This is a quick rewrite derived from my post on Music Think Tank last week.  If you read my comments on Music Think Tank, you will see that I combined all my thoughts into this new post.

Not long ago, record labels raked in profits by being experts at packaging and marketing music.  Real and imagined benefits were shrink-wrapped into jewel cases, slick marketing coupled to payola pushed the product onto consumers by the billions, and lack of quality was a promotion problem solved by the marketing department.  Digital music is changing all this.  Everyone’s ability to promote and market music is eroding rapidly.

Music is now the most naked product on earth, and this nakedness is driving down overall music sales.  Music sits upon the shelf unwrapped, raw and void of packaging.  Consumers can fully try it before they buy it, they can take it home, and they can pay for it randomly, or not at all.  I can’t think of another product that is so fully exposed and vulnerable to quick and precise, pre-purchase decision-making as music.  You click.  You listen.  You buy.  It doesn’t get any quicker or more precise than that.
 
Yes, exposure leads to sales, but exposure costs money, and some reasonable rate of return is expected on every dollar spent on exposure. Because music is so exposed, raw and naked, the return on investment (ROI) on every marketing dollar spent, generates the worst marketing ROI of any product I have ever marketed.

How many dollars do you have to spend on promotion, to generate a single dollar of music revenue?

Marketing and promotion is really just a form of navigation now, it can help people LOCATE a great song, but it can't budge rubbish beyond a core fan group or the teen demographic.  If marketing still worked, every single record label would not be cutting back on staff and expenses.

The truth is, the only promotion that works now is…the play button.

In the naked digital music world, the solution for record labels is to increase marketing ROI through perfect targeting. The problem: extremely low margins force your targeting to be dead correct. You have to be picking the exact songs to promote to the exact audience, and without a high rate of failure. (Record labels have to become information driven businesses.) Or, if cutting down on the failure rate is not an option, you have to have a workable per-unit cost basis (thus the cutbacks), plus enough volume/velocity to make it all work (obvious right?).

Fortunately for artists that make great songs, the same naked qualities that make music impossible to market, also make music the easiest product in the world to recommend.  Once again, I can’t think of another product that has the viral qualities that are inherent in music.  It’s the only product where the entire product (the MP3) can be easily attached to the recommendation.  Try doing that with chicken nuggets.

I fully believe, of the five billion tracks sold on iTunes to date, a billion (20% or FAR more) have been sold to consumers that have NEVER seen the artist, have NEVER visited the artist’s website or MySpace page, and have NEVER had any interaction with the artist…other than exposure to a thirty second clip.  A billion(s) of iTunes purchase decisions have been driven off simple recommendation algorithms (those that liked X, also liked Y).  For those that doubt this estimate, look at how much real estate the recommendation space occupies on iTunes; including the front of iTunes.  If it didn’t work, it wouldn’t be there.  

My advice to artists is as follows:  it's far better to focus your time and money on song quality and on making lots of songs, than it is to focus on any type of typical promotion (other than putting your songs everywhere and anywhere). Time spent in the studio, or money spent on a quality producer, will yield more return than the same investment spent on marketing tricks or promotion "experts".  Anyone that tells you otherwise, doesn’t realize how much music information retrieval will change the marketplace over the next five years.

If abstaining from aggressive promotion seems odd to you, the best thing you can do, is to form a consortium, or a brand of artists that brand together to promote an umbrella brand.  This is a form of recommendation, and it will stretch your marketing further by having thirty or forty artists all promoting one destination; which I would argue, should be a blogsite which features artists that have sonic synergy.  This strategy will improve your targeting, decrease your per-unit marketing costs, and it will drive up the sales volume of everything the brand sells.