advertising."
Audio books
fastest growing format most of growth is driven by Audible, an online subscription service acquired by Amazon in 2008
1998 Digital Millennium Copyright Act (DMCA)
gives YouTube safe harbor for copyright infringement for user-uploaded content on Internet platforms, provided certain requirements are met. "with a significant economic advantage over Spotify..." (p. 227) - Google as rent-seeker. Platform must remove content in a timely fashion when it receives a request to do so. Youtube is not required to pay for the right to use copyrighted material so long as it meets the requirements of DMCA.
Brand proliferation
increase in number of independent sub-brands under the same brand umbrella.
Influencer advertising economy
lBig-name stars can command $100,000 or more for a single YouTube video or Instagram post. Influential uses three IBM Watson technologies to evaluate influencers for brands. As social media influencers such as Kylie Jenner gain increasing power over consumers, advertising agencies are flooding into the nascent marketing space Fake followers/influencers What is worth companies' investments? Fragmented culture (are we taking influencers seriously)
Ticketmaster
often assumes the role of the villain to shield performers or promoters from criticism for charging excessive prices. Way to channel revenue back to venues or promoters, and indirectly to artists, for tickets that are underpriced. Acts a heat shield to protect artists from the reputational fallout from charging a higher price.
Concert Promoters
organize a show by booking musicians, securing a venue, and marketing the event. Could be interesting in signing the band to perform one show in a single venue or several shows in diff. venues. Needs to rent the venue and contract with a ticketing company. 1. From local monopolies - operating in their regions w/little competition. Over time local promoters consolidated to form national companies/conglomerates that "have horizontal as well as vertical monopoly power." 2. To horizontally- and vertically-integrated national conglomerates - In 2000, Sillerman sold SFX to Clear Channel Comm, a conglomerate of radio and tv stations, ampitheaters, and billboard businesses. IN 2005 Clear Channel spun off its concert promotion business into new company called Live Nation. LN merged w/Ticketmaster - formed Live Nation Entertainment. LNE biggest comp = AEG. AEG owns and operates several venues in US and around world. Another Planet (+ gender) - the nation's third largest concert promoter, and largest independent promotion company is an outlier among the field, boasting eight female executives heading up the company's various departments
Band's manager
plays a central role in the band's development and business decisions. Negotiates on behalf of the band and advises the band. Typical agreement mays the manager a commission of 15%of the band's net touring revenue and other income services.
Music Modernization Act of 2018`
provide a blanket license for streaming services to companies, covering mechanical rights in any songs not otherwise covered by a digital company's direct deals with music publishers aims to rethink the way rates are set when a song's rights are licensed by a collecting society in the US ultimate goal of songwriters and publishers earning more for their hard work; not only for mechanical rights, but also for performing rights!
Recent musician success
sign major label contract
Account Manager
supervise account executives and who report to the agency's director of account services. Represents the client
Magazine distribution
the channel through which a magazine reaches its exhibition point
Publisher/Ownership
the chief executive of a magazine who is in charge of its financial health Draws an attractive audience Draws an audience that is loyal to the content and personality of the magazine—its "BRAND" Provides an environment conducive to the sale of the advertisers' products Provides this audience and environment at an efficient price Provides a way for advertisers to associate with the magazine's brand and audience beyond the magazine's pages to a variety of platforms
Circulation
the number of units of the magazine sold/ distributed free to individuals in one publishing cycle
Convergence & the music supply chain
the technological, industrial, cultural and social changes wrought by the shared use of digital technologies, of sectors and product markets that were previously seen as distinct and separate.
Anderson
•scarcity of the broadcast distribution model: 1.Half-dozen TV channels 2.3 or 4 rock radio stations per market 3.Identical summer blockbusters nationwide - predicted that the monopoly system in entertainment that existed for the better part of a century would collapse. -The rise of consumer power and choice would replace centralized distribution systems. -The chokehold of mass culture would being loosened by the new Internet-enabled economics of niche culture and niche commerce. -The Internet would remove bottlenecks between supply and demand and establish a market where "everything becomes available to everyone." -Entertainment content would be increasingly defined by the inherent abundance of entertainment choices afforded by the broadband enabled Internet.