(Last updated: 6 Jan 2011)

Trends and opportunities

The market

The United States is the world's largest market for music. In 2009, total music revenue was over US$12 billion, accounting for nearly one-third of all worldwide sales. The majority of popular contemporary music is signed to record labels, recorded, and generated in the US. All major record companies, Sony/BMG, EMI, Universal and Warner, are headquarted in the US and dictate much of the activity of international affiliates including Australia.

The US (and worldwide) music landscape has changed dramatically over the last 10 years and it continues to constantly evolve and reshape itself. The business shifted from a focus on the sale of physical products (CDs, cassettes, vinyl) to digitally delivered products (downloads, singles, iTunes). As a result, the long-standing music industry model has shattered and has suffered massive losses in revenue and in a rapid contraction in the number of labels.

Industry sources now predict a brighter outlook, with greater control of online file exchange and CD copying, although the experience has had an effect on the industry, with traditional business models and market channels reassessed in light of the digital revolution.

The roles of the labels are changing – historically, the majors have coordinated most of the above processes for their artists. Independent labels, on the other hand, have had few of the administrative capabilities of the major labels. Their strong point has been signing and producing new or special interest music, but they often have to contract out other elements, hiring independent public relations firms, distributors, studios, and disk factories.

Whether due to burdensome cost structures that could not sustain the digital challenge or other reasons, by 2003 the majors were all struggling amid the bleak industry conditions and the less structured independent labels have proven more resilient.

Australia has a well-established music industry that develops and produces high level talent through its independent music scene and network of labels. Australia has history of successful artists in the US and has developed a reputation in the US for competitive sounding, English-speaking music and hardworking artists and business representatives.

Opportunities

Consumer purchasing habits have changed and there has been a dramatic shift in the channels for promotion of music. Channels have moved from a tightly controlled network of radio, press, video, and retail to a much looser and more open online-focused world of ‘new media’. Artists now have more control and access to these new and cost effective avenues such as social media (YouTube, facebook, twitter, MySpace) file sharing, sponsor-driven advertising, film, TV, and video games, which has created more opportunity and less reliance on major labels.

The newer avenues for music sales and promotion have opened up new opportunities for independent record companies and artists and have allowed them to become more competitive. As the CD sales have shrunken drastically, newer revenue streams have emerged including music downloading, music licensing through film/TV/advertising/video games, corporate sponsorships, and tour packaging.

Australian artists are well positioned to market into the US. There is a growing interest in Australian music, fuelled by a reported rock revival and following recent high profile successes such as the Vines, Wolfmother, The Temper Trap, John Butler Trio, Jet, The Veronicas, Sick Puppies, and other recent major label signings.

US music industry observers report renewed attention on bands from Australia, drawn by the high talent level cultivated from an strong Australian music industry and a rawness of the Australian live music product, born and bred in pubs and clubs throughout the country.

Competitive environment

Independent artists are no longer as reliant on major labels to record, market, and sell their music. Newer digital sales and online promotion channels, and inexpensive recording techniques have offered independent artists wider access and opportunities, but they have also bred a much more crowded field of artists competing for consumer attention and dollars.

Marketing your products and services

Market entry

The digital revolution and the effect it has had on the industry structure is good news for Australian acts. The historically dominant major label structures, which have not been conducive to marketing music from small foreign acts, are breaking down.

The US is already a target market for most Australian acts, however, doing music business in the US does not come easily. The extent of the market leads to opportunity but the music business in the US is more about hard work than glamour.

With the expense of marketing in the US it is not a market where acts can learn as they go – market readiness is vital.

Build the story

Australian acts need to be able to do as much business development work as possible from Australia before making the investment in visiting or touring in what is a very expensive market – getting a ‘leg-up Down Under’ is essential.

Australian acts can show US buyers that they are serious by building their ‘story’ in Australia, having the kinks worked out of their business, and having proven success in Australia. Examples of a story include significant radio airplay, touring ability, album sales, or press. These will not only give experience in dealing with those aspects of promotion, but can be used as fuel for the sales pitch.

Go digital

The digital revolution has provided some assistance in this regard. The Internet is making it easier for Australian acts to market their product in the US – MP3s can now be emailed to the US from Australia instantly.

While Internet marketing campaigns are only beginning to take hold in Australia, most marketers in the US see their Internet strategy as a cornerstone of any marketing campaign. An act should foster an active online community, through sites such as Myspace.com or fan sites. The key advantage to Internet marketing is its cost effectiveness, and the fact that it can all be done from Australia.

Have a marketing plan – and follow it

It’s really best if an act can guide people when asking for support or help. Knowing where their needs are is imperative. There are so many areas that need to be covered, for example, touring, recording, licensing, shopping for deals, showcasing, and sponsorships.

It’s very important that the act knows what they need, and when they need it. It’s really best to work out a marketing plan with a manager, and prioritise what areas should be focused on. Arriving in the US and simply saying, ‘Can you help us?’ often leads to nothing getting done.

Other resources

The following are various other tools for market entry and exposure in the US:

• Radio: For an unknown artist, commercial radio is probably not realistic. Research and submit music to college, specialty, and public radio.
• Social media: Sites such as facebook, YouTube, MySpace, and twitter allow artists a platform to market and promote their music and brand to a targeted and interactive audience in a cost-effective way.
• Sales: Artists can get make their music available on major digital retail sites such as iTunes and amazon.com through not only record labels, but by using a digital aggregator service such as CDbaby, TheOrchard, and Tunecore.
• Press: Traditional print media outlets should be an important component of a marketing plan, but online media and blog sites have become the dominant press outlets with more targeting messaging.
• Tour: Book regional tours to gain fans, industry awareness and personal market insight.
• Retail: Consider arranging in-store performances at local record stores while passing through the market.
• Internet: Check out cdbaby.com, Myspace.com, and target fan sites of artists that are similar to the act’s sound.
• Film/TV: Licensing tracks to film/TV is increasingly becoming an integral part of building the ‘story’.

Most importantly, doing research is vital:

• Know who the key players are for the type of music that is being created.
• Know the history and methods that other similar acts used to break themselves.
• Set up as many meetings and shows as possible before entering the US market.
• Never underestimate the power of networking and building of relationships over the long term.

Remember that nothing happens overnight. It takes most acts years of hard work and dedication to crack any market.

Links and industry contacts

Music–related resources

Australasian Performing Right Association – www.apra-amcos.com.au
Australian Independent Record Labels Association – www.air.org.au
Australian Record Industry Association – www.aria.com.au
International Music Managers Forum – www.immf.com

Contact details

The Australian Trade Commission – Austrade – is the Australian Government’s trade and investment development agency.

Through Austrade’s network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally.

For more information on how Austrade can assist you, contact us on:

Australia ph: 13 28 78 | Email: info@austrade.gov.au

A list of Austrade offices (in alphabetical order of country) is also available.