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A Record Year for Digital Music

August 8, 2011 - 2 Comments

In 1982, Roland Swenson, a band manager in Austin, splurged $75 of his band’s budget to travel to New York City to attend a music conference.  Knowing that his band wasn’t happy about the expenditure, he hustled to make sure the trip paid off.  On the first day he successfully tracked down a booking agent and secured a $200 gig.

As Swenson told Texas Music Matters, he figured if this model worked in the Big Apple, it would work in Austin, so in 1987, he co-founded the SXSW Music Festival, which in its inaugural year hosted 172 acts and more than 700 attendees.  For Austin bands, Swenson and his co-founders had created the most efficient way to connect with music fans, agents and distributors — ever.  That is, until the arrival of the Internet.

Digital Music Revenues Trending Upward

Last year marked the first time sales of a digital single crossed the 10 million mark when Kesha’s TiK ToK registered of 12.8 million units.  Ovum pegged global digital music revenues at US $7.4 billion, and by 2015 expects sales to more than double to US $20 billion.  Nielsen SoundScan data for the first half of 2011 indicate that total album sales, both digital and physical, are up for the first time since 2004, with digital-based albums climbing 19% compared to last year, trending toward a new sales record.

Possibly an even more important economic role the network serves is providing an affordable distribution channel for the independent artist whose life’s calling is to make music.   Singer/songwriter Elza composes music for TV shows such as Smallville, Boston Med and Hopkins, relying on the network to collaborate online with producers across the country.

SP Love Songs

Online music services make a perfect match for the ISP and mobile operator, providing the means to attract new customers, improve retention, offer new value and new subscription revenues.  This approach proved successful when Swedish service provider Telia partnered with Spotify, a leading music-streaming service to create an exclusive music offering on Telia’s TV set-top box — enabling the provider to increase its average revenue per user.

For more case studies visit the Cisco CLUE initiative and our Facebook page

Ovum estimates that ISPs in the UK alone could achieve additional revenues from new music services of more than £100 million per year by 2013.

The Social Network

Musicians, service providers and pretty much any organization today are dedicating resources to growing and strengthening their communities.  One of the best benchmarks of success is a band formed in 1965, which enjoys a community that is still going strong more than 40 years later.  David Meerman Scott offers a few takeaways in the book he co-authored, Marketing Lessons from the Grateful Dead, and we caught up with him at The Gathering of the Vibes in Bridgeport, CT.

SXSW: Happy 25th

I was in Austin this March when SXSW music festival celebrated its 25th anniversary.  It’s grown to over 16,000 registrants.  The internet economy ushered in a new event in 1994, SXSW Interactive, which last year hosted nearly 20,000 attendees.

Here’s to all the entrepreneurs, artists and the network for bringing us together.

UPDATE: Austin American Statesman: SXSW adds $167 million to Austin economy in 2011.

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  1. Hey Raúl -- enjoyed hanging out with you at sxsw. look forward to seeing you next year.

  2. Great post giving me a bit more history on SXSW and the Gathering of the Vibes. I identify with both since going to SXSW last march was a great experience for me and the organization of Gathering of the Vibes is very involved in the community in Bridgeport doing great deeds that they don't even disclose. I guess next year will make my effort to make it to the Gathering of the Vibes. Thanks for sharing Tim!