In the age of iTunes libraries and Spotify playlists, record labels are no longer bound by store shelves in what they present to consumers. With physical restraints disappearing, overall sales down, and listeners’ tastes as eclectic as ever, it might seem that record labels ought to stop chasing the blockbuster album and instead focus on the many smaller and wide-ranging artists who can provide long-term incremental payments. This belief was expressed in Chris Anderson’s 2006 book “The Long Tail: Why the Future of Business Is Selling Less of More,” and indeed made a pursuasive argument.
Seven years later, the music industry has continued to head down this modernized path, with platinum and gold albums growing more rare by the year. But Harvard Business School professor and entertainment industry specialist Anita Elberse says the superstar-driven industry isn’t going anywhere.
In her new book “Blockbusters: Hit-Making, Risk-Taking, and the Big Business of Entertainment” (out Oct. 15, Henry Holt and Company) she argues quite convincingly that in the music industry (in addition to cinema, television, books, and more) record labels are most profitable when they focus their funds on a small number of big-shot, can’t-miss juggernauts. Here, Elberse discussed the blockbuster’s role in the music industry, the role of brands in promoting artists and the possibility of bundling Lady Gaga's new album with her book.
Billboard.biz: With all the aspects of the entertainment industry you cover and your time at a premium, how much are you able to pay attention to the music space? How do you follow it?
Anita Elberse: I try to read Billboard -- it's an important source of information. And I try to talk to people in the industry as much as possible, and to keep writing studies on people in the industry. And write follow-up case studies on those people that I've already studied. It's one thing to say, “I'm writing a case on Octone Records,” in 2008 when they had had success with Maroon 5 and a few others. And it's quite another thing to come back two years later and say, “Okay, how did that all pan out for you?” To sit around the table and talk a little more about the current issues. For the first case I did with Octone, 360 deals were not at all being talked about. And then for the follow-up case, it was the focus. I wanted to see how things were changing and what the new challenges were. The executives and others in these sectors are the main source of information.
When you started your research, the music industry was just a couple years removed from the initial hit of file sharing and Napster. Do you think that's effected how the industry views what a blockbuster is?
The music industry has gotten a lot more sophisticated over the years, with smarter strategies. It was unlucky to be the first and that was so heavily affected by the impact of digital technology. The reasons were pretty simple -- it's easier to share music files than it is to share film files. Of course, it's easy to look back now and say "they should have done x, y, and z…" There's more of a sense of what we do, what we produce actually has value and we should not be afraid to charge prices for it.... There's more of a sense of what value music represents and what strategies are useful in building artists and building artists' portfolios. There's now a second wave going on where you see very successful artists branching out into domains that weren't previously domains that they were into. Jay Z is building a range of businesses just on the strength of his brand. Lady Gaga has formed really interesting partnerships. Justin Bieber and his manager Scooter Braun are investing in a number of different companies and also promoting them in many ways.
There have been quite a few blockbuster rollouts this year (Justin Timberlake and Daft Punk) and we're in the middle of a couple others (Lady Gaga and Katy Perry). Is there anything that's really impressed you lately or anything you think could have been done better?
I was personally very impressed by Taylor Swift and what happened with (her album) "Red." It's described in the book as well. I loved the creativity in finding brand partners. You've got to admire someone who says, “Let's call Papa John's and see if we can do a pizza-and-an-album deal.” People might frown upon that and say, “Is that really the way forward?” But she's reaching a lot of customers that might not have decided to buy that album. In a way, she is solving an important problem that plagues the industry -- there are fewer record stores. We need to be more creative about getting physical albums close to consumers.
I think the upcoming Lady Gaga album, released on Nov. 8, is going to be really terrific. I spoke with (her manager) Troy (Carter) about it just last week. And I think it's really fascinating what they have in store. You can see how his thinking has evolved from the "Born This Way" launch to the "Artpop" launch. I think it's going to be quite exciting to see how that's going to pan out.
I was joking with Troy about how, if he wants to, he can bundle it with the book. He said, “Maybe the album should be the soundtrack to the book.” We're working on a good bundling strategy at the moment! Obviously Gaga needs my help!
Many observers think the music space is moving towards streaming and “the cloud” in the future, as opposed to purchasing content via online retailers. Do you think this hurts the blockbuster model?
The ways and formats in which people consume music will probably change. We’ve seen the change in the past decade or so and it will continue to change. Consumers will be looking for the easiest way to get their hands on music and maybe the cheapest way -- [but] not always the cheapest way --- it’s the most convenient way, the most direct access you could have. I don’t think that is changing the blockbuster strategy in any way. In fact, the easier it is to gain access to a vast library of content, the more it is important to stand out and break through the clutter, to really compete with the millions of other products. I think it will only increase the significance to the blockbuster strategy.
In the book, you highlighted Radiohead’s pay-what-you-want strategy for “In Rainbows,” and how they self-released the physical edition of that album without a label or retailer. But all of today’s major blockbusters – Lady Gaga, Katy Perry, Justin Timberlake, etc. – are signed to major record labels. Do you foresee blockbusters ever not needing to go the label route?
That’s one of my favorite aspects of the book -- this discussion around, “will we see a moment when the talent just goes direct?” Will someone come out of nowhere and score the biggest hit completely by themselves? I think so, yes, and there have been examples that have come close, where they have been doing this for quite some time. And in other sectors, in the book publishing industry, for instance, there are some authors that have been incredibly successful as self-publishers, which would be the equivalent.
If the question is, “Will that be across the board, the most effective strategy for different players?,” I think the answer is no. It would probably make sense for you to align yourself with one of these bigger companies for all the distributing and marketing muscle they bring to the table. And the people that break through with self-publishing or self-releasing music, will they continue to do so? What we see is that many of them see the advantages of aligning themselves with a major label.
Justin Bieber is one example. I had a chance to speak with Scooter Braun for the book and he very clearly said, “Yes, we could have done this on our own. We probably could have conquered global markets, but I don’t think I would have wanted to. This is not how I want to spend my time and aligning ourselves with Universal gives us enormous advantages.”