It seems obvious that you don"t give away your product for free but this is exactly what indie rock group The Crimea did earlier this year. The band"s reasoning goes like this: more people will download the free album than would pay for it. Therefore more people will heat. The Crimea"s music. These people will then pay money for concerts by the band and perhaps buy a T-shirt or other merchandise. If the band play regular concerts to crowds of 200 or 300 people they can make more money than they would from sales of a CD. There will always be some people who want something they can hold in their hands so they will release the CD into the shops too—but making money through sales of their music isn"t the top priority.
The story illustrates the creative thinking going on in the music business in response to dramatic changes over the last few years in the way that people buy music. Sales of music digitally—to computer, phones and MP3 players rose to $2 billion in 2006—an increase of almost 100 percent on the previous year—yet overall record company sales are down. People are simply not buying CDs in record shops in anything like the numbers they used to.
This trend looks set to continue, so the big question for the music industry is whether they can successfully manage the move to being primarily a digital industry without profits falling to unacceptable levels.
There are both positive and negative signs. On the plus side, more and more people are buying music on mobile phones, which allows people to make impulse purchases—they can buy a song as soon as they hear it. Research by the UK mobile operator 3 suggested that 75 percent of 16 to 24-year-olds wanted to buy a track they liked as soon as they heard it. With so much competition for people"s disposable income, a product that you can sell immediately is a big advantage.
The bad news for record companies, however, is the amount of music that is downloaded illegally. Piracy—usually in the form of cheaply copied CD—has long been an issue for the music business but the Internet means music can be copied and distributed freely through file-sharing sites on a large scale than ever before.
It is this situation that leads bands to start giving away their music for free and promises to make the next few years a very interesting time in the music business. What is unusual about the Crimea"s business plan