smehro

Dialog

Lance, here is another article regarding why MBA education must change to focus more on long-term thinking and managing for longer term than just on the short-term financial issues:

Why MBA education must change

 

 

 

Lance, here is some evidence that the changes underway maybe moving in the direction of rewarding longterm performance rather than quarterly:

JPMorganChase new executive compensation to be voted on by shareholders?!

Greg. here is a post in response to your question about bringing back the Glass-Stegal Act:

Bringing back Glass-Stegal may not be the solution

Some thoughts from Sandro:

I was a little bit disillusioned by today’s guest speaker. I was extremely excited to have a strategy discussion about the music industry, as it is a topic that I am very interested in, and have been looking forward to it. Mr. Shum is clearly a great strategic thinker, using all the tools you’ve given us under the right mindset to be able to look at any industry and make recommendations. He lost me, however, in his analysis of the music industry at large.
I think the key flaw in his analysis lies in the nature of music itself. If we consider musicians as artists, I think the majority (this is purely speculative from my experience as a fan of music) of musicians would be interested in a revenue source that would allow them to live their lives and continue to produce their art as they want it.
My response:  I agree with you that musicians above all want to produce their art AS THEY WANT IT.
I think the last four words in that sentence is the very difficulty the music industry currently faces. I would wager to say that most artists know that they could make more money writing music for other projects – movies, games, etc… – but mot won’t because they have little attachment to it.
My response: This is the flaw in Martin’s analysis, I agree.
We blew up the industry to an unsustainable size with mass produced “artists” who were merely products of record labels to whom stylists, producers, and songwriters were attached,
My response: The Record Labels were the ones who gained the most from “mass producing” artists and growing the industry PIE.  The Labels controlled this industry. They captured the biggest share of the music publishing PIE, and as the labels consolidated, their power in the value chain grew.
Now the Record labels have the most to lose as the industry shrinks, and the as the digitization of music shifts the power from the labels to the artists.
The labels are being “disintermediated”; they even more than the artists need to find a new way to add value in the chain. In otherwords they need a new business strategy (new business model).
today’s rising musicians are true artists who are also able to market themselves effectively so that their “art” reaches more and more people.
My response: Exactly, I remember from my son’s listening preferences, that he was discovering bands such as “deathcab for cutie”, which have now become almost mainstream, through social media, and not because the labels were marketing them.

Not only that, but marginal artists who are making music that are not that easy on the ears of most are still finding their audiences, much like your tangible forms of art.
My response: Exactly, the Internet model allows even the marginal artists to find their niche!!
For these reasons, I believe that the music industry will have to follow a model similar to other art forms. In an extreme example, maybe some sort of audio gallery space, or an unexpected audio “installation” (concert), or any other sort of experience that will allow listeners to “discover” your art form through non-traditional radio or television.
My response: This is a very interesting notion of music galleries like art galleries. Are you familiar with NPR’s All Songs Considered? It is a form of music gallery. I have posted a link tto it at the end of my responses.
In a much more simple example (and one that could provide a job for the labels), artists could elicit the help of (for lack of a better word) “marketing agents” whose job is to put the art out in the public spaces with the aim of recruiting your tribe of followers. When a fan base is established, revenues can come from modern channels like downloads and merchandise sales. These marketing agents – a role that could be filled by labels – would profit share with the artists to a certain degree.
My response: You are redefining the labels “value proposition” to artists; and something like this is bound to happen. Much like the travel agents are having to redefine their “value proposition”.
That being said, I think that Mr. Shum’s idea of selling “healing music” packaged as a get well gift is an ingenious idea, and certainly fills a niche in the music market. I am afraid that I might have turned our guest off with some of my comments – and if I did, please extend my deepest apologies. I have nothing but respect for a man who is clearly a successful strategist, and one whose experiences I can learn a lot from.

Sandro, I will begin to post “all things Music” here in response to your very thoughtful comments:

This link is just funny (not strategic):

Correlation between music preference and SAT scores
Here is Steven Colbert interviewing David Byrne about his new album being “self-released”. The interview is funny but also reflective of the changes happening in music publishing:

David Byrne, a musician,being interviewed by Steven Colbert

Here is a link to NPR’s All Songs Considered:

All Songs Considered…a music gallery on the web

This is a good slideshow on what a “marketing agent” for an artist might have to do to build-up the artist as a brand”

Lance, more on RyanAir..this is interesting

Pay to Pee on RyanAir

More on Branding:

More on Learning from mistakes (failures):

Learning from Mistakes

More on learning from mistakes

Samir had asked the question last class whether businesses risk becoming myopic because of their single-minded focus on executing their current strategy. Here are some thoughtful links to address that important issue:

A point of view from the newspaper business

An excellent primer on the marketing concept and its relationship to creating value:

A worthwhile perspective on grades.

Grades are not entitlements

Lance had asked some weeks ago about RyanAir’s business model, which is disruptive. Here is a link that explains the model. It is a long article but worth reading.

The future of business. Free!! New model.

Question: Why is Microsoft opening retail stores? What added-value does retail provide Microsoft? Is this in reaction to Apple’s highly successful Apple stores?

Microsoft to open retail stores

Do we learn more from studying company failures rather than successes?

Example of how Amazon.com learns from its mistakes

How Google learns from its failures

Here is a book that I would recommend you read to put in perspective what can and cannot be learned from failures. This book is written by Barry Moltz, a strategy professor at Northwestern University. It  is worth reading because it gives a balanced answer to the question whether we learn more from failures or success:

Bounce

You had also made a comment that learning what Walmart did with its distribution strategy is not helpful because that is a UNIQUE situation and it cannot be generalized. The answer is that the purpose of analyzing Walmart case is NOT to learn the specifics of its Distribution strategy but to learn the tools of PEST analysis, Industry Analysis, Value Chain and Value Creation processes (and more to come). These tools are generalizable to any industry or company. This is why the focus of the lectures and the assignments is on helping you learn the tools and NOT on coming up with the “right” answers to the business problem in the case.

How does Gucci create value such that it can charge more for a handbag that has a Gucci label over a similar handbag without a Gucci label? How does one build a premium brand?

Here is a start to the answer. We will review this presentation in class as well.

Ben, here is another link that you should print out and study in detail

What is a Brand?

Gaurav Gupta asked if I could show some examples of Value Creating activities in the Financial Services area here is a good write-up worth reading, especially the section on Vanguard’s Value Map:

An excellent perspective on Strategy from Michael Porter

  1. Artists like David Byrne, Radiohead, and even “smaller” artists like Girl Talk can self-release albums because they know that they’ve already got a broad base of fans who will want to hear the music – whether it be for free, or on a CD, or in a concert. What’s interesting to me is how artists, worthwhile ones who are looking to be discovered by their audiences, can gain that exposure.

    Right now, the only way I see to do it is through internet marketing like MySpace music, your own web site, etc. The biggest impact on the way I listen to music has been blogs – usually music review blogs and web sites (like Pichfork – the one that posted the SAT scores chart) that will write up reviews of music that they enjoy and post a complimentary track. What this allows for is for the music reviewer to publish about whatever songs/artists they like best, giving way to a plethora of blogs spanning all the musical genres. This allows (for the people that are willing to look) anyone to keep up with the music that they enjoy when they want to enjoy it (this is also true of music podcasts – the sort of music “gallery” i was thinking about – like KEXP’s Music that matters series of podcasts at http://www.kexp.org)

    These blogs have become my new radio. I’ve found the “stations” I like, and read what they have to say through their rss feed. If I like, I buy.

    So yes, there is more power in the hands of the artists and the labels are getting disintermediated, but I think artists still need a tremendous amount of help to get “found.” After all, we (as their fans), would rather they spend their time making their art.

  2. Sandro, you have identified an Opportunity– a web marketing agency for artists, that can help them “be found”. I will send you links from leading thinkers on the idea of “personal branding”. There is some good thinking going on in the realm of one builds a “personal brand”, the thinking applies to your concept of a marketing agent helping artists get discovered.

    In the meantime take a look at this music search engine (I think it is better than Pandora):

    http://musicovery.com/index3.php?ct=us

  3. Sandro here is Martin Shum’s response to your thoughts. Please also note that he appreciated receiving your thoughts and was not in the least bit offended:

    1. The music industry has, for the longest time, adopted a business structure that looks like an inverted funnel instead of the more traditional pyramid. This means that there are just a few artists at the top and the majority are dead bodies trying to get there. There has not been a “middle class” in the music industry.

    2. With all the disruptive forces acting on the music industry, I believe the structure will change.

    3. I believe musicians won’t have to be signed by a major record label to make a decent living with their talents.

    4. I also believe the “major” labels will look more like one of the “minor” labels the way they are heading. This is because label is not the barrier of entry anymore. Internet makes sure of that.

    5. However, artists are typically not “business and process” oriented. They have lived far too long counting on an army of parasites to help them – lawyer, business manager, agent, producer, tour manager etc. The fragmentation of the music industry and the price per song of the future (and we see it already at 99 cents) cannot justify such a heavy overhead and support such a bloated business infrastructure.

    6. Musicians have to fend for themselves and be their own “general manager”, understand P&L, know how to cut costs, promote themselves, position their creations against competitions, connect with their fan base etc.

    7. I believe the future “middle class” artists are those who have talents and “business skills”.

    8. The bridge needed at this point in the evolution of the future music industry is, I believe, the establishment of “Music Business 101 Academies”.

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