Found Around: Advantages of the Loss Leader for Artists
Written by Aidan Rush Posted in: Found Around on May 05, 2011
Loss leading is the act of selling goods to consumers for the price of cost or below the price of cost, and sometimes even for free. This tactic is commonly used by large retail stores to lure customers in, the hope being that once in the store they'll buy more product that's sold at a price designed for profit. This practice has application within the independent music industry too, and you might be using it without even knowing it! If implemented correctly, sacrificing some of your music for free will work as excellent promotion for your other priced material. DC artist Minh Chau wrote a great article on the best methods to go about doing this as a musician, check it out below!
-Aidan
(MTT) Generate Demand for Your Music By Rightly Using A Loss Leader
Credit: Minh Chau
A general rule of commerce is this: You cannot demand money until you have generated demand, or at the very least, the perception of demand. And a sure way to generate demand is by using a loss leader. Your music is your business. And in business, in order to spike sales and increase the bottom line, you have to pick and put into play a loss leader.
A loss leader is a part of your whole product offering that you will lose money on (or not make money on) in order to get potential customers through the door. Once they are in, their experience with your “brand” should cause them to buy other products you also offer as well as become repeat customers.
This adds to your bottom line. This is what a loss leader does.
In our industry, there’s been a great deal of debate regarding the giving away of music for free. Many emerging acts have opted to give away their entire body of work for free through services like Bandcamp (with some using the pay-what-you-want or donate option). Most of us do this in hopes that it will generate more demand for our music and that, eventually, we’d get paid somehow. Whatever we decide to do, I think it’s important that we understand how a loss leader works and how to rightly choose one. We should make decisions with a clear understanding of a matter and not because it’s trending or something everyone is doing.
Think for yourself. Think objectively. Because if we don’t, we wont have a sustainable career in music. Here are some thoughts for your consideration. Please eat the fish and spit out the bones.
