Industry Shift: What The Armada Music Label Can Teach Us About New Media Marketing

By Yaro Starak
36 Comments

You may not know this about me (unless you follow me on Twitter where I tweet music video clips from time to time), but I’m a huge fan of the progressive and vocal trance scene. That’s dance music for the uninitiated, although the genre of dance is massive in terms of all the categories and sub-categories, which includes genres like techno and rave music, which you might be familiar with.

In the case of trance music, the leading DJ, at least in terms of a popular vote run by DJ Mag, is Armin Van Buuren. Armin has been number one for three years running and as DJs and trance producers go, he’s about as prolific and talented as they come. I’m a fan, that’s for sure.

One of the things I enjoy often late at night when I’m in the mood for music is to trawl around YouTube watching video clips of the latest and classic trance tracks. There’s an absolute library of great music in YouTube, and of course it’s all free.

Armin Van Buuren is not only the number one DJ, he is also co-founder of a music label called Armada Music. One of the very smart things I’ve noticed Armada is doing is making heavy use of YouTube as a marketing channel.

At least 50% of the tracks I listen to on YouTube come from Armada, especially if I follow a music trail going from one track to the next following the “similar video” recommendations provided by the YouTube algorithm.

Watching Armada use YouTube is interesting, because the music is free, but obviously the company makes money. I believe Armada, and labels like them, are pioneers in adopting new media, rather than fighting it. There’s a lesson in this case study for any of us who want to leverage the web for exposure of creative output, even if their is a profit motivation behind it.

The Profit Model For Music Has Changed

It’s been a wild last ten years for the music industry. The old big record labels clearly messed up, and instead of embracing change, tried to hold on to their old ways of doing things.

You can’t blame them of course, why wouldn’t you want to keep using the system that had poured billions of dollars in profits to them ever since the days of vinyl and the 8-track. Clearly stubborn greed won out over smart leadership during times of revolution.

Unfortunately as a result of a rigid thinking process, rather than being innovative and leading the industry through a period of change, which couldn’t be stopped – it was a revolution of how music is distributed – the big labels decided to fight it.

Taking actions like attacking customers, using the courts to sue certain unlucky members of the public, hoping it would act as a statement to discourage others from “stealing music”, is like biting the hand that feeds you. Sure you don’t want to encourage people to steal music, but if your deterrent is a slap on the wrist, that’s not good enough, you’re not addressing the core change occurring.

You need alternatives that offer innovative methods to consume music where everyone wins, that are as easy or even easier than the options available to download illegally.

Nothing really good surfaced until iTunes came along, which has gained some traction as a viable and legal method to distribute music with profit, thanks in no small part to the incredible adoption rate of the iPod.

It’s fair to say that in many ways Apple’s ingenuity has led them to become market leaders because no one else stepped up with a good enough alternative, plus they managed to convince the major players to support it.

If you look at how Apple has married their hardware and software, making one so dependent on the other, with a heavy dosage of cool factor marketing to convince the masses to take part, you begin to see how truly genius they really are.

Not everyone uses iTunes and fewer still make a purchase from the service. I feel confident saying that the majority of music listeners on this planet now purchase less music than they used to, largely in part to the relative ease of access to any genre you could possible enjoy thanks to websites like YouTube or niche specific music websites and podcasts.

So if so many people are enjoying music for free, on demand, whenever they want, how are musicians going to make a living from what they do? And what about the music labels? The Internet allows direct access to artists without the need for middle-man marketing and distribution services, so where exactly is going to happen to the music industry?

The Web Is Not The New Radio

Although I wasn’t alive at the introduction of the radio, I can only imagine that the idea of broadcasting music for free could have been upsetting to some business people.

Eventually everyone realized that the radio meant exposure, and because you can’t decide what tracks the radio plays, you still head out and buy that tape or CD of your favorite song or artist album, so you can decide when and what you listen to.

The radio turned into a marketing channel that led to an increase in sales. Landing air time on enough radio stations could make or break a band.

Television had a similar impact, and thanks to MTV, the music industry had yet another means of marketing their product. Once again, the music-listener could not dictate what was played and when it was played. Music videos on TV, like radio creating awareness and excitement about certain artists lucky enough to get air time, was more like a sample sized helping for the music fan. To enjoy a full music meal, you have to go out and spend some money to buy a record.

The Internet, though comparable to the television and radio as a new form of music distribution lacks one key ingredient, or should I say, restriction.

Content on the web can be time-shifted, stored, shared and consumed at will. There are no restrictions, you can press play over and over again on your favorite track or watch your favorite music video again and again.

Making things potentially even worse for the record labels, but way better for music fans, thanks to the infinite scale of the Web, ease of use of the technology and low start-up costs, music artists have flooded the medium with content. No longer are we forced to listen to only the top ten, twenty or one hundred tracks based on a mainstream popular vote. Now we can have what we want when we want it and there’s more variety to explore than we could ever hope to in a lifetime.

The music industry now lives in the Long Tail.

Music online is an all-you-can-eat buffet that only costs the price of a device to access the Web and the fees you pay to your Internet provider.

So what’s a record label or music artist to do if no one buys physical music anymore and so much digital music is free?

Exposure Still Counts

Although we’ve gained in the breadth and depth of content – we have more music than we could ever hope for – for a time it became hard to find the good stuff.

We went from having a few options based on what the mainstream or record label execs thought was good, to having so many options that even the most obscure tastes could be met, if you could figure out exactly what the good stuff is.

Then Google came along with its clever algorithms that show us what the majority think is best, even within tiny niches.

Next came social media, with the social-vote acting as the criteria to decide what is good and what isn’t.

Though not completely foolproof, if people vote with their attention and actions, what links they click and how long they spend consuming media, you can use technology to decipher what’s popular, even when presented with near-limitless options.

The end result we have today, is a conglomeration of new media companies, evolving old-media companies, e-commerce, social voting tools, search engines, file sharing and good old word of mouth all driving how music is distributed. It’s complicated, but we’re getting closer to a model that works, and from the point of view of the music fan, there has never been a better time to be alive.

One thing that hasn’t changed is that exposure still counts. If there is one commodity that has become scarce as a result of the technological shift, it is people’s attention spans. As options increase, attention decreases.

The Internet has brought down barriers to distribution, so your every day musician can capture attention for their work, even sitting at home strumming a guitar on their bed. With ideas like “1,000 true fans” demonstrating that you can at least make a living if you can get a loyal following from a small group of people, it could be said that it’s also one of the best times to be a music producer as well.

The music labels still have power because old media still has attention, and there are some things you can only do with the scope of a company behind you. People still watch TV and listen to the radio. Marketing is a multi-faceted function of a music label, with claiming air time on old media as important as building a solid following on Twitter, Facebook and Myspace.

If you want to be a big star, you still need big attention, however as Armada and smart labels like it are realizing, the key to success rests in giving away a lot. Instead of buying exposure in the form of advertising, today you give value for free, and just like us information marketers, record companies and musicians are coming to grips with the idea that selling their music is not necessarily how they are going to profit. Instead they have to give it away.

The Performing Artist

If the music itself is a marketing tool which you give away, how do you profit?

Before I go on, it’s worth stating that I don’t work for a record label and never have, and my musical inclinations are very much on the consuming side of the fence, so what I’m about to write is merely speculation from my business brain.

I like thinking about this especially when I can see a revolution going on in an industry that has contributed some of the most joyful moments to my life – music is transcendent to me. However I’m not privy to the accounting books of any record labels so I don’t know what the real profit centers are, what revenue streams are on the increase and which are in decline.

My gut feeling is that musicians and record labels, like us bloggers, are relying more and more on multiple streams of income, and the highest value product they have, is the face-to-face time they offer. In the case of music, that’s live-gig time, and especially at the very top end of most popular artists, the big cash is made from ticket sales to concerts.

The MP3 may have replaced the CD, but it’s not become nearly as profitable as the small disc, even though the manufacturing cost is so much less. Instead, the MP3, and videos on YouTube are the currency that captures attention, but they are mostly free. They help build the fan base, communicate creativity and are certainly valued highly by the listeners, but since so much of the music is free, it’s not a significant revenue stream.

ITunes is no doubt making millions, but it’s not the profit center that CD sales used to be for the record labels. Plenty of recording artists will never profit from direct sales of their music, which isn’t necessarily new – many a struggling artist has had to keep the day job (or night job) while attempting to “break into” the music industry – the difference now is the profit model has shifted, taking the power away from the labels and into the hands of the people, or at least anyone who can access the Internet to publish music.

Today because it has become so easy to reach people all over the world without the help of a label, and manufacturing paraphernalia to sell is an option to anyone online, smaller musicians can realistically survive.

If a proportion of their 1,000 true fans in each city they visit on tour attend live gigs at bars and clubs, buy a record or two and perhaps some related product like shirts, caps and posters, and combine this with some online sales, maybe some sponsorship income and other promotional opportunities, the artist can make a fairly good living.

At the top end of the scale, today’s leading DJ, or band or singer will leverage all media, both old and new, organized by the music label, though some media, such as twitter, will work best when the artist themselves is in charge of content, rather than an employee. The labels who will thrive in the new environment, are those who innovate by finding new profit channels and understand that online media is not about them losing profits to people stealing music, it’s about cutting marketing costs and finding new audiences around the world using the Web as the most affordable exposure tool ever invented.

Armada Gets It

Bringing this back to Armada Music, if you watch their tracks on YouTube you will notice they include plenty of branding and calls to action to bring a listener into the world of the label.

If you like this track, subscribe to our channel, or check out our website or podcast, or buy tickets to the upcoming gig for this artist, or share this video with your friends. They don’t even mind if you take the track and mix it in to your own podcast or video on YouTube that you give away.

Everything is free, which fosters a frictionless distribution of the music, the artist and the associated brand – Armada. The end result is massive exposure, with a huge global following, leading to sold out gigs all around the world (which are not free).

In my favorite industry, DJs release regular podcasts full of great tunes. Each MP3 podcast is an hour or two hour long mix, full of the latest music, all for free and designed to spread exposure for the DJs featured in the podcast, and the host DJ too of course. Armin Van Buuren runs a live radio show and podcast called A State Of Trance, which apparently has 30 million listeners world wide, which if that is true, makes it one of the most popular shows on the entire planet.

Unfortunately not all labels share the free distribution and sharing of music attitude and will send cease and desist notices if they find you infringing on their copyrighted materials. Is this old thinking or just protecting your assets?

It’s tough to say, but I certainly know what feels right – giving the goods away and asking for nothing but attention of your work.

Leo Babauta of ZenHabits has a very liberal uncopyrighted content policy, where he states –

I think, in most cases, the protectionism that is touted by “anti-piracy” campaigns and lawsuits and lobbying actually hurts the artist. Limiting distribution to protect profits isn’t a good thing.

If you read his full policy you will see he gives full rights to do whatever you like with his content.

The Free Economy

The web has ushered in an era where free has become the accepted norm. However the Dot Com boom and subsequent bust demonstrated that while giving away things for free is great for audience building, you still need a profitable model behind what you do, if what you are in the business of building a business.

As information publishers, we follow the model of give away so much that people never need to buy from you, but have the option to buy something from you anyway, of which a small proportion will.

The music industry is evolving to a place where the product that used to make them millions is either free, or in the case of a site like BeatPort for DJs, and of course iTunes, you can buy individual tracks for a couple of bucks.

As more and more companies learn to Move The Freeline, the most challenging aspect of what we do online will be about translating your hard work into money. Social media services have huge valuations as companies, but as yet, many of them don’t profit, though they are expected to eventually.

One thing is clear, as consumers we’re enjoying an unprecedented amount of free-ness in our lives, so much so that the challenge is finding the best content to fit into our busy lives. The future, as in the past, will belong to those companies and artists who find a way to bring meaning to our lives, and make enough to survive and thrive financially while doing it.

Yaro Starak
Musically Un-Gifted

About Yaro Starak

Yaro Starak is the author of the Blog Profits Blueprint, a report you can download instantly to learn how to make $10,000 a month, from only blogging 2 hours per day. You can find Yaro on Facebook, Twitter and .

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36 Comments

  • Thanks for your insights Yaro. The music industry analysis is an interesting one. Not only will you love the tunes that Oleg Mokhov puts out but he too has an ‘uncopyrighted’ thing going on: http://olegmokhov.com/music/

    I feel that asking for the sale is becoming more difficult Yaro. Do you think the free line is so far moved now that it’s time for us to start selling branded t.shirts and give away all the ebooks and memberships for free? lol!

  • Rising Searches for “Twitter Affiliate Marketing” are at 450% and have been for over two weeks. I don’t know anybody who couldn’t benefit from throwing a nice “Twitter Tool” on their homepage.

  • Interesting thoughts there, Yaro.

    Will we see up-and-coming music stars submit their demos online to the likes of Armada Music…much similar to bloggers submitting Guest Posts to leading blogs like yourself?

  • I really liked this post because it took one industry that is completely different than the web and related web-based businesses and pursuits to it. It was a fascinating case study and gave me a lot of great things to ponder and pursue with a little research for my own writings on my blog.

    Thanks!

  • I love The State Of Trance also. If you can suck $100 out of 30m fans each year that is $3B! I saw Tiesto 3 times in one month…. go figure and also saw U2 and Black Eyed Peas. People will pay for their passions just like people will pay for coaching courses, etc. Declaring war on one’s customers is never a very good idea.

    I agree; people can pay with either time or money and the distribution models need to reduce the costs of time if they are going to charge money. iTunes does a pretty good job of this by having everything labeled with pictures, etc. But the power is really being distributed which is exciting.

  • Jon

    I’ve read several times that Napter was the hugest opportunity for the music industry that had ever been offered to them but instead of accepting this new distribution model, they decided to fight a losing battle. Apple “saw” this and provided the distribution model that has since been accepted by the music industry. Moral of the story, try to find a way of profiting in the new ways of doing things instead of spending money and time going against it.

    This is a great blog post regarding Armada… I love their music as well. I really like (though it’s a little dated), Andain – Beautiful Things – give it a listen Yaro.

    Jon @ WoodMarvels.com

    • Oh yeah Jon, been a huge fan of Andain for a while, love that track.

  • Good article. The same could be said in the house music community as well which I’m a great fan of, with Defected/Strictly Rhythm, plus King Street and OM Records to name just 4, all utilising the internet for promoting their material, via their own YouTube/Vimeo channels, Twitter/Facebook pages etc – the same goes to the glut of DJ’s with live online broadcasts from venues as well as promoting their DJ mixes via download sites and online internet radio stations. The so-called big labels, rather than sticking with what they’ve always known – which might’ve worked well in the past – really do need to think about this new strategy for promoting as online is fast becoming the best way to get the new music out to audiences that might never have heard of the artists/tunes and get them hooked on the quality music, as opposed to being force fed purile pop music out for a big buck.

  • Hey Yaro,

    Great post, insightful ideas.

    Have you read Free by Chris Anderson? It’s his latest book and describes in great details the same phenomenon you addressed in your post. The way of doing business online is undergoing radical changing…towards the free end of the scale.

    I highly recommend his book. I couldn’t put it down. Gives you a new perspective on how to do business online.

    • I haven’t read that one yet. I did see it at Amazon and considered grabbing it. I enjoyed the long tail from Chris – that definitely put him on the map!

    • I also enjoyed “The Long Tail” by Chris Anderson – he gives a very interesting recap of how the economic model has evolved over time.

  • The music industry has so similar to what’s happening online right now. There are so many lessons we can all learn from the mistakes of the industry.

    It’s all about thinking outside of the box when it comes to earning money. There are so many ways to earn, it’s just a little different from the past.

  • Great post! It is very smart for businesses that know we are going through times of change to adapt to it instead of restrain against it. Change is definitely inevitable so for mega-corporations like Apple to step up and see the change as a challenge is tremendous on their part.

  • Great article Yaro!

    I think the age of value has finally arrived. With so much content to choose from (written, visual, musical, etc) the only way an artist or company/label can survive is to provide amazing value in two forms:

    1 – Make the content incredibly accessible if not free
    2 – Produce the highest quality stuff in the first place

    And this doesn’t just apply to the music industry.

    Because of the internet, word-of-mouth marketing has never been more powerful. It’s simple, produce amazingly high value content and flourish. Produce garbage, make it expensive, and die.

    I feel the days of big labels looking at a demographic where their sales are hurting and then whipping up a new pop icon (i.e.-Britney Spears, Backstreet Boys, etc) are over. Do you know any Britney Spears fans? Probably not. Yet I’m sure you can identify the thousands of 50/60-somethings who still go nuts anytime “The Boss” gets on stage or Paul McCartney comes to town. Quality always wins no matter the business model.

    People are smart. They want real. They want pure. They want art. Manufactured just doesn’t cut it anymore.

    Can the music industry still survive? Yes! Last time I checked, most people are still willing to shell out $300 to see U2. If anything, that follows what Internet Marketers already do with the sales/product funnel. Give away your best music for free. Make some small sales through merchandise. Then make the high back end sales on live concert tickets.

    One of my friends even suggested attaching a CD to a band’s t-shirt and selling the shirt. Fans won’t necessarily buy a CD but they will buy a shirt.

    Additionally, people should be all over the free line because it works wonders for your Karma!

    Thanks Yaro – you struck a nerve!

  • I thoroughly enjoyed this post, Yaro. Personally I am into psy-trance and I just love the fact that the internet has made free music so readily accessible. I never expected to see you posting about the music industry for starters, not to mention the fact that you’re a trance lover yourself.

  • “you still head out and buy that tape or CD of your favorite song or artist album, so you can decide when and what you listen to” I doubt you were able to buy a tape or Cd of the music when radio came out :).

    Nice analogy there with the music industry, the blogging industry is built on giving away free stuff usually information. If you are not prepared to give you will not be able to recieve.

  • Loved the post Yaro. Really interesting coming from my line of expertise so to speak.

  • Yes seems that nowadays we can get free music in the internet. I wonder what will happen to the music industries in time to come. But I’m sure it will get better for the artist and the industry and with all the new things in the internet today, its goiing to a be a lot more interesting.

  • I have heard that vocal trance is one of the best music to listen to when programming. I will have to check out Armada.

  • Armin Van Buuren embracing new media worked for me. Most of the time I spend at the gym is now accompanied by State of Trance downloads on my iPod. I haven’t seen him live yet, but one day I will, so he will make money out of me at some point. It’s such a simple model that traditional record companies just don’t understand.

    • That’s a good point and strikes a chord with me too being a fan of van Buuren. I thought it was great he took that step.

      Till then,

      Jean

  • Ha I’m in actuality pleased you to wrote this post.

  • For the first time, I have understood how the industry works and I thank you for it. It makes fascinating reading and I am particularly impressed with Armada’s approach.

  • Here banners and links cost you some money, blogs are free and many companies are using it to creatively talk about new products/ services and also get people’s feedback on the same.

  • Wow, someone has actually written intelligently on this subject – truly brilliant piece and the best I have seen!

    As for the comment that people don’t want artificial, this is not true. The majority want entertainment, not just art – and entertainment includes theatrics, image and merchandise. Look at the success of Lady Gaga as an example. I know plenty of amazing vocalists who write better songs and are not making money.

    Armada’s model also includes the fact that AvB makes money from touring, and so wide publicity of his tracks gets more people to the shows. But this is not feasible for the artist with recorded and published catalog only, and no live show.

    There are still some other revenue models however: advertising on your pages is one, and another is licensing. This is very important for the musician. Please check out this huge list of music licensing companies (genuine) – http://www.therichmusician.com/music-licensing-companies.html

  • Ha I’m in actuality pleased you to wrote this post.

  • Cy

    Wow, awesome article Yaro! Thanks for posting it. Great to read.

  • Really enjoyed your post Yaro…very good insight my friend and I do believe that the film industry will have lessons to learn from the music companies that are out there. I agree with you that the artist must have a hand in both traditional and contemporary forms of media. As times change, so must the artist adapt as must the “big” companies adapt in order to keep up with what people desire. Wanted to add my two cents.

  • It’s unbelievable how the music industry has changed these days! I bought a couple of the old cassettes on my last journey to Guatemala xd, they were on an art craft market lol

  • DD

    Hi Yaro,

    Fantastic article!! Thank You sincerely for taking the time out to compile it. I am a trance producer and business woman myself, and the Armada business model is something I have been studying and assessing for some time now. After spending many hours on the internet attempting to access as much information about the model as I can, in my experience no article has provided this much compelling and well-analysed information. Thank You again Yaro, a gold mine of information here :)

  • I had no clue you were into him. I have been listening to him since the beginning and was able to see him live at the reopening of Beyond, and at Cream. Great way to assimilate the two.

  • I don’t think Armada is a good example of an electronic dance music label that is adjusting well to the information age. They just recently put drastic restrictions on the use of their songs in podcasts (e.g. you can only play 2 minutes (most trance songs are 7+ minutes)), which has left even their own artists unable to play and promote their own songs. Even on Armin’s own website, the mood is almost unanimously against this decision. There are calls to boycott Armada in the tight-knit trance community where the “big name” artists are on a first-name basis with their fans.

    Response on AvB forum: http://forum.arminvanbuuren.com/index.php?showtopic=17774
    Well researched article: http://beatsmedia.com/featured-2/armada-bans-tracks-and-de-jong%E2%80%99s-podcast-is-now-off-itunes/

    • Yeah this article was written about a month before they went all “corporate” and attacked anyone else from helping spread their music. Thanks for offering some links to what is going on now.

  • Very Interesting Article. In these times of increasingly difficult challenges with music sharing, multiple labels appearing “overnight” (and disapearing just as quick).

    Music production is my life and hobby and yet i try to make as much of it (tutorials and music) free alhtough i do need to charge for some.

    Exposure is a huge part and the live radios on the internet, in my opinion are awesome, long may they continue.

    thanks for the article.

    Mark

  • Simon

    Armada and the likes are Mickey Mouse very small time operations. There is hardly any cost to release an MP3 if any at all. Back in the 90′s etc you needed a record label to sort out cutting and mastering, distribution and promo etc just to start. Its obviously very different paying £4 plus (back in the 90′s) for a physical product to 79p for a download, The whole dance scene is a total joke these days its all about miming DJ’s to lack lustre uncreative music made with the wrong equipment in a lot of cases. The Author of the artical is absolutley right there is no real way to make any real money from Dance music these days. Back in the 90′s your track etc would be registered with PRS/MCPS and the product barcoded and you would be due money each and every time it was played on the radio for starters etc.

  • Trance Family for the win!

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