EDITORIAL: LATIN ARTISTS -- EVOLVE AND SURVIVE April 25, 2009
A Tough Economy Demands New Business Models
PEGGY DOLD
"In down economies, the only thing that's going to change things is changing things."
—Seth Godin, best-selling author of "Meatball Sundae"
During the past 12 years, as an executive in the Latin music business, I've had the privilege of working closely with both developing acts and established superstars in a variety of genres. As a result, I've had a close-up view of the many businesses built around Latin music—many of which are no longer viable the way they're currently structured.
With few exceptions, Latin artists seem to be unsure of the next steps, which will be essential for reinvention, and ultimately for economic survival. As artists see their income dwindle, one must ask whether artists are focused on the turbulence in the music business or on their plans to reinvent their own approaches to it.
According to the recent RIAA Latin Market Summary, net 2008 Latin shipments for audio/video units are down 42.4% from the previous year; over the past three years, they're down 62.7%. And downloads only accounted for 2.5% of Latin album sales last year, according to Nielsen SoundScan.
Although total digital revenue is larger than that from album sales due to income from mobile and streaming music products, the difference between the decline in the physical market and the growth in digital is striking—and it probably will not narrow soon enough for comfort. Latin artists, like those in every market, need to explore new ways to reinvent their business and replace the income they've lost.
Here's a breakdown by genre of RIAA Latin music market summary figures on 2008 sales compared with those from the previous year:
Pop: -45.8%
Regional Mexican: -36.4%
Tropical: -57.7%
Urban: -55.9%
The causes are many—technology, immigration uncertainties, gas prices, etc.—but the numbers are relentless.
In the United States, 79% of Hispanics are online, according to the Pew Internet & American Life Project, higher than any other group. According to ComScore M:Metrics, 71% of Hispanics consume content on their cell phones, compared with 48% of the general population. The market research company Insight reports that 30% of all Hispanic users of mobile data download or stream music to their phones, more than double the figure for non-Latinos.
"Overall, Hispanics are heavy users of all digital media, embracing innovations more rapidly than non-Hispanic whites, and share it very freely with friends and family," according to Lisa E. Phillips, senior analyst at eMarketer and author of "U.S. Hispanic Media Usage," an Internet marketing report. "Ownership and usage of several forms of portable media devices indicates this group of super-communicators will lead the uptake of mobile Internet and video in the U.S."
Clearly, Latin consumers love entertainment. Perhaps it's their perception of value that has changed. So I'd like to pose the following questions:
How are you offering your fans more value than what you offered last week, last month, last single, last album or last tour?
Do you still assume that your label is responsible for building and/or maintaining your business?
Perhaps your label is providing strong support with traditional marketing or blazing a new trail for you (involving sales of recorded music). But unless you have an agreement that involves the label growing your business, (re)building your business is not its responsibility.
Instead, you owe it to yourself and to your fans to invest in your business, and to enhance your relationship with your fans as only you can. That will help your label so that it, in turn, can support you in the promotion and sale of your recordings.
To evolve—indeed, to survive—you will need to closely review your business model. Do you have a creative and aggressive team that can find new ways to connect with your fans and build new revenue streams to replace those in decline? Are you prepared to invest in new products that will replace some of the revenue lost to declining CD sales?
While there is no one way to prepare for the digital future, technology offers endless opportunities for artists to introduce their music to new fans, and give added value to existing fans. Do you have a compelling Web site that is updated regularly? Do you offer something special to fans on a regular basis? Do you search for strategic alliances to provide resources to connect with new and existing fans? If not—if you are still recording an album, promoting a single and going on tour as you were years ago—it is time for a change.
Now, more than ever, it is the job of artists to bond more tightly with fans, to build communities and to provide the music and experiences fans want, when, where and how they want them.
It is time to change things by changing things.
What are you changing? ••••
Peggy Dold is a marketing consultant for the general and Hispanic markets, as well as a former VP of the Univision Music Group's international department, which she launched in 2002. She has done consulting work for MTV Networks Latin America and held executive positions at Crescent Moon Records and the Island Independent Label Group.
Share
Share on LinkedIn
