Dave Allen
Dave Allen. Director, Interactive Strategy

Disrupting the music industry

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Disrupt Dave Allen Luke Williams SanFran MusicTech

A quick disclaimer – I haven’t had as much time as I would have liked to think this one through so it may be a little sloppy.

This afternoon I will be speaking on a panel at the SanFran MusicTech conference. We will be discussing Strategic Partnerships, which basically means talking about how bands and musicians can find revenue by partnering with brands by licensing their music and images.

Speaking on panels can go either way – they can be engaging and stimulating, and they can also be a rote rendering of the status quo surrounding certain issues. And then there’s the music industry. My concern today is that we will not have time to actually discuss strategy. Most likely the conversation will circle around tactics. There is of course quite a difference.

In case I don’t get chance to get my postion across clearly on the panel, I’ll start here with a couple of question – Why do we never consider transforming the music industry? What would that look like? I’m tired of hearing about streaming music plans, the introduction in the USA of Spotify, selling on iTunes or the Amazon MP3 store, the longing for a “music in the cloud” solution etc, etc. Those are no longer game-changing solutions (if they ever were) and by the way, those are businesses capitalizing on the music industry’s travails; by using any of those services musicians are not being strategical, they are being tactical.

Here’s the music industry problem – it’s “a surplus of similar companies, employing similar people, with similar educational backgrounds, coming up with similar ideas, producing similar things, with similar prices and similar quality.” That sentence is from a book, Funky Business by Jonas Ridderstrale & Kjell Nordstrom. Those words were not written about the music industry in particular, they are an example of business clichés. I read those astute words on the ‘plane to San Francisco yesterday as they appear in the book I am currently reading by Luke Willams, titled Disrupt. Music industry leaders should read Disrupt.

This is an over-simplification of Williams’ ideas in the book, but to get to a disruptive hypotheses he suggests asking a couple of questions: What do you want to disrupt? What are the clichés?

So, some music industry clichés:

Illegal downloading of MP3s is killing the business
Licensing music to streaming services will increase revenues
Licensing music to iTunes will increase revenues and sales
Blocking videos on YouTube will give us more control
Blocking licensing access to Spotify will give us more control

I could go on. Here’s what I think is going on:

The music industry is spending money in the present to solve the problems of the past
Licensing music for a brand campaign actually devalues and commodifies artists’ music
Only a handful of artists will really benefit from being aligned with brands
The music industry is not listening to music fans and how they want to access music

The industry understands the Problem – ‘music fans are buying less music these days.’ Yet they have come up with the wrong Answer – ‘let’s license our music to as many companies as possible, as expensively as possible.’ That’s a tactic, not a strategy. A strategy would be – let’s address why people are buying less of our music by understanding why that’s happening. Then solve that problem. To paraphrase Williams – If you simply go about finding a brand partner that will pay to license your music you effectively confine your range of possibilities to only issues to do with licensing. You are not looking at ways to sell more of your music. Such a narrow focus will greatly limit your options later, e.g. if your music sales continue to decline, then who will want to license your music?

In brief, to get to a disruptive hypotheses, Williams says “you make an unreasonable provocation.” So here’s my unreasonable provocation: Would it matter if recording companies completely disappeared?

Find the problem, then solve it. Then discover new markets.

Please let me know what you think.

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Comments

11 Responses to “Disrupting the music industry”

  1. Melody von Rock
    May 9th, 2011 @ 9:18 pm

    Q: Would it matter if recording companies completely disappeared?
    A: they serve the mass market. while the mass market exists they are needed.

    Q: let’s address why people are buying less of our music by understanding why that’s happening.
    A: the mass market is fragmenting

    hope this helps!

  2. Cindy
    May 10th, 2011 @ 1:23 am

    Someone said recently that every time I watch an episode of MTV Cribs, I don’t feel guilty about downloading music for free off the internet.

    Therein lies the problem, right? Here are these musicians walking us through their mansion. We see their nice furniture, their speed boat, 8 expensive cars and closet full of Nikes, and there’s no empathy for them. They’re already rich. If I can find the song for free, I’ll download it.

    Do you feel guilty about doing it? No. the chance of getting caught is minimal.

    You also know how the business works. Record companies take all the money from music sales and the artists make their money from touring and merchandise.

    I’m not sure what the solution is, but certainly if you have the talent and can successfully promote your brand on the internet, I think you can do well. You may not make MTV Crib money, but you can make a very good living as a musician.

  3. Dave Allen
    May 10th, 2011 @ 9:21 am

    Melody, I think you missed my point completely. If we are thinking about the mass market then we are not thinking about change. A mass market, if one would exist, could be served well by a different model than the current major label system.

  4. @travisaacson
    May 10th, 2011 @ 1:00 pm

    I think record companies HAD a meaningful place in the world when consumers had no way of filtering through the long tail of music to find an artist they liked. Today, digital music distribution methods and fancy algorithms can do much of what consumers needed record companies for years ago. It’s time for them to channel their creativity towards adding value rather than defending their turf.

  5. Cindy
    May 10th, 2011 @ 2:43 pm

    Good article on this issue.

    http://www.bit.ly/mCXA46

  6. Melody von Rock
    May 10th, 2011 @ 8:14 pm

    thanks Dave for the response! But maybe it needs to be taken back up to: the Problem – ‘music fans are buying less music these days.’ – is this the case?

  7. Melody von Rock
    May 10th, 2011 @ 8:27 pm

    (with the emphasis on buying)
    a: they aren’t buying in traditional channels (as reflected in traditional – mass market – sales measures) but demand for music products and services continues to thrive.

    PS are you anti-mass market?

  8. Dave Allen
    May 11th, 2011 @ 8:43 am

    Travis, you hit the nail on the head when you mention adding value. Not adding value and defending their turf is a dismal strategy..

  9. Dave Allen
    May 11th, 2011 @ 8:50 am

    Melody,

    The mass market hasn’t gone away, it has simply changed. Music never had to compete with the plethora of cool things that the young now have at their fingertips and sometimes spend theirs $$s on – video games, mobile devices, YouTube, and more. They find value in those things. They are also creating their own content and sharing it with their friends. If they see no value in buying music – because even the experience of buying it lacks value – then sales will drop. It’s a given.

    I’m not against mass market at all. I enjoy the fact that Tyler the Creator has more than 8.5 million plays on YouTube http://www.youtube.com/watch?v=XSbZidsgMfw It’s a new market, that’s the point.

  10. Melody von Rock
    May 11th, 2011 @ 5:34 pm

    AGREE – it’s a new market! That’s the best way to describe it because it’s hard to measure sales now as they’re so fragmented into new channels/services/products. there’s more here http://bit.ly/eDSFg7

  11. Edwin Melenicano
    June 20th, 2011 @ 2:54 pm

    I just wanted to take the moment to say that I agree with this article through and though. And want to say that maybe the market should consider a way where instead of thinking just about profit which inevitable leads to greed, in this new market, and i think you infere this by having them think about all these questions, is that in the new market “sharing” something to consider. not everyone has money, or better yet the markets rigid ways has made everything expensive so that’s why we have all these new outlets, which even then is proving to maybe not be so great because it focuses on labels and carries adds; yet, we the consumers of the market, and who make the market have decided (both musicians/artist/ consumers alike) that the current market in general is so focus on getting our money without giving us something worth it that we will share the products even reproduce them. Now do not go busting our bubble. remember it is sharing that has help those in under developed countries start to gain and now we are working on sustainability.

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