November 2009

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While it pains me to say it, based on a whole lot of years of experience, I see very little correlation between how well-recorded a record is and how well it sells.

I was talking about this with someone recently, and was inspired to draw the diagram below to try and explain it. Yes, it looks like something a convicted serial killer might scrawl on a jail cell wall, but I never said I could draw.

Essentially, it’s just stating that unless you’re 2 standard deviations (shitty sounding at the left end of the tail, and amazing sounding at the right) from the mean with respect to your sound quality, it will have little to no impact on sales. 1 standard deviation (noticeably bad on the left; noticeably good on the right) has less, and everything under the big part of the curve has zero impact.

It goes back to “remark-ability.” If your record sounds so amazingly good or bad that people are remarking on it, there’s a chance for there to be a negative or positive correlation to sales (“You gotta get this record and listen to it on headphone”; “Don’t buy it, that record is unlisten-able.”)

Yes, there is a small sector of audiophiles out there who buy things based upon what The Absolute Sound says, but ask them how well the DVD-A or SACD market is working out.

Just a thought. But keep it in mind, because unless every dollar you spend on recording correlates to attraction and retention of customers, that’s a dollar better spent on marketing.

Here’s the chart:

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We all know about the upsell: Mass Merchants, etc. lure you into their store with a low-cost item (too often, CDs) in the hopes that you leave with some high-margin item like a washing machine.

The “Downsell” is different. As I’ve discussed, the music business is now the merch business, and the way to go is to create a vast and sometimes over-the-top (like the awesome Josh Freese campaign) product array with some big-ticket (and high-margin) items that create awareness and drive people to the artist’s Site.

The reality, of course, is that most customers will look at the big-ticket item, but won’t buy. The psychology is sort of interesting. A customer is made aware of the site via the big-ticket item (Mr. Freese got a bit of press about his campaign, if you recall), looks at it, but can’t afford it/doesn’t want to spend so much. However, all of a sudden a CD/download priced at $10 seems like a bargain when compared with the big-ticket item priced in the hundreds (or thousands) of dollars.

It’s what economists call “the importance of being unimportant.”

The good news, of course, is that in addition to (for the time being, until everyone does this) creating awareness and driving traffic to an artist’s site, these big-ticket items have a high margin; you don’t have to sell too many of them to make material $. All the while, the majority of people who can’t/won’t pay for the big ticket item now are not only aware of the core product (the CD/download), but are predisposed to buy something because it appears to be a bargain.

Hence, the “Downsell.”

We’re doing this with Carly Simon’s new CD, and it’s working. It ain’t perfect, and we’ve got a long way to go (and it very much is an effort in refining), but the proof of concept is there.

It’s so important to think this way. The whole notion of just selling a CD/download is increasingly quaint (remember, the music business is the merch business).

Also, it’s crucial to not leave money on the table with respect to your core fans. The people — whether it’s 100 or 10,000 — who will buy whatever you throw at them, should not just be thrown a CD/download.

Doing so leaves a fortune on the table.

If you’re a true fan, and your favorite artist presents you with an offering that is personal/deluxe/etc., you’re not going to think twice about paying more for it. Yet, too often we as content providers don’t give these fans the opportunity to pay more.

As my three-year old says just before being chastised for doing so: “Stupid.”

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