Great way to get a second bite at the apple.
You release the album and X number of people buy it.
You release a deluxe version of the album – some portion of people who didn’t buy the first version will buy the deluxe version, and some portion of people who bought the original album will buy the deluxe version too. You get to make extra cash with very little extra work.
Artists typically record much more material than what appears on the album. This includes alternate or extended takes but also tracks that they decided simply weren’t good enough or didn’t match the flow/tone of the album.
A lot of this music you will *never* hear. It was recorded by artists who did not make it big or on albums that didn’t sell well. However, if an album is a hit, the artist (or their label) may rethink their original evaluations of the material that was cut and try to make a buck from selling that too. If an artist gets a dedicated fanbase, these kinds of releases can keep them engaged even after the artist dies or retires. You’re more likely to hear about popular artists and hit albums, so it may give you the impression that this is how it always goes, but it’s not.
Some of the constraints that required this are starting to be relaxed. You no longer have to cram an album on a record, cassette, or disc. The Spotify release can run as long as you like. But there will always be a certain amount of curation in an artist’s original output that may get relaxed once there’s a financial incentive to do so.
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