Banks with Beat- a new dawn for the Music industry?

Some days ago Johan Lindgren, the former marketing director of Universal Music Sweden, visited SSE. He gave a funny and bewildering speech about his long career within the music industry – an industry that during the last decade have been accused of both greediness and an unwillingness to adopt to new technologies. But that’s not the whole story.

When Johan quit his job in a record store in the mid 80’s to join Universal – the music industry was all about cocktails, money and rock’n’roll. Business was made in limousines on the way to nightclubs and artists were signed by coin flipping. The big record labels such as Universal, BMG, Sony were the unchallenged king of the hill. According to Johan Lindgren – the industry consisted of music lovers that know very little of business. Still, their companies made huge profits. This was all to change.

In the late 90’s Internet usage went up and so did the illegal downloading. The record labels, used to their convenient monopoly situation, reacted aggressively. Instead of adapting the new technology and use it to their advantage, they stubbornly continued repeating their mantra “A CD is $20, no less”. The only problem was that the customers did not need CD:s any longer and they certainly did not want to pay a fortune for them. Consequently the record labels lost not only money, but also trust. Universal was bleeding and the numbers of employees in Sweden dropped from being a several hundred to about 30 persons. The Golden days were definitely over!

It was interesting to hear this story from a person within the industry – what happens when a monopoly collapses? Why did the record labels only see the threats and not the opportunities of the new technology? However, the perhaps most interesting thing in Johans speech was how crisis also forces creativity.

Today Universal has changed strategy. If customers are less willing to pay for music – there has to be other ways of utilizing on their products and Universal Sweden is now offering their artists and their songs to companies in other industries. Since music’s primary function is to evoke feelings, it is a perfect marketing tool. We already know this from TV-commercials, were music plays an important role. But Universal has taken this power of music to the next level. The Swedish bank Nordea wants to target a young audience and Universal has helped them in this attempt by a close co-operation. Thanks to to this, Nordea’s customers do now not only get access to Universals large music libary, they are also provided with the latest news about their favourite artists and invited to exclusive events when their idol is in town. The result is astounding and Universal is now looking for similar co-operations. It might not bring them back to the good old days (who would like that?), but it is at least a good attempt to evolve the music industry. Cause, as Freddie Mercury once sang, the show must go on…

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One Response to Banks with Beat- a new dawn for the Music industry?

  1. Eleni Miliou says:

    I agree.. The past glories of music labels are long gone. The question is: how can musicians make a living from now on? One possible answer is live shows. And how can companies like Universal survive, especially as long as torrents are around? That’s a question to be answered.. Ironically, the music industry problem reminds me of the newspaper dead-end. Who will ever again buy something that they’re used to get for free?!

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