On January 26, 2006, the music industry changed.
I had the opportunity to speak with TuneCore CEO Jeff Price about the state of the music industry, what his company has to offer artists, and marketing advice for up-and-coming musicians. Jeff had a front-row seat for the digital music revolution, and offers insightful commentary on where the business has been and where it’s headed. He is intensely dedicated to music and the music business, and doesn’t mince words when it comes to the people and companies that have had the greatest impact, both positive and negative, on the music industry.
Jeffrey Winslow: Often people start a certain endeavor because it meets a personal need, only later realizing what they’ve started might benefit others. Why did you start TuneCore?
Jeff Price: When I got involved in the music industry, the physical distributor played a very important role, and as an artist there was really only one path to having a career as a musician—as a rock star musician. You had to get signed. That’s because the record label had the deal with the distributor, and the distributor put the product into the stores, to allow that magical moment—that economic transaction—to occur, where people would buy the music at the cash register.
When you think about it, record labels just made people famous, and then they monetized that fame. And the way they monetized it was by selling the music on plastic discs, or vinyl records, or whatever it might be. But in any event, that’s the lay of the land. And up come digital stores, and they change the lay of the land in two very significant ways.
The first way is you had unlimited shelf space. So, for the first time in the history of the world, you had everything in stock, at no detriment to anything else. You no longer had to fight to get onto that shelf space. In the old days, you’d take the buyer from the major national chain—like Borders or Best Buy or Walmart—out to live gigs, you’d get them gifts, you’d send them P.O.P. (point-of-purchase) posters, you’d send them advance copies, you’d stop by the store to play it for them. The bigger stores, like the Walmarts, got wined-and-dined and taken out, and tremendous amounts of money spent on them, to get them to open up their shelf space. But in the digital world, all that’s gone. So that was major change number one.
Major change number two was that you had unlimited inventory that could replicate itself on demand. In the old model, in the physical world, there’s only enough to sell as there is in stock. And once it runs out, it’s out. You also have to outlay the cash upfront to manufacture the CDs. So, if you want to sell 100,000 copies of something, you have to make at least 100,000 copies of something upfront. And if it doesn’t sell, you’re still out those manufacturing costs. But in the digital world, there’s no upfront money for manufacturing. The inventory just sits there, and when…
contine reading from source by Jeffrey Winslow