A&R AND MUSIC MARKETING SPEND
Read through the below recent Billboard article outlining the A&R and marketing spend by labels on new talent. First off let's not forget how important it is to have an industry investing this level of money into developing new music talent. While all different sectors of the music business can be an easy target for criticism, what would we do without it? We need the entire music eco-system to help give artists a chance to be able to make a living their passion of music their living. I'm a believer that any brand, media, label, broadcaster that touches music as part of their marketing efforts gives more music a chance the thrive.
Today there are more opportunities today for aspiring musicians to be able to create and distribute music. Garage Band comes pre-loaded into every Mac. There are so many free apps and tools to create music. Growing up I would have LOVED this. I had no access to any of these types of tools. And even distribution of music is easier than ever. Make your music and post it online. You have the ability to reach people around the country and around the world.
The dichotomy of the ease to create and distribute is it that now it is more difficult to cut through all the music, content and noise that is being put out into the world. YouTube users upload over 100 hours of video on the site every minute. Many of the new generation do not feel piracy is a crime – they are driving the industry to find solutions that can deliver music for free to consumers while still ensuring artists can earn money.
So where does this leave us? It means that now marketing is more important than ever.
Marketing helps artists build their fan bases.
Marketing helps artists get people to hear their music.
Marketing helps artists get people to connect and fall in love with and follow their brand.
Marketing helps artists get more people to come to shows.
Marketing helps artists build careers.
Artists, labels, managers - just like beverage, auto, skin care, etc brands – understand the importance of marketing. Bringing music and brands together for new and innovative marketing opportunities can create mutual value. The value of good marketing initiatives built on delivering shared objectives can create more long term value than an initial paycheck from a brand to an artist. I believe the key is to create relationships between music and brands and media companies rather than look to create more transactions.
IFPI's Investing in Music Report: Annual A&R and Marketing Spend Tops $4.3 Billion
By Richard Smirke, London | November 24, 2014 7:00 PM ES
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It's become a much-heard and endlessly repeated complaint of the digital age that record labels no longer invest in artist development, but a new report from IFPI suggests that the opposite is in fact true.
Record companies' annual spending on A&R and marketing now tops $4.3 billion and totals more than $20 billion over the past five years, according to IFPI's Investing in Music report, which was unveiled at a Nov. 24 Friends of Music reception in Strasbourg, France, hosted by IFPI chairman Plácido Domingo.
The report, which was produced with independent-label collective WIN and includes case studies of Lorde, Ed Sheeran, MKTO, Pharrell Williams and 5 Seconds of Summer, goes on to state that record companies remain the primary investors in artists, investing 27 percent of their revenue in A&R and marketing, up from 26 percent in 2011.
Five Reasons Lorde Won the AMAs Without Winning Any Awards
IFPI's research also reveals that more than 7,500 artists are currently signed to major labels' rosters, with tens of thousands more on independent labels. One in five artists on labels' rosters is a new signing, says IFPI, pointing out that global music industry investment in A&R (16 percent in total) exceeds what the computing, pharmaceutical and biology sectors invest in research and development.
The comparison is perhaps a little unfair, given that they are all vastly different industries with contrasting business models, but it does highlight the huge sums that continue to be spent each year on breaking new artists.
For example, the costs of breaking an act in a major market is between $500,000 and $2 million, IFPI states. A typical breakdown of costs is an advance of between $50,000 and $350,000. Recording spending averages between $150,000 and $500,000, with video production costing anything from $50,000 to $300,000. Tour support can drain the budget of an additional $50,000 to $150,000, while marketing and promotional costs are between $200,000 and $700,000.
Q&A With Placido Domingo, IMPI Chairman & Opera Star
"Investing in Music highlights the multi-billion-dollar investment in artists made every year by major and independent record labels," said Frances Moore, IFPI chief executive, in a statement accompanying the report. "That is an impressive measure of the qualities that define the music industry, and which give it its unique value."
"Most artists who want to make a career from their music still seek a recording deal. They want to be introduced to the best producers, sound engineers and session musicians in the business. They need financial support and professional help to develop marketing and promotional campaigns," added WIN chairAlison Wenham.
"From my experience in the recording industry, I know very well what a big difference a record label can make to the success of an artist's career," Plácido Domingo states in the report.
"The investors in music are vital to the work of artists. They are the risk-takers who win if an artist is successful but lose if they are not; they provide the financial support in advance of recording that others are not prepared to give; they offer skills and understanding of how to reach the consumer in all the ways the digital age allows," he goes on to say, adding: "Investment in music cannot be taken for granted."
