When the Compact Disc Disappears from the Marketplace, What are You Going To Do?

This question was posted in the Independent Record Labels Association (IRLA) LinkedIn group by a record label President about a month ago and I've received quite a few positive responses via private email from people who were interested in what I had to say. Being that the group is private, I'll share my response here.

When the Compact Disc Disappears from the Marketplace, What are You Going To Do?

I think just the fact that you and many other labels are accepting the fact that there is a major shift in the industry, moving towards "digital everything," is a good thing, in that you want to, and plan on, being prepared for it. Sprinkle the bad economy on top of all of this and it's obvious that there has to be a major strategy change.

I would imagine with iTunes, Amazon.com and the million other digital music stores, that the standards will continue to tighten up and all stakeholders will be happy as they continue to get their cut from the sale of each song. Profits from a digital song purchase aren't as high as selling a compact disc, but if you go all digital, you don't have the overhead of manufacturing the discs.

One area of expertise that I have, is in the marketing/digital promo part of the strategy. Labels, who are used to mailing out mass numbers of discs to various media outlets (radio, webzines, newspapers, magazines, etc.) could cut costs and save quite a bit of money, if they adopted using a digital promo service. (You pay a subscription, upload one copy of your promo into the system and then invite contacts to download and listen, so they can write their reviews and articles.) This service is less expensive than hiring an in house programmer or consultant to build your own. Plus, with watermarking technologies, you can decrease leaking. And then there is tracking. There's nothing fun about mailing discs out and then wondering if the recipient got them and when/if they will write about the album. Digital service has fine grained tracking so you can be more efficient.

Let's embrace the fact that music is going digital. Compact discs aren't gone yet, but you can certainly get a head start by serving your promos in digital format.