Music: The Worlds Worst Investmentand How You Can Get In On It!
Since the golden age of payola, investment bankers have laughed at music as the worlds dumbest investment
. But while Wall Street gurus such as Lehman Brothers and Bernie Madoff guided their moneyed gentry into investments like AIG, General Motors, Worldcom, Adelphia and Enron, all under the watchful eye of the SEC, music companies were busy generating billions upon billions of dollars by selling products of tangible, objective value. Music! By the way, has anyone seen my check from the government for our loans to GM and AIG? Im sure they owe each of us at least a Camaro and a health insurance policy by now.
Which would you rather have today, a thousand shares of Enron stock or the copyright to Stairway to Heaven? Pan Am stock certificates are now framed novelties while u2s 360 Tour generated over $736 million, according to the Hollywood Reporter.
Pop songs of all genre are commanding thousands and in some cases, millions of dollars for their use in films and television. And what do you think Ozzy makes every time you hear Crazy Train at a hockey or basketball game?
Perhaps the rumors of musics demise have been slightly exaggerated.
There is good reason why music is considered a lousy investment, though. Most music projects fail! Most of them dont generate anywhere near the cash flow that the icons do. Why? Because what makes an artist wildly popular in the marketplace and what causes their music to break through starts with a great song and artist, but is birthed and maintained by a lot of hard work that goes on out of the public eye.
It is this combination of talent, management, business affairs, accounting,
investment, great production, packaging, marketing (new and old), publicity, promotion, booking, staging, travel logistics, merchandising and distribution that boost a great artist to where we can discover them.
But even with a million dollar investment in the launch of the artist, success is not guaranteed. It has to be a killer song or an amazing performance thats relevant for the time! Lots of bad singers with money have tried to buy their way and it just doesnt work that way. It has to be an artist the
mass audience want to hear. But it goes beyond that. Even with the enormous instant exposure these singers get on the tv contest shows, most of them fritter away after their 15 minutes on network television.
Some estimates say hundreds of thousands of artists grab for the brass ring every year. And its painful to watch them, because some of them have crafted an amazing work of music, but I know that without the whole support mechanism in place, their chances of it blowing up are almost nil.
For those who understand this and for those investors and labels (big or small) who discover the right act with the right music at the right time, everyone involved can still make a fantastic return, despite rampant piracy. Why? Because even though the piracy clearly hurts, a music career is made-up of many revenue streams. Those who understand how to build these revenues through touring, merchandise, endorsements, sponsorships and licensing will continue to prosper. And judging from past recessions, great
musicians will likely weather todays economic hurricane better than this weeks hot stocks.
by: Jim Lim
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