Up-and-Coming Label Illustrates How to Sell Infinite Goods in the Internet Age

Culture

from the true-fans dept

The New York Times has an interesting profile of Fueled by Ramen, a record label that has managed to thrive at a time a lot of other labels are struggling. The label seems to be practicing several of the principles we’ve talked about here on Techdirt. First, they seem to understand that the secret to success for a band is to build up a core of serious fans. Fueled by Ramen encourages its bands to engage with their fans online, doing frequent blog posts and studio updates. And the label has apparently mastered the type of viral marketing that builds excitement among the most devoted fans. Second, it has kept expenses low. It produced Panic at the Disco’s debut album for just $18,000, allowing it to make its money back even if the album doesn’t sell hundreds of thousands of copies. Finally, it seems to understand that the real money is in using the music as a way to market the band, and to use the band’s popularity to sell scarce goods related to the band. For example, the label’s bands tour aggressively, and the label has “a merchandise company that sells band T-shirts at stores like Hot Topic, as well as on its Web site.” As the costs of music distribution continue to drop, it will be increasingly difficult to turn a profit on music itself. But people who recognize that the music is a way to build the band’s popularity in order to sell other stuff, for which marginal cost isn’t dropping toward zero, will do just fine. Fueled by Ramen is still largely in the CD-selling business, so they’re not all the way there yet, but their success at a time when more traditional labels are floundering suggests that they’re moving in the right direction.

Filed Under: business models, economics, free, record label
Companies: fueled by ramen