It’s official! The economy is on the up. The International Monetary Fund says the UK economy will be the fastest-growing of the G7 this year. Globally, the economy is forecast to grow 3.6% this year and 3.9% in 2015. According to Mahindra Comviva and Ovum Consulting, 2012 saw the digital music market grow around 9% on the previous year and at retail, growth is anticipated to exceed $9 billion internationally this year.
So what does this mean for small to medium enterprise in the music industry?
Is it a return to ‘business as usual’ or has ‘business as usual’ fundamentally changed following the W shaped recession (depression) and disruptive technological change? What might be the challenges we now face? Here are some suggestions:
– We know that music fans have demonstrated a very different buying behaviour. How ingrained is this? How exactly has the downturn affected music consumption moving forward?
– PESTAL (Political, Economical/Environmental, Social and Technological) change seems more rapid than ever, how do we forecast the transient nature and shortening life cycle of music product?
– What does the increase in costs and decrease in resources mean for the financial viability of business models in music old and new?
– Lack of financial assistance is an obstacle for the small to medium music business sector. This was stated by UK Music in a 2010 report “Financing A Private Sector”. Access to funding has improved for small to medium independent music companies since the May 2014 UKTI Music Export Growth Scheme, but is it enough?
It is predicted that the global recovery will be hesitant, but there is still opportunity for growth within these limitations for music industry SMEs. Here are some strategies that can be implemented from the get go:
– Now is the time to ramp up. The more prolific we are the more influential we become. In 2007 Billboard reported that Spain’s small labels hoped to ramp up via joint ventures in the United States. This was mainly with distributors through licensing and label deals thanks to an alliance with the Spanish Government. So, this is the climate where we significantly increase our output levels.
– Go global with any branding. This means entering new markets, one effective way is via joint ventures with other businesses, as exemplified by the business to consumer route in the 2007 Billboard story above. The first NYC trip in the story meant that the foundations for leveraging B2B strength in B2C markets was set.
– However, promotional budgets are best spent on tight niches. As an SME in an already challenging sector, focus on joint ventures and sales rather than mass marketing efforts. Again in the Billboard story above, the SMEs focussed on their niche Latin markets in other territories, as they were clear on their identities. This meant that they could consider other territories such as China.
On a daily level, consider employing the following strategies:
– If you are a solo entrepreneur, act super-fast to build your team. We achieve more when we run onto a pitch with a team, rather than kicking a football around alone. An organisation chart can clarify who we need on our team in order to take our businesses to the next level.
– Form a mastermind group to work on and implement solutions to the group’s common challenges. Mastermind groups offer education brainstorming but most importantly accountability. Additionally, is important to choose peers who have a similar direction and goals to create an outward focus.
– Create a fan-centred music business. Factor in loyalty strategies for all existing fanbases and encourage repeat purchasing and word of mouth. We can achieve this by getting teams focussed in the fan when it comes to making decisions and implementing them.
– Get new and fresh mentors and advisors. The best way to do this is to scour your existing network and ask for introductions. Be prepared however, to bring attention, commitment, hard work and possibly even a budget to the table for great people here.
– There are a few funds being made available. The best way to find out about these is to leverage your network for leads to chase up. This means practicing pitching at every occasion no matter how mundane to get it succinct and ensure that the listener understands what problem we are trying to solve. Try to attend pitching events for the learning alone but essentially the best way to hone a pitch is to let the market shape it by pitching to others ourselves.
Entrepreneurship is seen as important for economic growth, innovation and employment. It is the solution to faster PESTAL changes. High income, high human development countries have prioritised entrepreneurship in response to the recent Depression and to remain competitive with emerging economies. This is because SMEs tend to be more agile and innovative. The space now exists for SMEs in music to refashion the industry so that it greater represents them as an international competitive sector, but only if we act fast.
Leena Sowambur has been working in the music industry for 15 years. She is the founder of Positively Music, a coaching business that helps the music industry create communities of fan customers by providing training in entrepreneurship and digital business.