A Cautionary Tale:

Canary In A Coal MineHow the Music Industry

Destroyed

Itself

And How You Can

Avoid

The Same Fate

George Howard

Founder, GHS

Associate Prof., Berklee/Brown

Co Founder, Music Audience Exchange

@gah650

gah650@gmail.com

Any institution built upon a firmament of

unethical behavior, will ultimately crumble.

From its inception to today, the music industry has traded on exploitative

asymmetrical relationships between themselves and those who create and

purchase their products.

This has resulted in “relationships” of necessity and command/control power

dynamics, rather than actual - shared benefit - relationships.

This “original sin” led to practices and byproducts that so handicapped the music

industry that it has essentially collapsed.

Its fate is avoidable, but requires a shift in traditional business thinking.

What the hell just happened?

Ironically…

…the music industry refused to listen to customers

or market signals

An incalculable - literal and figurative - distance between the industry and its customers/suppliers was created, and, thus, dea

Result:

Result:

Vast over adherence to “cash cow” model, even while

“shooting stars” presented themselves…constantly

…just slower than the Amish. (Credit to: Stan Cornyn)

The music Industry adopted new technology…

Attempted to Destroy:

Temporary salvation: Piano Rolls

Attempted to Destroy:

Temporary salvation: Vinyl

Attempted to Destroy:

Temporary salvation: Cassettes

Attempted to Destroy:

Temporary salvation: Mustaches/Brooklyn

Just making sure you’re still with me

Temporary salvation: Coffee

Attempted to Destroy:

Temporary salvation: Compact Disc

Attempted to Destroy:

…it became information. People share information.

When music transformed from analog to digital…

"On the one hand information wants to

be expensive, because it's so

valuable. The right information in the

right place just changes your life.

On the other hand, information wants

to be free, because the cost of getting

it out is getting lower and lower all the

time.

So you have these two fighting

against each other."

—Roger Clarke, Whole Earth Review,

1985

The collapse of the music industry obviously and easily predicted the travails of newspapers, books, film, tv, retail that mo

Its fate, however, is a cautionary/instructive for far more.

Our Models:

Harry Potter’s Mirror

Customer As

Teacher

Architecture of

Participation

Model I:

Harry Potter’s Mirror

All great companies avoid commoditization via product offerings that

make those who use them feel a more realized version of themselves.

This requires a deep understanding of and transparent expression of a

firm’s values. It’s “WHY.”

Model I:

Harry Potter’s Mirror

“We are like X company, with Y competitive advantage no longer works.”

Replace “Y” with “wh(Y),” in order to avoid innovator’s dilemma trap and

embrace whatever technology gets you to your KPI/WHY fastest.

Model II:

Enlightened Customer As Teacher

As customers resonate with the firm’s clearly defined and articulated values (its

Values…its “wh(y),” They build durable bonds of trust as well as Positive

Information Asymmetry.

They have discovered some product/service that makes them feel better about

themselves.

Model II:

Enlightened Customer As Teacher

They will be unable to NOT share this with their friends.

De-tethers you from outmoded “command and control” “marketing,” and shifts

the burden of promotion to customers/users in a distributed fashion.

Results in an increased NPS.

Model III:

Architecture Of Participation

Our heuristic for an architecture of participation is drawn from Cross Fit:

• Social

• Fun

• Competitive

Model III:

Architecture Of Participation

• This approach enables an ongoing dialog (Markets are Conversations)

between firm and stakeholders, in which the firm becomes a dynamic platform

for: learning/teaching

• creating/sharing

• cogitating/iterating

Closer relationship to customers.

Platforms

Platforms

Platforms

Platforms

One Thing In Common

Soundcloud

Sartre?

Why?

Why?

Result

But…

$

Why?

?

?

?

?

?

There is no longer a music business.

There is now a technology business

with subsets.

Music is a subset.

…so is everything else.

From modeling to measuring

Already beginning:

Streaming made last year the music

industry's best since 2009

Already beginning:

MAX, Dubset, et al. just the start

Your job as lawyers/professors is to

remember:

There are two ways of being creative.

One can sing and dance. Or one can

create an environment in which

singers and dancers flourish.

—Warren Bennis

Thank youGeorge Howard

gah650@gmail.com

@gah650