Linkin Park Got Business Advice From Harvard, Starts Venture Capital Firm
"To be clear, we are still in the music business, but creating and selling music now plays more of a supporting role."
The music business is rapidly changing, with artists clawing for new ways to create revenue as physical and digital sales continue to slide, so Linkin Park did what anyone would: they called Harvard.
Late last year the alternative rock veterans dropped their outside management and went in-house through the band's "innovation company" Machine Shop. In an essay for the Harvard Business Review, the company's executive vp Kiel Berry writes that the band ultimately decided to "focus on innovation through non-traditional business partnerships," not just in music, but in fashion, design, and technology.
Linkin Park vocalist Mike Shinoda says the band's "goal was to build an internal team of diverse talent to support the non-traditional endeavors the band plans to pursue in the coming years."
So, after migrating most of its business to Machine Shop -- which "now operates like a tech startup, with less hierarchy and far more agility" -- the group teamed up with Harvard Business School professor Anita Elberse and three of her students for what amounted to a semester-long independent study on the business of Linkin Park.
Phase one of the study involved doing research into successful innovators in both the music industry (specifically Jay Z's universe, Jared Leto's investments, Trent Reznor's role at Beats/Apple, Pharrell's i am Other, and Beyonce's management company) and across other platforms. Those brands included Vice and Red Bull, among others.
The band learned that they need to build a diverse "brand ecosystem" and "diversify revenue streams" across several businesses to reduce financial risk in case something doesn't stick. The Harvard study also suggest that the band "partner with a broader community or network of global influencers to remain tapped into bleeding-edge cultural trends."
The second phase involved restructuring Machine Shop from a brand agency to "multi-pronged innovation model based on four verticals: video content, global brand partnerships, merchandise, and venture capital."
Before the Harvard study was even completed in late May the band took the Ivy Leaguers' advice and launched their own venture capital firm, Machine Shop Ventures, to invest in "consumer-focused companies that align with the band's ethos of connecting people and innovation through tech and design." So far, Machine Shop has invested in Lyft, Shyp, Robinhood and Blue Bottle Coffee.
Machine Shop also beefed up its staff and hired Lisa Kidd to help expand the band's brand and merchandise business, and for big-picture ideas they hired Michael Seversky, formerly of Beats By Dre.
"To be clear, we are still in the music business, but creating and selling music now plays more of a supporting role in our overall business mix," Berry concedes. "Of course we'll play the shows and meet with fans, as we've always done. But along with continuing to make great music, today's Linkin Park is now better positioned to operate in the ever-evolving cultural and business landscape."