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« Does your band still need a Myspace page? | Main | Using Google’s services and apps to further your music career »
Friday
Aug192011

Rock success – the Ryanair way

In today’s article we’re going to make you approach your music career the way Ryanair approaches its business model. Hopefully this won’t lead to you firing anyone in the band who’s in the Musicians’ Union, charging people an extra £60 for turning up to one of your gigs in a wheelchair, or having fans that absolutely hate you but reluctantly buy your records anyway because they're cheaper than all the other bands' albums; rather, the point of it is to look at:

  • the power of free stuff in opening up other markets and revenue streams
  • the importance to musicians of sticking to budgets.

What most people don’t realise about Ryanair is that they are not really an airline. Sure, they fly a lot of planes, but they are a multi-faceted business that actually make their money out of

  • selling a load of things that aren’t flights
  • keeping their business costs as low as possible.

Let’s start off by examining  the first bit: the ‘non-flights’. Ryanair will indeed sell you a ‘free’ (or extremely cheap) flight. But that’s really just a cunning ploy to make you buy other crap. Because once they’ve tempted you with the flight, they now have an opportunity to do three main things:

  1. Sell you a huge range of other products and services that simply don't resemble an airplane: travel insurance, bus tickets, sandwiches, car hire, hotel accommodation, credit cards, scratchcards, calendars, perfume, tobacco, gift vouchers, ‘approved-size’ travel bags, saucy calendars, airport parking…
  2. Subject you to a raft of terms and conditions that come with punitive fees for those who transgress them (£35 for having the wrong-sized bag at the gate, anyone?)
  3. Make any other essential aspect of taking your flight as expensive as possible via hidden charges (think of the very expensive credit card booking fees, or high charges for those who need to bring a suitcase or sports equipment on holiday).

The truth is that the free flight is really the ‘turnkey’ to get you into the Ryanair selling machine. The free flights generate a new market for the company, which is then bombarded with pleas to buy additional services and products. And clearly, enough people do find ‘The Girls of Ryanair’ calendar, a cardboard sandwich or an extortionately-priced small can of Heineken worth parting with cash for.

The other successful aspect of Ryanair’s business model is to do with keeping costs insanely low, meaning that they really maximise the profit from all the other tat they sell very effectively. They do this via a pretty draconian stance against unions; paying relatively low wages compared to other airlines; reducing the number of staff they employ to a bare minimum; forcing customers to book their own flights and check in online; and using cheaper, more regional airports.

“So what on earth has all this got to do with my rock and roll dream?”, I hear you ponder. Well, just as with cheap airlines, the music industry is a viciously competitive business, and in this digital era, is as much about free stuff and low costs as anything Michael O'Leary could dream up. Odd as it may sound, Ryanair's business model might finally be the thing that that helps you turn that money pit rock career of yours into something that actually makes you a profit.

Ryanair might have a choice about giving away free flights, but musicians increasingly don’t have this choice about giving away their music for free. The relentless march of the internet means that music is arguably already free - and getting freer by the day, thanks to file-sharing and the increasing availability of streaming services like Spotify and Apple’s iCloud. But just as Ryanair make a lot of money out of ‘non-flights’, musicians can also generate cash out of 'non-albums'. Here’s how a Ryanair-style model might work for a band.

First, the band give away an album download in exchange for an email address or Facebook ‘like’. This free album is the equivalent of Ryanair’s free flight, the turnkey which opens the door to new, less obvious, business opportunities. Then, using this email address, they provide fans with the opportunity to buy a range of other stuff related to the band, for example…

  • limited-edition, physical editions of the band's music: signed CDs, special vinyl pressings, designer USB sticks and so on
  • t-shirts
  • tacky merchandise: mugs, mouse mats, hats, calendars and anything else that fans might consider a desirable object (Cafépress allow you to whack your band logo on a thong)
  • signed posters and lyrics
  • gig tickets
  • private performances in fans homes

Additionally, if you are a big enough act, with enough traffic going to your site (or a big mailing list), you could actually contemplate selling advertising to other bands or music-related businesses.

The point is that strictly speaking, none of the above stuff involves the fan buying a recorded song – it’s all ancillary stuff…but your free music provides you with an opportunity to sell it.

As for Ryanair’s approach to keeping costs low, there are lessons to be learnt here too for independent musicians. We hope that you won’t be as heartless as Ryanair when it comes to anybody you employ (surely you’re not that big a bastard), but if you want to turn a profit from an independent release, you do have to be very mindful of cost reduction.

Let’s say that you are a singer-songwriter that typically sells 300 albums at £10 apiece per release. Of these 300 record-buyers, 75 might attend the album launch, paying £10 in at the door. You might generate another £250 from t-shirt sales or other tat. Meaning that before your costs are deducted, your indie album project has the potential to generate £4,000. In these crazy economic times, this is not an amount to be sniffed at. But how do you hold onto as much of this cash as possible? It’s all about the cost reduction. Here’s some ideas on how to do it.

  1. Consider not printing any CDs. They’re on the way out but, when design and manufacture costs are considered, can be incredibly expensive to produce.
  2. If you are getting physical (i.e. printing CDs), see if you can barter with graphic designers. Do you have a skill that you can swap in exchange for a CD sleeve design? You can apply this barter technique to other aspects of the release too – your session guitarist might need a website, for example, and you might be just the man to make it for him, so long as he'll do a free gig or two for you.
  3. Cut out as many middle-men as possible. Although it’s always worth getting a digital distribution arrangement of some sort (i.e., via Tunecore, Zimbalam etc.), do set up a Paypal account and get as many of your fans as possible to buy direct from your site. 
  4. Always do a cost-benefit analysis before spending any money on a project. Before placing an advert in an expensive magazine, try to work out how many albums you will sell as a direct result of that ad. Before mastering your album at Abbey Road, consider if it will maximise or reduce profit. Apply this logic to every stage / aspect of the release.
  5. Use negotiation skills to get the best price from any agency, plugger venue or manufacturer you may be hiring. Ensure you are getting the best bang for your buck, and, unless it’s Prescription PR we’re talking about, shop around :-)
  6. If you are a singer-songwriter, ask yourself if you really need to spend £1000 on session guys for a live performance that will only take in £500 at the door.
  7. Create a profit and loss spreadsheet  at the start of your project. And stick to it!

The point of all this is to get you thinking about music like a business. This is not very romantic, admittedly, and may not fit well with your well-crafted starving artist image. And nobody likes to mention Ryanair in the same sentence as rock success. But the point is that the rock and roll dream and bad decision-making typically go hand in hand. You get so sucked in by the dream that you will spend daft amounts of money to create that diamond-encrusted digi-pack, but you’ll neglect to set up a Paypal account that you an use to sell overhead-free digital downloads direct to fans. Or because you are so wrapped up in selling albums, you forget that even a modest fanbase can generate significant income for you if they can be persuaded to buy other stuff too. Maybe enough income, one day, to allow you not to have to resort to buying that ‘free’ Ryanair flight.

Now, where is that 'Girls of Ryanair' calendar I bought on Prescription's last outing to Majorca?

Don't miss great free music promotion advice from Prescription PR

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