Hypercompetition, Scarcity, and the Economics of Music

I saw this last week and decided to pull together a blog post on several topics I've been thinking about:

About 1 million design students in China, compared to about 40,000 in the U.S. Implication: your competition for jobs is about to expand exponentially. Welcome to the flat world. ...

The supply is currently outstripping demand, so compensation for things like logo design is going to be low. "Crowdsourcing & Disruption Event at Pratt: Realities & Denial," eyecube, 3/11/10.

And also this:

There are too many films out there, there are too many filmmakers. "SxSW: Nobody Wants to Watch Your Film: Realities of Online Film Distribution," Magnet Media, 3/14/10.

Because of the Internet and global competition, we're seeing declining income in a number of creative fields (e.g., design, writing, music, video). People are competing for these jobs even when there is little or no payment.

RU Sirius, former editor of Mondo 2000 summed up the problem at a recent Net 2.0 conference in Amsterdam: “Get people to work for free.” That has essentially become the motto of the post-scarcity economy. "NET 2.0: Post-Scarcity Economics and the problem with Google," Medialternatives, 2/2/08.

One line of thinking is that if you give away your digital content, you'll gain exposure, build an audience, and then sell "scarce" goods and services. Here are two posts on the subject:

The Technium: Better Than Free

The Grand Unified Theory On The Economics Of Free

While I am not going to argue the rightness or wrongness of "free" (it's already a reality, so I don't think there is much to be gained by exploring the concept here), I am skeptical that there are a lot scarcities to sell. At least not in the areas related to creative content and to human labor. Pretty much anything you offer as "scarce" in these areas can and will be duplicated. Once people see there is money to be made, they will begin offering their own versions until the price is driven down. This is what is now commonly referred to as hypercompetition.

You may think your business offers rare and valuable goods and services. But the chances are that, somewhere, a recent entrant or potential competitor is preparing to do something similar, for a lower price. As the author says: "Everything becomes a commodity eventually." "A more virulent form of hypercompetition," FT.com, 12/16/09.

Here's a definition:

Hypercompetition:
A situation in which there is a lot of very strong competition between companies, markets are changing very quickly, and it is easy to enter a new market, so that it is not possible for one company to keep a competitive advantage for a long time.

And two more explorations on the subject:

From our financial models, such as using net present value analysis to value projects, to our investment models, which presume more or less predictable and long life-spans for given business activities, we have built a lot of operating frameworks on the idea that our lines of business will be around for a while. And not only around, but profitable.

All this began to change in the early 1990's, when a number of scholars, such as my colleague Ian MacMillan and his co-author Rich D'Aveni, started talking about a phenomenon they called "Hypercompetition." In hyper-competitive environments, to paraphrase Hobbes, the life of a competitive advantage is nasty, brutish and short. In other words, advantages don't last for very long before competitive entry, imitation and matching erode their edge, or customers move on, or the environment changes in such a way that the advantage becomes irrelevant. "Competitive Advantage Is Fleeting (And It's Okay to Admit It)," Harvard Business Review, June 2009.

"Welcome to Hypercompetition—Competitive Advantage at its Fastest"

Barriers of entry have kept some competitors out, but technology is reducing some of those. For example:

The tools of factory production, from electronics assembly to 3-D printing, are now available to individuals, in batches as small as a single unit. Anybody with an idea and a little expertise can set assembly lines in China into motion with nothing more than some keystrokes on their laptop. A few days later, a prototype will be at their door, and once it all checks out, they can push a few more buttons and be in full production, making hundreds, thousands, or more. They can become a virtual micro-factory, able to design and sell goods without any infrastructure or even inventory; products can be assembled and drop-shipped by contractors who serve hundreds of such customers simultaneously. "In the Next Industrial Revolution, Atoms Are the New Bits," Wired, January 2010.

The revolution that is brewing now will get us much closer to another seemingly impossible Star Trek technology: the Replicator. You won't be able (for some time) to press a button and get a whole meal synthesized on the fly, but we are at the stage where a short time after pressing the button you can have a wide variety of objects appear magically. These range from tiny, fully functional gears to large, colorful pieces of art and cover materials as broad as glass, ceramics, metal and plastic. Yes, glass, ceramics and metal! "Communicator: Done. Replicator: Next. The Future of Making Stuff," usv.com, 3/22/10.

The music industry used to have significant barriers of entry, but now that everyone can cheaply record and distribute music, the flood gates have opened. There are still some barriers (e.g., getting on broadcast radio), but artists are being told there are many opportunities for them these days. Sure, they may have to give away their recorded music to get some attention, but to make money they can offer fans goods and services that aren't easily duplicated.

However, I'm saying that just about everything an artist or band can offer can be duplicated:

Develop some interesting merchandise, and it will be copied.

Representatives for the jam-band Phish are due in federal court this afternoon to argue that it should be allowed to stop bootleggers from selling T-shirts, jackets, bumper stickers and other merchandise bearing its trademarked name during its upcoming reunion tour. ...

The issue isn't necessarily about money, the lawsuit says. The band says the unauthorized merchandise sales "threaten" the band's reputation because it relinquishes control over the quality and appearance of the merchandise, according to the suit. "Phish in court this afternoon to block bootleg merchandise," The Virginian-Pilot, 3/5/09.

Create a great live act, and that can be copied as well.

... the sheer number and variety of tribute bands has exploded, branching out to modern-era acts such as Pearl Jam, the Dave Matthews Band, and even the Arctic Monkeys. "Tribute bands are music to fans’ ears, wallets," The Boston Globe, 3/6/10.

Even relationships aren't perceived as scarce. While it's nice to think that artists/bands will hang on to their fans for life, the reality is we're a society where people too often change friends, even spouses, when they see someone better. Toss in commitment phobia and you have a situation where relationships aren't a sure thing.

Given all of the above, I question the usefulness in talking about scarcities as a music business strategy. In addition, much of what we buy has little to do with scarcity anyway. Sometimes it just comes down to being in the right place at the right time. For example, if we want a cup of coffee, and we see coffee vendors on all four sides of the street, the reason we pick one over the other isn't a scarcity issue. Similarly, if every girl on our block is selling Girl Scout cookies, we may end up buying from whomever comes to our door first. Or maybe we'll buy a box from each one of them.

Buying behavior is much more complicated than saying people will pay a premium for scarcity. Here are a few resources that outline the many factors which determine why we buy what we buy:

Factors Which Influence Consumer Choice. If you want the PowerPoint version, go here.

Buyer Behaviour: Stimulus-Response Model.

The Black Box Model of Consumer Behavior.

So I think talking about "selling scarcity" can be the wrong strategy. As I have already mentioned, hypercompetition suggests that as soon as you have an idea, someone else will copy it and drive down the price. For musicians, that means being on an endless treadmill trying to find scarcities to sell. As soon as you come up with something fans will pay for, many other bands and artists will try it too. There will be a glut.

You may make money in music, but I doubt that offering scarce goods and services will be the key. For virtually every option that an artist/band offers, there already is or will be someone else offering something similar. And it won't take much effort for fans and potential fans to find it. All anyone has to say is, "I want ... " and the marketplace will provide it, often in multiple ways. Think of the various "saleables" that artists/bands currently offer (e.g., entertainment, merchandise, community, engagement, celebrity access) and there are equivalents both within and outside of music.

We're running out of scarcity. ...

It seems as though once a category becomes successful, the headlong rush to knock it off is stronger (and quicker) than it ever was before. ...

While there are almost half a million lawyers practicing in the United States today, there are (gasp!) more than 125,000 in school right now. ...

The same thing is true for doctors, Web sites, T-shirt shops, sushi restaurants, thumbtack manufacturers, and brands of blank CD-ROM disks. ...

If it's remotely digital (like music), then it's easy to mimic. And if it's easy to mimic, someone wins if they can knock off the original--the sooner the better. When someone starts to sell exactly what you sell but for half the price, how long does your good-service, first-mover, nice-person advantage last? "The Scarcity Shortage," Seth Godin's Blog, 8/27/07.

And even the fallback argument, that talent is scarce and people will pay for access to it, doesn't really hold water because making money in music and having the most talent do not necessarily go together.

SUCCESS = SOME TALENT + LUCK
GREAT SUCCESS = SOME TALENT + A LOT OF LUCK
Nobel prize-winning economist Daniel Kahneman quoted in "FORMULAE FOR THE 21ST CENTURY," Edge.org, 10/13/07.

Godin acknowledges there might be a few scarcities, but even those may not confer a lasting advantage.

So what's scarce now? Respect. Honesty. Good judgment. Long-term relationships that lead to trust. None of these things guarantee loyalty in the face of cut-rate competition, though.

Some people are even suggesting that we're surrounded by so much abundance that now we want less. J. Walker Smith, president of Yankelovich Inc., lays it out in an article, and then Mike Heronime, Partner/Strategic Services Director, Numantra, expands upon the idea in a presentation.

Enough of Too Much

Marketing to Consumers in a Post-Abundance Economy

However, these models tend to benefit people and companies that provide filters rather than artists trying to sell their music and music-related products. It would be a bit like having a musician say, "Pay me to go away."

So let's jump ahead and envision a world where there's more stuff than any of us can consume. Imagine a scenario where people are making a ton of music and art, but there are few economic transactions. So how do artists (or anyone for that matter) make a living in the post-scarcity society?

In the post-scarcity world, technological advances will facilitate decreasing costs until conceivably almost everything is “free” to the consumer. Scarcity will no longer exist in this world, and, without scarcity, the concept of charging a price to consumers as a means of generating revenue will be unworkable. The post-scarcity world will put tremendous pressure on current business models, potentially rendering them irrelevant and obsolete in the future. If traditional businesses do not adapt to this emerging “free” world, many of the strong, traditional organizations of the early twenty-first century will cease to exist over the next 50 years. "The Post-Scarcity World of 2050-2075"

If products are no longer scarce, does this mean that the only jobs left will be service positions? Are there enough service positions for everyone? Or do people do the services that they find fulfilling, leaving others to lounge around and/or be non-productively creative?

I'm not a regular Burning Man attendee -- the schedule rarely works out -- but I have gone. My first time wandering the playa, visiting the various camps offering gifts of art, services and/or more physical forms of entertainment, I was struck with a realization: this is one model of what a post-nanotech world might look like. Assume your material needs for food, water, shelter and toys were met, and that you no longer needed to work; what might result is a world where creativity, mutuality, and the gift economy ruled... or a world where sex, drugs and sleeping until 2pm ruled. Or, as with Burning Man, both. "Abundance, Scarcity and Beta-Testing Tomorrow," Open the Future, 9/12/06.

How are we to survive as producers and creators in an age, in which value is no longer determined by scarcity, but rather the accumulation of bits and bytes, the 1s and Os that describe information?

... We figure out a system of revenue sharing, in which the exchange of information is granted value. ...

One day we will awake to find the proverbial Google cheque in the mail. It will be a dividend in which all the clicks on the internet have been divided by the total population of the world and squared with the amount of money earned by the earth’s service providers. The legend will say: You are user # 51 298 123 187 here is you ten-cents (US$) for the 8kb of data we actually siphoned off your site. We know its yours, because the IP number says it’s yours.

The result, I predict, will be a practical and infinitely rewarding utopia in which everybody would have a guaranteed income, courtesy of Google Corporation. This is the kind of error, which could make life worth living. "NET 2.0: Post-Scarcity Economics and the problem with Google," Medialternatives, 2/2/08.

The above scenarios, where EVERYTHING is abundant, are still in the future. But the world where music (and everything associated with it) is abundant is already headed our way. The oft-proposed solutions, based on some sort of scarcity, are going to be hard to sustain. So I suggest we look beyond that.

Suzanne Lainson
@slainson on Twitter

UPDATE 4/4/10
This article says that there are now so many photos online available for licensing that the price paid per photo has gone down significantly.
For Photographers, the Image of a Shrinking Path

UPDATE 7/14/10
This article talks about how museums sometimes pay a great deal of money for something that turns out to be fake. The value isn't in the object itself, but in the perceived artist. Therefore, if you can produce a copy and convince someone it is real, they may pay you the same amount as if it is real.
Testing Art for Authenticity at London’s National Gallery

UPDATE 10/17/10
I mentioned in the post that as a society we will even replace personal relationships if someone better comes along. Here's a recent article on the same subject.

[Writes sociologist Eva Illouz in Cold Intimacies,] "Romantic relations are not only organized within the market, but have themselves become commodities produced on an assembly line, to be consumed fast, efficiently, cheaply, and in great abundance.” In other words, as dating (or ersatz love) has migrated to the internet, it has undergone the same changes as everything else that has moved online: it has been remade by the ethic of convenience into something more solipsistic and disposable. "Love Worth Fighting For," The New Inquiry, 9/30/10.

Five Degrees of Separation in Music Income

After reading too many posts by non-musicians about how musicians should give their recorded music away for free and then make their money selling something else, I decided to create a "degrees of separation" chart. If you create music and also have an income stream from something, you are likely to fall somewhere along this continuum.

At one end, you make music and profit directly from it. And at the other end, you make music and don't make any money from it. Both of those options, and everything that falls in-between, are acceptable.

If you look at your two goals (to make music and to make enough money to pay your bills), you can combine them into a variety of different ways. Ask yourself (1) what allows you the most time to make the music you want to make and (2) what allows you to make the most money. What mix of skills can you bring to your career planning which will provide you the optimum level of creative activity and income?

And if you have a spouse and kids, you've also got to factor in those obligations. Maybe you would love to travel the country to expand your fan base, but if you aren't making enough money to take your family along, you may find the sacrifice is too great. So between music, income, and personal goals, you've got to combine them in some mix that works best for you. More than likely, you'll compromise somewhere, but that's what this blog post is about. It's okay to compromise. Most people do.

Here's my chart:

No degree of separation: Sell your music.
This includes selling your recorded music, performing live, working as a studio musician, and so on. You are being paid directly as a musician.

One degree of separation: Sell stuff related to your music.
A lot of people talk about this as a way to make a living in today's music environment. The idea is that your music will make you a brand. Then you'll use that brand to sell goods and services around your music. If you are popular enough and good enough at marketing, this might work for you.

Here are two examples:

Jimmy Buffett’s Business Empire

Sammy Hagar's Tequila Dreams

Two degrees of separation: Use your existing music to sell other people's stuff.
Using your music for marketing doesn't have to be limited to items you're selling directly to fans. After all, a lot of musicians don't want to bother with developing a line of products to sell. An alternative can be letting your music sell another company's product. Often what happens is that you have a song already out, the company likes it, and you make a deal. But you could also approach a company and work out a partnership where you provide the music and they provide the goods and services to sell.

This level of music income covers everything from licensing your music to having corporate sponsors. But in each case, you've already written the music for your own use and then you use it to market someone else's goods and services.

Some examples:

Olympics GM Commerical with Brandi Carlile

"Bacardi approached us and, we found out later, they had tried so many songs for that commerical. A slew of tons, and songs, and knew 'Daylight' was the one which stood out and worked more than any others." "Interview: Matt and Kim," Alter The Press! 2/6/09.

More stories of bands whose songs have been used in commercials: Selling Out to Survive.

Three degrees of separation: Write music specifically to sell other people's stuff.
While people have gotten used to artists having their music licensed for ads, it's still not as common for artists to write music specifically for commercials. Of course, there have always been people who do this for a living (one of the more famous musicians who was also a jingle writer was Barry Manilow) but it's not nearly as common as just having a pre-written song in a commercial.

Two examples:

Robert Schneider, singer/songwriter for The Apples in Stereo, also does commercial work-for-hire.

For Schneider, who's worked both sides of the fence, he relishes the opportunity to release his inner Tin Pan Alley songsmith and write on demand. "It's like, 'Oh, now I have to write a song about having fun in a new pair of shoes!'" he laughs. "To me, that's a legitimate song topic. Fun in the sun? I'd write a song about that anyway.""Songs that sell," 'boards, 6/01/08.

Recently the band Franz Ferdinard was commissioned to write a song for an elaborate promotional campaign by Dior.

Four degrees of separation: Play music. Use your visibility as a musician as a way to promote your real profession.
Now we are into the grey areas of new music business models. Some of the examples being used to illustrate how musicians can make a living are stretching the connection between music and income rather thin. I mentioned some of them here. Musicians are auctioning off their possessions, selling lunch dates, and so on.

Basically the concept is to use music as a way to generate attention and relationships, but then sell non-music goods and services to fans. Given that concept, why stop at selling your time as a lunch date or selling stuff out of your closet? A lot of goods and services are fair game. If you have skills as a lawyer, or a plumber, or a caterer, you can use your music as your positioning and then sell services and items that people want to purchase anyway. Instead of just being a singer, or just being a plumber, you become the singing plumber. Plumbing, after all, is something people need more than having lunch with you or getting an extra t-shirt. This way you are selling something of real value, and making it more distinctive because it is coming from you, the popular musician.

Examples:

A musical doctor.

Carl Ellenberger, who has managed to combine a successful medical career (as a neurologist) with enough musical skill to have been principal flutist in several orchestras, beginning when he was preparing for medical school. As a student of Joseph Mariano at Eastman School of Music, Ellenberger never thought of giving up flute for medicine or vice versa. Medicine, he says, allowed him to avoid teaching music to “indifferent students” (among other things musicians do to pay the bills). And music helped him survive the stress of medical school.

In addition, he has told me, “As a tenderfoot doctor at the bottom of the medical hierarchy, when the vast universe of medicine seemed overwhelming, regular calls for my services as a professional musician did wonders for my self-confidence.” "Musicians with two careers: Pro or con?" Broad Street Review, 12/22/09.

A musical priest. "Baton and Sacrament, Tools of Dual Career"

Blair Tindall, who interviewed a number of dual career musicians, points out, for example, that "mathematics and proportion learned through musical form may plug directly into another field, such as architecture or computing. Other musicians find more abstract uses for their musical training, citing the competitive nature of performing, the discipline of practicing and flexibility learned from irregular scheduling as among their professional assets."

"Counseling is much like playing a symphony," says Rae Ann Goldberg, a Bay Area violinist who is also a certified marriage and family therapist in Oakland's Early Childhood Mental Health Program. "There's a rhythm. There are silences. Intensity and release."

Goldberg completed her master's degree at the California Institute of Integral Studies after her orchestra, the Sacramento Symphony, folded in 1996. With a full schedule and increased income, she now cherry-picks only the gigs she really wants instead of accepting everything in order to survive. "Musicians add second careers to their repertoires," Los Angeles Times, 1/11/09.

Five degrees of separation: Play music. Don't mix it with any money-earning activity. Keep your hobby and your income-generating activities totally separate.
This is what many "amateur" musicians do. They don't play music for income. Just for fun. And there's a lot to be said for this approach. If you don't play music for income, you don't make decisions about music based on money. Which also means, you may be more realistic about your day job, too, if that's your sole means of financial support.

The reason I want this discussion out in the open is to get us past the idea that today's musician needs to concentrate on fan purchases for financial support. It's certainly one way to survive as a musician, but not the only way. If you can find a non-music day job that pays well, it may be far more time and cost-effective to do that than to jump through hoops looking for music-related projects you can do. Don't assume that being a musician means everything you do for money somehow has to point back to your music.

To illustrate where I am coming from when talking about the "new music business model," let me point you to some comments I made on this MediaFuturist blog post, "Content 2.0: New Ways to Monetize," which was looking at ways to make money if you are giving away your content (which, for musicians, is usually recorded music).

I have several thoughts in regards to music:

1. Labels are in the content business because they already own content. But for individual musicians, it isn't really about the content business anymore.

2. Musicians are in a relationship or service business these days. While they can sell merchandise, all the emphasis on social media plays up their relationships with fans. However, lots of other people (the vast majority of them non-musicians) are also in the relationship business and can deliver many of the same services (e.g., community).

3. Music is a powerful force and the people who make it have something to offer. But as we pull away from selling the music directly, that means other companies can grab on to that music and link it to what they are selling. Unless there is some special reason for the fans to connect directly with the music creators, then they can have access to exactly the music they want and exactly the "reasons to buy" that they want, but not necessarily coming from the same sources.

In essence, what I am trying to say is this:

Just as it is possible to couple your music with non-music goods and services to generate income, it is also to possible to decouple your music from non-music sources of income.

And this means that while you can bundle your music with t-shirts or online fan communities, so, too, can non-musicians bundle your music with their t-shirts and communities. (Even if they don't have an agreement with you, there are multiple ways to tie your music to their stuff, which most musicians like anyway as a way to get extra exposure.)

In other words, there's no rule that says a musician's music is going to automatically be linked with the musician's source of income. They can, and often are, two entirely different worlds. And sometimes it makes financial sense to approach it this way. Don't get so caught up in what you can do to make money from your music that you fail to see what you can do to make money from any source. Don't let people convince you that if you aren't making your living from your music, you aren't a REAL musician. Do what you have to do to survive.

@slainson on Twitter

UPDATE, 2/17/10
I wanted to move one of my comments from the comments section into the blog post itself to further explain my reason for writing "Five Degrees of Separation."

Some of what is being called Music 2.0 isn't really about music. When Amanda Palmer auctions off her personal possessions, it isn't any more about music than having a day job selling stuff on eBay. True, music has made Palmer a celebrity, but what she is doing to generate income can be done by anyone, in any profession, who has a degree of fame.

So I'm trying to explain that in situations like this we aren't talking about music, we are talking about marketing and celebrity. Getting a spot on reality TV is probably a faster route to celebrity than doing music. That's the reason for the "degrees of separation." At each stage you get further and further from earning your living directly from music. So at some point it makes sense to accept that the money isn't coming from music and quit trying to pretend that it is.

UPDATE, 3/9/10
While owning a restaurant might not necessarily be a more profitable side business than music, here are some people who are doing that.
Ten Musician-Owned Restaurants

The Mariah Carey Ad Controversy

Detouring momentarily from my series on "selling stuff," I wanted to put down a few thoughts on the idea of including a mini-magazine, complete with ads, in CD packages and attached to digital albums.

The first deal, created for the Mariah Carey release Memoirs of an Imperfect Angel on Sept. 15, is a 34-page co-production with Elle magazine that includes lifestyle ads from Elizabeth Arden, Angel Champagne, Carmen Steffens, Le Metier de Beaute and the Bahamas Board of Tourism. Providing the experiment goes well, the label is eyeing bigger brand deals for booklets of CDs by Rihanna, Bon Jovi, Kanye West and other artists. "The Monetization of Mimi: Mariah CD to Have Ads," Brandweek, 8/1/09

The reaction has been very negative in most circles. Typical comments: Greedy labels. Crossing the line between art and music. Foisting ads on a public that doesn't want them and is already paying for the music.

Being the marketing person that I am, and a strong believer in sponsorship support of sports, music, art, and non-profits, I don't have a problem with the concept. But I see a lot of problems with how it has been presented in the media and, as a consequence, how it is being perceived among music fans and critics.

I'll point to this as the primary offending comment:

“The idea was really simple thinking: ‘We sell millions of records, so you should advertise with us,’” said Antonio “L.A.” Reid, chairman, Island Def Jam Music Group, a unit of Universal Music Group. “My artists have substantial circulation—when you sell 2 million, 5 million, 8 million, that’s a lot of eyeballs. Most magazines aren’t as successful as those records.”

There is nothing being said about benefits for fans. How does this promotional package bring value to them? If it is being done well, it should be offering something to them. Discounts? Limited edition offerings? Unique content?

This is as close to fan value as it gets:

The mini magazine contains Mariah-centric editorial (“VIP Access to Her Sexy Love Life,” “Amazing Closet,” “Recording Rituals”) and lifestyle advertising along with lyrics and other CD booklet elements. Elle contributed the editorial and designed the layout.

Granted this article was directed to advertisers and marketing professionals rather than fans, but even so, why is this idea being touted as a way to benefit labels rather as a way to improve the relationship between fans and artists? Why is it being sold as another form of print advertising rather than something else?

On the other hand, maybe we should give credit to Reid for being honest rather than trying to spin the story. In a world where product placement on TV and in movies is common, where there are weekly promotional tie-ins with fast food kids' meals, and where print magazines have long looked for added value packages to offer advertisers, this development is basically business-as-usual. He's touting the millions of eyeballs that these ads will reach, which has been the premise of mass media advertising. And perhaps the fan base for mass market artists is so used to non-stop ads that they aren't offended anyway.

Unfortunately, instead of being accepted by fans/critics as business-as-usual, the concept seems to highlight everything that is perceived to be wrong about major labels, celebrity culture, and mass marketing.

If this had been an independent artist or even one on a small label, the reaction might have been more favorable. Sponsorship and advertising have long gone hand-in-hand in action sports, so I feel the right pairing will be accepted in music as well.

And if this had been presented as a benefit to fans and as a way to support an artist and/or cause, I also believe the reaction would have been different.

Therefore, my advice to anyone exploring music-related sponsorships and advertising: Put the fans first. Don't bother to do it if they don't benefit. When you are touting the idea to the press, if you can't come up with a single fan-focused aspect to your promotion, this is not the right project for you to pursue.

Suzanne Lainson
@slainson on Twitter

Short-Term Versus Long-Term Music Branding

A few weeks ago, SOUNDS LIKE BRANDING™ published the results of a survey of 70 global brands concerning their views about music as a branding strategy. Key findings:

97% think music can strengthen their brand.
76% use music actively in their marketing.
68% consider music to be an important tool for building a consistent and unique brand.

But 71% spend 5% or less of their marketing budget on music.

Why so little if they believe music is a good branding tool? The primary reason, according to 41% of respondents, is difficulty in measuring return on investment.

Unfortunately, music is used in so many different ways, there is no "one size fits all" measure of effectiveness.

Percentage of respondents using music in these formats:

TV commercials 20%
Websites 16%
Commercial locations 13%
Artist sponsorships/collaborations 12%
Music events 11%
Radio ads 10%
Music products 10%
Sonic branding 6%
Other 1%

A topic not covered in the report, but which I think is relevant to any discussion of music as a branding strategy, is how long the music will be called upon to deliver a brand association.

I want to suggest four types of music branding tactics, with their corresponding timeframes:

1. Sonic branding is the most long-lived, presumably for the life of the company. Typically companies commission a unique sound or song as a form of corporate identification.

2. Next in permanence is the jingle. Generally the intent is to create a sonic tagline which will be used for at least a year and often as long as a decade or more. Here are some well-known jingles. And this list ranks the top 30, with introduction dates included.

3. Sponsorships often run on a year-by-year basis, although they can be shorter (perhaps the length of a tour or promotion) or longer (extending over several years). Sponsorships can be quite elaborate, with a company entering into a relationship with an artist/band that extends through multiple presentations and platforms. The sponsorship may involve music for a website, for multiple commercials, and with artists appearing at events. This article mentions a number of sponsorship deals with bands.

4. Song use is generally short-term, often for just one commercial. A song may be chosen to augment a specific concept rather than reflecting a more comprehensive corporate image. Sometimes the songs are classic, but more often than not, they are momentarily popular and are forgotten as soon as the ads disappear. A good resource for the latest in music and advertising is Advertising Age's Songs For Soap blog.


The purpose of the above list is to show that music as a branding strategy can be as simple as picking the right song for an ad running only once, or as complex as finding the right sound to be incorporated into corporate branding for decades.

The "try today and gone tomorrow" scenario allows for experimentation. The "tie your corporate history to a sound" scenario should involve far more deliberation.

Suzanne Lainson