Consumer Trends Strategy

More Rockstars should do MBAs

By on January 19, 2017

No, I’m not talking about ‘rockstars’ that are dubiously sought for in ads for software engineers (What’s with that by the way? Why would an accomplished engineer want  to brand themselves as an emaciated, promiscuous, drug addict?). Here I’m talking about the real, hard-drinking, leather-wearing kind. Why? Because the music industry has been devastated since the proliferation of the internet, file-sharing, and streaming services. It is harder than ever for bands to survive from their traditional revenue stream – album sales. Because of this, bands desperately need to get strategic and re-think the way they want to go to market to be able to build a sustainable business.


This blog was inspired by a little and relatively low-profile  article I read in HBR about the band Linkin Park who engaged with Harvard University to get help with re-imagining their business model. I loved the concept. This idea of looking outside of your industry and peers is one that could be applied to any company and is a fundamental part of Design Thinking approaches. For now let’s stick to the rockstars.


Let me start off with some facts:


1. Physical album sales have died out. Streaming is in (but artist revenue sucks)

Credit: The New York Times


2. The recorded music market is a ‘Superstar artist’ economy with the top 1% of musical works accounting for 77% of all artist revenues.


3. Songwriters are currently heading to extinction


4. Listeners are trending toward older stuff  instead of new material (likely due to lack of both quantity and quality)


Despite most people on the planet loving music to some degree fewer and fewer are willing to pay for albums, while revenues from streaming services are so paltry it is just not feasible for many artists to survive off. So, what’s the answer? Well, like in any other industry it is about finding ways to engage customers (fans) and find new revenue streams based on products and services that they are willing to pay for. I know a thing or two about re-inventing business models, it makes up a fair bit of my day job. I’ve seen how companies have introduced new products and services and found ways out of very bad situations. It is hard for bands, but I think there are quite a few strategies that many could trial and see what works for them.


Some ideas on how artists can generate new revenue streams

  • Ditch the record companies, managers etc. They will just take your money: This is cost cutting not revenue generation, but good to get it out of the way. Unless you’re a global name you can get away with a lean organization.  Record labels usually loan bands the money that must be paid back – OR ELSE – anyway. Now that you can release an album yourself on the internet, advertise on the internet, where’s the value add from these other guys?
  • Forget albums:  Constantly release music to keep mindshare, hype and engagement up. As someone who always listens from an album from start to finish, this pains me to say. But the fact is the majority of people stream genre playlists or store only a few songs from each artist on their devices. Instead of releasing one album every year or every 2 years and then disappear, release 1 song per month and keep your fresh material out there. For each one release a lyric video on YouTube too.
  • Create living songs: Some claimed that Kanye West’s ‘The Life of Pablo’ release was the first SaaS album. I think this can be explored more. Consider having half a dozen variations of a song out there that have evolved over time. I like the idea, it takes the old releasing ‘demo’ material concept one step further.
  • Stream:  Twitch is a global phenomenen in gaming. Many other streaming services exist. The good news is people will happily pay and ‘donate’ to their favorite celebrities and artists via digital payments. This is ‘digital transformation’ is the most profound sense. Some, like electronic music producer Deadmau5 have been doing it for a while but it hasn’t quite taken off like I imagined.Things fans would like to see live:
      1. Rehearsals
      2. Band announcements/updates
      3. ‘Private concerts’
      4. Q/A
      5. Podcasts: Discussions, show reviews, etc etc.
      6. VR: A concert in your home? Sign me up!


  • Subscribe: Subscribing and donating to artists was mostly popularized by Patreon – a platform where fans can choose to give artists any amount, usually in exchange for some exclusive content. It has proven quite lucrative for some of the top names. Content like some ideas listed above still needs to be the trigger but subscriptions can set up predictable revenue.
  • Merchandise as a service: Selling merchandise is a good earner for bands. Unless you’re on tour, there are easy are plenty of ways to create it on-demand without all the upfront costs, distribution etc. The only cost here is producing the designs.
  • Vinyls (as a service): Yes, legions of hipsters are buying vinyls again. Find a way to produce them with a lean supply chain so there is no risk. Put compilations of material on there.

Before finishing, I need to add one thing – What doesn’t change? Playing lots of gigs. This is still the best marketing you can do for a band. It is hard work and bands lose money until they reach a certain size, but it is essential. Digital is the new enabler, but a physical presence is still key to create a groundswell of support.

Arts and entertainment have always been cutthroat industries but recent trends have made it harder for bands outside the top global names to be sustainable. I believe that with time new trends will come along and trigger better times for artists. But for now, bands have to be extra savvy and learn some new business skills. This is going to be a lot of hard work, and wont leave much time for partying. I suspect this is also a reason why many in recent times have decided to cut the long locks and trade in their guitars for career paths us mere mortals must follow…


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Nick Milani
Redwood City, CA

Hi, I'm Nick. My career has been built on working with tech inside large enterprises. Here I write about it. Outside of work, I love the outdoors, big engines, gaming, writing, heavy metal and 80s action movies. BSc, MBA. This is a personal weblog. The opinions expressed here represent my own and not those of my employer.


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