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With record sales dwindling, big brand sponsorships are taking over music

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Image by CBSLocal

The days of musicians earning money from record and merchandise sales are dwindling at a faster rate than you would believe. In a report by David Carr of the New York Times, musicians are now turning to brand partnerships in order to rake in some income while music labels take a back seat.

At this year’s South by Southwest festival, we saw Lady Gaga partner with Doritos, Jay-Z and Kanye West with Samsung, Coldplay with iTunes, and Tyler, the Creator with Pandora. Carr argues that this is not a coincidence, but rather a shift in how musicians earn money. Summed up nicely by Lady Gaga herself, “Without sponsorships, without all these people supporting us, we won’t have any more festivals because record labels don’t have any.”

In other words, sponsorships are bridging the revenue gap that has become evident with dwindling CD sales and less-than-meaningful micropayments from streaming services, such as Spotify and Rdio.

Carrie Brownstein, musician and star of Portlandia, thinks that festivals still provide the best way for people to get together and watch music, though she notes that “everyone in music is trying to figure it out and there is no algorithm for that. It’s very treacherous.” Meanwhile, McCann Erickson senior vice president Peter Gannon thinks that sponsorship collaborations are at least up front about what they offer musicians, since record labels have been anything but nice to artists.

“At least when a brand is involved, there is an understanding that we are borrowing the cachet that the artist has built and we try to make high-quality projects that give value to both the client and the artist,” says Gannon, who himself was in a band called Calla.

However, this leads to confusion, as noted by Merge Records founder Mac McCaughan. With sponsorships, brands take advantage of your short attention span by throwing their logos with the music. As such, rather than the music, they want you to look at something else. “Doritos is trying to get you to look at one thing, and we are trying to get you to look at another thing,” says McCaughan.

While merchandise and record sales certainly go a long way to supporting your favorite artists, don’t think this an upward trend. Right now, there is a major revenue gap forming around popular music and the hot answer this month is more sponsorships.

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