Break time

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).

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About the Author

Ed Teja

edtejaEd Teja is a musician, composer, and book author who writes, arranges, and performs a variety of music.

8 Responses to “Modeling a nonexistent industry?”

  1. 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

  2. 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).

  3. [...] 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. [...]

  4. I love the idea of exploring our premises and I, too, have a fondness for economics…it filters its way into my thinking and I’ve applied the concepts therein to everything from the environment to dating to arts. First, let me say that I will not concern myself with any indicators of “happiness” or “satisfaction”. I also think that human beings strive for “realizing themselves” (Maslow’s hierarchy of needs) and that this is what drives a lot of artists in the first place. Let’s also introduce the premise that we are “vessels” and that we have a “choice” in what we do with the ideas that occur to us. Some of us hear and listen to the muse more than others, perhaps. Therein lies the problem. How do we all integrate ourselves into a society that values monetary profit?

    Another thing I want to add before continuing is that I don’t think any of us are here to serve anyone else’s needs. I don’t believe in altruism in its purest sense, because if you feel good about doing something for someone, then you have gained something in the course of doing so. So I start with the premise that I am here to serve my needs and, from the time I’m born, I do everything I can to find a way to serve those. If I get a lot of joy from helping others (which I do), I recognize that it still serves me.

    Now, that said, it occurred to me some time ago that branding and brand recognition is everything when it comes to selling anything. It doesn’t matter how well you sing in the eyes of the booking agent…what matters in the microcosm of LA, for example, is your draw. What matters is how well s/he can “sell” your image to the public. So branding is what is important for the performing and/or recording artist. Yet, that is also what is important for an educator, as well as anyone who is interested in media placement and/or scoring for film/tv/theatre. Your brand exists whether or not you sat around in some meeting to create one or not. And that is what gets you work…in fact, your reputation is what gets you work in any arena.

    I suppose the challenge, then, is finding the portfolio of activities that enable you to do what it is you want to do and branding yourself in those arenas without driving yourself crazy. This is because the eye of the beholder wants you to be the expert in whatever it is you do. It is reassuring to the fan somehow to know that the band before them is a cohesive unit, as opposed to some group of random musicians who will appear in other bands the next night. In some fields like retail/hospitality, people will accept that the person before them has other aspirations besides serving them the next cup of coffee. But in most cases the person before you has in mind an image of you that works for them and seeing in you in a multi-faceted way can be challenging. Some people are fascinated and are accepting of the need to manage the portfolio, but many will be confused.

    I call it the portfolio of IGOs (income-generating opportunities) and NGOs (non-income generating activities). Now that I think of it, in today’s world we are each operating a General Mills, if you will. We are the mini-conglomerates. I think I will write more about this if I have time. It seems to me that the supply of people who choose to listen to their muse is always greater than the platforms for us, at least on a large scale, but if we can carve out our place in the economy as a mini-conglomerate and accept that its portfolio of activities are likely to change every so often due to changing winds of economic times, then we will likely break-even or even make a profit at the “household” level. Of course, some people might do really well and achieve a lot more financial success than others with their portfolio of activities. And some people might be able to create a brand as a performing/recording artist and become a “star” because society still needs “stars”. The thing is that stars rise and fall, but sustainability is sexy because it has staying power. I’m still flushing out these thoughts, but I suppose that is a model of some kind for consideration.

  5. I want to add one more thing about demand, which I did not address before. The consumer products industry is predicated on generating demand for the next flavor of deodorant, for example. Do we really need LILAC underarm deodorant???? If P&G says so, than we do. Now I think all musicians believe they have something to offer the world, but the question is: does the world need it? And the answer to that is YES. But are they willing to pay for it? Do they have to? And how do we generate demand for what we are offering in a time when the consumer is more wary of being “told” and wants to choose. Or is that a myth? Are consumers overwhelmed by choice and do they still need a filter? I need to flush out these thoughts some more in addressing the demand-side of the equation.

    Two items I want to suggest to people for reading are

    1. Artists in the Winner-Take-All Economy (part of a larger project) Mark Stern at UPenn
    http://www.sp2.upenn.edu/SIAP/Part%20III.1–Artists%20in%20the%20Winner-Take-All%20Economy.pdf

    2. Karl Paulnack, the Music Department head at Boston Conservatory, gave this speech to incoming freshmen. What I love is how Karl talks about the purpose of music, how it works inside of us . . . and this is something that I think will resonate with most musicians. As with any point of view, there is room for discussion, of course. Enjoy and share…
    http://amandamichellewhite.wordpress.com/2009/02/21/speech-by-karl-paulnack-of-boston-conservatory/

  6. Hi Kavit,

    I would say the best place of focus of your whole article and the most difficult to teach in any ‘life arena’ though the most essential to us all is what you iterated in; forming a clear picture of your ideal and then exploring intutitive/gut reactions.

    Any system, strategy, approach or ‘how to’ is more or less useless and meaningless unless we have done ‘the deep level inner work’ of knowing how to communicate clearly to ourselves with honesty.

    Also, I find that systems and strategies are naturaly born of the inner vision and the choice to follow it, they kind of stream and flow in as a matter of course, as direct insight or via people like yourself with specific key knowledge, I find they are secondary though to first having this inner clarity, as it is only then they beocme useable and actionable.

    That has been my experience so far on the journey…

    Best wishes
    Sean

  7. hear my music ok

  8. Hi kavit,

    is quit interesting going through all your article, i must confess that i enjoy every bit of the write up. My inability to respond to some of your article is due to some unforeseen circumstances beyond my control.

    Thanks 4 now.

    James u

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