While not directly related, fellow readers might also find the memo titled "Dave Goldberg on music"[1] to be an interesting prediction around the future of music as it comes to streaming.
As a bit more background, it was a memo sent to then-CEO of Sony Entertainment Michael Lynton by Dave Goldberg[2] who was most recently known as CEO of SurveyMonkey but had been the Director of Marketing Strategy at Capital Records in the early 90s.
I'm not entirely sure when it was sent but according to my notes, it was originally sent in the form of an email, and was released as part of the Sony Pictures hack from 2014.
Anyway, the gist of the memo recommends that back-catalogue becomes the core of the business, as that's where the most streams occur with the new release business being greatly scaled down with a focus on music that will have longevity.
> Music is becoming a purely digital product. A digital-only recorded music company will be a much more profitable one after one-off restructuring costs.
> Catalog needs to be defined much more broadly to include all music that hasn¹t been created in the last 2 years
> With catalog providing the base profits, new releases need to be cut back dramatically to the point where the new business either breaks even or loses a small amount of money (justified by the long term catalog income stream of those songs)
> This will bias new releases to genres like rock and country that typically have had strong catalog. These also happen to be the genres that don’t have expensive producers so more music can be created for the same A&R dollars
> Artist contracts that have large fixed marketing costs will need to be restructured or sold off as there will no longer be headcount to do the work. New releases will be tested on consumers before added money is spent to ensure that it isn’t wasted.
> Internationally, most local repertoire will probably have to be eliminated. The record company will want to sell off the local repertoire or spin out the local labels and focus on English language repertoire globally, unless there is some country that has managed to be profitable on its local repertoire (i.e.Japan)
Not all of this necessarily came to pass, and some of it sounds a little miserable, but it's an interesting peek at some thinking at the time, at least from a consultant.
As a bit more background, it was a memo sent to then-CEO of Sony Entertainment Michael Lynton by Dave Goldberg[2] who was most recently known as CEO of SurveyMonkey but had been the Director of Marketing Strategy at Capital Records in the early 90s.
I'm not entirely sure when it was sent but according to my notes, it was originally sent in the form of an email, and was released as part of the Sony Pictures hack from 2014.
Anyway, the gist of the memo recommends that back-catalogue becomes the core of the business, as that's where the most streams occur with the new release business being greatly scaled down with a focus on music that will have longevity.
> Music is becoming a purely digital product. A digital-only recorded music company will be a much more profitable one after one-off restructuring costs.
> Catalog needs to be defined much more broadly to include all music that hasn¹t been created in the last 2 years
> With catalog providing the base profits, new releases need to be cut back dramatically to the point where the new business either breaks even or loses a small amount of money (justified by the long term catalog income stream of those songs)
> This will bias new releases to genres like rock and country that typically have had strong catalog. These also happen to be the genres that don’t have expensive producers so more music can be created for the same A&R dollars
> Artist contracts that have large fixed marketing costs will need to be restructured or sold off as there will no longer be headcount to do the work. New releases will be tested on consumers before added money is spent to ensure that it isn’t wasted.
> Internationally, most local repertoire will probably have to be eliminated. The record company will want to sell off the local repertoire or spin out the local labels and focus on English language repertoire globally, unless there is some country that has managed to be profitable on its local repertoire (i.e.Japan)
Not all of this necessarily came to pass, and some of it sounds a little miserable, but it's an interesting peek at some thinking at the time, at least from a consultant.
[1]: https://sriramk.com/memos/goldberg-music.pdf
[2]: https://en.wikipedia.org/wiki/Dave_Goldberg