While the music industry struggles to deal with all the changes in customer behavior it’s important to point out other industries have seen changes of similar or even higher magnitude and have proven to be much more adept to handling and even anticipating these changes. Technology companies are a good example, but not the only one. Companies that attempt to defend the status quo, always end up losing to others that keep up with and/or lead in innovation. General Motors loses to Toyota, Blockbuster loses to Netflix, Altavista loses to Google, Borders loses to Amazon, the LA Times loses to the Huffington Post, and the list goes on.
From the moment music sales started dropping dramatically the music industry has talked about a lot of different issues and related solutions. From illegal file-sharing and piracy, to 360 deals, watermarking cd’s, utilizing social and streaming media, dropping prices, iTunes LP, and the list goes on. While all of these topics are interesting and important, it seems that what is truly at the core of the music business often goes unaddressed. While music is so much more than a standard ‘product’ and not to be compared to a can of beans, the fundamentals and basic truths of the business of music are no different from that of any other kind of business. Many people get caught up in tangental topics, so we’d like to start by bringing it back to the fundamentals first.
Artists Are Entrepreneurs (Now)
Typically, artists don’t think of themselves as entrepreneurs running a small business, but this is an increasingly appropriate view as we move forward and evolve. Artists create and/or deliver content, much like an author, or a software engineer, or an artisan furniture maker. In the early days of the music industry artists could be likened to factory workers, churning out songs in the Brill building or for their major label for low pay and with little influence, benefiting mostly the people in charge. The power was on top and to be a song writer was a job. These days no one is building any factories, and the big corporations formerly in charge are failing left and right. Artists now have the opportunity to embrace the idea that they themselves are responsible now, and there is no boss to tell you what to do. Artist can now be at the center of a team, rather then at the bottom of a corporate ladder. That’s liberating, but also scary. Without an understanding of what is changing in the music industry, and equally important that which isn’t, it’s easy to panic and think the music industry is failing. But it’s not failing. It’s just changing. Artists and forward thinking companies can grow with the changes and become more successful because of it. This article was just an introduction to what we’re going to be talking about in the next few weeks. In the next article, we will take a bird’s eye view of the music business and illustrate how basic business fundamentals can be applied for the benefit of customers and artists.
(This is the first part in an on-going series of articles written together with McKinsey & Co’s Erik Rutten*. Through regular brainstorms we will examining the music industry starting from an outsider’s perspective as business men and music lovers, and working our way through the different aspects during the next six weeks. *Erik is on sabbatical and the views expressed are his own, not his employer’s. )