Changing The Economics Of Music

Tim Ferriss' 4 Hour Work Week blog has a chapter from Fast Company Magazine founder Alan Webber's new book Rules of Thumb: 52 Truths for Winning at Business Without Losing Your Self. Using The Grateful Dead as a transformative business model, the excerpt contains several important lessons that apply to any artist, label or tech company struggling with the new realities of music. The article and the book are worth a full read, but here is an excerpt:

"…In my book Jerry Garcia was
one smart businessperson …(he) articulated a
competitive strategy for the Grateful Dead that put him at the top of
my list of management gurus: You do not merely want to be considered
just the best of the best. You want to be considered the only ones who
do what you do."

"The game today is all about changing the game. Competing head-to-head on products and services is table stakes. Innovators are looking for a new business model that will destabilize their rivals and produce a breakthrough opportunity." How to do it?

"Start by analyzing the status quo. What’s the standard economic
model the industry uses today? When you pull it apart, how does it
work? What are the assumptions that it’s based on? How and why has it
become the industry standard? Take a look at it from the point of view
of the customer. Exactly what is the customer paying for? And where
does the business make its real money?

"…take a look
outside your own industry…What would happen if the whole business moved to the Web? If things that customers paid for now became free? Free, as the saying goes, is a pretty good price. What if you did a King Gillette and gave away the razor? What could you charge for? Take it one more step: are you hurting your business by charging for something you should give away free?…

"…There are a lot of ways to reinvent an economic model. But most
established companies are unwilling to do it because it would mean
destabilizing their own operation.

Which is exactly what those innovators and entrepreneurs in the garages and dorm rooms are counting on."

Purchase Rules of Thumb: 52 Truths for Winning at Business Without Losing Your Self