We’ve been looking, industry by industry, at the effect of the coronavirus and giving some easy, actionable tips on how digital technology and eCommerce can help at this time. In our previous blogs, we looked at two very different sectors: fashion, which is currently locked out of the high street but is innovating in digital spaces; and pharmacy, which is open for business but eCommerce is only now beginning to build great online channels.
This time we are looking at the music industry but many of the ideas are transferable to any small business that is looking for new profit streams in a time of crisis.
Why the music business can survive the lockdown
On the face of it, the music business is far ahead of many industries in its digital journey. Napster, PirateBay, and LimeWire, followed by YouTube and Spotify, have almost killed off high street competitors and—in the UK, for example—we’ve seen the loss of Tower Records, Virgin Megastore / Zavvi, Our Price, MVC, and, very nearly, HMV. The latter announced more closures in January 2020 and we can only hope that its remaining 110 stores can somehow come through the current crisis.
The music business has been adapting for two decades. Record labels and artists have been forced to find ways to monetize music online rather than in-store. It’s a constantly changing landscape in which streaming is now king (although it is somewhat surprising and counter-intuitive to learn that Spotify streams in Italy have fallen 20% during the COVID-19 lockdown).
As for other forms of buying music, the sale of downloadable media fell by 25 percent in 2018, marking the sixth consecutive annual decline. CD sales are also falling by over 20% each year, though vinyl continues to perform strongly and sales grew by 7% in 2018. However, these physical products are not being sold in brick-and-mortar stores. More and more purchases are online, often from artists’ own web stores or social media profiles as they build stronger relationships with fans and communicate with them directly.
The coronavirus will not kill the music industry, but it is blinkered to only see major label sales and streaming sites as the entire industry. I spoke to Dan Flitcroft, singer of Sergeant Thunderhoof and owner of Stage 2 Studios—a rehearsal space and recording and mixing studio that has been open in Bath, UK, since 2009—about how bands and small business can adapt.
How is coronavirus disrupting bands?
“Like most bands nowadays, Sergeant Thunderhoof doesn’t make money. We decided early on that we would prefer people to hear our music for free than not at all,” says Dan. “Our aim is only to make enough money to put back into the band, so it is self-sufficient. We’ve booked a UK tour for the spring that is now canceled, so we’ve lost deposits for venues and transport, money spent on advertising, and tour-specific merchandise that we now can’t sell.”
And it’s not just bands that lose out from canceled events. With live music venues struggling to attract the crowds anyway, closing doors for the coming months will put a strain on many premises.
What can bands do to offset the loses?
Firstly, what can the major platforms do to help bands? Bandcamp stepped up by announcing they would waive fees on all money transacted through the platform for 24 hours. Spotify pays out only around $3 per 1,000 streams and artists have petitioned the site to triple that rate in order to lend them a helping hand during the crisis. However, even this will not pay the bills for bands like Sergeant Thunderhoof who don’t attract millions of streams a month. Here are some ways in which bands can offset the loss of gigs:
- Use the time wisely: This too shall pass. Write songs, record at home, get your EPK (electronic press kit) in order and send it out to labels. It’s a unique time for artists. Don’t waste your time on your phones.
- The show must go on: Play live, at home and keep the fan base engaged and inspired. Chris Martin did it for free but smaller bands can play shows online and ask for fans to donate on funding platforms as a virtual entry fee and show of support.
- Play private shows: If you are a solo artist, use this unique moment in time to give fans a once-in-a-lifetime private show. You can offer an hour-long one-on-one concert for a set price and then interact with and play directly to excited fans on Skype or other platforms.
- Sell some limited edition merchandise: You can’t write, record, and release a whole album in days (unless you are Wesley Willis) but you can dig into the archives and give fans a treat. Sergeant Thunderhoof reacted to the cancellation of their tour by launching a double orange vinyl live album to generate funds and bring value to fans.
How is the crisis affecting rehearsal spaces and studios?
The story of how Dan’s practice space and studio tried to adapt to and manage the dynamic situation during the first stages of the coronavirus outbreak is typical of many businesses. “We quickly brought in measures to sanitize things but soon realized that the situation was very serious. By 16 March, we were taking calls every ten minutes from customers wanting to cancel their bookings. It didn’t feel right enforcing the paid cancellation policy in the circumstances, so we were losing money all ways. It was clear the business was being wiped out. Two days later, we felt we couldn’t justify the risk to customers or staff and we closed the doors for the coming months.”
How does a small business offset the losses?
Stage 2 Studios is a good example of a business that is exploring all of the possible ways in which it can create revenue from its traditional on-site services and its brand identity in the online space while the doors are closed: take what you can online, think what your customers value, diversify and open up new revenue streams.
- Home recording equipment may not be studio quality but technology has come a long way and it is not far behind. With many musicians now sitting at home and using their own equipment, Stage 2 Studios started to promote a service for mixing home recordings. It’s the only part of the current profit engine of the business that can easily be taken online: the artists are at home, the engineer is in the studio, and the technology sits in the middle.
- Diversification of business only works if you speak to your existing client base. The studio space caters for bands, so Dan quickly set up an eCommerce site selling music-themed t-shirts, hoping to generate revenue from existing clients who want to support the business.
- Think outside the box. If your clients are all music-mad and you run a practice space, why not charge teams a fee to join an online quiz and give the winners free hours in the space when it reopens? Generate revenue, keep people thinking about your business reopening, and build a closer community around your brand.
And engaging your community isn’t just good for business. As a retailer, you spend a lot of time with customers and often share friendships and interests. As Dan says, “It makes perfect business sense to keep those relationships going and, more than that, keeping a positive attitude is beneficial for everyone’s mental health—including my own.”
How about independent music stores?
Saturday 18 April is Record Store Day, the annual event in which bands release limited edition content to small stores to help keep them profitable. According to statistics, vinyl sales at independent record stores increased by 426 percent during the week of Record Store Day in 2018. It looks for certain that most stores are going to be closed this April, meaning one of the pivotal days of the trading year is wiped from the calendar.
Can small stores quickly get online?
Record stores may not see five times more business this year but customers still want the unique deals and special editions that are on offer on Record Store Day and will make the purchase online if the option is available. Three weeks may seem like a short time for a small, independent business to build a basic eCommerce sales platform. However, we have put together a free Quick-wins Guide that shows any retailer how it is possible to get started and gives some simple tips on how to utilize stock and staff to maximum effect.
How can we help?
We are looking to help as many small businesses as we can during the coronavirus crisis. We initiated techtotherescue.org to partner NGOs who are looking to innovate at this time with technology businesses who are volunteering their resources. And if you are in the music business and are looking for any way to offset losses and explore online revenue streams, speak to us at firstname.lastname@example.org and see if we can advise you on how to unlock eCommerce channels at speed.
Full disclosure. I am both a friend of Dan Flitcroft and a fan of Sergeant Thunderhoof. I don’t apologize for highlighting a friend’s business at this hard time. But it’s also in my article on merit. We’re looking at ways businesses in all industries can diversify and innovate and I reached out to Dan because I saw him doing both and knew it would fit the content of my article.
Published March 24, 2020