In this speech, I talk about how the re-invention of the music industry illuminates new ways of thinking about four fundamental questions that can help any industry stay ahead of their Napster. I have given variations of this speech to several companies and classes over the past few years, and I'll deliver this version to students at the Kellogg School of Management on May 16, 2014.
7. âFor years, the record labels had a
business model that was consistent
and single-minded: (1) bundle
together a dozen songs on a CD, (2)
ship the discs out to retailers, and (3)
collect money. â
13. Through a decade of
collapse, innovators within
the music industry have
had to re-invent their
approach to everything.
14. What do we
really sell?
Who are our true
competitors?
Who are our
customers?
What is our
media approach?
And the re-invention in the music
industry illuminates new ways of
looking at four fundamental
questions that can help any industry
stay ahead of their Napster.
23. -âŻGuy Oseary,
Madonnaâs manager
âIn the past, people would tour to
sell their albums; today they put
out albums to promote their tours.
The pendulum has swung.â
24. It turns out that a hefty number of âMDNAâ albums
werenât sold the usual way.
For every ticket sold online to Madonnaâs upcoming
shows, purchasers automatically receive a copy of
âMDNA.â They get a link to a free purchase on
ITunes, or they can send in their mailing address
for a physical CD. It doesnât matter if the concert
ticket is $52 or $350.
25. - John Philip Sousa, 1906
"I foresee a marked
deterioration in American
music and musical taste, an
interruption in the musical
development of the country,
and a host of other injuries to
music in its artistic
manifestations, by virtue -- or
rather by vice -- of the
multiplication of the various
music-reproducing
machines."... The player piano
and the gramophone strip life
from real, human, soulful live
performances.â
In partnership with McSweeny's,
Beck's forthcoming Song
Reader will be "an experiment
in what the album can be at the
end of 2012," there will be no
CD, no LP, no mp3. Â Just the
sheet music, ready to be
performed by anyone willing.
34. Celebrating the New Americana that is
being created each and every day.
âMakers of Tomorrowâ
TV Spot Premieres During
Olympics Opening Ceremony
Print Ads
Made In Parties
in Local Markets
Teaser Video on
Life + Times
On-Premise Promotion
Instagram Flag Mosaic
30 Artists Perform
on 4 Stages
Project 12
Local Brewery Feature
Made In America
Merchandise
Live Mural Painting
R/W/B Project
for Young Artists
Mobile App
Live FanCam
Over 1.3 Million Festival
Live Streams
MadeInAmericaFest.com
Over 600 Million Earned
PR Impressions
Commemorative
Budweiser Bottles
Forthcoming Documentary
from Ron Howard
Proceeds to the
United Way
35. âMAKERS OF TOMORROWâ TVC
1500% increase in Budweiser Social Conversation
TOTAL FESTIVAL ATTENDANCE
90,000+
TOTAL LIVE STREAMS
1,310,256 (Goal was 500,000)
TOTAL MEDIA IMPRESSIONS
Over 2 Billion
NEW FACEBOOK FANS
Over 1.19 Million (238% above goal)
UNITED WAY DONATION
$700,000 to Local Philadelphia Chapter
Celebrating the New Americana that is
being created each and every day.
36. Start with your mission.
From products to
experiences
Design the molecule that includes
everything your customers experience;
not just those that you directly create/sell.
Identify the gaps; and design for them.
49. The Age of Liquid
Expectations
Direct They sell products that compete
with ours.
Experiential
They sell experiences that
replace ours.
Perceptual
They change the expectations our
customers have for us.
54. âMyth 1: People today just
want stuff for free and
won't pay. Yet, here, they
not only paid, but the
average amount paid was a
hell of a lot more than a
typical album. If you're
open, human, and awesome
and you give people a real
reason to buy, they will.â
- Techdirt
Investors donât see prices;
they see investments.
56. âit effectively heralds the arrival of the world's
first bespoke album. Ten songs from a choice of
20 for ÂŁ7.50 â no more, no less â but what those
songs are, and the order in which they run, is
down to you.â
Investors think of themselves as partners,
not consumers.
58. âNo word on whether this new J. Cole track
is finished or not nor whether itâll make his
debut, but itâs dope nonetheless. Iâm going
to post it for download because the empty
minute near the end of the song gives me a
feeling itâs unfinished. As for the rest of
âCheer Up,â Jermaine gets his singing on
and everything. Both catchy and conscious,
I donât see how anyone could hate on this
man right nowâŠâ
J. Coleâs album debuted at No. 1 and
sold 217,000 copies in its first week.
Investors donât seek transactions; they are
drawn to experiences.
62. 24 million
Commercial views on YouTube from June 25 â
July 5
1.2 million1.2 million copies of the app were downloaded
AFTER MIDNIGHT on July 4
16 millionViewers of the initial spectacle on June 16
3.5 billionTwitter impressions on June 16
65. âThe
 album
 will
 be
 put
 on
 listening
 display
 in
Â
renowned
 galleries,
 museums,
 venues
 and
Â
exhibi9on
 spaces
 around
 the
 world
 âŠ
 before
 it
Â
disappears
 into
 the
 private
 collec9on
 of
 a
 buyer.
Â
Â
Â
The
 public
 will
 know
 that
 what
 they
 will
 hear
 will
Â
be
 a
 once
 in
 a
 life
 9me
 experience.â
Â
66. Youtube's live stream of the event racked up over 8 million viewers --
setting a new record for the most concurrent live streams (the previous
record for a single Web video service was 500,000 concurrent streams)
Stratos conversation generated more than 61,634,000 likely impressions
across social channels.
71. Staying ahead of
Your Napster
What do we
really sell?
Products Experiences
Who are our true
competitors?
Static
Expectations
Liquid
Expectations
Who are our
customers?
Customers Investors
What is our
media approach?
Marketing
plan
Conversation
plan
Here are some titles that you never really seem to see in business schools or magazines:âKodak on Digital MarketingââThe Pinto on Product SafetyââThe BetaMax on competitive strategyâAn equally-unlikely title is the one that Iâm tackling today: âInnovation Lessons from the Music Industry.âSo why is it that I believe the music industry is such a fruitful hotbed of innovation in marketing?
Earlier this year, at the Coachella music festival, one of the artists who made an appearance was TupacShakur.Thereâs just one little wrinkle: Tupac has been dead for 16 years.During the set of Snoop Dogg, Tupac made a surprise appearance via some innovative (and frightfully-real) hologram technology.This event was a re-invention for two artists who had no other option.Snoopâs career had been left for dead and Tupac was actually dead.Only through this innovation could both artists come back to life. And only because they had no other option did these artists think of such innovation.Necessity is indeed the mother of (re-)invention.
When you combine these traditional marketing approaches, you see that for decades, music was sold almost exactly as if it were cereal.Packaged goods sold on shelves in ways occasionally clever but almost always traditional.Every year, independent of anything other than avarice, the price crept up a bit more.Fat margins propagated an industry that was massively myopic and immune to innovation.
Napster and its progeny laid bare a deeply disruptive fact: music was content, not plastic discs.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
Napster and its progeny laid bare a deeply disruptive fact: music was content, not plastic discs.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
Napster and its progeny laid bare a deeply disruptive fact: music was content, not plastic discs.
Like Tupac and Snoop on the Coachella stage, sometimes innovation only happens when there is no other option.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
In a music world where itâs easy to think that people expect everything for free, letâs look at a video made by an artist by the name of Amanda Palmer.
Have you ever seen a video of an eclipse?There are few things more underwhelming. Itâs like reading the proverbial book on dancing.When you approach content distribution, think about where and how you can create these eclipse momentsâ how you can create events that you canât quite re-create.Moments that people will want to witness⊠not just passively re-watch.-Youtube's live stream of the event racked up over 8 million viewers -- setting a new record for the most concurrent live streams-The previous record for a single Web video service was 500,000 concurrent streams, which Google served up during the Olympics this summerStratos conversation generated more than 61,634,000 likely impressions across social channels. That means Red Bull garnered more than 60 million instances of peer-validated earned media through social as a result of Stratos.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.
And the resulting collapse was both sudden and severe.In the wake of the disappearance of CDs, the industry has traded analog dollars for digital pennies⊠when theyâve been lucky.