3. How the music industry works: learning from professionals in the space

Reach out (via email or LinkedIn), I’ll be there

It’s been a little while since I’ve provided an update (holiday and family commitments seemingly getting in the way), but since then I’ve made significant progress across a number of fronts and so wanted to provide an update to my previous post, to give some more depth and flavour to the three different conversations I have had with people active in different parts of the music industry and how this has shaped my approach moving forward.

As a quick disclaimer on the below: I plan to keep all contact names and companies confidential, mainly because I want to ensure privacy and not hit any legal issues, but also because I believe the specific companies and contact names really don’t matter when it comes to the approach and key learnings which would be valuable to support you in your career shift journey.

So, let’s get into it…

Conversation #1: contact at a leading record label

Here we go, starting strong by managing to get in touch with someone who works at one of the world’s biggest record labels!

As I’m sure some of you may be aware, the music “industry” has typically been one of those highly-maligned entities even from way-back-when in the 50s and 60s where there was always allegations of labels taking advantage of artists, tying them to unfair recording contracts and controversy about the use and ownership of the musicians creations. However coming from working in the life science industry with “Big Pharma”, it’s going to take a lot more than that to put me off!

In order to get this call set up I focused on two main things:

The first was to do some initial research myself into both the main companies in the space and used a technique I tend to use when starting to learn about a new topic from scratch, which I like to call the “dumb questions approach”. This involves, firstly, imagining that a close friend will ask you about the topic in question, writing down a list of the most simple and (seemingly) stupidest questions you can think of that you don’t have a clear answer for, and then doing some initial research to be able to answer these questions so you can explain them to yourself in simple terms, for example, some of mine were:

• Who are the main companies in the music industry?
• How do these companies make money?
• How do these companies work with artists to create music?
• What are some of the key trends/developments impacting the industry right now?

As you can see, definitely not SpaceX level, but a useful starting point because as you learn more, these questions become more nuanced as does your understanding of the space and avoids conversations with experts being taken up with things you could have found out on your own, rather than the more interesting points of e.g., what types of skills and experience is most highly valued at companies like these?

Secondly, and tied together with the above, was to look into the different job titles and roles of people who work at these companies, by engaging with everyone’s best legal stalking friend: LinkedIn. To do this, I researched the main companies and initially looked for people with roles which would have some overlap with my experience in the business world; this tended to not be roles like A&R/artist management, but more in the business development, corporate strategy-type domains…you have to start somewhere right?

So all this considered, I endeavoured to conduct a highly-targeted reach-out process. Why? Well, as I’m sure most of you have had the experience where someone reaches out to you on LinkedIn or social media to connect about a role or topic, but it’s pretty clear from the start that they haven’t taken the time to understand your role or background in enough detail and so you basically ignore them (apologies to the many recruiters out there who I have done this to in the past!).

So, my gut feeling was to be highly targeted and then tailor each of my messages to the individual as well as give a nice, sharp summary of who I am and why I would love to grab just 30 minutes of their time; in addition, the more context I felt I could add to show I understood their role or current challenges (e.g., reference any recent news events relating to their role in streaming platform business) would help them know I am a serious(ish) person.

This approach seemed to work quite well and I managed to get quite a few responses, and so wanted to share an overview and some key insights from this first call which was super useful:

Insights into the industry and business roles within record labels

So without getting into anything too identifiable, it was a really great and educational conversation about the music industry from a record label perspective. My contact laid out a few key facts and figures and helped explain why and how certain activities were undertaken and how this related to the overall business model of the companies and how they are able to be successful; and some points which are weirdly similar to the Pharma industry. A few key points:

• ~70% of the publishing/licensing rights of recorded music are controlled by the top three records labels: Universal Music Group, Sony Music Entertainment and Warner Music Group. This is due to the fact that these companies are huge conglomerates who have acquired many smaller record labels over the years as well as bought publishing rights of leading artists when they become available. This provides these companies with vast catalogues of music which are essentially the “product” that the company commercialises in different ways.
• The “product” (…I know, I hate to talk about music in these terms too, but just go with it for now) has many different ways in which it can generate revenue for the company, with the company typically being structured around these different business units. From what I understand, the main business units are: Physical sales (i.e., CDs, Vinyl etc.), Streaming (Spotify et al) and Licensing/sync (using music for adverts, TV and film productions). There may be additional business units based on specific focus areas (e.g., corporate partnerships with companies like McDonald’s, Starbucks; radio promotion deals etc.) and other activities not captured in these main buckets which are the smaller/newer ways to generate income.
• In terms of end-to-end process of music creation, there are a number of different ‘front line’ functions/roles within the record label that support the process across a series of distinct activities:
  1. Talent scouting and artist development – A&R (Artist and Repertoire) employees are responsible for seeking out new talent and contracting them to the record label, whereby the label will fund the development of the artist and their music.
  2. Writing, recording and production of music – Once the artist has signed, they will be given support (financially and otherwise) from the record label to write, produce and record their music. This may take the form of hiring in-house/freelance producers and songwriters to support the artist in the direction they choose to go to create and finish their songs/album.
  3. Promotion and management of artists and album/singles – This is essentially all activities supporting the commercialisation of the recorded music and effective management of the artist to maximise their airplay and impact.
• Note: strangely, the above process can be seen as quite similar to the broad strokes of drug development in pharmaceuticals, whereby (1) talent scouting is finding an eligible compound to develop (either by discovering a compound in-house, or acquiring/licensing one from a biotech), (2) is the R&D process of researching and testing the compound via clinical trials and (3) is the commercialisation of the drug once it has been launched on the market. Weird.
• Once the music has been created and is on the market, then there are many activities where the business development teams would then get involved to help drive revenues and maximise the commercial potential of the album (forgive the consulting speak again). The activities conducted by these roles actually seem fairly similar to the skillset needed in management consulting, whereby teams within each business division are tasked with conducting quantitative analyses to assess different market opportunities for physical sales, streaming and sync/licensing globally (e.g., what would be the revenue potential and ROI of partnering with a new streaming service that is growing in Estonia?) to advise the company on making strategic decisions on where they should invest time and resources for maximum effect.

As you can see I got a lot of information from this call. My reflection on all of this is that, actually, there does appear to be a number of roles within the business development/strategy arms of record companies that have largely overlapping needs of skills and experience where I could potentially play a role. The major difference being that I would need to learn the nuances and key dynamics specific to the music industry, but in essence the business fundamentals I have learnt in consulting would be very highly applicable within the right role…which is a positive sign!

So here I think next steps would be to continue to reach out to other contacts on LinkedIn within similar areas to get into more detail about these roles and what level I would be able to join at if I were to make the jump to one of these leading players.

However, on learning about these ‘front line’ roles within music production and recording, I was eager to learn more about the production process and whether there could be any route into this are to work directly with artists to write and record music – so this is where I focused next…

Conversation #2: local music production and mastering facility

Again, in my previous blog post I took a different approach here to identify relevant people to speak to – this was more of a ‘hit and hope’ approach, but focused on small studios and production facilities in my local area to see if I could just get a very early introduction to how these types of places operated, what services the offered and how they fit into the bigger picture of recording and publishing music.

Luckily, and quite quickly in fact, I was able to connect with a producer in the local area who got back to me and was open to meeting for a coffee. Winner. So we grabbed a coffee to discuss my plans and to get some insights on their experience of working in the industry and how they ended up doing what they’re doing.

Some initial learnings from this conversation were that, like any industry, companies tend to slot into different tiers, based on their size, reputation, capabilities offered etc. For example, Abbey Road Studios would be in the top tier which offers the highest quality end-to-end production and facilities at the highest price point, with customers ranging from record labels, high-end independent producers, leading artists and TV/film production houses. However below this there are a range of other mid- and lower- tier studios and production facilities which, not being able to compete directly with Abbey Road et al, have to find ways to differentiate either in terms of which customers they target or by the types of services they offer. This producer explained to me that therefore there are a number of specialist facilities which cater to things like high-end vocal recording or 3D/spatial audio conversion, all of which require specialised set ups and technology as well as producers with the relevant skills sets for these tasks.

What this means in practice is that, for these smaller studios to be successful, they need to have a clear understanding of their niche and use this to develop a coherent strategy on who their core customers are and how they can market themselves effectively to drive revenues. On top of this, I learned that deep knowledge of business fundamentals and strategy is, not surprisingly, uncommon amongst a lot of people working in the creative industries, and so there may exist a need for “someone” who does have this experience to help studios think through and evaluate their operations in order to help them grow their business.

Some sagely advice tied to this point was that in the music business there are a LOT of people who are keen to be involved, intern, and work basically for free, so I should not expect to get many responses from my cold reach outs. However, they suggested that what can set me apart from others when making connections is to use my professional background and previous experience as a way to offer something of value to these contacts (i.e. to help them with their business strategy and goals), and so have a mutually beneficial situation for both parties. This was great advice I feel and so I decided to leverage this idea in my reach-outs moving forward.

Finally we ended up discussing our goals and dreams for our careers, which was challenging but valuable to actually reflect on this and the big WHY of why I wanted to get into this industry rather than just stay working in an area which I had a lot of experience in.

My answer here was two-fold, the first (fold) was that I am just a huge music fan and think it would be cool to just be around this in my day-to-day work. However, on a second, more deeper fold, I felt that I had been given so much from music over the course of my life, with certain albums soundtracking different periods of my life, relying on music to get me through the good times, the bad times and everything in between, and therefore I felt like I’d taken so much from music that it was only right that I paid back in, in some small way, so that I could help others get as much out of this magical ordered noise as I had…I had never really thought about it in these ways until pressed, but this really inspired me to look deeper and understand then what role would I want to play to help make this a reality.

We had a great conversation, and they invited me to spend a day in the studio to see the setup and what it is to actually work on different types of production (plus I can make a damn fine cup of tea like a good intern should), so we are tying to line this up and I’ll report back on how this went at a later date.

But before that I will walk you through how I used what I learned here to make some further connections.

Conversation #3: local recording studio

So, taking what I’ve learnt so far, I adapted my outreach email so I could emphasise my consulting skills and experience and offer some value to their business, I contacted a few more local studios as I still was still keen to get more info on how things worked on a practical level.

Again, I got quite a quick response from a recording studio owner not far from where I live who was keen to meet up and discuss my plans and tell me more about their recoding studio and how they operate. This was a very different studio from the production facility described above, and focused much more on providing an end-to-end service for artists to come and work with the producer to turn their visions into reality. This studio therefore included a range of different guitars, synthesisers, drum kits and machines and a range of other tech, by which the producer I met (who is a multi-instrumentalist) could then use to support the artist and provide any additional elements they needed to craft their sound, without the need for a full band or other session musicians to be hired.

We started off by discussing my goals and ambitions for my career change (which seemingly are crystalising day by day!) and then had a long discussion about their background, how they ended up owning the recording studio and how their business currently operates. Interestingly, they did say that before responding to me they had looked me up on LinkedIn (again, stalking can be ok) and that one of the reasons they were interested in talking to me was to discuss some ideas on how they could expand their business through different channels and that they had been exploring this already by getting some business coaching in the past. This just reiterates the fact that, for career changers, past experience should be positioned as a huge positive and not a hindrance as there will always be transferable skills that you may think are inconsequential or obvious, but others who come from very different backgrounds would find extremely valuable.

As I have previously worked with start-ups as part of my consulting work, albeit in a different field, there are huge amounts of overlap in terms of how small companies should position themselves, what their USP is, clearly articulating your value proposition for different customer segments etc. and so I felt confident that I could add value here.

We therefore agreed a skill-sharing arrangement, whereby I would spend time analysing their business and help them think through some strategies on how to reshape their business, and in return they would provide me with an introduction to the music production process and would also provide feedback on music I have created. It sounded like a pretty sweet deal to me as it would help me learn about the industry and also how individual artists and producers actually make money in this game.

So, we spent a bit of time digging into some of the key challenges of their business, what they hope to achieve and then some ideas on different paths to revenue which they see as having potential for their operating model, and agreed we would organise a follow-up meeting.

This discussion gave me some interesting insights in to the sync/licensing market, which can be a nice revenue driver for a number of musicians, whereby if they create some royalty-free or “stock” music this can then be uploaded to music libraries which are accessed by film and TV musical directors who are looking for specific types of music (mood, genre, etc.) to fit with their visual creations.

I took this information away and spent some time researching and analysing how these different revenue streams could work for this recording studio and the producer’s own creative output as an artist. On top of this I suggested that they fill out the lean business model canvas (which is a great way to structure and assess a business or new product idea) so we could use this as a starting point for discussion. In parallel I also had a think through some different options for ways to drive more revenue and what was most feasible given time and resource constraints of a 1-person business.

We are currently in ongoing discussions about the best path forward and will have regular check-ins on progress, so I will provide an update in a future post on what types of strategies we have decided to employ and what else I have learnt about the production process.

Summary

A lot of discussions, a lot of learnings and tons of valuable insights to take away I feel! Also I have come away from this feeling super inspired as it seems there is a path forming in how to change my career as well as still build on the skills and experience I have accumulated over the past (too many) years in the corporate world, so I’m not just throwing it all away and having a mid-life crisis!

Thinking back to some of my principles I decided upon for this journey, the key one being “imperfect action is better than perfect inaction”, I feel that the next stage here will be in the doing, rather than the sitting at home in front of a laptop researching, and so I plan to get active and spend time meeting with these contacts as well as reaching out to others to help me expand my network (plus spend time on actually producing music, which, after all, is what I seemingly want to get involved with!).

So until then, here are a few of my key takeaways which are hopefully valuable to you when thinking through a career change:

• Tailor your approach and who you reach out to as much as possible: ensure who you contact is the right person and you’re not just scatter-gunning hoping for one person to reply; people tend to respond better to thoughtful outreach with a clear rationale as to why you would want to connect/talk with THEM, not just “someone in the industry”. Just try to imagine if someone was contacting you, what would you be most likely to respond to?
• Start doing, and committing to, the thing that you want to do: similar to the ‘take action’ mantra, but if you’re dreaming of being a chef: push yourself to create some new dishes, if you want to be a singer: practice singing as much as you can. Until you start doing what you want to do, it’s only an idea, so make time for it, stick to it and get going!
• Spend time reflecting and have a clear, honest answer on your “Why”: this may end up changing as you find out more and experiment with different roles, but it seems that a lot of people (friends and family included) will ask you this at some point and so, to avoid dinner table arguments and petty name calling, it does definitely help to have clarity here. I’ve also found it helps to have something that is really true to yourself; I’ve had plenty of stock answers over the years when people asked me at parties about my job/career and used answers more as a deflection, but if you can be honest with yourself and others it can be very empowering (and any criticism just rolls right off as, really, who gives a shit what people think if you’re doing what’s right for you?!). One of the contacts I spoke to actually said to me that he found my vision for myself and my not wanting to compromise inspiring! So think of how you can best find this for yourself (note: it’s ok if it’s not fully clear, but just try to be honest with yourself and your motivations for wanting change in your life)