Latin Music Healthy; Music Revenues Coming Back

Many musicians are still feeling the pain of a music industry transformed by the digital age. Despite a longer than needed reaction of denial by the music industry, the waters of revenue are finding their way.

Steve Jobs said this all along when leaders of the industry went to see him at Apple to talk about a problem they couldn’t solve. Steve said back then, that the solution was not in DMRs or RIAA lashing millions of dollars on punitive fines on mothers or teenagers that did some illegal downloads. The solution was to provide a viable alternative to illegal download. And so, iTunes began part of the solution.

Music Industry Sales Up – Illegal File Sharing Down

Recent news have indicated that music sales finally ended a 12 year decline with a small, almost symbolic increase of 0.3% in music sales. Not surprisingly, this increase was driven by digital music sales. At the same time, a separate report indicated that illegal music downloads and file sharing are down. The increase in music sales is, like Steve Jobs predicted years ago, due to reasonable and easy alternatives for consumers. These include not only iTunes and Amazon for purchasing digital downloads, but also music streaming services like Spotify, Rhapsody, and Last.fm.

Spotify has reported to have paid royalties of $500 million during the last 5 years, but its paid membership is growing so fast it expects to pay $500 million in music royalties this year alone (see article in the Links section below). Music executives, like Sony International’s Edgar Berger have said that “At the beginning of the digital revolution it was a common theme to say digital is killing music; well the reality is, digital is saving music”.

This does not mean all musicians are seeing the old days of LP and CD sales come back, but the record business is showing a heartbeat, and indy labels are playing a major role.

Latin Music Growing Fast – Strong Digital Track Sales

Latin music is showing strong sales. It is the 2nd fastest growing music genre in terms of digital albums sales, growing at a healthy 23% in 2012 compared to 2011. However, total sales are not that strong, finishing in 13th of the top 15th music genres reported.

Spotify drove music revenue by offerning service through smartphones.

Digital music track downloads is another strong point for Latin music, taking the 6th place in total sales in this category. So it seems that although Latinos are purchasing more digital albums than any other genre except Country music, Latinos particularly prefer to download individual tracks. Either way, Latinos are bringing in the revenues.

Jazz, on the other hand, has been dropping in sales in almost any genre category. It’s down in Total Album Sales, down in Digital Album Sales, and down in Digital Track Sales.

Is it any surprise that Niel Portnow (President of NARAS) decided to reinstate the Latin Jazz category in the Grammy Awards this year? As I said before (see Latino Music Café article HERE), this was a business decision, not a moral decision. Either way, I’m glad it happened!

Embrace Social, Build a Tribe

As I said, although the year of sales declines have stopped (for now), the music business model is not returning to what it once was. It has change, and the change is here to stay. Musicians can’t depend on record sales to make money. Since big record labels are still trying to get the big chunk on record sales, many artist, including famous ones, are flying to independent labels, mostly creating their own, or joining a friend’s one.

But many musicians are finding the building a tribe is the way to best sustain a music career. A tribe can make your recording-funding Kickstarter project a success (or a failure if you haven’t built a tribe). To build a tribe, you have not only to have presence in social media, you have to attend to your tribe. That’s the only way the tribe will grow. And once you have a big enough tribe, you have the leverage that record labels used to have. Simple, but not easy.

I hope to see more and more Latin music artist building and nurturing their tribes in social media. This is a win-win for artists and fans of Latin music, in a new era where connections are the currency of success.

Links:

USA Today Article: “Spotify’s Daniel Ek wants to turn you on to new music
NBCNews.com Article: “Illegal music file-sharing dropped ‘significantly’ in 2012, says NPD”

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