“Music has value”: Hard lessons from the music industry
When Scott Borchetta walked on stage last week in Nashville to accept an award from the industry association MusicBiz, he had a message written on his suit sleeve which said “Music has value”.
Yes, that message seems trivial and obvious. After all, you don’t see executives attend other industry conferences writing messages like “software has value” or “football has value” on their designer clothes.
But when the American Idol mentor, who founded Big Machine Records and signed Taylor Swift, took to the microphone for his speech, he quickly went beyond the obvious. He issued the industry a challenge about value:
“Everybody is going to be paying for music,” he said. “We just have to keep saying the same message. So let’s get one on that same message,” he said. “And when that happens, we are going to have the most profound breakthrough in our business.”
He implored the audience of industry executives further: “When we take the lead, it is going to change the whole economic scale of what we do.”
The music industry is easy to troll and has taken so many black eyes and body blows since even before Napster and MP3 files and the “physical to digital transformation” overtook it some 15 years ago. I heard the condescending comments from executives in several other industries in my many years as a pricing consultant around the world.
But I’m not here to troll. Nor am I here to go all Nathan Jessup on the industry’s critics and trolls – many of whom work in industries where the pace of change is imperceptible – and insist they either “grab a weapon and stand a post” or keep their opinions to themselves. Neither stance helps. Instead, I’d like to pull together a few takeaways from last week’s industry conference in Nashville.
Define your value: The question is not whether music has value, but how much. Part of that answer is getting decided in courts, but as a colleague and I wrote in Wall Street Journal op-ed in December 2000 (“Online Music: How to Make the Deal Work”) ultimately this answer needs to come from the market, from fans and listeners, and not from judges and court orders. The topic of “value” was ever-present in Nashville.
Rewrite the formulas: I worked as a consultant in a few dozen industries. For all the criticism the music industry receives – even within its own ranks – that perspective allows me to say that few companies and few industries have the courage to place big bets and rewrite their success formulas than music. Instead of clinging to the past (an all-too-common accusation), enough people in the industry knew that decisions in the present would have huge consequences and that these decisions could not be avoided. Whether the major labels got the “deal right” with Apple in 2003, for example, is an academic argument now. The real point is that they took decisions in the face of uncertainty I wouldn’t wish on folks in other industries.
Stay balanced: The tenor at last week’s industry conference in Nashville was neither negative nor overly exuberant. It seemed better and more balanced than the last conference I attended in 2011, when the operative words were “piracy” and “free”. Last week the operative words were “value” and “data” and “opportunity”. The spirit seemed like a universal recognition that there is definable work to do, and it’s time to roll up sleeves and do it.
Take the lead: This is the more compelling three-word message in Borchetta’s acceptance speech. What that phrase means will differ depending on the perspective – artist, label, streaming service, retailer, festival promoter – but the industry’s stakeholders today have many more revenue opportunities than years past, and thus more opportunities for differentiation. The confidence to seize them is building.
The conference even made me wonder if a lot of executives in the music industry would like to have a bunch of “do overs” for the last couple decades. Four years ago, at the last conference I attended, I would have been inclined to say “yes”. Today it seems as if a collective feeling of “we’ve survived and we’re looking forward” pervaded the conference. The industry’s past makes for great coffee house talk and entertaining business school case studies. Executives at Kodak, Blockbuster, AOL, Borders, and General Motors (let’s not forget they went bankrupt) and many other companies would probably like a few “do overs” more than the music industry executives would.
The difference is that the music industry has indeed survived, as have many of the executives in it. It may be smaller and very hard to compare apples-to-apples to its CD-pressing heyday, but it does seem ready after years of playing defense to start seizing opportunities and poised to use the word “growth” once again.
No one knows for sure whether that growth will come, but name me a fast-changing industry where someone does.
Frank Luby is co-founder and CEO of Present Tense LLC, a communications company dedicated to helping people express their ideas through better business storytelling. To learn more about Present Tense LLC, please visit us at www.presenttensellc.com and follow our regular blogs and posts. You can also follow Frank on Twitter: @FrankLuby