What drives vinyl sales?

Over the last year, you might have noticed that we have been overexcited and wondered over the growing resurgence of vinyl records. The 2014 year was named as the most successful year for vinyl in decades with 9.2 million units sold, according to figures from the British Phonographic Industry (BPI) and the Official Charts Company.

British rock group Arctic Monkeys’s AM was the biggest selling vinyl album of the year, ahead of Daft Punk’s Random Access Memories and David Bowie’s The Next Day.

Later on, the UK’s first weekly vinyl chart has been launched by the Official Charts Company as sales of vinyl albums and singles continue to soar. The charts company said it was responding to “the huge surge of interest” that has seen vinyl sales climb from a low of 0.1% of the albums market in 2007 (205,000) to 1.5% in 2014 (1.29m).

Despite the fact it’s still seen as a small part of the music business, the interest here is the unusual come back of the format. Usually new formats followed the cycle where it arrived and grew in popularity, reached a peak and then declined and eventually disappeared. In case with vinyl, it has grown in popularity back in the 60-70s, declined in popularity through the 80-90s, got the way down to the bottom and then suddenly started climbing back. The question here is “why”. Why is vinyl growing in sales again, who those people who drive this trend?

When I started to ask myself these questions, the initial thought which popped up in my mind was “nostalgia among vinyl generation”. Vinyl records are becoming popular again among listeners who were brought up with vinyl records, who remember and had experience with this format. However, when I visited a record store in London not so long ago and paid attention to the audience in vinyl sector, I was surprised as the majority of customers were in their 20-30s. What drives these people to buy vinyl records, while they are pretty much familiar with streaming services and can easily access music online, and in some cases even for free?

Are they hipsters in pursuit of being “cool”? Or is it an attempt to compensate the feeling of ownership which is so rare in this day and age, when everything is so digital? I personally go for feeling of ownership, as I do need to feel what I get otherwise it’s not my. It’s very convenient indeed to listen to the music online when you are on a train or driving a car, but when I’m at home I would rather prefer to go for vinyl.

There are certainly signs that, at the very least, millions will continue to buy vinyl each year. It’s been recently reported that vinyl consumers are largely music fans under 35, spelling a relatively bright future for the format. While we certainly can’t say vinyl is on the way to overtake streaming music anytime soon, the format is definitely here to stay on consumer’s radars for the near future and beyond. And for those who once feared vinyl would be lost to the sands of time, that’s a comforting thought!

New Music Economy

The technological breakthroughs and the resulting consumption behaviours, that the media industry has seen, have deeply influenced the whole music industry’s operation. Although it is yet too early to estimate if the digital music market will generate as much revenue as the physical music distribution, the viability of the recording industry sector’s old paradigm based on control and scarcity is at least reconsidered.

This paradigm no longer suits the way that music consumers respond to marketing messages. Historically, audiences used to respond by buying the music. Nowadays, the audience’s action does not turn into financial profits. The new innovative tools that digital technologies have provided to the audience allow them to respond in completely different ways. Nowadays, it is arguably said that the audience’s action shows itself on the cloud: at its most, the audience goes on various media-sharing websites such as YouTube to consume the music, they communicate their fondness for song or artist on fan-sites, music forums and social networking sites such as Facebook and Twitter. Some of them make cover videos and remixes of their favourite music and post them on the cloud. At its worst, they illegally download the music on peer-to-peer networks. More often than not, they can do both.

Though, this response to the marketing messages, appearing on such a powerful medium, creates a feedback loop reinforcing marketing messages. It can play a critical role in the music marketing dynamics. This loop can give rise to trends, exposure of artists which are critical for the success of artists, making the audience as an active player in trendsetting.

The ability to control the audience’s action by targeting various marketing messages is at the core of music marketing. And more than ever before questions arise. What kind of marketing messages bring about the most positive response from the targeted audience? How to generate revenues from online audiences’ activity?

The user-centred functioning of the Internet and the growing devaluated perception of media content on behalf of the Internet consumers have led the entire record industry sector to rethink its value-chain. The major record companies’ reluctancy to enter the digital market gave a place for new players that were beforehand external to the music industry. Such companies like Apple that has implemented the Itunes music store. These new major players as well as numerous other innovative companies such as DittoMusic, came up with the new marketing strategies that lead to think about the record industry sector in another way. These players are simply redefining the recording sector in accordance with new rules in the market.

The Streaming effect on music consumption

Music industry has passed through tremendous changes in the last decade, and still continues its transformation. Just 10 years ago could you imagine listening to the music online on your smartphone? The answer is probably no.

Nowadays, there is no wonder in streaming music wherever and whenever you want. What you need is internet connection, smartphone/laptop and to choose streaming platform. In some cases it’s not even necessary to pay for music content, you will be forced to watch some advertisements instead. By using streaming platforms you have opportunities to create and share playlists socially, discover new artists, follow them and be aware of any new music content they upload. There is no space for CDs and even downloads seem like a past. Sounds like a miracle for all music lovers, music is everywhere and can be easily accessed.

It’s not a surprise, Britons streamed 14.8bn tracks last year, almost double the 7.5bn of 2013, as internet connectivity improves and becomes pervasive according to the music business body the British Phonographic Industry (BPI).

In 2015 it’s expected that Apple will work hard on the scene using the Beats brand it bought for £2bn in May 2014, the same with Google’s YouTube, which last November launched a paid-for, ad-free music and video streaming service YouTube Music Key. Even Snapchat, best known for its self-destructing photos, is about to launch its own music service according to emails leaked as part of the hack of Sony Pictures.

Sometimes it seems as if everyone is planning a music streaming service. However, not everyone is happy with this reality. Going digital was the first phase of the digitization of the music industry, and moving from ownership to access is the next. It’s hard to deny we are on the cusp of a new era for the music industry, we are indeed on the cusp of a new industry. Consumer behaviours changed, perceptions of value of music changed, technology transformed our buying approach.

Streaming revenues are rising fast, according to the BPI’s they have dramatically increased from zero in 2007 to £76.7m in 2013. Data released by the Entertainment Retailers Association and BPI suggested that streaming revenues across the UK in 2014 were £125m.

Despite the fact that revenues are rising, there is a huge problem that streaming services are still far from being stable in profits. For instance, Spotify has lost a total of $200 million since it was founded in 2006, according to a report last year based on its financial disclosures written by PrivCo. However, Spotify declined to discuss its balance sheet. Only in 2013 Spotify’s UK business claimed for the first time it finally got profit. From £92.6m in 2012 to £131.4m in 2013 revenues, helping the company’s UK arm to move from an £11m net loss in 2012 to a £2.6m net profit in 2013.

The company earns money from subscriptions and advertising on the service’s free version. About 70 percent of Spotify’s costs are music royalties (although most artists are not making much from streaming music). The remaining 30 percent is used to cover overhead at the company.

The problem with streaming services is that they seem remarkably ineffective at persuading people to pay for content. Let’s have a look on Spotify, with 60mln users the company has maintained its conversion rate of 25%, which means only 15mln users are willing to pay for music. Another US-only service Pandora claims 250 million users, but only 3.3 million paying its $5 a month subscription.

Mark Mulligan (Midia Consulting), who has a long track record watching the music business claimed that there are only about 35 million paying subscribers worldwide for all streaming services, out of more than a billion potential users. Even before the digital revolution, the average person spent less than £5 a month on music. There is something to be changed in a price policy. It’s likely that cutting subscription prices would entice more consumers to pay, easily making up for lost revenues.

Like Google’s paid-for YouTube Music Key service launched in November did with its six-month free trial and a discounted £7.99-a-month cost (down from £9.99).

Therefore, it’s possible to guess other companies will make subscriptions less expensive than now. And it’s just a matter of time when artists and labels swallow their pride and accept the world of change.

What exactly Facebook new algorithms mean for musicians?

In recent times Facebook has announced some changes the company is about to make in the nearest future which every musician should take into account.

One of the changes has become an update to News Feed, where there will be less opportunity to be noticeable with promo messages such as “My new tune is out now via iTunes, for buying click the link below”. If you’re not already having a natural conversation with your fans, this might cause some problems for communication with your audience.

The next changed which is going to happen is a nearly demise of Click-Baiting Headlines. “Click-baiting” is when a publisher posts a link with a headline that encourages people to click to see more, without telling them what exactly they are about to read and see. However, according to recent research 80% of the time people preferred headlines that helped them decide if they wanted to read the full article before they had to click through.

The third changes worth to be mentioned is importance of video content. Compared to 2013, video on Facebook in 2014 has become an integral part of the experience, with preferential treatment and auto-play capability being given to native video on the platform. All these led to signifiant growth in video since May 2014 on the social net. Indeed, just have a look on statistic that Facebook videos receive 70 percent more engagement on Facebook than embeds of videos from YouTube on Facebook, which means Facebook is about to become a huge video content platform in 2015.

But what all these mean for musicians then and what you should do?

  • Replacing the traditional “go buy our album” text posts with smarter creative video posts.
    For example it might be your personal appeal to your fans with information about new EP, your tour dates etc. Just replace the retail post with the retail video. At the same time your message will have a personal character which is so important nowadays and will follow the latest trend – Facebook as a video content platform.
  • Provide your fans with crystal clear and short headings in your posts. Let them know in advance what they are about to read or see, otherwise your posts are likely to be scrolled down.

All these rules are very simple and easy to follow 🙂

YouTube Channel as a crucial part of social media strategy for musicians.

In this day and age, record companies have almost been replaced by independent artists, for whom YouTube is playing a crucial role. Millions of singers have bagged a record deal after being found on YouTube!

Creation of video content is such an important and perfect task when you live in fast-paced world of sharing and downloading. Video might be shareable and what is most important here, it always has a potential to go viral.

Like many other social networking sites, you can also interact with your audience (I would even say it is a must!). In my previous post I mentioned some basic rules which you should follow on Facebook, Twitter, so let’s discuss your opportunities on YouTube Channel. People who view you videos can share it, ‘like’ and ‘dislike’ your work, they are able to leave comments (sometimes not polite, but it’s a reality of business where you are about to step in, so be ready). YouTube gives you a wonderful chance to communicate with your audience, show yourself, tell your story. And these people are your potential investors, so please do treat them well!

Sharing videos online is a very easy task. To start with putting your video on YouTube, you can also insert it into blog posts and of course share on your social media profiles. However, putting the content ‘out there’ often isn’t enough to stand out.

If you’re a YouTube newbie, the information below is definitely for you:
Sharable Content

The key to YouTube success is uploading videos that people will appreciate and keen to share. Therefore, by uploading content that people want to see and listen, you’ll be able to reap the benefits. You can try for example to record a cover of the ‘song of the moment’ which will help to increase interest in your profile.

Remember successful story of “I See Fire” – Ed Sheeran Cover by Alice Olivia? She has got 6,5 mln views so far 🙂

Tag Your Videos

Like Instagram, YouTube has a ‘tag’ feature, and you should do most of it! Make sure to tag your video with everything that is relevant. This will help you to increase the visibility of your video.

Don’t forget, the more visible the video, the more likely it is to be shared 🙂

Also, make the most of the YouTube categories by placing your content in the most relevant places. Again, it will help you to be sure the right people see your videos.

Regular and Consistent Updates

Social media is a great way to raise your profile, and build a fan base. But it doesn’t happen overnight. So if you’ve worked hard to build up a YouTube community, you should make an effort to regularly update the channel.

You should also make an effort to reply to as many comments as you can. Obviously if you have thousands of subscribers it’s not possible to track them all. You should however, make sure you have an active presence.

Analyse Your Big Data

YouTube offers free analytics through its ‘insights’ feature. You can easily see a lot of valuable information about every video you’ve uploaded. This includes a demographic overview of the people who’ve viewed your video, and how they found you. This will help you when it comes to creating future content so make sure you use this feature, and of course it’s very important for you to understand the market and where your fans are based.

By following these easy steps, you should be able to seamlessly integrate YouTube into your current social media strategy.