Popkomm Kicks Off

More than 15,000 visitors are expected to throng the 800 exhibition booths at Berlin's International Congress Center for the 18th Popkomm international business platform for music and entertainment. The fair runs until Sept 23.

This year's combination trade show, conference and festival is overshadowed by plunging CD sales worldwide amidst turmoil in the music industry over new Web-based music sources. More than 2,000 musicians are converging on Berlin for the event in hopes of signing lucrative contracts with major labels.

Like every year, executives and industry experts will be huddling to come up with strategies for saving the industry. "Viral marketing" is one of those strategies, involving word-of-mouth marketing via Web logs, Internet forums, chat rooms and such wide-open cyber-venues as MySpace and YouTube. Marketing strategists cite the band Arctic Monkeys as an example of how to break the mould on traditional marketing.

Learning from the Arctic Monkeys

The four young Brits defied conventional industry wisdom by side-stepping time-honored marketing procedures and making their music available free of charge via the World Wide Web. The resulting word-of-mouth buzz propelled them to the top of the charts.

The Arctic Monkeys thus made obsolete the traditional procedure of pressing a demo and hawking it to label executives and radio station program playlist managers. The group cut out the middleman by starting their own homepage on the Internet and offering their demo singles as free downloads. They burned their own CDs and distributed them free of charge at live gigs.

Unbothered by the fact that fans copied their CDs and distributed them to friends, the British band seemed to accept it as a necessary step towards fame and -- eventually -- to fortune.

And it worked. By the time the Arctic Monkeys released their debut album last January on Domino Records, they were so well known that British sales soared to 118,000 within days.

Not surprisingly, a panel discussion at this year's Popkomm in Berlin is entitled "Arctic Monkeys Business Style and the Future of the Music Industry."

Until now, the conventional wisdom within the industry was that downloading music from the Internet was in fact stealing from the artists. The Arctic Monkeys turned that argument on its head.

And as far as artists are concerned, the industry has been stealing from them all along. Artists tend to receive $0.25 (19 euro cents) in royalties on a CD that costs $0.50 to produce and which retails for $15 -- meaning the middlemen get most of the money.

Against that backdrop, executives have been discussing ways to save the "physical product," by which they mean the CD, as opposed to Web-based products, which are beyond their control.

Fighting piracy and illegal downloads

Another issue that will take center stage at the music fair is the problem of illegal downloads and piracy.

German recording industry figures for the first half of 2006 will be released during Popkomm and are expected to show yet another decline in sales, this time by about 3.4 per cent. Industry analysts put the first-half figure at 54.6 million albums, which, though bad, is better than they had feared a year ago.

"It's a good sign," said Michael Haentjes, a German industry spokesman. "Sales are still very soft but are not off as much as they could have been. The problem of course is the nagging problems of widespread downloads and piracy."

The bright spot in a gloomy industry landscape is the online market. In the first half of 2005, 7.5 million music titles were bought online in Germany via iTunes, Musicload and others. By contrast, online sales for the first half of 2006 are expected to top 12 million.

Even so, those figures are not as high as the German music industry had hoped.

"Piracy is insidious and is putting the brake on online sell-through,' said Haentjes. "Coming up with ways to curtail piracy is the major topic we'll be discussing."

Berlin is a high-profile venue for these deliberations because the German government is in the processing of drafting a new law that would stiffen penalties for copyright violations, extending them to include Internet downloads.

Popkomm has invited German lawmakers to panel discussions to ensure that the industry's concerns are covered by the wording of the new law.

As the panels hold their deliberations, music-lovers will be treated to a marathon festival of live concerts offering more than 600 hours of performances by 400 acts over four nights.

The fair will conclude Saturday night with a gala club night featuring artists from 26 countries.

Deutsche Welle is an official media partner of Popkomm.