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FROM THIS EPISODE

This is Celia Hirschman with On the Beat for KCRW.

For the last fifty years, the traditional record label business was built on an ecosystem of radio stations, press outlets, retail stores and live venues, all of whom lived behind velvet ropes. The system closed to the public. Only the trade could participate. Today, that business is a shell of its former self.

The deluge of technological growth evolved much faster and more efficiently than the traditional record business model did. Consumers rallied against the closed system, and embraced the benefits new technology brought. And the record industry held onto the foolish belief it could stem the tide of change by managing consumers. It could not.

One would think, that by 2009, major labels would have adapted. But while labels fight over copyrights, peer-to-peer downloading and the eroding business infrastructure, the nature of the record business has changed. No longer are radio stations, press and ticket sales the sole determining factors in success. Today, the value of success is measured by information, your information. Whether it's your email address, your purchase history, or your online habits, your personal information is highly valued to the marketers of music.

If you've ever been to a concert and paid with a credit card – if you've signed up for a band's mailing list, or bought a CD online – chances are, someone has captured your email address. And that email address is prized in the right hands. You see, the most significant relationships in the music business are now the ones between the band and its audience.

Collecting and analyzing consumer information is the future of the record business. With an unlimited number of CD titles now released each year, finding a band's audience will make the road to success that much easier.

The most successful data mining company in the music space is TopSpin, a music marketing concern in Santa Monica, California. TopSpin uses their marketing analytics to deliver a band's exclusive offers and promotional opportunities to their fan base.

Next Big Sound is another company building a lot of noise for the record business. NextbigSound.com provides data of streaming song plays, comments, friends, fans and mentions. The company scours MySpace, iLike, Last FM, Facebook and Twitter and currently offers free analysis online for more than 400,000 bands. The company is the brainchild for four guys from Northwestern University, who recognized the next wave of record business marketing. Next Big Sound has just finished another round of venture capital investing.

And the MacDaddy of band websites, MySpace Music, has expressed an interest in monetizing their own data. MySpace users have well documented history of their interests on the site. By tracking and analyzing users' activity, MySpace can spot trends both large and small. Whether someone has "friended" an artist, or whether they listened to them on a band page, according to MySpace, it's all there for the taking. Not only will the information reveal which artists are most popular but also which users are most influential.

It's a brave new world in the record business and if you want to be successful, start by getting to know your fan base, one at a time.

This is Celia Hirschman with On the Beat for KCRW.

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