What You Can Learn from the Music Biz
Over the past several decades, few industries have changed as quickly as the recording industry. From cassette tapes and vinyl records to CDs and iTunes, there have been plenty of chances for record labels, producers and artists to suffer some serious growing pains. In a way, the music industry has given would-be entrepreneurs and upwardly-mobile professionals plenty of examples of what to do, and what not to do, to be successful in a rapidly changing environment. Of course, music isn’t the only business that is prone to uncomfortably rapid changes, so many of these lessons translate well into other sectors.
So what can up-and-coming businesspeople learn from music’s mistakes and eventual evolution?
Bootlegging has always been a problem in the entertainment industry. I remember seeing those FBI warnings at the beginning of videos and movies even when I was a little kid. But when file sharing became popular, the music industry was basically powerless to stop it. A handful of attempts at lawsuits against sites like Napster and efforts to make examples of random unlucky users of Bittorrent and Limewire did little to stop the tsunami of downloads. Looking back, this was a foolish move by an industry that had already lost the battle, but didn’t want to admit it to itself. This is something that could happen in any industry: there is almost always a desire to keep the status quo, even though it is obvious that change is what is needed. Any person with business ambitions, however small, can increase their odds of success, of moving up the ladder, if they can take an honest look at themselves and the situation of their industry and make sure that they are not falling behind.
Change brought discomfort to many on the corporate side of music, but it also brought opportunity and a kind of democratization to the record-making game. While major-label muscle is still needed to reach the stratosphere of the industry, plenty of upstarts can use iTunes and a host of publishing and monetizing tools to at least get their music out there and perhaps even make a living at it. Sure, some people get carried away with new technology, but those who think of these advances as tools, and nothing more, can find ways to use them to move their business forward.
Not everything has changed in the music world. Some old school money-making strategies remain. Concert revenue is still the financial backbone for many musical acts. This hasn’t changed since the early days of the recording industry. Some bands will tour for a year or more after releasing a record, and aged bands, trying to milk their past fame, may tour without having released anything. Again, this can be translated into other industries: it is unwise to change things just for the sake of change. If some strategy is still profitable, why throw it away?
Artists and labels have been able to step outside of the studio and find income from other sources that are not immediately related to iTunes, CDs, and making music. Video streaming services offer music videos for free to the public while earning revenue via ads. A couple of these services share a cut of their income with labels, giving them a small, but consistent, source of cash flow. And of course, a few artists have used their music and recording success to move into other businesses.
Perhaps no one is more famous for this than multi-millionaire Jay Z, whose celebrity status (and business savvy) helped him score big money with clothing brands, premium alcoholic beverages, and even partial ownership of a pro sports team. Jay Z has a genius for developing brands, but there are several things that anyone can take away for this artist/businessman’s success. Having multiple income streams has made Jay super wealthy, but for up-and-coming entrepreneurs or established small business people, developing more than one cash flow source can be extremely important and may even be the difference between success and financial security and welfare. Hourly-wage-slaves and other W-2 employee can adopt a strategy based on this approach, either by dabbling in a side business, learning another skill, or regularly searching for jobs in different industries.
People will always listen to music, and artists and labels will always be looking for new ways to monetize their product. Music, like many other industries, will continue to change, but those who can stay ahead of the curve and be savvy about their strategies won’t have to worry about falling by the wayside.
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About Josh Lew Josh Lew lives in the Midwestern US when he is not traveling. He is a columnist for Gadling and has contributed to Hackwriters and Skive Magazine.