Live events are the profitable strategy for the music industry

Two contrasting newspaper articles on the music industry today which are full of superb business studies content.

We’ve tracked the strategic issues and challenges facing the UK music industry several times at tutor2u. Today’s papers have two really useful and interesting pieces which can be used to illustrate the changing nature of the music industry with students.

First up is the news in The times that software is being made available that enables iTunes users to bypass the digital rights management (“DRM”) restrictions that prevent them from using their iTunes MP3 files on devices other than an iPod.

In a move that seems bound to lead to legal action, a “rogue” software developer has made available a conversion program removes the DRM on iTunes MP3s.

Second, is a really useful article in the Telegraph that focuses on how running live music events is turning into the most profitable and fastest-growing source of revenue for the music industry.

This article has some interesting financial data that could be used to explain the importance of sales and profits.

‘Borne out of a single Barfly venue in North London’s Camden in 1999, more than 2m people swung through the doors of MAMA’s 18 venues last year. Revenues at its live music division jumped by 40pc to £6.8m, helping to boost overall sales to £12.2m and turn a pre-tax profit of £2.14m, compared with a loss of £129,000 in the previous year

I like it particularly for its focus on the marketing opportunities from running live events. Sales from these events are more than just the ticket sales; there is the merchandising and the direct marketing database that is built which can be used to develop additional revenue streams.’