The 10th Vienna ‘Music Business Research Days’ was held at the University of Music and Performing Arts Vienna, Austria, from September 11 to 13. Music Australia’s Chair Michael Smellie was invited to present a keynote on‘the future of the music business’. In a speech entitled ‘Music industry – 7 deadly sins’ he sought to draw insights from his career, hoping that the music industry would heed Santayana’s warning that “those who cannot learn from history are doomed to repeat it”. The 7 sins that he identified were:
- Technophilia (or a love of technology) where one loses track of one’s distinctive expertise, one’s core competency, which is finding and developing great musicians, writers and performers. He cited examples of great technological initiatives being opposed by some record companies (eg the CD, reinventing Napster), and some bad initiatives pursued vigorously (certain formats and label-sponsored retail platforms);
- Intellectual Narcissism (or the desire to over complicate things) A key business principle that was drummed into him at an early stage of his career, was the KISS principle (Keep It Simple Stupid). For example, artist contracts and elements like ‘packaging deductions’ have ridiculously over-complicated agreements with many dysfunctional consequences. Record companies have often argued among themselves over technicalities while companies such as Apple have tried to pursue consumer simplicity with great rigour, and thus stole the momentum. The best solutions are those easily understood, and easily communicated. In times of ongoing change, complicated strategies almost always fail. A simple strategy well executed always surpasses a complex strategy poorly executed;
- Customer Nonchalance resulting from record companies and publishing companies being closer to intermediaries (retail, wholesale and media) than the end customer. In the long run, the fans and customers should become music’s biggest assets and supports. This leads to the vital topic of data ownership and access and the current interoperability between the various distribution services. More work is clearly needed here;
- Size Addiction has meant the neglect of niches. For many decades the focus has been about achieving scale and clout with gatekeepers. This has led to significant industry consolidation through acquisition for both recording and publishing companies as well as artist management companies. Better analysis of customer data will make it easier to target niches;
- Global Fixation and failing to appreciate the idiosyncrasies of local markets in terms of local tastes and processes. Great international management involves managing outcomes not processes, leaving processes to local managers;
- Business Indifference and not understanding that large music organisations need to marry artistry and creativity with sound commercial acumen and business thinking. Both are critical and you ignore the latter at your peril. The modern contemporary music business is a major industry that requires all the technical skills and professionalism of other large industries. Take care that you don’t let your “passion” undermine your commercial judgement;
- Impatience: Take your time. When launching artists make sure artists are ready, have prepared as well as possible and have the best available support. Even then, it will likely require an immense amount of work, dedication and resilience. Every 4 years the Summer Olympics award about 300 gold medals to athletes competing in the various events. This is about the same number of Platinum albums which the RIAA accredit in a 4 year period. There is often a great public awareness of the effort, talent and sacrifice needed to win an Olympic gold. There is also a public appreciation of how much professional support from coaches, trainers and advisors is required. To succeed in Music needs similar dynamics. There is no easy way.