From 360 to 0

Sitting on the plane back to Sónar after two days at London Calling and thinking a bit about 360° deals and the future market structure of the music industry. Unstructured thoughts go something like this.

So, we’ve all in one way or another heard about the new music industry craze for 360° deals. In case you missed it a 360 can basically be summed up by actors that traditionally only did one part in the value chain (or rather value network) trying to integrate vertically both forward and backward and thus grabbing more of the potential revenue streams around an artist. The prime example and overly quoted Madonna case where she moved all her rights to LiveNation and signing with them to handle all her bookings, recordings, merch, licenses etc. In other words the full pack. All of all, 360.

In an age where many if not most actors within the music industry are having a hard time meeting their revenue projections its naturally quite reasonable to start looking over the fence so to say at the green grass of whoever else is making some cash in the ecosystem. This could be pointing to a bit of a shakedown within the industry and a lot of actors getting pushed out. However, I’m not necessarily sure that is what is going to happen, at least not yet.

The whole hype around going after 360° deals makes me, for right or wrong reasons, think about the portal strategies of many previously successful web sites in the late 90s. Roughly, a lot of actors good in a certain field felt the need to expand and realized that, hey, you know what, if we got all the traffic for all these topics that would be great! The problem, of course, occurs when everybody is trying to set up their own walled garden catering to everybody. Basically you end up in a race where everybody’s star struck with the possibility of getting the benefits of a monopoly or oligopoly. But as we all know, if that’s to happen not many companies can survive and take that position. And, if too many actors are pursuing the same path much too fast (say by fueled on by desperation of seeing your 20 year nice revenues suddenly slipp through your hands) there’s a good chance that far too much investments will be used on attempting to build too many companies with too much overlap in a market that only allows a handful of them to survive.

Thinking of what has been happening to the web the last couple of years I’ve come to believe a lot more in partnerships and integration between services rather than walled garden approches. On most days, I tend to have a similar view on what companies should base their strategy on.

And, that’s why I think the 360° deals will eventually fail. At least in the way they are structured today where a single actor previously specializing in one area branches out and offers a complete set of services in a 360°deal to the artist. What on the other hand does make sense would be the formation of several indie networks of partners each specializing in their particular field. Granted, since everybody’s having trouble making ends meet these companies need to down-size and use online more to make their organizations more effective. But ultimately, just like online services built on an open platform idea leverage the use of the network around them to provide their customers with a more compelling experience I think this needs to happen in the music industry value network too.

Currently the artist manager is the one person (apart from the artist) that is actually involved in all the areas of the 360° deals. So, it would make sense for the artist managers to strengthen their positions as the business partner between the artist and the indie 360 network of choice.

Or, maybe I’m completely wrong. And as a quick note on the 360 term itself, I think Fred said it best when he asked if he wasn’t right in remembering that in geometry 360 actually equals zero?