Rock's New Economy: How Bands Make Money

For Austin rockers Spoon, 2007 was a breakthrough year -- but not because they sold a lot of records.

Ga Ga Ga Ga Ga, their album on the indie label Merge, garnered more radio play than any disc in their 15-year history and earned them an appearance on Saturday Night Live. So far the disc has moved just over 250,000 copies, according to Nielsen SoundScan -- about half of what Spoon's manager, Ben Dickey, believes it would have sold even five years ago. “But as far as the band is concerned, the record is a hit," says Dickey.

The reason? CD sales are no longer the yardstick the band uses. While hip-hop and pop artists ranging from Jay-Z to Britney Spears have long used recordings to sell every- thing from perfume to liquor, rockers are only just starting to think of album sales as a component -- rather than the sum of -- the commercial equation. Spoon have been actively licensing their music for use in films, television shows and a Jaguar commercial, making money, gaining exposure and moving up from clubs to 3,000-seat venues.

Album sales are down 25 percent since 2000, leading to widespread predictions of the record business' demise. But smart artists and managers are finding new ways to reach fans and make money. “For some bands we represent, there's more licensing income than record sales," says Carol Sue Baker, whose Ocean Park Music Group has been connecting independent artists with music supervisors for movies, TV and advertising agencies since the early 1990s.

Baker recently paired Robert Plant and Alison Krauss' “Killing the Blues" with the TV ad for American Living, Ralph Lauren's new clothing line for JC Penney. Baker won't reveal what it means in dollars for the artists, the songwriter and Rounder Records, but it is at least a six-figure pot.