Because I have a passion for music, a lot of years dealing with it, and a background in economics, I recently spent time with people who wanted help in designing a new business model for the music industry. I felt I could use the exercise as well, for my own efforts. It is a subject that one of my cowriters and I discuss all the time. We didn’t come up with a good model (let’s get that out of the way right now) but we did come up with insights that I want to share.
Ayn Rand held that the biggest mistake philosophers (and economists) always made was in not checking their premises—the assumptions that you make when you start your thought processes. After rattling our brains in an unproductive fashion for some time, I realized that we had never checked our premises. So the first question is, what were they? Were we even starting from the same ones?
When business might not be business
A basic premise for me, in this case, was that we were going to produce a business model. That’s the words we used, at any rate. Immediately we saw difficulties. I understand a business model to be a set of strategies that can be used to produce a consistent profit. Old economics training dies hard, after all. I was looking for ways to, in the vernacular, monetize the music. The people I was talking with were asking the questions: “How can I make a mark on the music industry? How can I get a foot in the door.” And those are quite different. If profit making is not a critical factor, and sustainability of a business enterprise isn’t at stake, the horizons widen considerably. You have many, many more options. Including one I dislike, which is giving music away. (But I digress.)
The next premise was that it is possible to create a viable model for doing business (however you define that) that can accommodate all the facets of “getting music out there.” There are certainly some strategies, but the delivery systems, targets and attitudes of the people using music are in a lot of flux. People are trying all sorts of things to get music into the hands of folks who will listen to it and use it. Anticipating both technology and trends, when taken to extreme, becomes speculation, and can be a distraction from music.
When is an industry not and industry?
The final premise was that it is possible to model the music industry. And why wouldn’t it be? Well, the answer here is when there is no industry to model. I know, we talk about it all the time, but that doesn’t make it real. And here is why: Music is a piece of several related industries, not one of its own. Music is used in movies and television and in theater. And these are a part of the entertainment industry, which also encompasses a lot more. As such it is subject to the fortunes of those industries. Songwriters are in the recording industry, which sometimes produces product for film and television, and sometimes for the multimedia industry and sometimes for educational purposes. Music teachers are educators and their career fortunes are tied in more to that industry than anything musical.
It is a tangle of economic indicators, fortunes, and requirements.
In major industries, they separate consumer (retail) activities from business to business products. Sometimes the products are the same, and sometimes quite different. In the world of music (as opposed to industry) a master recording is a business to business product and a CD or download is a consumer product. They are marketed quite differently. The investment and rewards are quite different as well. As you can see then, a musician/songwriter/composer/performer/teacher serves a lot of different (and diverse) client bases. Each has different needs, requirements, and even business cycles. As a session musician or songwriter, the amount of government spending on education probably won’t affect your business significantly; as a teacher, it might. And the opposite is true if there is turndown in consumer spending on entertainment.
Get a handle on the goal
So, the discussion we had should have started with questions that helped defined what we want to do. “Making music” is too vague to mean much to anyone. But defining specific roles within that universe would tell us who and what you want to be, which makes it possible to find a way to get there. And that is a better understanding of the idea of a business model than we used.
A vision of what you would be doing, a clear picture that shows you touring, or sitting home writing music, or doing studio work, is a place to start. Then trust your gut reaction to that picture. Is it cool, or stressful? That will tell you a lot about whether to even bother pursuing it. There is no point in figuring out a way to get more gigs if you hate playing them!
I would like to hear about your business plans and models. How do you segment this fragmented, bit of lots of other industries? How do you plan to make inroads in your specific segment? This is less about trying to be a star than a serious, and business like, approach to doing what you want to do and being successful at it (by your own standards).
Tags: Music Business, music business strategy, music marketing, music success
About the Author
Ed Teja
Ed Teja is a musician, composer, and book author who writes, arranges, and performs a variety of music.Last 5 posts by Ed Teja
- Avoiding the long, sharp teeth of song vampires - February 9th, 2010
- Adapting to changes - January 25th, 2010
- Narrow your focus - January 2nd, 2010
- The year end refocus - December 30th, 2009
- Don't Devalue Your Music! - December 19th, 2009
Related Posts
Subscription Options
February 3rd, 2010
7:57 am
Dear Ed:
You wrote:
“I understand a business model to be a set of strategies that can be used to produce a consistent profit. . . . I was looking for ways to . . . monetize the music. . . . If profit making is not a critical factor, and sustainability of a business enterprise isn’t at stake, the horizons widen considerably. You have many, many more options.”
Another way to express the conceptual problem you’ve raised is to say that profit calculated in monetary terms is but a means to the psychic profit that is the goal of all human action, and some musicians may reap great psychic profit by means of (comparatively) moderate monetary profit — contrary to the presupposition of “the industry,” which glorifies only mega-money-earners.
You cited Rand, so let me cite her economics teacher, Ludwig von Mises:
“Profit and loss can be expressed in definite amounts of money. It is possible to ascertain in terms of money how much an individual has profited or lost. However, this is not a statement about a social phenomenon, about the individual’s contribution to the societal effort as it is appraised by the other members of society. It does not tell us anything about the individual’s increase or decrease in satisfaction or happiness. It merely reflects his fellow men’s evaluation of his contribution to social cooperation. This evaluation is ultimately determined by the efforts of every member of society to attain the highest possible psychic profit. It is the resultant of the composite effect of all these people’s subjective and personal value judgments as manifested in their conduct on the market. But it must not be confused with these value judgments as such.”
An excerpt from his discussion of “Entrepreneurial Profit and Loss,” which may be read here: http://mises.org/humanaction/chap15sec8.asp
Best,
Tony
February 9th, 2010
10:47 am
Thanks Tony. My degree is in economics and the Austrian school is always near and dear to me. I think the reference you cite is certainly accurate, and musicians definitely define profit and loss differently, which is one reason for conflicts between creative and business people. For many business people money profits and psychic profit are the same. But my intent was to look at what musicians deal with when restricting their efforts to that business world. It would be a useful starting point for a discussion of the social benefits of music (arts in general).
February 9th, 2010
10:59 am
[...] Last time, I mentioned that the music industry might not actually exist as a separate industry, for the purposes of creating a business model. Sometimes it seems like there is a sort of music industry—one that has as its customer base all the musicians, songwriters, composers, and other creative people. It is akin to the once growing vanity publishing business that made “pay to publish” a terrible phrase (although it came from a noble tradition). And we don’t even have to look as far as “pay to play” to see the demon rear its ugly head. [...]