What the Music Industry’s “Cut to Grow” Phase Teaches Us About Legacy Brands
A shift is underway at the executive level of longstanding music industry giants.
Following suit of larger corporations across the cultural and entertainment spectrum, legacy music companies are embracing a strategic paradigm known as “cutting to grow.”
It’s not an isolated movement. Across the board, there is a growing prioritization from companies to reassess their structures, resource allocation, and legacy operations. It’s a substantial shift for the music industry, though, and the latest response to the digital era and the ebbs and flows that broader brands have followed in pursuit of building a stable future.
Spotify announced this week it would cut a massive 17% of its workforce. Warner Music Group and BMG had previously spearheaded this transformation, with single-digit percentage layoffs, redirecting resources to align more closely with the needs of modern artists. UMG has also signaled its commitment to this strategy.
What’s going on?
Things have changed in the industry. As Music Business Worldwide’s Tim Ingham astutely summarizes:
“The power of traditional broadcast radio as a promotional platform in the US music industry continues to decline — inevitably, in the streaming age — year over year. Yet the largest companies in the US record industry continue to apportion large annual investments into terrestrial radio promo.
If you ran a major music company today (and were seeking improved EBITDA margins), would you perhaps think about reducing expenditure on this declining part of the market?”
He goes on to point out that, from a data standpoint, ‘catalog’ music “has eaten into the market share of ‘frontline’ music in the past few years, as consumer listening habits continue to transform.”
As a result, labels have met the needs by shifting or reducing their headcount.
What does this tell us about ‘Legacy Brands’?
While the music industry collectively dives into introspection, the action of these companies illuminates a bigger conversation about legacy brands, particularly those ostensibly built on the growth and transformation of culture but entrenched in traditional paradigms. The challenge lies in reconciling a brand’s cultural heritage with the imperative for adaptability in a rapidly changing landscape. The music industry’s stance is, really, another example of why all legacy brands embrace change.
The underlying message is pretty clear – traditional models must evolve to remain relevant. The music industry’s journey to “cut to grow” catalyzes a more extensive discourse on the necessary transformation of legacy brands, particularly the delicate balance between honoring tradition and embracing innovation. Entities built on culture must shed outdated practices and embark on a path of reinvention.
Executive Recommendation — What Legacy Brands Need to Survive:
Let’s discuss how to address the challenge legacy brands face and the fundamental principles that will guide that growth:
- Ask yourself Hard Questions: The path to adaptation begins with taking a little time, possibly in a soundproof room, to look a little inward. Legacy brands need to ask themselves a fundamental question — “Why do we do what we do?”
- Adapt for the Long Game: The call for adaptability is not a really nearsighted exercise; it’s a strategic commitment to the long game. Consider the fact that data-driven A&R has proven itself poor at predicting long-term success in artists. Brands must consider both hard and soft metrics to develop long-term goals.
- Invest in Brand Assets: Distinctive assets are the bedrock of legacy marketing. But only 15% of brand assets are truly distinctive. In the pursuit of long-term growth, brands should ask themselves if and how they’re using brand assets, and if they’re effective in their current state. Music, Sonic identity, slogans, logos, mascots, and fonts, are all elements that should be reviewed to drive top-of-mind awareness. Uncovering and leveraging these assets is not just a marketing exercise; it’s fundamentally how you build a lasting and recognizable brand.
- Take Chances on Marketing: According to Nielsen, creativity provides 47% of the total sales impact. With that in mind, pursuing creativity as a long-term priority is pivotal for brands to continue to drive effectiveness. Brands should at minimum challenge themselves to initiate experimental marketing as part of their media mix. This allows you the opportunity to test and learn how best to capture attention and nurture enduring connections through creativity.
- Invest in People: Fifth and finally, the heart of brand growth lies in investing in people. The recent cost-cutting measures within the profitable music industry present a paradox. While the pursuit of improved margins is evident, without prioritizing and deeply investing in the human elements that fuel a company’s creative spark, sustainable success becomes elusive. Creating a culture that not only recognizes but cherishes its human assets is not merely an ethical imperative; it’s how you’ll build enduring growth and resilience as a brand.
THIS WEEK’S NEWS
Essential updates from the worlds of music and advertising
- Music fans worldwide believe human creativity essential in time of AI
- Music Licensing Giant BMI Sells to Private Equity Firm
- Warner Music Group and Sandbox launch 2D Video Game ‘Breakin’ B.I.G.
- Spotify could soon let you turn off personalized recommendations
- Taylor Swift Is Spotify’s Top Artist of 2023
- Music Impact Report confirms: TikTok Fuels Music Discovery
- Details Emerge in Hall & Oates’ Mysterious Legal Battle
NEW MUSIC
This week’s most necessary listening — no filter
Albums
“New Blue Sun,” is an 87-minute exploration of new age, ambient jazz, and spiritual discovery, marked by a collaborative effort with a community of musicians in Los Angeles. The most fasinating artistic left turn in recent memory.
“Afro Fado” by Slow J is a vibrant celebration of Portuguese hip-hop, inspired by the convergence of football player Eusebio and fado singer Amalia Rodrigues, echoing the phrase Slow J’s parents shared about the cultural exchange between Portugal and the world, resulting in a beautiful and unique musical expression.
Saxophonist Joseph Henwood and drummer Tash Keary’s debut EP, recorded by Dan Carey at Speedy Wunderground, revitalizes neo-jazz with vintage dub influences, capturing a formative two-year period in O.’s musical journey.
Singles
Rediscovered from the archives, Björk’s updated “Oral” with co-production by Sega Bodega and vocals from Rosalía is a sweeping pop song blending misty-eyed strings and ’90s dancehall rhythms, exuding youthful exuberance and optimism while supporting the cause of saving Iceland’s fjords from destructive practices of factory fish farming.
In “18 Years,” Annie Dressner candidly recounts the painful realization that someone she deeply cared about didn’t reciprocate her feelings, delivering a poignant narrative through spirited melodies and straightforward vocals, with backing vocals from Pollly Paulusma adding depth to the emotional lyrics that explore the harsh truths and vulnerabilities of unrequited love.
