New Marketing Songbook: How the Music Industry is Building Community

Posted by Sharmin Kent

December 12, 2012 at 8:02 AM

Heavy metal fans, rejoice: Metallica drummer Lars Ulrich has given Spotify and its community his blessing. The band’s entire catalog is now available on the popular music streaming service, and Ulrich and Napster co-founder Sean Parker attempted to mend fences at a Spotify news conference last week. This news is sort of surprising; not only were Ulrich and his bandmates fierce and vocal opponents of Napster’s file-sharing platform in 1999, but they sued the service in 2000, opening the door for major record companies to follow. In 2002, Napster lost its final battle with Big Music and shut down.

“It was just about control”

Ulrich now says his misunderstanding with Napster’s founders was never about money; instead, “it was just about control.” Peer-to-peer (P2P) file sharing was hot in the late ‘90s, and it led to a massive freakout by record companies and artists who saw file sharing as stealing—they were losing control over their property. When the Recording Industry Association of America started spending tons of money to sue individuals for unauthorized downloads, it was clear the organization believed the music business was under attack.

P2P file sharing made record labels nervous, but for Internet users, P2P networks were building blocks for a new community. By giving people a new way to share information online, it created an entirely new business paradigm, forcing existing markets to either adapt or die. Internet users now had the power to share content like music with whomever they chose—P2P networks gave users the control, if not the express permission, to trade music with anyone with a working modem.

Paying to play

Fast-forward ten years and record labels are now harnessing the power of the Internet: from YouTube channels to personal social media accounts, artists are more connected to their fans—and their fans’ wallets—than ever. So, what makes it work? How does a nearly endless catalog of music available online satisfy users, artists and their record labels all at once? And how has the Internet shaped the way online communities share and consume content?

It took almost a decade and millions in lost revenue for record companies to catch up to their audiences, but the musical landscape has been transformed in the time between the death of Napster and the stateside arrival of Spotify. Spotify’s subscription-based model allows users to choose exactly how much music they want, how they listen to it and with whom they share it. It’s a model that’s been more successful than music executives anticipated, and it strikes an important balance between variety and control while still making money for both the artist and their record label.

SpotifyThe new marketing songbook

Record labels have also discovered the ability to share music through social media platforms is another integral element of the success of services like Spotify, Pandora and and the communities built around bands or singers can be just as powerful as other online communities. Now, instead of fearing leaks of new tracks, many artists welcome the chance to receive feedback from their fans or to lure them with exclusive content like videos and secret live performances.

Marketers of all types have discovered online music services are effective marketing tools: not only can musicians use social media to share their new music or their favorite songs, but everyone from science-fiction writers to presidential campaigns have used Spotify playlists to connect with users. Music can be used as a call to action as effectively as a sales pitch—and it’s a lot more attractive.

Music is just one of the businesses that’s been completely made over by the Internet; having hundreds of millions of users has expanded the music market exponentially, and the power of online communities gives the industry ready-made target audiences. It’s a phenomenon even a heavy metal drummer can appreciate.

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