Thursday, April 10, 2014

Is Wu-Tang Clan’s New Album A Look Into Future Music Industry Sales?

Wu-Tang Clan album image
The only copy of "The Wu - Once Upon A Time In Shaolin"
When Wu-Tang Clan announced recently that they’d be pressing only one copy of their upcoming album The Wu - Once Upon A Time In Shaolin and would put it up for auction after a museum listening tour, the general thought of music industry insiders was that this was a giant publicity stunt.

Well, stunt it is that’s working beautifully in raising the group's visibility, but it’s also an excellent case study in one of the principles of the Economic of Free, a theory put forth a few years ago in Chris Anderson’s book called Free: The Future of a Radical Price. Whether they know it or not, Wu-Tang is proving that the little understood second principle of the concept works like a charm.

While Anderson doesn’t outline the concept of the Economics of Free (E of F) specifically like I’m going to in his article, breaking it down into the following two principles makes it easy to grasp and see in action. Let’s take a brief review in how E of F applies to music sales in the world we live in today.

The Two Kinds of Products
First understand that the typical artist has two kinds of products; infinite and scarce. Typical infinite products are music or videos in a digital form, which cost nothing to reproduce. Scarce products include tickets to live shows (not very scarce, but more so than digital music), custom CDs and CD box sets, signed merchandise, exclusive access to musicians, backstage passes, private concerts, and anything else that has a limited supply.

Giving Some Away
Keeping that in mind, Principle #1 is “Give some or all of your infinite products away for free in order to charge for the more scarce ones.” We see this all over the web every day in the form of the many “freemiums” that are offered. For instance, sign up for the free tier of Pandora or Spotify, and if you like it, you can buy up to the next level of service that makes it ad-free with better audio quality.

Instead of using money, many Principle #1 transactions revolve around social currency, like giving away a free download or exclusive content in exchange for an email address. That allows the record label, artist or band to continually offer other products that you might buy later that potentially carry a higher profit margin. Read more of Forbes.

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