Record Labels Look To Generate Revenue Through Online Ads
May 14, 2007 at 6:12 AM (PT)
The NEW YORK POST is reporting the music business, unable to sell enough CDs or downloads, is now selling advertising. With CD sales in free-fall and digital music purchases not yet able to offset declines, record labels are beginning to ramp up their interactive marketing departments in an attempt to generate income by selling advertising against their content and across their vast network of artist Web sites.
"There's a recognition on the part of the labels that advertising needs to be more core to their strategy," said ARTISTDIRECT CEO JON DIAMOND, who added that the additional advertising income labels generate provides a nice supplement to the transactional music models already in place.
There's a recognition on the part of the labels that advertising needs to be more core to their strategy.
In NORTH AMERICA alone, UNIVERSAL MUSIC GROUP's network of sites generate roughly 70 million page views per month, enough to rank it as a top 10 music destination, according to WARNER MUSIC GROUP EVP DAVID ELLNER. WARNER's artist sites attract upwards of 10 million unique users per month.
"We're inventing a new business model with advertisers," said WMG SVP/Global Consumer Marketing DAN PELSON. "We are optimistic about the opportunity advertising presents, that's why we are investing in our ability to serve marketers with our assets."
Labels can generate advertising income by selling sponsorships and banner ads on Web sites and incorporating pre-roll and post-roll ads into videos, among other ways. In deals with video sites such as YOUTUBE or JOOST, the labels typically receive an upfront payment, a percentage of the advertising revenue, a per-play fee, and in some cases even an equity stake in the business.