The sky is falling for most artists and companies in the music business, but not all. Universal Music Group (UMG) announced earlier this week that their gross income was about even with last year at this time. Given the economy and the fact that a 20% loss is actually considered good, UMG had a great year.
The company had sales of a bit over a billion dollars, with digital sales comprising about 28% of gross revenue. What's more, digital sales were up by almost the same amount over last year. Although CD sales fell by a bit more than 9%, the loss was offset by an increase of the same amount in artist services and merchandise sales (from 360 deals?).
As a Universal exec said to me in private, "We still sell an awful lot of CDs, and we have a lot more income sources than we used to."
So what does this mean? Say what you will about UMG, but they seem to have figured something out. The rest of the industry's income takes a bath and theirs stays flat (which is a win in this economy). Digital sales stay flat for the rest of the industry while theirs is up 28%.
I'm a big proponent of Music 3.0 (have a book coming out about it, as you know if you read this blog regularly), and believe that it's a big part of the new music business, but the fact of the matter is that not many artists have broken out of the noise of the Web despite the advantages it provides. And, the vast majority of artists selling even the meager numbers of units that we see on the charts every week are still tied to a major label or large indie.
So who will be the first artist to really take Music 3.0 to the next level and break out big? It will happen some day, the question is only, when?
After many requests, I've added numerous chapter and interview excerpts as well as a Table of Contents to all my books on the Bobby Owsinski website. You'll find the book excerpts here, with the interview excerpts being particularly popular so far.
Here's a list of what's currently available from each book.
Just like trade shows, conferences have outlived their usefulness in most cases as well. Maybe they were never useful except in the rare instance of some superstar panelists, but even then the same problems apply. The problems?
If the panelists are boring, so are the panels.
If the topic is boring, so is the panel.
When the panelists use the session as a sales tool.
When the panelists refuse to reveal any new information and just spew press release-talk.
This sounds like 99% of the panels we've all seen, right? So how can conferences be created that are worth attending? After having been a program or conference director for 7 major conferences and a few more minor ones, been a panelist and moderator at a number of sessions and given a few session presentations, I can speak from experience on where my own failings were. Here are 6 ways to improve conferences:
1) Ban panels altogether. Presentations can be so much more interesting and informative. Presenters almost always spend a lot of time on their presentations since they're out there on their own. Panelists never spend any time preparing however, even given the topic and potential questions. The TED conference is a terrific example of a presentation-only conference that really works.
2) Vet every presentation or panel. There has to be someone who can vet the presentation beforehand to make sure it's interesting. This can be easy these days since just about everyone who's capable of doing a high-level presentation also has the tools and skills required for a pre-conference presentation via the web. Vetting is much tougher for a panel, although the questions and direction can be gone over beforehand. The big problem here is the workload for the program director, who's usually only too happy just to have all the panelists, moderators and presenters confirmed a week before the show. The way around this is:
3) Fewer, but better, sessions per conference. Most conferences try to be all things to all people to draw more attendees. As a result you may have 2, 3 or even 4 sessions running simultaneously (like the recent Digital Hollywood), where you can be sure that at least some of the attendees are distressed because they can't be in 2 places at the same time. If there were only a single dynamite session in the time period that everyone could attend, it's better for all involved.
4) If you do employ a panel, it needs a great moderator. Not just a good moderator, a great moderator. Think Tavis Smiley or the late Tim Russert, or for those that are familiar with him from various conferences in the MET (media entertainment technology) space, Ken Rutkowski of METal. You need someone willing to challenge the panel, willing to take the conversation in a new direction, and willing to be provocative. Anything less and you slip back into the boring panel syndrome.
5) If you do employ a panel, have no more than 3 panelists. So many times a panel gets stacked with 4 or 5 panelists in order to appease a conference sponsor. While this is a concern, be aware that every panelists over 3 will usually diminish the success of the panel. It's too difficult to have a meaningful discussion. Try it yourself. Is it easier to have an intense conversation with 3 people or 5?
6) Q&A sessions can sometimes replace a panel discussion providing that the guest and moderator are both interesting. Some really great potential presenters are just not good at doing it themselves. They go from interesting and outgoing to bland and boring if they're the center of attention. But if they're interviewed they become themselves again - funny, interesting, thoughtful, even exciting. Once again, you need a great interviewer. Think Tavis Smiley or to a lesser degree, James Lipton (The Actor's Studio) - who may not be textbook great but is comfortable interviewing and usually has a great set of questions.
If the above suggestions were taken to heart by conference organizers, I'm sure we'd see more interesting and successful conferences. But there's a lot of extra work involved, and for that reason, I have my doubts that anyone will care. Most program directors aren't getting paid for the enormous amount of work they put into a conference, so the more they can lessen their burden and make their lives easier, the better they think it is. But if TED can do it, it is possible. Then again, maybe webinars are the future anyway.
Trade shows and conferences have finally outlived their usefulness, at least in their present form. Let's face it, except for the networking factor (which is dwindling as fewer people attend), there are fewer and fewer reasons why anyone needs to go to one.
And yet there are more and more shows of all shapes and sizes all over the world. Regardless of the industry, you can easily go to a trade show at least once a month and probably a lot more if you what you do crosses technology disciplines.
So why are trade shows obsolete? Here are a few reasons from both the manufacturer's and end-user's viewpoint.
1) The customer can get all the information he needs off the Internet. Once upon a time, all new product releases and announcements were planned around a few trade shows since that was the best time to get the word out since you had most of your customers and factory reps in one place. With mailing lists, social media and a good website, product releases can now come any time. And if a customer needs info, it's now usually just a few clicks away instead of waiting for the trade show to collect a brochure or 1-sheet. And perhaps the most disappointing for veteran trade show goers is that with everything being more and more software based, there's no advantage to seeing a product in person since it'll probably look the same as on your computer at home.
2) Dealer networks are now easily reached. For a manufacturer, a trade show used to be the perfect place to see many of your existing dealers and find new ones. With fewer and fewer dealers in a distribution network because most business is done with "big box" stores, speaking with or find new dealers is far less important that it used to be. Again, thanks to the Internet, Chat and teleconferencing, it's now possible to effectively communicate with your dealers without seeing them face to face. From the dealer or rep perspective, a trade show is the perfect place to find new products or replacements for old ones (this still holds true actually), but again, just a few clicks and the dealer can have all the info he'll ever need.
3) Trade Shows have become too expensive. The return on investment has reached the breaking point for trade show attendance. Yes, they've always been expensive, but now, thanks to the recession, it's gone beyond what many companies large and small can afford. And it's not so much the travel expenses for personnel (which are really high but tempered by the economy) but the union costs, drayage, and booth costs. Apparently, trade associations and unions haven't gotten the message that there's not as much money available and have done what the government is so good at doing - when there's not enough business, they raise their rates to cover the shortfall instead of lowering prices or adding value to attract new customers or keep existing customers from leaving.
4) The stigma of not being there has been lifted. Once upon a time, if your company wasn't at a major trade show, dealers, reps and customers began to question the health of the company as a result. No more. The formidable Apple Computer has been one of the leaders in shunning trade shows, starting with NAB a few years ago and even extending it to trade shows built specifically around it's brand like MacWorld. This starts a snowball slowly rolling down the hill with other manufacturers thinking, "If Apple doesn't feel they need to attend, then neither do we." We're seeing it starting to happen at trade shows all over the world as the booth space dwindles.
5) Let's face it, trade shows are boring. The biggest problem I see with all trade shows these days is that the products are evolutionary instead of revolutionary. It used to be that there'd be not one, but as many as 3 or 4 new products that just had everyone buzzing. In these days of mostly software, what we see are products that seem to have a few new features, or run faster, or have a different user interface, but nothing that you'd truly call truly new and innovative. As a result, there's even less incentive for an end-user to attend. There's just no excitement anymore. And with a general lack of money around, there are no lavish parties or gatherings to go to, no blockbuster presentations that you haven't seen before, and very little "wow factor."
For all these reasons, we're seeing more and more companies look at the bottom line and feel that the cost of attending a trade show just doesn't justify the return. And now that the stigma of not being there is lifted, they don't feel forced to do so either.
Tomorrow - The Trouble With Conferences. What's wrong with them, how to fix them, and which ones are actually worth attending and why.
Did you ever notice what happens when fewer people are using a toll road because they're driving less? The income to the state goes down. Did you ever notice what the state does in response? It raises the tolls to make up for the shortfall! This is the automatic response from any city, state or federal government entity. Fewer people using the city parking lot - let's raise the price.
What most privately run businesses would do instead would be to give better service, provide added value or lower the price to get more people in the door (or as in our example, on the road or in the parking lot).
But here we have the giant concert promoter Live Nation respond to the 22% decrease in concert attendance by raising the prices!!???! These guys are so big they think they're the government.
According to CEO Michael Rapino during yesterday's earnings call, "With the reduced attendance expected throughout the year in North America, we knew driving more dollars from each fan was a key strategy. We believe we'll achieve this in two ways; first, through higher margins on food and beverage...that will be an outcome of our new concession deal with SMG Airmark which will increase profits by 10%."
"The second way we expect to drive per head is through a host of new onsite initiatives including reducing the items sold and focusing on the most popular, profitable increasing points of sale, portable hawking to sell food and beverages directly to the patrons in their seats, and finally increasing products and adding new products like souvenirs photos, early access passes and bundling to create incremental revenue," Rapino continued.
OK, so they want to raise the prices on the already over-inflated concessions (are we looking at the $12 beer?), and sell us more overpriced crap too?
Come on, people. Vote with your pocketbook. Just say no!! Stay at home and listen to your favorite artists on a CD, MP3 or DVD instead. Let them feel the pain the same way you're feeling it!
In an announcement that should surprise no one, concert promoter Live Nation stated that concert attendance is down 22% so far this year.
Why should anyone be surprised? With the added "convenience charges" and general high ticket prices, consumers are balking at the high prices for a concert ticket. But it's not only the ticket that gnaws at joe-ticket buyer. It's the price of parking, the price of refreshments and the price of swag that adds up to an evening that's beyond the ability of the average consumer to afford at the moment.
The audacity of the concert industry is that they don't consider this in the least and continue to charge prices that are way beyond what their fan base can absorb. So it's no surprise that concert attendance is down.
But the interesting part of all this is that Live Nation's revenue per fan is actually up 5% despite the drop in attendance. While it might seem to be the proper MBA strategy to raise prices, it's a disaster for long term business. The public is already resentful and getting more so every day.
We're reaching the breaking point for the average consumer in terms of affordability. They really want to support the artists that they love but just can't swing it financially.
The average concert goer wants and needs value. It needs a price concession to the economics of the times. If it doesn't get one soon, yet another facet of the music business will be in trouble if it isn't already.
