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Record labels also baffled over how to make money on social networks

With Facebook and MySpace accounting for two of the top 10 Internet spots in the U.S., the music industry is grappling with how to make money on social media.

Mike Jbara, chief operating officer of WEA, Warner Music Group's domestic sales and marketing company, today told those attending the music retailers' annual conference in San Diego that social networks present an opportunity to reintroduce consumers to the habit of buying music.

"It looks like social media is competing with peer-to-peer (file-sharing networks) and we all have an interest in turning that into an appropriate revenue opportunity, given that it's substantial," Jbara said.

So far, that secret formula has proved elusive. Panel after panel addressed the question of how to monetize social networks, but offered little by way of concrete success stories of bands converting Facebook fans to song buyers.

Many digital media experts extolled the power of social networks as powerful marketing platforms. But that's not exactly what the music industry needs -- new and innovative ways to give away its music online, in the hope of one day cashing in.

"It remains to be seen if it's going to be successful in that capacity," said Adam LaRue of IndieClick, who consults with major and independent labels in developing online strategies for artists.

The most advanced experiment to date, the MySpace Music service started in a joint venture with the major music labels, has yet to live up to its hype as a one-stop shop for music fans.

Alicia Yaffe, director of digital media at Rocket Science, which provides music label services, put it this way: "MySpace's new music service is taking a lot of time to get off its feet."

-- Dawn C. Chmielewski

 
Comments () | Archives (3)

they need to pick a site to back like bestbuy or walmart or whoever that sells downloadable mp3's . Post 1or 2 mp3s for free for the band to get listeners hooked to the band. Funnel the buyer to the site that sells the mp3. Make affiliate money of the sale referral and make their cut off the mp3 sale itself. Hard part is generating traffic to the new bands, but they can do that from the pages of the established bands with retweets to the new bands pages every so often.

It's frustrating to see continuing messages about the lack of understanding that music industry leaders have about business today. It is frustrating because there are many ideas that work out there today that they miss.

One idea might be to bring in business skills from other, more dynamic industries since I am thinking they are too close to the problem, and continue to look at the industry from a single point f view that is obsolete.

But to be honest their dilemma to me seems to be around a lack of fundamental understanding of product and market research and development.

Social networking is an opportunity for developing brands around the applications of music. Its an opportunity for market research and developing new products to meet the needs of social groups. Its not rocket science (pardon the pun).

I agree with Ambient Guy and software testing that the music industry just doesn't seem to get that their business model is ancient history and heading the way of the dinosaurs.

Just like General Motors didn't understand that they had begun down the right path with the EV1 and now they are attempting a comeback with the Volt.

Eventually the music industry will catch on but the bands will possibly have gone into self production, as some are already doing, and the music companies will die.

I really don't think that the social media will help them because they'll try to use it the same way the use the mainstream media - throw money at it and 'spam' the sites. All they'll do is alienate their potential customers.


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