Theory and background

Entrepreneurship in the cultural industries

New business models create new challenges and the need for new skills for the independent music entrepreneur. Direct relationships with consumers, enabled by web 2.0 technologies, create new cultural and commercial frameworks.  Innovation is led not by those within the traditional music industry but by technologically savvy individuals like Shawn Fanning, the 19-year-old love-child of a rock guitarist who founded Napster.  Exponential rates of change in technologies and trends mean the individual must become a lifelong learner, media maven, innovator, and – very importantly – a self-starter. This presents challenges to those who are not literate, educated or IT savvy, and who therefore could be disadvantaged in marketing their product.

‘Cultural industry’ was coined by Adorno in 1977 as a derogatory term, believing culture was meant to critique everyday life and the political and economic system, not profit from it.  Subsequently, positive definitions of the cultural, creative, or art entrepreneur have described the twin drivers of creating something of intrinsic personal, artistic or aesthetic merit, yet driven by the extrinsic necessity for commerce and profit.  Cultural entrepreneurs exploit intellectual capital, using creativity to unlock wealth that lies where risk taking is a core attribute.  Without any commonplace government subsidies, such as those provided by Arts Council England to visual and performing artists, popular music practitioners are driven to work more entrepreneurially and commercially.  Yet, as Peter Drucker believes, ‘entrepreneur’ and ‘entrepreneurial’ are behaviours which can be applied to the business process, qualities that can be learnt and developed rather than personality trait.

The rise of the ‘Pro-Am’ and Middle-Classes

We now see two different but interrelated trends unfolding: the increase in the ‘middle-class’ artist – neither star nor pauper but making a comfortable living from their work – along with the mass amateurization of music production creating ‘musical landfill’ in the digital landscape.  This creates a generation of ‘Pro-Am’ (professional amateurs) consumers who increase demand, and also competition, in music production.  Their consuming is active and participatory, led by bottom-up self-organisation.

Within this shifting landscape, there is a potentially huge opportunity for independents. An Association of Independent Music (AIM) survey showed 65% of members believe they will increase revenue in 2009, despite a global recession.  They now represent thousands of ‘micro-businesses’ operating under the radar – untroubled by market share, chart positions, or profile.  Independents can be core-focused and nimble, building on customer loyalty and brand recognition, surviving on lower sales using niche-marketing methods, proving historically to be more innovative, more willing to take risks and better at nurturing new talent and genres. No longer tied to specific formats like the ten track album (which evolved as many majors refused to pay royalties on more than ten tracks), this could herald new forms of expression and new creative formats.

Research findings

Find out more about the research background, methodology and see the full survey findings here.

Relationships with fans

Building direct relationship between artists and audiences as a ‘consumartist’ is one of the most valuable developments of the online economy, which has begun to democratise the music industry for independent producers.  Fans produce fast, free viral marketing that ‘pyramid sells’ artists.

66% believed they need to build relationships with fans for economic gain, distinct from the mysterious ‘auteur’ of previous generations e.g. The Smiths or The Residents.  The relationship is now critical, with consumers paying the musician rather than paying for the music, but “savvy PR companies” still garner more attention and relationship tools like MySpace “promotes competition rather than true artistic impression”. The directness and closeness of fan relationships was an exciting prospect to develop new models “like selling ourselves on Ebay for a tour” (Shillingford). This focus on individual relationships in an ‘art’ versus ‘commerce’ market may, however, bias one exchange with a customer at the expense of another.

Developing business skills

Business skills are critical for survival in the digital economy – mainly traditional skills like strategy, funding and database management more than A&R. It is critical to master online marketing skills by either developing them personally or getting people onto your team with them through partnership or skills exchanges using “an old-fashioned chicken for a loaf of bread” (Shillingford) as an alternative economy.

Being simultaneously the business brain and artistic guru vexed many independents, when “the two aren’t always the best of friends” (Oyewole) but mastery is necessary: “I’ve had to work on my Achilles Heel… I took up the business course like a rhythm guitarist would go for lessons to expand their lead playing…” (Shillingford).

The ‘360-degree’ model of signing bands with existing success was felt to be culturally damaging, favouring the entrepreneur over creative talent when “people like Bjork might never have got signed, because you can’t imagine Bjork setting up her own label.” (Shillingford) Those who are PR and business savvy may achieve success with an average product, while those who are creative but not business savvy “might be a little bit lost” (Oyewole).

Recording and technology

Music technology students, growing from the expansion of creative industries education, have less star-centric and more realistic ambitions about music enterprise than previous generations, developing “a massive cross-pollination of audio and video and films and web”.  However, the British art school tradition developed attitudes “to buck the trend and stand out”, stimulating more great music than the current education system (Junga).

Sound engineering is shifting in the digital economy; home studios and affordable software has led to many musicians recording, mixing and mastering their own releases. This has led to lower mix quality but overall higher audio proficiency as usable, affordable digital tools and peer-comparison drive up quality (Junga).

We see two related trends between ‘good enough’ disruptive innovations (Christensen,1997) in sound production and management which allow for authenticity and creative independence; the traditional music industry uses specialisation of skills, whereas the independent must be a multi-dexterous entrepreneur to succeed, potentially weakening auteurship. Partnerships and exchanges are crucial ways of embedding skills but difficult to barter for newcomers.

Read part 6: Key findings and conclusions
Independent music online research index