In continuation of the four-part series on why and how to treat your music career like a startup, it’s time to move on to part two: Strategy –my favorite! Research forces you to gather as much information as you possibly can. Information helps you make decisions in strategy. Setting metrics will give your something to aim for. Lastly, planning will give you an idea of where you need to fill gaps, as well as give you possible courses of action. Now the strategy will tell you how you’re going to do it –similar to a policy that you’re going to stick to in order to achieve your goals.
This is the time to be really honest with yourself.
In business, the ideal place to start with setting a strategy is Porter’s Five Competitive Forces. This methodology forces the entrepreneur to look at their endeavor holistically, considering all of the variables impacting the business. Or as Charley McGowan explains it, “Oh, so everything that can f*$% you.” Below are the Five Forces and how they pertain to indie music.
- Competitive Rivalry: competition between you and your direct competitors in a market. In independent music, this would be other musicians (indie and signed.) What’s important here is the capability of your competitors and the intensity of the competition in your market. Due to the vast volume of independent musicians, I’d say competitive rivalry is a strong force in the market.
- Threat of New Entrants: the likelihood of new competitors (more independent musicians.) Although it is easy to become a “musician” due to the proliferation of technology and quick access to the tools needed, the threat of viable new competitors is relatively low. To put it into perspective, just because someone picks up a guitar and starts singing, doesn’t make them a competitor, yet a potential competitor. To become a viable competitor, a new entrant must have the resources needed to compete in the market as it exists today. If a new musician can’t even book a show or get the mindshare of buyers, they’re not a new entrant.
- Power of Suppliers: the organizations, people, or things that facilitate the costs associated with your revenue (for example, in manufacturing, this would be raw materials.) In this industry, there are several types of suppliers –vendors (t-shirt makers, bottle openers, stickers, etc.,) album publishers, recording studios, session musicians, venues, and so-on. Overall, the bargaining power of suppliers is mediocre, as the price pressures on vendors doesn’t only come from the music industry, but also nearly every other industry, and the competition between vendors themselves is strong. The only suppliers which have high bargaining power are venues, as the number of venues in particular region are limited, and amount of popular venues are additionally constrained.
- Power of buyers: these are music fans, or even further, people looking for entertainment. Buyers have very high bargaining power –they don’t have to go to your show, buy your CD, or your shirt. These buyers have so many options on what to purchase for entertainment –not only other shows they can attend or music they can buy. The power of buyers is so strong that musicians are giving their products away for free –or “exposure.”
- Threat of Substitution: substitute products. This goes hand-in-hand with the argument about the power of buyers. There is such a vast array of options for buyers (substitutes,) giving buyers so much power. I’ll admit it, selling to consumers sucks.
Differentiation & Disruption
You must consider all five of these forces in your market in order to set the strategy –the how –for your music career. While it sounds cliché, you need to be different. While you cannot control the threat of new entrants in this industry, the other four Competitive Forces can be influenced. Competing with rivals sounds cut-throat. In the indie music business you must cooperate with your competition. Coopetition is the first step in differentiation. In Portland, coopetition is rampant, which has created a variance in the music you can hear in this city. Once you’ve established a strong regional following, you can buy larger volumes of merchandise, dropping your cost per unit (do not, I repeat, do not buy larger volumes of merchandise to receive discounts if you don’t think you’ll sell them.) Your leverage with venues increases as your fan-base grows. And lastly, buyers (new fans) will be compelled to come to your show through proper promotion tactics, and substitutes aren’t as much of an issue.
Differentiation means doing something different; doing something people do not expect. You need to ruffle some feathers and disrupt.
In closing, setting a strategy is not that difficult. It requires critical thinking, however, you just need to do it. I sat down with a musician at the end of 2015 for four hours to set a 2016 strategy. We filled up a big-ass whiteboard three times during this session and came to a solid strategy. It took some brain-power, dialogue, disagreement, conflict, then agreement, but now we have something to look to when were at a, “what are we doing?” point in the year. I recommend an annual strategy session for every musician and band. Always create a long-term strategy, but also have a strategy going into every year. Remember, the strategy is the how. Write it down.
Questions or thoughts? @YuriyM on Twitter or email@example.com