The Music Industry, Michael Jackson & The Zombieconomy
Consultant and big thinker Umair Haque took a look at some of the dollar figures being thrown around in the wake of Michael Jackson's death including reports that sales of his recordings have "generated more than $300 million in royalties…since the early 1980's". Haque did little math and asked:
"If the world's biggest pop star only made $12 million a year from his recordings, why would anyone make serious music? Where did the rest of the money go? Why, straight into record labels' pockets. Did they make better music with it? Nope — they made Britney and Lady GaGa. And that's how they killed themselves: by underinvesting in quality, to rake in the take….
The world's top hedge fund "managers" regularly pull in hundreds of millions. That's an order of magnitude difference…
That's the big problem behind the zombieconomy. We don't reward people for creating, growing, nurturing, or even remixing assets. We just reward them for allocating the same old assets. That 's not an economy: it's just a game of musical chairs."
Video: How To Fight Zombies –
Haque believes that the antidote to the attack of the Zombieconomy is to be authentic and create real value. As he explains in this video, while he's speaking about the overall economy, the implications for the music industry couldn't be clearer.
Penny For Your Thoughts – Umair Haque from Sander Duivestein on Vimeo.
Uhh…you mean antidote?
The problem as I see it is that while we want corporations to innovate and add value to society, we’ve effectively entered a co-dependency with them that delivers us exactly the opposite. We get pissed when we head over to the corporate coffee shop and find that the size of the donuts has noticibly decreased seemingly overnight, while at the same time getting pissed when our RRSP fund takes a hit. As long as we tie our financial futures with the value of publicly owned corporations, we can only expect them to cut corners and rip us off as consumers. This is also why the Hedge fund managers mentioned are valued more than artists.
Mr Haque’s article surely contains some oversimplifications and a bit of influence of musical taste as well. But the similarity of structures in the musical and financial business is indeed a striking one, given the fact that the labels were effectively “the banks” of the music business. Hacque says, to get back on track, it’s important to create value again, but what exactly is value and where and when does it happen? Thinking about this can get deeply philosophical or neuro-scientific, depending on which road you choose, but it should be obvious that once the distributor of a record thinks of his own product “you know, this is crap and I don’t like it, but if we market it this way, people will love it and turn our artist into a star”, he only thinks his business model has any value but not his product. We are witnessing now that this is short-sighted and that even valuable business models can run dry if those using them don’t release product that is of value to them. Seemingly, at one point in time, an attitude of cheating sets in on the consumer’s side as well. For the music industry, that was P2P. What will it be for the finance industry?
Anyway, the really interesting thing about this article is highlighted by the following comment from a reader of Haque’s blog (quote):
> The bigger issue you raise is that so much creativity, drive, and brain power is sucked into the finance industry,
> draining valuable resources from the creation of value (in new companies, services), into the re-packaging of
> existing value.
> Posted by Jeff Frick
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