The results have not been pretty, either. The value of the global music industry has fallen by a third since 2004, a third of what's left delivers lower-margin digital sales, and sales growth overall slowed to 6% in 2010 (according to the IFPI's latest "Digital Music Report"). Nielsen SoundScan reported that 2010 album sales were down almost 13%, and only 13 albums scanned sales of more than a million copies, which is a 20-year record low. The results are marginally better so far this year (a 1% increase in album sales, driven mostly by older titles).
So what could CMOs learn from the music industry? A lot, it turns out. All you have to do is imagine that your brand is a band and you can pretty much teleport into the uncomfortable shoes of your counterparts at any of the major labels. They've dealt with more change over the past few years than you or I could imagine in our worst nightmares. While the parallels are imprecise and sometimes discordant, there are at least five things -- variations on a theme -- that you might want to avoid ... or rip:
Don't disaggregate your branding. Many people trace the implosion of the record business to the moment consumers no longer had to buy entire albums to get the tracks they wanted. Enough has been written about this as a tech or retail issue, but as a branding issue it meant that consumers took control of their music brands, choosing where they wanted to buy (or rip off) their products and defining their ongoing brand relationships by their own proclivities. Consumers put themselves in charge and the labels have yet to figure out what to do about it. Any of this sound familiar to you? Could it be that that purposefully disaggregating your branding into smaller pieces sold in different permutations across more channels isn't necessarily a good thing?
It's hard to monetize free. The music business got hit with a double-whammy on the pricing front, first with peer-to-peer sharing effectively reducing the value proposition of its products to zero, and then a paid model in which it deeply discounts its most popular or sought-after products and then tries to raise them back to "normal" prices when demand subsides. Such a transition that hopes to lead consumers from "free" to "expensive" defies logic and experience, and the music industry continues to suffer from it. Again, this must sound familiar to you, as you consider how much of your consumer relationships are constituted by free content. If you asked the labels, I bet they'd tell you that asking people to pay gets harder over time, not easier.
Don't always bet on hitting home runs. Success in music these days is a bifurcated proposition; you either have one of a rare number of big hits, or your products barely scrape by (it's that way in the movie business, too). New artists tend to sound like old artists because the economics, however broken, support mimicry. Now think of how many marketing campaigns are modeled on other ones. We presume we can deconstruct the most stunning successes and then wonder why the same great ideas don't work as well the second, third or hundredth time around. Maybe an innovative approach would be for marketers to lower their expectations while simultaneously raising their tolerance for risk?
Stop trying to invent things. It used to take years of investment, nurturing and hard work before bands were ready for prime time. No longer. Now, the big labels simply go out and find smaller labels that have already built artists and followings, and either cut partnership deals or buy the businesses and their acts outright. This is primarily a function of financial necessity but doesn't it also make good sense? Imagine if your product-development activities (or all of that overly complicated innovation work you do) were replaced by some talented execs with roving eyes and wallets?
Realize the value of past investments. When the future looks bleak, it makes sense to look to the past for ideas and opportunities, and the music business has made a reasonable business out of doing just that : Back-catalog tunes (remastered, or repackaged in novel ways, like commemorative sets), old bands getting together to tour (albeit sometimes without most of the original members), and old record labels resurfacing, like Geffen. It doesn't always work, but imagine if your marketing strategy wasn't only focused on embracing new values, but instead better mined past attributes or ideas. Old Spice did it brilliantly earlier this year. Why can't your brand?
I think there's much for CMOs in any industry to learn from a real, in-depth analysis of how music business brands have entered the digital age. It would make sense to learn from their mistakes and steal their good ideas. And it would be a helluva lot more interesting than just reviewing each other's work for a change.