Welcome back to Dance Business Asia, Mixmag Asia’s monthly column focusing on the business of dance music in the region. Dance Business Asia dives deep into the business issues confronted by artists, managers and promoters. We look at the economics of dance music in Asia to see what’s working, what isn’t, and how issues can be addressed. The column also features interviews with movers and shakers on the business end of the industry in the region. Your guide, Otto Clubman, is a music industry executive with over twenty years of experience in the dance business.
Over the last few months, we’ve all been sitting around with too much time on our hands, which often leads to cases of the “should have’s”. Should I have stayed with my college girlfriend? Should I really have beaten up that kid in high school for having the gall to like Nickelback? Should I have eaten two slices of that Cheesecake Factory red velvet thing? Because I don’t feel so great now...
Finally, and most importantly: Should I have listened to my mom when she pushed me to get an MBA, to have something to “fall back” on in case my DJ career didn’t pan out? Or even if it did pan out, and then there was a subsequent worldwide pandemic that shut down pretty much all revenue-generating activities for an extended period of time. (Ok, she probably didn’t anticipate that one, but anyway, now we know that anything can happen).
It’s the age-old The Creators vs. The Suits debate as to where the real value in the music chain lies, taken to its extreme in times of crises. Most DJs I know have lost close to 100% of their income over the last few months. So, you can’t blame them for having little sympathy for the executives at the big music firms who were recently forced to take 20% pay cuts. Boo hoo. How will they get by on only 80% of their bloated salaries? But, it does make one think: Maybe Mom was right. It would be great to be able to earn a few extra bucks for the next few months as a music mogul, until the DJing market recovers.
This leads us back to the broader question: What if I do want to be that mogul you just mentioned, Otto? Do I need an MBA? Is it too late for me? I mean, I’m smart, have good ideas, have business acumen – essentially, I’ve been running my own business since I was 15. I’ve been in charge of promoting myself, negotiating contracts (which I mostly understood), collecting money, chasing down deadbeats who don’t pay. Essentially, running a small business. Maybe I am ready to make the jump into the corporate world. Do I really need an MBA to make it to the top?
Well, I’m glad you asked. And I have mostly good news for you.
Let’s start with the least interesting part of the music industry and work our way to the most exciting. Luckily, the opportunities for you, my DJ friend, lie primarily in the more interesting parts of the business. And you don’t need an MBA, but you will need some basic business skills.
1. Become an executive in the dance music department of a big music company
This is the place where your mom was hoping you’d work. But, let’s be honest, you’re an “artist”, and this probably won’t be a great fit. My big secret this week: A big corporation is a big corporation is a big corporation. Whether they make music or copper wiring, the nuts and bolts of daily corporate life tend to be quite similar. Meetings, bureaucracy, sittin’ around waitin’ for a promotion. It doesn’t mean that working in a sprawling music company isn’t interesting. But, you need to hear it now: Most of the issues of daily work life, as you make your way up the corporate ladder, are “business issues” and have nothing to do with music. Even worse, the higher you climb, the further away you are from the music itself.
Any music lawyer will tell you that just because a contract has the word “Diplo” in it, doesn’t make the job — or the contract — more interesting. You are still dealing with the basic mundane legal issues — indemnification provisions, choice of law wording and force majeure clauses. Sound exciting? Right, it’s not. Ok true, it gives you some cred with your friends who took the boring corporate gigs downtown and are working on mind-numbing mergers between Widget Company A and Sprocket Company B. But, honestly, you’ll also be in the weeds dealing with day to day issues that barely touch on the thing you love. Worst of all, you’ll be so busy that you probably won’t even don’t have time to listen to music anymore.
At the very top, the senior executives barely touch music. What do they do exactly? They allocate resources, review budgets, deal with lawyers & bankers & accountants and sit on airplanes. These are the key skills. The further you rise, the further you get from the music itself, in most cases. So, whether or not you, Mr. / Ms DJ, have the innate set of business skills, you probably won’t be happy here. It’s four walls and a cubicle.
The one exception is if you are lucky enough to land a job in the A&R department. Great gig, if you can get it. You get to go out to the clubs, spot talent, sign and nurture artists. But, frankly, that’s usually not the skill set that gets you to the very top – you’re likely to hit a glass ceiling, or burn out, or both. At the apex typically sit ex-lawyers, accountants and bankers, who if pressed can “talk the talk” with the talent, but are actually much more comfortable hanging out with their investment banker buddies.
2. Music-sector start up as a paid education
Great concepts in the music space are being launched and incubated around the globe. Cool content companies and novel distribution platforms are springing up, creating opportunities for “business newbies” with a love for music to join the corporate world. Essentially, this is your MBA. These start-up firms often can’t afford top-tier MBA graduates, so they are willing to take in scrappy young ones like yourself who are willing to work hard and learn (usually at low pay, but often with an equity component).
The good news in a company like this is you’ll get plenty of hands-on business experience. It’s amazing in a start-up how much you can experience: product development, marketing, finance, managing growth. There really is no better “practical MBA program” on the planet. And, sometimes you get lucky, and the company actually works out (goes public, gets acquired). In those cases, the payoff can be significant. Another positive: Usually in a smaller company where everyone has to do a little bit of everything, you can stay “closer to the music”, as compared to big conglomerates where you become specialized very fast. Finally, success in even a mid-level role at this music start up will give you credibility to move to option #3 below. Your own show.
3. Start your own music company, grow it, sell it, make a bundle (but don’t manage it any longer than you need to)
If you’ve been a DJ for even a few years, you’ve essentially been running your own small business. The odds are, you’ve acquired the scrappy set of skills that are needed to be an entrepreneur. No MBA required; you have already learned what you need to know. Again: branding, marketing, sales, collections; you’ve had real-world experience. You’ve seen the entire ecosystem of corporate life, without even asking for it. Now…you just need that great idea.
Good news: most winning ideas aren’t hatched in board rooms. They are found at the ground level, in the clubs and studios. You are living in the real world of dance music, and can see where the opportunities exist. A great business can be (i) a huge innovation, (ii) or a small step towards making life more convenient for DJs, producers and fans. Either will do. In the trenches, you have the bird’s eye (more like worm’s eye) view of what’s missing, what’s needed, what the fans and DJs are craving or would make their lives easier, but don’t have yet.
As an artist who has picked up some business skills along the way, you can see these opportunities and jump into these niches before the big guys get there. Just a small, specialized company that fills a need can be extremely valuable. Big companies aren’t great at the zero to one part of new idea development (i.e. spotting a need and building the initial concept). But they have the resources to take you from 1-100. So, take it your idea to one, and hand over the keys (for the right price).
The biggest challenge is knowing when to ask for help or step off entirely. You are probably used to doing almost everything yourself. As mentioned, as a company grows, so do the senior management. You almost necessarily becomes further away from the music — what you know and love. By the time you have a staff of about a hundred, you’ll suddenly be in meetings all day that have absolutely nothing to do with music, and most likely won’t be a great fit for your skillset (reviewing projections and budgets, etc.). It’s hard to let go, but don’t be afraid. Bring in professional management when the time is right. You can stay on and modify your role to focus on the aspect you truly love. It’s no shame to hand over the reins to a competent professional manager to let you focus on …the music. Look, you’ll still own 60% or so of the shares; most of the upside. The MBA chump-in-the-suit you bring in will earn about 4-6% of the company, vesting over the next three years, and be stuck doing the things you don’t want to do anyway. Even better, you can launch another idea in the meantime, because you’ll be back in the clubs spotting new opportunities.
See you at the Top.