There is Still Money in the Music Industry

It wasn’t just all the little hearts that were fluttering when the boys rolled into town at the weekend. The cash registers were singing too!! One Direction, or 1D as they have been branded, are not just the most popular boy band in the world, they are also a veritable money making machine as well. And in their short career, they have demonstrated that despite all the technological disruption undermining margins in the music industry, there are still some serious returns to be made for innovative outfits.

One Direction was formed in 2010. Initially each of the five members of the group had auditioned as solo performers for the successful British reality TV series, X Factor. They failed to progress but were put together as a boy band and signed to Simon Cowell’s Syco record label on a recording contract reputed to be worth £2 million. Concert Tours and studio albums quickly followed. But it was their use of social media that really helped to propel them to global stardom. Both the band as a whole and the individual members exploit the power of channels like Facebook, Twitter and Instagram. The boys have received coaching on how to respond to messages in order to appear close and accessible as opposed to distant from fans. Interaction is high, with band members asking for suggestions about what to wear or where their next photo shoot should be. Loyal fans are given access to exclusive content. While traditionally, bands have had to rely on radio play to build a following, 1D were the first group to build a global audience largely via social media.

And the money is pouring in. About 50 per cent of their revenues are generated from concert tours. Tickets for their shows normally sell out in minutes and it is estimated that concert sales have grossed the band close to US$500 million. With their singles and albums rocketing to number one in the charts around the globe, the group is estimated to have sold in the region of 30 million albums worth a further US$300 million in revenues. Other income streams include movie ticket sales (US$150 million) and DVD sales (US$15 million). Even their wide range of merchandising products including everything from backpacks to pillows to pajamas is estimated to be a business worth US$68 million in its own right. In short, it is estimated that 1D have earned close to US$1 billion. Not bad for four years work and a £2 million investment!   

Christy and Arthur have a falling out!

Legendary Irish singer/songwriter, Christy Moore has weighed into the now annual Arthur’s Day controversy by penning a hard-hitting critique of the event which he is planning to release on September 26, the same day as Guinness celebrates the fifth iteration of its 250^th birthday. For a musician who lived hard and documented in song, the travails of the morning after and more, it represents quite a sober reflection. It has also been quickly embraced by Arthur’s Day critics who dismiss the event as just a cheap marketing gimmick designed to sell booze. But are these critics missing the point?

Far from being a cheap gimmick, Arthur’s Day is marketing genius. By any commercial metric you care to use, the event is highly successful. Through connecting with live music events, the brand generates high awareness and very positive brand associations. Peer-to-peer marketing through social media and the attendant public relations coverage of the event itself has been estimated to be worth around €350m annually to the brand. What tends to be forgotten is that Arthur’s day was originally conceived as a vehicle for supporting Guinness’ channel partners, namely the pubs, who have been steadily losing sales as more consumers chose to drink at home. Bringing consumers into licensed establishments at 17.59pm generates a surge in sales for the distributor and of course for the brand itself.

So far from being a gimmick, Arthur’s Day has been a highly successful marketing initiative which probably explains why it also generates such a torrent of criticism. To look at it in isolation each year is to miss the much more important point which is what does society deem to be acceptable behaviour by businesses. Left to their own devices, businesses will push almost any boundary that will drive an increase in sales and profit – we need to merely look at the behaviour of the world’s major financial institutions (and our own) to see that. Ireland’s sporting organisations have been campaigning hard this year against proposed restrictions on the sponsorship of sports events by alcohol companies which they are well justified in doing when events like Arthur’s Day remain untouched by regulators. More than anything, the annual outcry against Arthur’s Day shows how guilty society is of not being able to see the wood for the trees!

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