By Ernest Gill Sep 19, 2006, 14:11 GMT
Berlin - 'Viral marketing' is the buzzword as artists and representatives of the global music industry gather in Berlin to discuss innovative ways to combat piracy and illegal downloads at a four-day fest and fair opening Wednesday.
More than 15,000 visitors are expected to throng the 800 exhibition booths at Berlin's International Congress Centre for the 18th Popkomm international business platform for music and entertainment that concludes Saturday night with a gala club night featuring artists from 26 countries.
This year's combination trade show, conference and festival is overshadowed by plunging CD sales worldwide amidst the turmoil in the music industry over new web-based music venues.
More than 2,000 musicians are converging on Berlin for the event in hopes of signing lucrative contracts with executives of major labels.
And those executives are huddling to come up with strategies for saving the industry. 'Viral marketing' is one of those strategies, involving word-of-mouth marketing via weblogs and Internet forums and chat room and such wide-open cyber-venues as MySpace and YouTube.
Marketing strategists cite the Arctic Monkeys as an example for how to break the mould on traditional marketing.
The four young lads from Britain defied conventional industry wisdom by side-stepping time-honoured marketing procedures and making their music available free of charge via the World Wide Web. The resulting word-of-mouth buzz propelled them to the top of the charts.
The Arctic Monkeys thus made obsolete the traditional procedure of pressing a demo and hawking it to label executives and radio station programme playlist managers.
The Arctic Monkeys cut out the middle man by posting their own home page on the Internet and offering their demo singles as free downloads. They burned their own CDs and distributed them free of charge at live gigs.
They were not bothered by the fact that fans copied their CDs and distributed them to friends. The Arctic Monkeys accepted that as a necessary step towards fame and -- eventually -- to fortune.
And it worked. Their gambit paid off. By the time the Arctic Monkeys released their debut album last January on Domino Records, they were so well known that sales soared to 118,000 within days nationwide in Britain.
That's what's called 'viral marketing' and, not surprisingly, a panel discussion at this year's Popkomm in Berlin is entitled 'Arctic Monkeys Business Style and the Future of the Music Industry.'
Until now, the conventional wisdom within the industry was that downloading music from the Internet was in fact stealing from the artists. The Arctic Monkeys turned that argument upside-down.
And as far as artists are concerned, the industry has been stealing from them all along. Artists tend to receive 25 cents in royalties on a CD that costs 50 cents to produce and which retails for 15 dollars -- meaning the middle-men get most of the money.
Against that backdrop, executives are discussing ways to save the 'physical product,' by which they mean the CD, as opposed to 'web- based products' which are beyond their control.
German recording industry figures for the first half of 2006 will be released during Popkomm and are expected to show yet another decline in sales, this time by about 3.4 per cent.
Industry analysts put the first-half figure at 54.6 million albums, which is bad, and yet is better than they had feared a year ago.
'It's a good sign,' says Michael Haentjes, a German industry spokesman. 'Sales are still very soft but are not off as much as they could have been. The problem of course is the nagging problems of widespread downloads and piracy.'
The bright spot in a gloomy industry landscape is the online market. In the first half of 2005 7.5 million music titles were bought online in Germany via iTunes, Musicload and others. By contrast, online sales for the first half of 2006 are expected to top 12 million.
Even so, those figures are not as high as the German music industry had hoped.
'Piracy is insidious and is putting the brake on online sell- through,' says Haentjes. 'Coming up with ways to curtail piracy is the major topic we'll be discussing.'
Berlin is a high-profile venue for these deliberations because the German government is in the processing of drafting a new law that would stiffen penalties for copyright violations, extending them to include Internet downloads.
Popkomm has invited German lawmakers to panel discussions to ensure that the industry's concerns are covered by the wording of the new law.
As the panels hold their deliberations, music-lovers will be treated to a marathon festival of live gigs offering more than 600 hours of live performances by 400 acts from 26 countries over four nights.
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