The Record Industry: Going Alternative

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To be sure, the momentum behind the all-you-can-listen subscription model is growing. Spotify, a new music service founded in Sweden, has done phenomenally well in the six European countries where it's currently available, among them Britain, France and Spain. The company started by building a vast catalogue of some 7.8 million songs licensed from all the music majors, which it then made available to consumers for free at www. spotify.com. The only catch: users have to listen to a few advertisements interspersed between their songs. So far, 7 million people have registered to use the website, and Paul Brown, Spotify's senior vice president responsible for strategy and partnerships, says the company is generating a "decent" amount of advertising revenue to help pay for the music it has licensed.

New media is being used by record companies now to promote albums too. Plastic Beach's release is what might once have been called a concept album in the baroque days of Pink Floyd: a recording with no obvious single, which meant that the traditional strategy of radio play wasn't an option for delivering sales. "We had to find a way of getting away from the traditional approach where there is a flurry of marketing activity for four to six weeks before an album release," says Nick Gatfield, EMI's global head of A&R; the man responsible for finding and handling the company's artists. Since radio play no longer matters so much, the band and EMI partnered with YouTube to "premiere" the album's first single "Stylo" on the video-sharing site in March. The video, depicting Bruce Willis and the band involved in a car chase, generated a YouTube record of 900,000 views in its first 24 hours, and caused a spike in sales that lasted for weeks, helping to make up for lackluster prerelease orders of the album.

EMI also found a way to breathe new life into the Beatles' music, 40 years after the group released its last studio album. Last September, Paul McCartney, Ringo Starr and the families of John Lennon and George Harrison agreed to give Viacom the right to use the Fab Four's songs in its Rockband computer game. Like Guitar Hero, its more popular rival, Rockband allows people to simulate playing rock songs by using plastic guitars, drums and other instruments. The hype surrounding the game tie-in spurred renewed interest in the Beatles, helping to sell a whopping 10 million albums in the four months leading up to Christmas. In fact, the partnership benefited EMI more than Viacom, which only sold 1.2 million units of Rockband an unusual reversal of fortunes in the entertainment industry, where the gaming business has long outperformed music.

Screen Gems
Even as the industry explores the potential of digital subscriptions and new media tie-ins, it's a traditional medium television that's been most successful in keeping the record companies solvent. Last year, the promotional power of television reached its apotheosis in the unlikely form of Susan Boyle, the Scottish woman who appeared on Simon Cowell's Britain's Got Talent program in a dowdy frock and untamed hair, and stunned the judges with her remarkable rendition of "I Dreamed a Dream." Her performance was an instant hit not just in Britain but also in the U.S., thanks to a clip on YouTube and a Tweeting fan in Demi Moore. The video, which has been viewed more than 89 million times, propelled Boyle to global stardom. It's been a boon for Sony, her record company too: Boyle's first album was a massive hit, selling 8.4 million units worldwide.

Sony received a further boost this year when Cowell signed a five-year deal with the company to create a 50-50 joint venture to house Cowell's sprawling television and music interests. The new company, SyCo, will oversee all of the acts discovered on his shows and any new programs he devises, in addition to existing shows like X Factor, another British TV singing contest moving to the U.S. in 2011. Add it all up and 2010 is not going to be the year the music industry died.