A Cautionary Tale:
Canary In A Coal MineHow the Music Industry
Destroyed
Itself
And How You Can
Avoid
The Same Fate
George Howard
Founder, GHS
Associate Prof., Berklee/Brown
Co Founder, Music Audience Exchange
@gah650
Any institution built upon a firmament of
unethical behavior, will ultimately crumble.
From its inception to today, the music industry has traded on exploitative
asymmetrical relationships between themselves and those who create and
purchase their products.
This has resulted in “relationships” of necessity and command/control power
dynamics, rather than actual - shared benefit - relationships.
This “original sin” led to practices and byproducts that so handicapped the music
industry that it has essentially collapsed.
Its fate is avoidable, but requires a shift in traditional business thinking.
What the hell just happened?
Ironically…
…the music industry refused to listen to customers
or market signals
An incalculable - literal and figurative - distance between the industry and its customers/suppliers was created, and, thus, dea
Result:
Result:
Vast over adherence to “cash cow” model, even while
“shooting stars” presented themselves…constantly
…just slower than the Amish. (Credit to: Stan Cornyn)
The music Industry adopted new technology…
Attempted to Destroy:
Temporary salvation: Piano Rolls
Attempted to Destroy:
Temporary salvation: Vinyl
Attempted to Destroy:
Temporary salvation: Cassettes
Attempted to Destroy:
Temporary salvation: Mustaches/Brooklyn
Just making sure you’re still with me
Temporary salvation: Coffee
Attempted to Destroy:
Temporary salvation: Compact Disc
Attempted to Destroy:
…it became information. People share information.
When music transformed from analog to digital…
"On the one hand information wants to
be expensive, because it's so
valuable. The right information in the
right place just changes your life.
On the other hand, information wants
to be free, because the cost of getting
it out is getting lower and lower all the
time.
So you have these two fighting
against each other."
—Roger Clarke, Whole Earth Review,
1985
The collapse of the music industry obviously and easily predicted the travails of newspapers, books, film, tv, retail that mo
Its fate, however, is a cautionary/instructive for far more.
Our Models:
Harry Potter’s Mirror
Customer As
Teacher
Architecture of
Participation
Model I:
Harry Potter’s Mirror
All great companies avoid commoditization via product offerings that
make those who use them feel a more realized version of themselves.
This requires a deep understanding of and transparent expression of a
firm’s values. It’s “WHY.”
Model I:
Harry Potter’s Mirror
“We are like X company, with Y competitive advantage no longer works.”
Replace “Y” with “wh(Y),” in order to avoid innovator’s dilemma trap and
embrace whatever technology gets you to your KPI/WHY fastest.
Model II:
Enlightened Customer As Teacher
As customers resonate with the firm’s clearly defined and articulated values (its
Values…its “wh(y),” They build durable bonds of trust as well as Positive
Information Asymmetry.
They have discovered some product/service that makes them feel better about
themselves.
Model II:
Enlightened Customer As Teacher
They will be unable to NOT share this with their friends.
De-tethers you from outmoded “command and control” “marketing,” and shifts
the burden of promotion to customers/users in a distributed fashion.
Results in an increased NPS.
Model III:
Architecture Of Participation
Our heuristic for an architecture of participation is drawn from Cross Fit:
• Social
• Fun
• Competitive
Model III:
Architecture Of Participation
• This approach enables an ongoing dialog (Markets are Conversations)
between firm and stakeholders, in which the firm becomes a dynamic platform
for: learning/teaching
• creating/sharing
• cogitating/iterating
Closer relationship to customers.
Platforms
Platforms
Platforms
Platforms
One Thing In Common
Soundcloud
Sartre?
Why?
Why?
Result
But…
$
Why?
?
?
?
?
?
There is no longer a music business.
There is now a technology business
with subsets.
Music is a subset.
…so is everything else.
From modeling to measuring
Already beginning:
Streaming made last year the music
industry's best since 2009
Already beginning:
MAX, Dubset, et al. just the start
Your job as lawyers/professors is to
remember:
There are two ways of being creative.
One can sing and dance. Or one can
create an environment in which
singers and dancers flourish.
—Warren Bennis