|
Product
Pricing: |
|
Pre-recorded music sales in the industry are going to wind up as much as
40% down this year, compared to last year. And last year was
significantly down from the previous years' totals. In fact the
industry has been in an almost steady decline for several years.
What happened to an industry that never declined since the great
depression of 1930's? |
|
This
year Harmony House, the biggest record store chain in Michigan, closed
15 of its 40 stores and intends for now to go with a leaner 25 store
chain. Some of those stores could actually be better described as
moving since the chain may start to put in new stores in different
locations as early as next year. I'm sure, however, that they will
be closely looking at the sales figures for this Christmas season before
deciding on how many new stores and when they should be opened.
What happened to a successful music retailer that enjoyed expansion and
increasing sales for decades? |
|
If
you ask a record company executive why there is
declining sales in the industry, the first three utterances out of his
mouth would be "MP3." The record company executive attributes
almost all of its sales woes to people getting illegal copies from
Napster-like Websites and from friends. Although I agree this is a
significant negative factor to sales, I don't necessarily agree the it
is the largest part of the picture. A lot of it could be
attributed to pricing |
|
The music
industry was healthiest when product prices were
$12.99 or lower. As soon as you couldn't buy two CDs for $25 the
industry began to suffer. Copying somebody else's CD rather than
buying it has been going on for decades, although admittedly on
lower-quality cassette formats. But, with all the copying, people
still bought the actual product as long as it was reasonably priced. |
|
12 years ago CD's cost
$9.99, CD recorders cost thousands of dollars, CD blanks were about $20.
But now the public sees CD recorders being included as "free"
give-a-ways in computer packages, and blank discs approaching 50 cents
(on sale in bulk at a place like Best Buy). During this same
period the price of prerecorded CD's has nearly doubled to $18.98.
Many people justly feel that if the media price has dropped so much,
that the pre-recorded product should drop also. They can only explain
prices doubling with the words "record company greed." The record
companies would easily sell twice the CD's at a $12.99 list.
|
|
Because of current market conditions I suggest that independent
releases on new artists be priced no higher than $9.99! |
|
|
The $9.99 list price is
magical to the customer's hand reaching in the pocket. With this
you should pack the disc to capacity ( fourteen cuts?) Overall you
want the product, when you are new or less established, to be a great
value and not like the the common disappointments that customers have of
paying close to $20 for 3 cuts that sounded good and a bunch of
garbage filler. |
|
Large record companies
often have subsidiary labels that make "developing artist" releases and
initially list the price of the product at a $12.98. After the
artist becomes popular, the record company raises the price to full list
price in about 2 steps. In recent years, a national artist from
Michigan, Kid Rock, was marketed like this by Atlantic Records with the
result of 14 million sales on the release, with its initial list price
under $10. |
|
|
Your
First Hit: |
|
It sold
one million copies, but its definitely not a hit and it's definitely not
"Invincible." The "King of Pop" turns in a highly disappointing
#17 on this week's www.billboard.com
"Top 200 Albums" chart after entering the chart at #1 two weeks ago.
This is almost a fee-fall and indicates that the release may never get
certified as double-platinum (2 million sales). This level of
sales performance is a flop for Michael. |
|
But what
is a "hit" record to a local performer putting out the first release?
My decades of watching hundreds of local performers releasing their
first record tells me that cleanly selling 1000 copies is a "hit" for
this performer. Selling 5000 records would be like a "gold" record
to a local act and could result in getting national recording contact
offers; but most acts will be very lucky to sell 1000 copies the first
time out of the box.. |
| The 1000 copy level of sales is a
nice level to achieve because there is actually enough money involved
for it to pay for itself and to keep a bit of pocket change.
To plan such a release, you will need to figure out the where and "how"
you'll sell that many records. I've included a listing of where
you might sell the records and how much money you would take in off
these sales. For this chart I used the $9.99 list price that
I recommended earlier.
Actually the chart shows the distribution of 1000 copies and cleanly
selling 850. |
|
Sales Source: |
Copies Sold: |
$$ Received: |
|
Store Chains
Larger store chains are serviced though
a distributor who takes a fee for each record sold.
Having your record in these stores (as well as independents) is
necessary to getting air play. |
150 |
$750 |
| Independent Store
Consignments
You place records
on consignments at major independent stores, especially those
specializing in "local" releases. |
50 |
$325 |
| Family, Friends and
Fans
Don't be giving away a lot of free records - sell them. Any true
fan or friend wants you to make it - let them help! |
200 |
$2000 |
| At Live Performances
You probably won't
make your sales goal by a large margin unless you gig and sell
product at the gig. |
400 |
$4000 |
| Internet Marketing
An essential
marketing tool that will only get more significant as the years go
by. |
50 |
$325 |
| Free Goods
Be very careful how
you distribute free promotional copies. Each time you hand
out a free copy there should be a bell in your head to remind you
that you lost $10. |
150 |
0 |
| Totals |
1000 |
$7400 |
|
|
|
Selling The Sources: |
|
I'm going to roughly outline how sales are
achieved from these different sources and how you get started. |
| The
Store Chains: |
|
When I say "store chains" I am referring to a
local chain based in your area that has a dozen or more stores. In
Michigan, you would mouth the words "Harmony House," although there a
lot of similar chains in different areas. For national store
chains you can apply the same principals I'm outlining here, but you
will not always meet with success. Some national store chains will
only accept product from national distributors. Other chains, however,
will allow individual store managers to consign local product - in which
case they are treated like another independent store, as described
below.
|
|
By "consign" I mean that you will put the product
(the CD) into the stores and receive money and unsold product back
some months later - usually 6 months. All of your store sales
will likely be on a consignment basis. For a 25 store chain you would
probably cosign between 75 and 100 copies into the chain's central
warehouse on the initial order. When the chain runs low on it's
inventory it will place a reorder with your distributor. |
|
When you manufacture your product you will need to
have a valid UPC code on the product. This is the bar code that
scans at the register. Almost all stores today only will sell
the product if it can scan at the register. Chains use the
scanning to keep track of sales and replacing stock by using these bar
codes. Usually the CD manufacturer can provide you with a proper
code.
|
|
Usually chain stores will only stock product if
they get it from a distributor. Often store chains work with one
particular local distributor to cosign local releases. At
Harmony House they would refer you to my office, but for chains in
other areas you would contract someone in the chain's office about
their polices on accepting local product or you would talk to the
manager of one of the stores.
|
|
The
Independent Stores:
|
|
There are always additional key retailers in the
area and usually these kinds of stores will accept consignments
directly from you. When you cosign records start with very small
numbers (like 2 or 3 copies). If you wind up selling a dozen
copies of your product at a particular store, you want them to "sell
out" three or four times (at 2 -5 copies each order) because it makes
your product look like a hot seller. If you initially stock 25
copies and they have to return 13 unsold copies to you, it looks like
a "slow" seller.
|
|
The perception of a record selling at a store is
important to you, because a product that is selling gets displayed
better and the store is more likely to put up posters or even give you
in-store play of the product - generating sales. |
|
Getting Sales:
|
|
In the chart below I list the ways I feel store
sales are generated for an initial release that will sell 1000 copies: |
|
PERSONAL APPEARANCES |
|
Probably the biggest source of sales in stores will be from
fans that have seen you. If someone saw you and loved
you, they may have wanted another drink and couldn't buy a
CD from you that night. Or, better yet, maybe they
couldn't afford a tee shirt and a CD. Whatever
the reason, store sales happen after a good show. You
will, of course, announce the store at the gig and include
the store's name on gig flyers where possible. You
will also want to consign a few copies (like 3) to the local
hot store when you play an out-of-town gig. |
|
|
IN-STORE PROMOTIONS |
|
There are very few things that are more effective than
in-store promotions, but I list it as number 2 because this
is not an initial tool that you will be able to fully use.
This kind of activity is usually reserved for records that
have established a small flow of regular sales and now want
increased sales. You'll find it will be a more
effective tool in selling your second or third thousandth
copy. |
|
Stores usually have counters for fliers of local product.
Get a sharp color flyer out on this shelf (usually 1/4 page
size) and list your local gig dates. Initially let the store
manager know that a poster and in-store play copy are
available when they are needed and suggest acceptance after
they sell out on the initial stock. |
|
|
THE INTERNET |
| The Internet
will eventually weigh in as the most
import way to sell records, but right now it is a vehicle to
increase all sales sources, including store sales.
It will be important that you get a site up that lists the
stores where your product is and provides audio samples of
the release. You will of course promote the web
address in your promotional literature. The samples heard
over the net can help make up for the fact that you won't
initially get in-store airplay. |
|
|
RADIO PLAY |
| Decades ago,
air play on radio was the way you
got store sales - no longer. Radio play doesn't
usually significantly affect sales in stores until you have
at least a couple of good stations playing your music in
some type of regular rotation. Radio interviews
and any airplay you get, however, will get people interested
in you and later interested in your store product.
Like other difficult promotion vehicles, air play affects
increased sales more than it causes initial sales of 1000
copies. |
|
|
|
|
Friends and Family:
|
|
Don't be giving away a lot of free records - sell them. Any true
fan or friend wants you to make it - let them help!
When talking to these important supporters, encourage them to buy extra
copies as gifts - like for that cousin you've only met once in you're
lifetime.
|
|
The best
way to sell them is to get them down to the gig. When a friend
buys a copy at the gig, it encourages other, newer fans to buy a
copy.
|
|
At Personal Appearances |
|
Selling records at personal appearances is an
important source of sales to everyone, star and beginner. In the
initial stages of your career, half your records sold will be at
the gig. It will be important for you to organize the activity
and actually try and bring in these sales. Some advice on this
includes: |
|
1. Have a manned "sales area" with
a display area at the gig. A nice poster helps
(handmade is alright). Have a family member or friend
there and able to take money. Keep your sales area
manned by paying a 15% commission or give the friend a free
copy if they sell seven. |
|
2. Sell T-shirts and other
items along with CDs. The T-shirts attract people and
get them to look at the CD. Even if the customer buys
a T-shirt instead of the CD, it's a sale and may result in a
future store or gig sale. |
|
3. If possible, make
announcements between sets and/or after the show.
Introduce original material performed as coming from
the CD. Make as many mentions of the CD from the stage
as circumstances will allow. |
|
4. Get names and addresses
(snail and e-mail) so you can promote to your fans future
gigs and future releases/products. A person who has
bought something today is a hot prospect for another sale of
a new release. |
|
5. Break times between
sets are not for the performers to relax - its time for them
to smile, sell and autograph product sold.
|
|
|
|
The Internet: |
|
It would take several tips and articles before I
could scratch the surface of the Internet Sales subject. The
important thing to realize is that putting up a website and using the
Internet for promotion and communication properly should double your
sales from all sales sources. |
|
So the number of CD sales though the Internet will
be small but important. Some of the things you will need to
provide for, include: |
|
1.
It will initially cost between
$250 and $300 to initially set yourself up with the proper
type of site. Much of this cost will be for a good web-page
design program. I suggest that you start with one of the
most professional programs, Microsoft Front Page - this is
by far the most popular professional program in use. If you
start with a bargain program you most likely will have to
redo hours and hours of work at some point. The site space
will cost about $20 a month for about 250 Megs - the minimum
size you will need to post audio demos on. You will want to
establish an e-mail account (which can be done for free on
the Internet). |
|
2. Credit card processing on
your site is important. The company that provides the space
on the Web f is a good place to start looking for services
that will process a credit card for you. When you get the
order you ship the CD - charge a modest price (like $3.00
per order) for shipping. While you are looking and
arranging for a credit card processing company, set up a
mail-order form that can be used. |
|
3. You will need to get two
full tunes converted into a downloadable MP3 that
prospective buyers can sample your product. Internet sales
happen with a lot of "free goods" and today's Web surfer
expects something for free before purchasing. |
|
4. With all of this, you will
still probably have less than a dozen sales from your site.
You will get your target sales by selling a few at each of
several different sites on the Web. Mp3.com and amazon.com
are obvious places to check out, but there will be a hot of
smaller sites that will promote and even sell your CD over
the Web - find some. |
|
|
|
Free Goods: |
|
Giving some of your CDs away is essential, but very
easily overdone. The kind of places you would want to give away
your hard-earned product would be: |
| 1.
Radio stations and to stores for
"in-store play" are obvious places you
would would provide free product. If a store actually
gives you in-store play consider a second free copy. |
|
2. Stores that sell a lot of
records should get "free copies" at the rate of one copy for
seven CDs sold. On the re-order to a store selling this
volume, include an copy with the reorder. The store can
sell it or use it for promotion. |
|
3. Don't forget the investors.
If Aunt Beth paid the studio bill, give her a copy. |
|
|
|
All in all, if you properly "work" the sale
sources, you'll probably achieve your sales target of 1000 copies
sold. |
|
|
