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The Music Industry: No Longer a One Trick Pony

There was a time when all a record label had to worry about was making hits. Good hits paved the road to successful albums, and then the label got paid--really paid. As holder of the majority of the publishing rights of music artists' songs, label executives where in a perpetual phase of not having to think about how to make money. But that was then, and this is now.

Now is the time when the recording industry is truly embattled. With CD sales on the costant decline and the surge in digital musical sales making very little impact on the overall bottom line, the recording industry could use a saviour.

The savior du jour happens to be Chris Lighty, CEO of talent management firm Violatar, and most notably, manager of superstar rapper 50 Cent. As reported in the Wall Street Journal today, later this month Lighty goes into business with Warner Music Group to launch Brand Asset Group, a consulting firm that will aid record labels in structuring product endorsement and equity deals--like the ones Lighty brokered for 50 Cent with Mark Ecko Enterprises for a clothing line and with Vitamin Water for the Formula 50 sports drink. The money an artist made on branding, touring, and licensing deals normally went to the artist and his management team, similar to the way it works with an athlete. But now, companies like the one Mr. Lighty proposes, will cut record labels in on a piece of the action.

"If the next 50 Cent comes along and the label that signs him doesn't get a part of all that brand extension, shame on them," Mr. Lighty recently told Samantha Marshall of Crain's New York Business.

Lighty isn't the only one hoping to change the recording industry into the music industry. Mark Pitts, president of urban music at Zomba Label Group, is always thinking about how his artist's music will fit into advertisers' youth marketing plans. Warner Music Group is also calling itself a music-based content company nowadays, with plans on foraying into film and video production. Other labels are venturing into network series and reality shows based on their artists. Long gone are the days of being hitmakers. Labels are in the business of entertainment, where today entertainment means making a hit that works well for radio and the club, as well as for ringtones. It also means making videos not only for MTV and BET, but for the YouTube and MySpace generation as well. What it mostly means, is thinking about new and novel ways of doing business and creating excitement about an artist.

It's sort of like the deal Prince brokered with Verizon Wireless recently. The artist's new single "Guitar," from his upcoming album Planet Earth was made available for free download on V CAST, as a direct-to-mobile release for anyone who participates in an online demo of Verizon's new Song ID music identification service. This was weeks before the single was available on radio and before the album picked up Columbia as a distribution partner, as reported in Billboard.

Related Links:
Why the Music Industry Needs A Makeover
Branding the Music Artist
The Long Tail of Music
Music Marketing 2.0
The Future of Music
Way Behind the Music