The music industry still remains one of the biggest money makers in entertainment. While it’s true that digital technology is widely embraced in production and distribution of music, the primary source of revenue for most musicians is still the sale of albums and songs. With the evolution of a global market, more consumers are looking for free content rather than paid. Music fans are likely to pay for experiences related to music than buy songs or albums.
It’s been suggested that the music industry can triple earnings in the coming decades if they adapt the strategy used by gambling and gaming companies. Gambling and gaming companies have long since moved on from traditional marketing methods and have started to employ more progressive methods. How does it work?
Segmenting the market as a monetising strategy
Take for example the players in a casino. There are different groups of players depending on how much they are willing to spend. Players are considered to be either a whale, a dolphin, or a minnow. Whales are the big spenders but generally comprise only a small percentage of the playing population. However small, these players are the most profitable. That’s why casinos always give them the best service possible. They are given amazing perks to encourage them to spend more.
The same principle is also used by gaming companies. They publish games that are free-to-play to encourage a large population of fans to engage in the game and bring in new players. Gaming companies take care of these free players because they are often the most eager when it comes to trying new games. Similarly, those who are willing to spend more on the game and avail of paid add-ons, get access to exclusive freebies and new features. To a certain extent, high spenders are treated by developers to special gifts and rewards.
Being able to customise treatment of customers depending on which spending category they belong to, increases loyalty and retention. In essence, when you spend on the experience you provide to the consumers, you need not work as hard in keeping them and bringing in new patrons.
Application to the music industry
A similar model can be applied in the music industry, particularly in the USA, where coupons and free offers are the order of the day. This will help the industry adapt to the changes in the coming years. Instead of relying on album and song sales alone, artists and music producers can invest in giving fans the experience they want. Fans who are willing to spend big sums of money should be treated well to maintain loyalty. These fans are the ones who can pay for private concerts, fly overseas to watch concerts, and pay big money just to meet the artist in person.
This doesn’t mean that fans who are not willing to spend and prefer to access music for free should be ignored. The majority of music fans fall under this category and their influence is a precious commodity that should also be maximized. One of the unique characteristics of these fans is the ability to use social media to the fullest extent. They can promote and advertise a certain artist, as well as influence their overall reputation. The value of being able to influence peers is basically what’s working at this point. An artist will get free advertising through loyal and dedicated fans.
There are many start-up music companies that are already adapting this marketing model and are focusing on engaging the fan base. While there aren’t that many artists these days who are already adapting this marketing method, it may become mainstream in the coming years. Indeed, the survival of the music industry depends on its ability to adapt and employ new models of conducting business. By treating music as an experience rather than a product, the rapid changes in technology and innovation will not be a disadvantage but a tool for success.