A Third Path For Music Investors
Is the music industry a smart place to invest?
Yesterday in "Is Music A Good Investment? Whyte vs. Resnikof," I contrasted the doom and gloom of Digital Music News’ Paul Reznikoff who wrote "make no mistake, very few are actually making money in this space" to investment banker Robert K. Whyte who said, "Bands and independent
artists now have the tools and ability to promote themselves…and investment in those new endeavors reaps
the benefits once found in royalties and copyrights."
Resnikoff thinks that all is lost. Whyte says you can still make a buck by empowering musicians.
There is a third path. I think it’s a smarter path.
Invest in fans.
Help them find good music. Help them enjoy it, share it, remix it, put it on a t-shirt, watch it live and do stuff with it that they’ve never imagined doing.
The new music business mantra is that it’s "all about the fan". It’s true. I’d bet on it. – Bruce Houghton
Glad you commented on the essay, actually it was not intended to be “doom-and-gloom” as you mention. But it was intended as a realistic assessment of where the space is now – incredibly difficult for companies to monetize, yet still incredibly alluring for entrants. And very high failure rates, characterized also by difficult, time-consuming and expensive licensing paths – in other words, just to play in the game is hard.
That could start to change over time, especially as the role of major labels evolve. But so far, digital music has been a tough space for startups and established players alike. Yes, downbeat, but really just a survey on the current situation.
Talk soon Bruce.
Bruce,
Hope you get the chance to review our startup for Midem’s Music Ally Showcase. It’s all about accelerating the music discovery process. We’re putting our faith in a major FAN INVESTMENT.
-Adam
@Paul
When you mention that there are “very high failure rates” it’s important to consider that high failure rates are to be expected when the barriers of entry have been drastically lowered, if not completely demolished.
My point being that the high failure rate could be at least equally indicative of the numbers and kinds of people trying as it is of a shift towards a space that is hard to monetize.
Other than that little addendum, I generally agree with you and think you make some strong points.
I can’t say for sure of course, but I suspect the whole new paradigm of fan engagement and ‘owning’ the artist-to-fan relationship, is over-rated in terms of what can really be achieved, beyond the experiences fans can find now, and the busines generated from that. Noone who advocates this has really been specific or demonstrated huge success (unless they already have an established career as an artist). See my latest post on http://juggernautbrew.blogspot.com/