Supply and Demand Secrets in the Music Industry

Posted: September 29, 2013 in Artist Corner
Tags: , , , , , , ,

Michael Jackson, Whitney Houston, and Adam Yauch (aka ‘MCA’ of the pioneering rap group, Beastie Boys) all have something in common. You may think it’s obvious, but another tie that binds them is much less apparent and far more subversive.

There is a term in the music industry. You won’t hear it bandied about in the VIP lounge at the Viper Room, nor will you hear it used in a sentence while music execs order expensive lunches at The Ivy but behind closed doors, in every board room, at every record label, every concert promoter and every merchandise company, it is quietly spoken on a regular basis.

Shush…come closer…listen… “Death Profits.”

Now, before you begin composing your hate mail, you must understand that death is big business. Tupac Shakur’s hologram at the recent Coachella Music Festival is a prime example. And if you aren’t aware of this incredibly popular spectacle of technology and music, please take off your Darth Vader helmet and get a life.

MTV News reports that the life-like hologram that continues to produce so much buzz with fans and non-fans alike, cost somewhere between $100,000 and $400,000 to produce. You may wonder what the incentive would be to make such an investment. Well, here’s an easy answer. Both AV Concepts (the creators of the hologram) and Dr. Dre have hinted to the press about a possible world tour. How much would you pay to see another Tupac concert?

Michael Jackson merchandise

Then, there’s MJ. Jackson was the top-selling act of 2009 due to a surge in interest in the King of Pop’s albums which raised his career total to more than 750 million records sold worldwide. Since his death in June, 2009, This Is It, the backstage look at Jackson’s unrealized final tour, has been a runaway hit, helping his estate collect $310 million from music, merchandise sales, and its share of publication rights on Jackson’s music catalog. Cirque du Soleil’s The Immortal is selling out at as much as $250 per seat and the lucky fan can purchase over-priced commemorative merchandise both at the event and in the official online store.

Even the Beastie Boys have begun to profit from the sad and untimely death of Adam Yauch (‘MCA’) with an increase of 1,235% in purchased music immediately following his death.

But where does the demand of the fan who wants to relive their memories stop and the greed of the music industry begin?

Whitney Houston in SparkleThe day after Whitney Houston was found dead in a Beverly Hills hotel, prices for two of her albums: “The Ultimate Collection” and “Greatest Hits” jumped in price in the U.K. iTunes store. In dollars, the prices rose from $7.80 to $12.50.

Right away, Sony and Apple came under fire from consumers who believed one or both of the companies were trying to cash in on the singer’s death.

Sony quickly issued a statement saying: “Whitney Houston product was mistakenly mispriced on the UK iTunes store on Sunday. When discovered, the mistake was immediately corrected. We apologize for any offense caused.”

According to Billboard, who spoke with a source at Sony, they explained the price increase lasted for just a few hours and was due to “employee error.”

This type of business practice is not at all uncommon in the music industry and New York University professor Samuel Craig, deputy chair of the Stern School of Business’s marketing department, says it is perfectly legitimate for entertainment companies to do everything possible to extend their catalogs’ revenue stream. Rule No. 1, however, is never, ever price gouge. “You don’t want to be viewed as taking advantage of a tragic situation,” Craig says. Also, companies should refrain from really aggressive marketing tactics until “an appropriate mourning period” has passed. How long? Professor Craig suggests six months.

So, consumers, do you find yourselves alarmed by this? Disgusted by any of it? Or are you too busy coveting your cherished, 35th Anniversary Commemorative Edition of the Official Guidebook to Graceland?

No demand…no supply.

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