Why the music business has to change

Originally posted as A Different Hat, Dec 18 2009, 01:15 PM

Early in my career, a rock band asked me to be their manager. I listened to their demo and was impressed but, for various reasons, I was more than a little underwhelmed by the music business at the time.

And I had one big doubt in my mind. They didn’t want to play live. They just wanted to be a studio band. As their potential manager, I knew that this would be a dangerous way forward. Actually, I thought it would restrict their potential to make money, which I wanted them to do (so I could take a cut for me too), but this didn’t seem to matter to the band. They just wanted to sit in a studio, get stoned and make great music.

Luckily, I knew the Managing Director of Island Records. He agreed to meet for a beer one lunchtime. We did that kind of thing in those days.

He told me something very interesting and I have never forgotten it. He said the Island Records philsophy was very simple.

If a band was big in Dublin and if, every week, more and more fans turned up to see them, Island would encourage the band to go and play in Belfast.

If, then, more and more fans turned up to see them in Belfast, they would encourage and, by this time, pay for them to play in Cardiff – and then Leicester, then Manchester, then London and then the world.

Of course, he was talking about U2. In fact, at the time of our beer (or three), he told me Island Records were out of pocket to U2 to the tune of nearly a million pounds – and those were the days when a million quid was worth a flipping lot more than an MP’s house.

But Island knew four things;

1. They knew that wherever U2 played, they would build an audience.

2. They knew that if U2’s music was popular in one country, it would be popular in the next country.

3. They knew that U2 were young and hungry and just wanted to play live music to live people – every night if possible. Gigs were their passion.

4. And the last thing Island knew was that if, wherever they went, U2 could pack out pubs and clubs and stadiums, then Island could sell a lot of records for U2 (and take a cut for them too).

And so I went back to my mates and told them that my career as manager of a rock band was over before it had started. And the band never made it either. No gig-time, no big-time (sorry).

But I have never forgotten this very important lesson. I guess you could call it ‘bottom up’ rather than ‘top down’ marketing.

However, in this digital age, is this lesson relevant any more?

Certainly, the music market has been turned upside down. Now, bands give away their ‘records’ for free online. Then, when the music has become popular, more fans will go and see them live – and, proportionately, pay much more to do so. Plus, of course, there is that highly-marked-up stuff called merchandising.

And, actually, the fans get a better deal this way. Because they have had access to the music for free, they know all the songs the bands play live.

In the old days, in order to hear the tracks you did want to hear, you had to endure half a gig of music from the band’s new album which, because you had not been given the chance to get to like it, made you feel a bit ripped off – but it was the only way the band could get their new music ‘out there’.

So, way back then, the band played all the gigs they could by way of launching their new music and made money from selling ‘records’. Now, they give you the new music for nothing and make money from the gigs – which tend to be staged smarter, more expensive, ‘named’ venues with more expensive, drinks, food and T-shirts. U2 @ O2 (sorry again).

However, every rule has exceptions.

As we have seen over the last few weeks, the massive TV exposure created by the The X Factor has created awareness very quickly for a small amount of people – this way, Cowell will coin it in even more when he starts selling these people’s records before they start playing live. The sheer volume of the OFFLINE exposure has paid massive dividends.

But in Susan Boyle’s case it was the explosion of one simple video clip of her first TV appearance ONLINE that created her worldwide following.

So where does this leave us in the real world?

Since my Island Records U2 lesson, I have always challenged clients and agencies (both creative and media) not to think:

“what is the best way of spending the budget we have been given?”

but:

“if our budget was a thousand pounds rather than, say a million pounds, what would we do and can we build a more effective campaign from the bottom up rather than from our budget down?”.

I am certain that however many media channels we can access, however great the online explosion and however much data we can access and track, this is a factor worth considering more than ever.

About Hugh Salmon

Business leader. Adman. Writer.
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