The Physical Subscription Model – a New Model for 20Ten

“The Internet is completely over”

For the past couple days, music journalists have had a field day with this somewhat controversial, but ultimately lukewarm statement by r&b/soul music icon Prince. However, the real controversy is that Prince is once again bypassing the brick and mortar record stores and releasing his album via a national newspaper. Prince’s 2007 album Planet Earth was released as a free cover mount with a British newspaper. And in the past Prince has given away free “purple tickets” in select records, these tickets function in the same way as a coveted pass to Willy Wonka’s factory.

However, the purpose of this article is not to address Prince’s beliefs surrounding the Internet. This is about whether or not giving away cds with newspapers and other printed media is a viable option for musicians- we will call it the physical subscription model.

In this transitional and digital era of the music business, many would call it career suicide to boycott digital download and distribution services. The majority of the music being purchased is being sold as singles via iTunes and thousands of albums are sold through iTunes and Amazon. Countless artists have restructured their business plans to go exclusively digital by offering their music through iTunes, their own websites and on other distribution outlets such as Cdbaby or Rhapsody.

But are we missing something by discounting the power of physical storage ?

If one takes a closer look at the physical subscription model, it makes sense that an artist can monetarily benefit from this kind of arrangement. I’ve never been a numbers person, but I can paint a very general picture. For instance – if you are an artist, such as Prince, with a very wide appeal and large fan base, you can secure a contract with a reputable newspaper that has a very large paid circulation i.e. the Wall Street Journal or NY Times. If this newspaper circulates around 2 million copies daily and the artist is making ten cents per copy, that artist can make around $150,000-200,000 over the course of two days. If the album is distributed with the paper over the course of a week, one would multiply those figures by five.

If you compare this to the current brick and mortar model, nowadays, most “major” artists are lucky if they can move around a quarter of a million records in a franchise such as Best Buy. In addition, these same artists will only receive 8-12% of the revenue generated from their physical cd sales. Once the first crop of records has been sold, the record is usually leaked and people either download it or stream it for free from various sources (if the album hasn’t already prematurely leaked).

The physical subscription model potentially gives artists a chance to have a “built-in” or “guaranteed” source of income for their record. Moreover, if this model is coupled with digital distribution services (something Prince has not done), music artists can make even more income. Nonetheless, we must assume that the album will always leak and find its way online. Some people will even seek out this material and download it for free even if it’s coupled with a newspaper as a complementary freebie. Either way, by giving the album away as a freebie, 1) the artist is publicly acknowledging the possibility for a leak, but 2) still engaging their audience by granting them a piece of their material via the circulation of another form of media. It’s like the fun and hidden prize within the Cracker Jack box, you can’t wait to open it and see what’s inside.

What lies in the future for the physical subscription model?

This is not something I can accurately predict. We are still in transitional times within the music business and several options are being tested and experimented. But I could picture smaller artists finding a way to tailor and couple their music with other forms of media. A regional artist could secure a deal to distribute their album with a local newspaper or include it as a freebie with the sale of concert tickets and dvds. Local artists from all artistic backgrounds of music, film, art and journalism can band together and create a media package that emphasizes a particular theme or brand. I would even be interested in seeing the sales of movie soundtracks with Netflix physical sales and downloads. A music fan could rent a Netflix movie and for an additional charge receive the film’s soundtrack.

Overall, there is no definite solution to how the physical subscription model can pan out. But it’s important for artists, managers, and label heads to realize that we must be fluid and think outside the box. Musicians will have to tailor and package their content in a way that is convenient for their audience, but also engages them. In addition, recognizing what works for one artist may not work you, but that’s ok – you can still create an alternative solution that is fun and may become popular amongst your fan base.

If the music industry becomes fixated on a one-dimensional belief that the Internet is the end all be all, then yes, the purple one was right – the Internet is completely over.

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2 responses to “The Physical Subscription Model – a New Model for 20Ten

  1. It’s really tough to tell what’s going on without seeing the numbers. Even the above calcs could be very very optimistic. Conversion rates, etc in those industries can be really really tiny.

    The deal may even be structured as a NON-susbscription model.
    Your subscribers are already getting the carrier so the extra product is just being pushed to them regardless of an extra incentive.
    The new incentive might serve to drive newsstand (non-subscription) circulation, which is where you’d look to see a difference in performance of the periodical it’s tied to.

  2. That’s a great point JD

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