Seth Godin: 14 Business Lessons from the Music Industry

Last Updated Jan 8, 2008 1:07 PM EST

14 Lessons from the Music IndustryWhat better industry to learn from than one in a full-fledged struggle to revive its business? With sagging sales and a distribution model in crisis, the music industry of old is scrambling to make a comeback -- or at the very least, stay afloat.

Thus, what better moment to examine the industry's mistakes than now? This week marketing guru Seth Godin takes a hard look at the record business and came up with 14 valuable business lessons. Here's an abbreviated version of the first five:

0. The new thing is never as good as the old thing, at least right now. (Godin starts with zero to underscore the importance of this first lesson.)
Soon, the new thing will be better than the old thing will be. But if you wait until then, it's going to be too late. Feel free to wax nostalgic about the old thing, but don't fool yourself into believing it's going to be here forever. It won't.

1. Past performance is no guarantee of future success. The music business had a spectacular run alongside the baby boomers. Starting with the Beatles and Dylan, they just kept minting money. The co-incidence of expanding purchasing power of teens along with the birth of rock, the invention of the transistor and changing social mores meant a long, long growth curve.

As a result, the music business built huge systems. They created top-heavy organizations, dedicated superstores, a loss-leader touring industry, extraordinarily high profit margins, MTV and more. It was a well-greased system, but the key question: why did it deserve to last forever? It didn't. Yours doesn't either.

2. Copy protection in a digital age is a pipe dream. If the product you make becomes digital, expect that the product you make will be copied.

3. BUT, Interactivity can't be copied. Music is social. Music is current and everchanging. And most of all, music requires musicians. The winners in the music business of tomorrow are individuals and organizations that create communities, connect people, spread ideas and act as the hub of the wheel... indispensable and well-compensated.

4. Permission is the asset of the future. For generations, businesses had no idea who their end users were. No ability to reach through the record store and figure out who was buying that Rolling Stones album. Today, of course, permission is an asset to be earned. The ability (not the right, but the privilege) of delivering anticipated, personal and relevant messages to people who want to get them. For ten years, the music business has been steadfastly avoiding this opportunity.

It's interesting though, because many musicians have NOT been avoiding it. Many musicians have understood that all they need to make a (very good) living is to have 10,000 fans. A life making music for your fans, not finding fans for your music.

The opportunity of digital distribution is this:

When you can distribute something digitally, for free, it will spread (if it's good). If it spreads, you can use it as a vehicle to allow people to come back to you and register, to sign up, to give you permission to interact and to keep them in the loop.Many authors (I'm on that list) have managed to build an entire career around this idea. So have management consultants and yes, insurance salespeople. Not by viewing the spread of digital artifacts as an inconvenient tactic, but as the core of their new businesses.

See the rest of Godin's music lessons here.

(Image of Bob Dylan street art by clickykbd, CC 2.0)