January 28, 2006

I bet you'd look good on the internet

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The Arctic Monkeys, four young lads from Sheffield, released their first CD last Monday and it looks likely to be the fastest-selling CD in years. They also played the Ambassador in Dublin last Tuesday. Next day, I met a girl who had been at the gig.

She said it was a rocking performance and, despite the fact that the CD was only out a day, the crowd knew all the words.

How could this be?

We have all met the odd groupie who might stay up all night learning lyrics, but the whole crowd at the Ambassador?

Surely that is unprecedented? Until, of course, you appreciate that the Arctic Monkeys are no ordinary band: they are turning the traditional music industry business model on its head.

This revolution will have implications for other types of business that are based on intellectual property rights.

But before we talk about business and economics, let’s talk about music. Did you ever want to be in a band? Of course you did. Every self-respecting teenager wants to front a tight four-piece, blasting out three-minute wonders.

Oh, the glory of it all: the gigs, the tours, the groupies, the sex, the drugs and the rock ‘n’ roll. Unfortunately, no one told me that the ‘great’ bassists of the time, from Sid Vicious and Paul Simenon to Bruce Foxton, had devoted time to learning an instrument that made Junior Cert science seem fascinating. Yet after the Rats, everyone in Dun Laoghaire thought Top of the Pops was only months away.

My suburban hopes dissipated after only two garage jams, breaking up ultimately over a packet of Major, a row at someone’s debs and the pressure of honours maths.

The closest we came to Dublin’s rock ‘n’ roll scene was a bloke called Dave Farrell who lived down the road and played lead guitar for Free Booze, who were regulars in the Baggot Inn. For a short while in the early 1980s, Dave was God.

Over the past 20 years, the dream has remained more or less the same. Maybe, for a while, dance music elbowed out the axeman in favour of the DJ, but the buzz of making your own music, making your mark or doing your own thing is almost primeval in teenagers.

This urge leads to the usual fights going on all over Ireland this morning after a difficult Saturday night between ‘square’ parents and their hormonal offspring, whom the parents ‘just don’t understand’.

This scene usually culminates in the ”I didn’t ask to be born” routine, which is followed by hours spent locked in the sanctuary of the bedroom – listening, downloading, texting, chatting, blogging, empathising, taking solace and being taken seriously.

However, for many successful dreamers, making music not only offers a great escape, but also a first brush with the corporate world. This can be soul-destroying because, when the Suit meets the Artist, sparks fly and the Suit normally wins.

The traditional music industry, controlled by the large record labels, is one of the most fascinating and ‘ some might say – disingenuous of all. While it masquerades as hip, the music business is probably one of the most conservative, tightly controlled and tightly regulated businesses.

But all that is changing. The traditional model is one where a promising band gets signed by an A&R man. They get tuppence and the record company owns them.

A carefully choreographed launch is planned where nothing is spontaneous.

The image, sound and attitude are engineered for maximum sales, advertising and merchandising.

The launch of the CD is a marketing blitz of media, TV and billboards. The radio stations are lined up, bought off and the pre-launch single makes all the daily play-lists. The tracks are kept secret, the publicity builds and the CD is launched with the maximum hype.

The key to the traditional music model is exclusive ownership of the copyright by the record company. To get an example of what is at stake, you might remember the hullabaloo about the Edge losing a laptop with some of U2′s uncut songs from Vertigo.

The record company panicked, fearing that, if the new songs got out, they would be downloaded free and no one would pay for the album.

For years, this basic business model has remained the same, that is until the Arctic Monkeys swanned out of Sheffield and made everything available free on the web before they had even signed to a record company.

This has turned the traditional distribution channel of the business upside down. They turned down an opportunity to appear on Top of the Pops and also spurned the lucrative ring-tone market, choosing to stick to the internet.

Over the past year, the band made CDs of their songs and gave them out free after gigs. These were loaded onto specialist websites by fans and then recommended via sites like Myspace or Drowned Insound, which allow users to rank new bands. This is the ultimate ‘word-of-mouth vehicle’ for a new generation of music fans.

The upshot of all this is that, by the time the album, Whatever People Say I Am, That’s What I’m Not, was released, every song had been available free for months.

This explains why the crowd at the Ambassador knew all the lyrics. But most significantly, the fact that every song had been available did nothing but good for the sales of the CD.

In Britain, it sold more in the first day’s sales than other ‘hot’ bands such as Franz Ferdinand, the Kaiser Chiefs and Coldplay sold in their first week.

This enormous commercial success was achieved without any TV publicity. Up to now, it was regarded as an article of faith that to achieve such stellar first week sales, the band had to have huge TV exposure behind them.

For example, the ‘first week sales’ record holders were Hear’Say, a manufactured pop band with Pop Idol-style exposure behind them.

Now, the Arctic Monkeys have blown all these assumptions out of the water. You don’t need TV, Top of the Pops, a record deal, an A&R man or a corporate market machine behind you. You don’t even need the songs to be exclusive to the CD. In fact, the more they are out there in cyberspace, the better the sales.

So what are the lessons for other businesses?

The Arctic Monkeys story is one all branding experts dream of. Here is a band/brand that has caught the imagination of a generation by being authentic, rather than manufactured, free rather than greedy.

They stay close to their fans allowing that greatest of all publicity machines – word of mouth – do its thing. In addition, the amplifying effect of the internet means positive word of mouth is a global, rather than local, phenomenon.

Obviously, the album is good or it would not sell, no matter how ‘authentic’ the band, but the scale and means of the commercial success are instructive.

Two things spring to mind. First, despite the warnings of Naomi Klein and all the No Logo predictions, globalisation has been a boon for attitude.

In a sea of the generic, people value the genuine. People see through the sales pitch: to really make a mark, you have to stand for something.

The second lesson, of course, is that the internet changes everything. Its ability to mutate selling channels via chat rooms, free downloads and the like implies that every business based on copyright or intellectual property rights will have to be on its toes.

The music industry thought that it was safe, having seen off the challenge of Napster, only for the battle front to change, with bands themselves giving away songs they previously charged for.

One thing is sure: before they know it, the Arctic Monkeys will become the subject of business school case studies. In the great corporate battle between the Artist and the Suits, who said the Suits always win?


  1. Tom Farrell

    The music industry will go down in history as another great
    proof point for the Darwinesque cliche ‘it is not the
    strongest who survive, but the most adaptable’. Not only are
    they facing ‘activism’ from their content creators (bands
    etc), they are also facing a similar rejection of status quo
    from the end consumer.

    The entire Napster/Kazaa debacle was essentially about
    consumers giving ‘two fingers’ to the music industy
    distribution system, i.e. if I want one song only, why
    should I have to pay for the entire album? Consumers today
    are more informed, more sophisticated, more networked and
    more demanding than ever. The genius of Apple with regard to
    the iPod is that it understood this consumer ‘activism’
    mindset and thus provides a legal platform for consumers to
    decide for themselves how they want to listen to music. In
    that sense, Apple and the consumer ‘co-create’ value
    together for an experience-led product. This is key because
    as industries and technologies converge, consumers are
    overwhlemed by the proliferation of products (with a myriad
    of features) available to them and so the basis of
    competition migrates from ‘confusing products’ to ‘simple
    experiences’.

    This ability to co-create an experience is what the music
    behemoths just don’t get because they are still rooted in
    the ‘physical’ paradigm (vinyl to CD) and they still believe
    they know what’s best for consumers. The Artists and the
    Consumers believe otherwise – it’s too late for Suits.

    Tom

  2. Christian

    Look at google & see its uber sucess, and then realise its
    also free.

    Look at Linux, see its sucess and how its has scared M$,
    Linux is essentially free also.

    FREE works, works for nature so wht not go with it!

    Open source planet, open source future. DNA is free and
    should not belong to anyone and so on…. private property
    is a temporary myth. This planet is free, but finite.

    Come on David get to the fundamentals, pop-tastic insightful
    crumbs are just for the broadsheets ;)

  3. Paul

    Interesting article, btw Tom are any relation to the
    Farrell mentioned in the post?

    I agree with most of your points about Apple but in reality
    I think the only way they got to co-create value as you say
    and not scare the rec-execs was because they too have a
    proprietary format.

    THe unanswered question here though is why did people who
    dowloaded material for free go out and buy the album? I’m
    just assuming it’s the same group I admit. I guess I’ll
    have to wait until the case studies are written or will
    anyone hazard a guess?

  4. [...] the week Facebook announces a floatation archives from 2006 on the Arctic Monkeys and the impact of the internet on the music industry and from ten years ago, warning against [...]

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