November 9, 2010 Management In The Music Industry
Applying Strategy and Planning to Improve Value by the Music Enterprise
Peter Drucker stated, “Long-range planning is necessary precisely because we cannot forecast[1].” According to this statement, planning is essential to any enterprise so that the right decisions can be made when the environment changes. Music enterprises must be able to strategize and plan in order to create value for its customers. Strategizing and planning allows the enterprise to create its goals in its mission and vision for all levels of the hierarchy to strive for.
For example, Motown Records’ mission statement was, when it was first created, to “unite and bring people together through music[2].” A mission statement, as being part of planning, was created for Motown Records so that all artists, publishers, employees, and presidents of Motown Records would make decisions based on “uniting and bringing people together.” Knowledge of the goals and direction of the enterprise are necessary to know throughout the entire enterprise so that everyone knows what decisions are to be made and which are the right ones[3]. Motown Records brought value to its customers that shared the same ideal in music: the desire to unite people. Planning the mission and vision statement encompasses all decision-making for music enterprises. After knowing the enterprise’s plan, any employee or superior would have to ask, “Does this decision align with our core values and work towards our vision as a music enterprise?” Customers will value an enterprise that is consistent with its plan to create that value for its customers.
Jerry Goolsby stated, “The pathway to success is paved with creating and implementing sound business plans[4].” Music enterprises can improve its value by stating the aim of the organization. Those who work within the organization are likely to do a better job with a sense of direction and goals in mind. Planning also affects the marketing aspects for a music enterprise. The enterprise creates more value by effectively and efficiently targeting a certain market its artists will appeal to. A strategy is essential to be able to identify, distribute the product to, and advertise to the target market. Resources are wasted when enterprises market to the wrong market; therefore, the product becomes less valuable to the customers it would appeal to. Strategizing and planning requires a scan of the business’ environment to maximize value to its customers. For example, music enterprises may ask, “Is this type of music going to sell in this market?” “Is this an appropriate time for the album release?” “Is this an appropriate facet to market the artist with?”
Henry Fayol stated that the “absence of plan entails hesitation, false steps, untimely changes of direction…in business[5].” Without planning or strategizing, a music enterprise is bound to fail and lose value by its customers.
The Focus of Future Research to Improve Management in the Music Industry
Future research should focus on the willingness to change by management. The music industry is constantly changing due to new technologies, audio-devices and formats, music styles, and marketing facets. It is already apparent that the CD is going to vanish (Apple is now distributing software on very small USB drives[6]) and managers of the music industry have to be willing to implement these new changes to keep up with the environment and stay alive as an enterprise.
I also believe that the notion of artists “going pop” is also an implementation of change. “Pop” is the root word of “popular,” and managers realize that there is much profit and marketability in popular music. This is why we see artists who are reluctant to “sell out” are left in obscurity by the mainstream music industry. Perhaps, the reluctance to change is simply a value by management, but there is always a risk when refusing to adapt to the changing music environment. The notion of change is not limited to style of music, but is highly applicable to music marketing and distribution.
Peter Drucker was correct when he said, “We plan because we cannot forecast.” Managers must be ready when the masses take on an entire new mindset for how they listen to, purchase, and tell others about their favorite artists. Managers who are reluctant to adapt to these changes or are afraid to take the risk of adapting will be left behind. Instead of embracing change in the music industry, most managers attack it, or attempt to lobby the government to attack changes like p2p sharing, torrenting, youtube videos, etc[7]. What some music enterprise managers do not understand is that they cannot manage their customers. Customers have an uncontrollable market of gossip and secrets that neither the music industry nor the government can fully control. The music industry has to somehow adapt to what customers are doing and talking about, or risk losing its customers by combating these changes that the masses wish to implement.
In the future, managers should also focus on how music can be used as a marketing tool instead of the main source of revenue since it is becoming cheaper and cheaper to buy music. If popular artists like Radiohead and Trent Reznor are willing to give away their music, they are lowering the standard of value of music for customers. The market will ask, “If this artist gave away his music, why can’t you?” Royalties on digital downloads and physical CDs are no longer sustainable for artists, especially those artists who have too much to recoup. Management will have to change the value of music that aligns with its customers’.
Filters Used to Determine if I am the Right Fit With a Potential Management Client
There are many filters used to determine if I will be the right manager for the right artist. I actually believe the filters are more sequential than just a checklist, as in there are certain filters before signing a management contract that shows a suitable match with his or her manager. The first filter is whether the manager likes the artist’s music or not. The manager’s job is to expose the artist’s music, and, as human beings, we share the music we like with others. I would be more adamant in sharing and exposing the artist’s music if I truly enjoy the music. John Braheny stated that songwriters should never write for genres they detest because it will not create a good product[8]. I believe that a manager’s attitude should be no different towards the genre of their potential client. People work well, if not better, with what they enjoy. Of course, others would argue that it is not the manager’s job to “like” the artist’s music, but it really isn’t anyone’s job to “like” the business they work for, but I think we would prefer to work for a business we enjoy.
The same can be said for the artist’s personality. I would be more reluctant to effectively work for someone I do not like as a person. Of course, I will never find a perfect artist, but, ideally, I would like to work for an artist that I get along with and could possibly be friends with even if I am being paid to. I would say that if my personality works well with the artist, then my work ethics likely will too.
After deciding whether I like the artist’s music and personality, an important filter is whether the artist is already being managed and if I am managing other artists. This is important, not just because of the commission payments, but this filter could highly affect how successful the relationship is. I would have to examine if I have an adequate amount of time and resources for this artist if I am already managing other artists. If the artist already has a manager, then the other manager could sue the artist or me if the artist is breaking an exclusive agreement. The artist will be more reluctant to fire their old manager and hire me if the sunset clause is in place, because the artist will have to pay their old manager for a certain amount of time after the management term and myself as the new manager. If the artist has no manager, and I have the adequate resources and time to manage this artist effectively, we could move on the next step.
The next filter would be if my goals for the artist align with the artist’s goals. George Howard states that a manager and artist should see if their goals align with one another to create a successful, compatible relationship[9]. Throughout the artist’s career, the artist and I will have to state the objectives and reinstate certain goals, but we have to examine our primary goals before any contracts are signed. I believe this is more of a study of what the artist and I value. If the artist’s goal is to maximize profits no matter what, while my goal is to expose his or her music at a sustainable expense, then we may have a conflicting relationship throughout his or her career. Ultimately, this will end in a short management term.
After examining our goals and values, the next filter is what the artist and I have already accomplished and what skills we have. The more experience the artist and I have in the music industry, the easier it will be to accomplish our goals. The artist will want to know if I have the people skills to communicate with venues, press, record labels, agents, and others that the artist will have to maintain contact with. If I do have the people skills, I would have more clout by showing some kind of past accomplishment that showed this skill, such as what venues, press outlets, record labels, and agents I have connections with. I would also want to know how well the artist manages him or herself, such as what connections they have and if they have the people skills to communicate with venues, press, agents, etc. If we both have substantial experience in managing, then the management term will be more like working together than just me working for the artist. We can help one another to further the artist’s career and not have the artist simply waiting to be told what to do.
Lastly, the artist and I will have to discuss the commission percentage and whether it’s on the artist’s gross or net income, the income before (gross) or after (net) the artist’s expenses. I believe that managers should have certain package deals if the artist is not willing to pay a high percentage like 25%. Perhaps, at 10%, I will manage their online presence, 15% is online and booking, 20% is online, booking, and traditional press. The higher the percentage, the more services are rendered. Ultimately, the goal of a manager is to expose the artist’s music to increase sales for his or her commission. An evaluation of how much effort and time the manager is putting in to expose the artist is necessary, because the manager may feel that even 25% of the net income is not sustainable. Before signing a contract, the following filters should be used to see if I am the right fit with a potential management client:
- If I like the artist’s music
- Whether the artist already has a manager
- If I have the adequate resources and time to manage this artist if I am already managing other artists
- What goals do the artist and I have for the artist’s career
- What experience, connections, and accomplishments the artist and I have
- What percentage on what income is the artist willing to pay
Works Cited
[1] Matteson, Michael T., and John M. Ivancevich. Management and Organizational Behavior Classics. 5th ed. Homewood, IL: Irwin, 1993. Print.
[2] Rogers, Georgie. “BBC - 6 Music - Motown Turns 50.” BBC - Homepage. BBC © MMX, 12 Jan. 2009. Web. 30 Oct. 2010. <http://www.bbc.co.uk/6music/news/20090109_motown.shtml>.
[3] Goolsby, Jerry. “Strategy Planning Theory.” Web. 28 Oct. 2010. <Powerpoint Presentation.>.
[4] Goolsby, Jerry. “Strategy Planning Theory.” Web. 28 Oct. 2010. <Powerpoint Presentation.>.
[5] Matteson, Michael T., and John M. Ivancevich. Management and Organizational Behavior Classics. 5th ed. Homewood, IL: Irwin, 1993. Print.
[6] Siegler, MG. “Yep, Apple Killed The CD Today.” TechCrunch. 20 Oct. 2010. Web. 30 Oct. 2010. <http://techcrunch.com/2010/10/20/a-compact-death/>.
[7] Cornwall, Jeff. “The Entrepreneurial Mind: Change in the Music Industry.” Belmont University Blog Server. Belmont University, 5 Oct. 2007. Web. 31 Oct. 2010. <http://forum.belmont.edu/cornwall/archives/007994.html>.
[8] Braheny, John. The Craft and Business of Songwriting: a Practical Guide to Creating and Marketing Artistically and Commercially Successful Songs. Cincinnati, OH: Writer’s Digest, 2007. Print.
[9] Howard, George, and Jonathan Feist. Getting Signed!: an Insider’s Guide to the Record Industry. Boston, MA: Berklee, 2004. Print.
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This is an essay I wrote for my Managing Music Enterprises class at Loyola University. Pretty much different facets of management in the music industry. None Like Joshua © 2010
Management, strategy, value
Reader Comments (5)
This is an intriguing article, and timely given how artists are now having to think so far beyond "just" their music. That job is a part of the manager's duties as well - how to work with an artist to leverage his/her musical talent into something that can be branded and fully molded into a media experience for the betterment of its patrons.
http://makeyoursoulpop.tumblr.com
This article is all the proof needed that the existing music industry is fitted with cement shoes and heading to the bottom. When you see babel like this RUN!
"Henry Fayol stated that the “absence of plan entails hesitation, false steps, untimely changes of direction…in business[5].” Without planning or strategizing, a music enterprise is bound to fail and lose value by its customers."
Simply put the existing industry was born out of a cultural phenomenon, that is the value, the "phenomenon". Overtime, the "phenomenon" was replaced by a brand. At this point there is no chance that the current industry will recreate the phenomenon, it will make every attempt to make the issue an academic exercise complete with footnotes to social science snake oil salesmen.
Examine the product past and present with a few trivial examples:
[past]
1) Innovative music that sounds different - a tractable perception of something new - interesting.
2) Visual arts supporting the music - album art, posters - something you can hold and present.
3) Music propaganda - skateboard stickers, t-shirts a badge of legion to the musical movement or group - loose association.
4) Records as the core product - collectable as a tangible artifacts.
[present]
1) Music is over produced or indy music sounds the same - nothing is new - not interesting.
2) Visual arts replaced with video - lacks anything tangible - you can not hold it.
3) Music propaganda - replaced with artist brands - the movement replace by a corporation - the ultimate sell-out.
4) Downloads the core product - total loss of collectable value - value is marginalized to zero.
There is a total disconnect and lack of understanding with the product when the statements (below) are quoted.
"The enterprise creates more value by effectively and efficiently targeting a certain market its artists will appeal to."
NO - the enterprise creates more value by adding MORE cultural value to the product. Music was much more than a recording, it was a social movement supported by all forms of creative arts. What management should be focused on are the structural drivers of the industry, examine what has been lost in the digital transformation and replace key components that have broken the system. B-school graduates should be familiar with the concept of mean reversion - that is what is happening at present, digital distribution factored all the value out of the product - nothing tangible or collectable and homogenized the sound of music to a drone.
Management should focus on new formats and financially engineering the reconstruction, this is where management fits and add value. Management should not try to create or channel the product, creativity is incubated.
Can this be done? Absolutely, will it require a complete reformat of the product and social support systems, Yes and it will also need to leverage technology.
Will the current managers rise to the challenge? Not a chance.
Great article. Perfect for anybody taking their first steps in this environment.
nice try joshua
1. If I like the artist’s music
My rule is I Have to be able to go see that Artist at least 3 nights in a row. If I can not enjoy the artist for all 3 nights I would have a hard time managing that artist.
2. Whether the artist already has a manager
If they do. I stay away until the artist has fired that manger and shown me proof or that Manger has contacted me about co-managing.
3. If I have the adequate resources and time to manage this artist if I am already managing other artists
4. What goals do the artist and I have for the artist’s career
NO Brainer
5. What experience, connections, and accomplishments the artist and I have
Great questions
6. What percentage on what income is the artist willing to pay
Always important and should be talked about right from the start.