The re-release of the Rolling Stones' 1972 album "Exile on Main Street" in May was accompanied by a merchandising blitz that illustrates how far the business has evolved beyond selling black T-shirts. Bravado released more than 100 items, from baseball caps to boxes containing signed lithographs. There were not only album-cover T-shirts but also a higher-priced "as worn by" collection, featuring reproductions of clothes that members of the band happened to be wearing in the early 1970s. The huge range of items at different prices meant products found their way into budget stores like Target as well as dearer ones like Bloomingdale's.
The Stones are wily old businessmen: they were among the first to realise that fans would pay more for concert tickets. But even up-and-coming acts now try to build livelihoods around merchandising and live performance. Scorcher, a rapper from London who recently signed his first record deal, set up a clothing label even before he made his first video. He invariably wears his own products in the music videos that he gives away on websites like YouTube. Scorcher is not so much selling music as using music to sell. "If you buy into me musically, you will also buy into the clothing and the lifestyle," he explains.
Music's cachet and emotional pull also make it a potent weapon for businesses that want to build their own brands. The Rolling Stones (again) led the way in recruiting tour sponsors, from Sprint, a phone company, to Ameriquest, which sold mortgages. Sponsorship can lead to musicians wearing a company's clothes and naming songs after it: Rascall Flatts, a country music band, has done both for American Living, a label carried by JC Penney. IEG, a firm that tracks the market, estimates that the value of tour sponsorships in North America will reach $1.74 billion this year, up from $1.38 billion in 2006.
Music's best business customer is television. "Watch an evening's worth of TV and count how many times you hear music in the background," says Jeremy Lascelles, chief executive of Chrysalis. Your correspondent tried, and found that a new tune appeared, on average, every 40 seconds. Many necessitated payments to songwriters and the music publishers, like Chrysalis, that represent them. Publishers have become increasingly adept at hawking their wares to programme-makers. And music is not always in the background of TV programmes. Some of the most popular shows of the past few years--"American Idol", "Glee" and "The X-Factor"--have been music shows.
Because it derives revenues from business as well as consumers, publishing is much more stable than recording. Record companies' publishing departments, which once seemed rather dowdy next to sexy, talent-spotting A&R, have become vital cash machines. Publishing supplied 29% of EMI's revenues and 45% of its profits in the year to March 2010. The outfit's new boss, Roger Faxon, comes from that side of the business--a reflection of how the economics of music have shifted.
On television, music is either supported by advertising or bundled invisibly into the cost of pay-TV subscriptions. That model is spreading from the box to the web. Free music-streaming services like We7 and Spotify have proliferated in Europe: the latter claims 10m users. America has Vevo, a music-video website linked to YouTube and owned in part by Universal Music Group and Sony Music Entertainment. Because Vevo's content is consistently professional, it draws advertisers. Rio Caraeff, who runs the outfit, says companies pay $25-30 to reach 1,000 viewers. That is more than television networks tend to get, although Vevo reaches fewer people and runs many fewer ads (just 15 seconds every six-and-a-half minutes).
The free music-streaming services have not yet brought in money commensurate with their huge audiences. In 2009 ad-supported digital music earned just £8.2m for British record companies, less than 1% of total revenues. But some have started charging fans for tunes on mobile phones--charges that may be bundled into monthly voice tariffs. Some music executives view the streaming services as the industry's best hope.
