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Business Truth: A successful business provides a product or service that satisfies a customer need.

The above goes for cars, therapy, food, coffee, accounting, chocolate, but also for concert tickets and recorded music. If customers don’t need or desire your product, you don’t have a viable business model. Ikea fulfills a need for cheap furniture of reasonable quality. Whole Foods fulfills a need for upscale priced organic food. Louis Vuitton fulfills a need for durable, fashionable bags that signal wealth. These companies know who their customers are, what their needs are, and how to satisfy them. An artist can approach their business model, and their ability to pay rent by creating art, in the same way by asking these few basic but important questions:

1. Who are my customers?
2. What are my customer’s needs?
3. Which products or services do I provide to fulfill that need?

Who Are My Customers?

Artists serve two broad categories of customers: individuals and corporations. Individual customers consume music-related products for private purposes and range from dedicated fans buying albums and attending concerts, to accidental consumers that come across your music on the radio or at a bar. There are many different kinds of individual customers, more on that here, and in a future post. Corporate customers purchase or license an artist’s products somewhere in their value chain. This can range from a movie production house, to retail chains with overhead music, to advertising agencies, and more. We’ll focus on individual customers for now, and speak on corporate customers in a future article.

What Are My Customer’s Needs?

At the core, the most basic and powerful need an artist can satisfy for individual customer revolves around the powerful concepts of belonging, esteem and self actualization. Music can help, heal and remind people they are not alone, and belong to a bigger group with shared experiences: the human race. Music can also entertain, lighten up your day and make you feel better about yourself or your situation. This may sound pompous or grandiose, but think about it. Regardless of genre, age, ethnicity, location and any other distinguishing factors between humans, music has always had this function. It can be a Ryan Adams song that helps you feel better about your break up (belonging, esteem), a Lady GaGa concert where you have fun and dance with your friends (belonging), a Public Enemy album that helps you relate to social injustice (self-actualization, education, belonging), or a Dave Matthew Band concert where you miss half the show because you’re having fun tailgating. Whether you write and perform party music, or socially conscious Hip Hop, Be-Bop, or sad singer-songwriter break-up songs, you have the power to touch and connect people, to set and change the mood, and that’s pretty amazing. The better you fulfill these needs, the more successful you will be, and the more people you will touch. Note that success is a self-defined fluid concept. It can mean being John Mayer big, or being able to play your favorite local place weekly to 50 friends.

In this light, being a successful artist is a win-win situation with your customers, and one that removes any stigma associated with making money by creating art. There is no such thing as selling out, just good and bad ways to fulfill your customer’s needs. Every opportunity that presents itself can be analyzed this way. Just ask yourself if an opportunity will strengthen or weaken your relationship with your fans. It will be different for each artist, depending on where you position yourself in the spectrum of transaction-driven vs. relationship-driven artists. More on this in a previous article, “What Kind Of Artist Are You?”.

A transaction-driven group like the Black Eyed Peas can have corporate sponsorships with dozens of companies without compromising their brand or alienating their fans. For their customers it won’t affect the way the Black Eyed Peas satisfy their need for entertainment. For a relationship-driven artist like Dave Matthews the same kind of deal could possibly achieve the opposite, alienating their fans and confusing the bond they’ve established over the years.

Using heavy-handed words like belonging or esteem shouldn’t create the impression that all music purchased or consumed is supposed to be proof of a meaningful relationship between artist and customer, or that each song will make a customer feel better about himself. While belonging and esteem can refer to that, most of the time they refer to meaningful experiences and relationships for the customer and whatever group of people she identifies with, with music providing the social context and glue. It’s not about you, it’s about them. Pop charts are full of songs by one hit wonders and transaction-driven artists alike. For the most part, Ke$ha’s “Tik Tok” doesn’t create a bond between Ke$ha and her listeners. It creates a bond between her customers that have fun dancing to it in their bedroom or covering it for a self-created YouTube video. And that’s what music is about.

(This is the second part in an on-going series of articles written together with McKinsey & Co’s Erik Rutten*. Through regular brainstorms we will examining the music industry starting from an outsider’s perspective as business men and music lovers, and working our way through the different aspects during the next six weeks. *Erik is on sabbatical and the views expressed are his own, not his employer’s.)

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“Today, I asked my mentor – a very successful business man in his 70’s – what his top 3 tips are for success. He smiled and said, “Read something no one else is reading, think something no one else is thinking, and do something no one else is doing.” (via Makes Me Think)

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While the music industry struggles to deal with all the changes in customer behavior it’s important to point out other industries have seen changes of similar or even higher magnitude and have proven to be much more adept to handling and even anticipating these changes. Technology companies are a good example, but not the only one. Companies that attempt to defend the status quo, always end up losing to others that keep up with and/or lead in innovation. General Motors loses to Toyota, Blockbuster loses to Netflix, Altavista loses to Google, Borders loses to Amazon, the LA Times loses to the Huffington Post, and the list goes on.

From the moment music sales started dropping dramatically the music industry has talked about a lot of different issues and related solutions. From illegal file-sharing and piracy, to 360 deals, watermarking cd’s, utilizing social and streaming media, dropping prices, iTunes LP, and the list goes on. While all of these topics are interesting and important, it seems that what is truly at the core of the music business often goes unaddressed. While music is so much more than a standard ‘product’ and not to be compared to a can of beans, the fundamentals and basic truths of the business of music are no different from that of any other kind of business. Many people get caught up in tangental topics, so we’d like to start by bringing it back to the fundamentals first.

Artists Are Entrepreneurs (Now)

Typically, artists don’t think of themselves as entrepreneurs running a small business, but this is an increasingly appropriate view as we move forward and evolve. Artists create and/or deliver content, much like an author, or a software engineer, or an artisan furniture maker. In the early days of the music industry artists could be likened to factory workers, churning out songs in the Brill building or for their major label for low pay and with little influence, benefiting mostly the people in charge. The power was on top and to be a song writer was a job. These days no one is building any factories, and the big corporations formerly in charge are failing left and right. Artists now have the opportunity to embrace the idea that they themselves are responsible now, and there is no boss to tell you what to do. Artist can now be at the center of a team, rather then at the bottom of a corporate ladder. That’s liberating, but also scary. Without an understanding of what is changing in the music industry, and equally important that which isn’t, it’s easy to panic and think the music industry is failing. But it’s not failing. It’s just changing. Artists and forward thinking companies can grow with the changes and become more successful because of it. This article was just an introduction to what we’re going to be talking about in the next few weeks. In the next article, we will take a bird’s eye view of the music business and illustrate how basic business fundamentals can be applied for the benefit of customers and artists.

(This is the first part in an on-going series of articles written together with McKinsey & Co’s Erik Rutten*. Through regular brainstorms we will examining the music industry starting from an outsider’s perspective as business men and music lovers, and working our way through the different aspects during the next six weeks. *Erik is on sabbatical and the views expressed are his own, not his employer’s. )

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Little piece of genius via More New Math, which translates well for pop song writing. Sure Tom Petty’s songs only have three chords and they’re G C and D, but I don’t see that many people using them as effectively with as catchy melodies as Tom.

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Ever since “The Secret” became a popular book from the self-help section I have come across many a musician trying to visualize their way to success to no avail. This book and movie, do the opposite of empowering people. They move responsibility away from the person in question, and promote an external locus of control. Success is nothing more but a combination of very hard work, a little bit of luck, talent, persistence and consistency. No rocket science required, and no secrets either. I would like to share with you two and a half minutes of Dave Chapelle destroying “The Secret”.

Video via Eskay.

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When I first ventured into the music industry I tried to immerse myself in as many facets of the business as possible. One that I explored early on was writing columns and interviews for a few online publications and providing the accompanying photography. My e-mail soon made it’s way onto countless pr blast lists, and I was able to learn a bit about music PR in the process. Should my address have been on all of those lists? Probably not, and that’s an example of music PR gone awry. I was just a lowly writer without editorial power, but publicist seemed to either be unaware of this or they just didn’t care as long as their list grew bigger.

A year and a half after shutting down my Hip Hop blog, I still get dozens of PR e-mails a week. They all claim to “really love my blog” and that they’d “love to build” and have me post about their artist. This is a waste of time for everybody involved. Carpet-bombing without research is the most common PR approach, and it’s also the least effective. Everyone can buy or compile a list of press contacts, but it’s not the data that will bring your acts coverage, it’s the genuine relationship you’ve build over time with a writer.

Have you ever bought anything you learned about through a spam e-mail? My guess is no. Not a very effective way of marketing, is it? Yet this is exactly what you when you send out a blanket impersonal press release to your entire list of contacts. 37Signal’s summarizes it as follows in their book Rework: Press Releases are spam.

What to do instead? Build a relationship over time. Show your genuine interest and respect. Make their job easier. Read their blog regularly. Give before you ask. Don’t attach MP3s (only send links). Don’t pitch to blogs that don’t cover your genre. All of these might seem like common sense, but sense isn’t too common in music pr.

Finally, let me illustrate with an example that in addition to impersonal and uniformed, sometimes PR e-mails can be ineffective in quite a few other ways. This one’s a gem that came in yesterday. (Click on the image to enlarge.)

Related Reading: Music PR (Or Are We Focused On The Wrong Things?) (read)

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The title of this post is a quote from Shawshank Redemption, a great movie based on a short story by Stephen King. Allen Webber recently wrote a short article centered around this quote and focusing on challenges people meet in the work place and the job market. What this quote is really about, is perspective and attitude. Traditionally, the music industry has had a bad attitude towards their customers and technology-driven change, and an historically proven slanted perspective. We should all realize we’re either here to change the status quo, or to defend it. In other words, to get busy living, or to get busy dying. Whenever you’re contemplating a business strategy or a marketing initiative, as yourself the question which side of the spectrum this places you on. Lets end on another quote, this time from a great song, “Friend or foe yo, state your biz”.

Examples of “Get Busy Dying”: Suing customers for millions for illegal downloading, only allowing full album downloads on iTunes, selling albums for $17.99, focusing on a 3-year album cycle,

Examples of “Get Busy Living”: Selling T-shirts that come with a digital download of your album (like we will with Casey Shea and Lacrymosa), performing livestreams over the internet between tours (like Wakey!Wakey! does on Facebook to over 25K viewers weekly), creating an army of volunteers across the country to help promote a tour (like Pearl and the Beard, more on this strategy soon).

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The music business has a long and well documented history of ignoring their customers and their wishes. Examples include the failure to embrace new digital models of distribution, pricing strategies, and even ‘artistic’ choice of genre. Marketing your music and the products associated should be a well thought-out and planned process, and it should start with you answering the following question: “Who is My Customer?”

When you ask this question many a musician, manager or label head the typical answer will be much too general. If your customer is defined as “Everyone that likes music!”, “High School kids!”, “Jazz lovers!” then I wish you good luck trying to devise a succinct and successful marketing strategy to reach those folks and make a profit.

Now take Trader Joe’s, my favorite super market, and their description of their target customer: “An unemployed college professor who drives a very, very used Volvo.” This is specific to the point of caricature, and there probably aren’t very many people out there that fit that exact description, but it provides TJ employees with a very identifiable and vivid picture of their customers. Whether you are someone stocking shelves, an executive, or the dairy buyer for TJ, you know who you’re trying to reach and please. Strategies can be formulated based on this image, products can be chosen, advertising can be designed, etc.

Now try again and tell me: Who is your customer?

Related Reading: Made to Stick: Why Some Ideas Survive and Others Die by Chip & Dan Heath. Well worth reading, and it includes many examples of ideas that stick, including the TJ customer definition.

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A little while back Seth wrote about all the other things he’d rather do than watch TV. I haven’t had a TV in 7 years myself, and aside from The Office and Lost on Hulu, I’d rather spend my time building my company or helping others build theirs, creating or helping others create. Clay Shirky gave a great keynote at the Web 2.0 Expo San Francisco 2008 on “Cognitive Surplus”, or in other words the left-over brain power we are regaining as we ween ourselves off of passive entertainment and move ourselves back into creating for entertainment. The success of Youtube, Flickr, Blogger and many other communities that run on consumer-created content, combined with TV viewership dropping dramatically over the last few years, show us where this new industrial revolution has been going for a while.

“Media that’s targeted at you but doesn’t include you may not be worth sitting still for.”

Now take that, and translate it into the realm of the music business. We are no longer driving on a one way street with our audience sitting by the side waiting for us to stop by and share our art. We are now engaging with our audience on an equal level, and you better make sure you’re driving in the same direction as your audience is going. Fighting piracy as a strategic component? Next exit, Nicetryville, TN. Feeling above addressing fan questions on Facebook? Oh we missed that exit a little while ago right around Dontcareaboutyoueithertown, VA. Suing fans to stop them from using your artwork to create their own? That exit is coming up right after Begratefulton, OH. (Like Jennifer did with Wakey!Wakey!’s song “Twenty-Two”, and we loved it.)

We are moving slowly from a consumption to a creation society once again and artists should be on the forefront of that, stimulating fans to create with them, embracing the new ways in which people can express themselves, and applying this as a consistent part of their strategy in getting the word out. Sell your sheet music, give props to those that create using your art, be inclusive and grateful for this possibility to truly bond with others.

This video is well-worth watching for all the insights and provocative imagery. Highly recommended.

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Those that follow me on twitter have noticed a slew of #SXSW related tweets with insights and lessons learned at the panels and speaking events I’ve been attending. A few of the panels I’ve attended at SxSW have revolved around and managing communities around a band or product. One of the books mentioned has been