Without Opportunites, There Are No Opportunites

Posted by Mandy Arola on September 16, 2015

At some point, every company has to undergo organizational change. According to John P. Kotter, the simple objective behind most organizational change is “to make fundamental change in how business is conducted in order to help cope with a new, more challenging market environment.” (pg. 127)

Record companies have been responding to a “more challenging market environment” for nearly two decades. As soon as one revenue source is understood and accepted (i.e. digital downloads), a new revenue source emerges (i.e. streaming songs), and forces change. The older revenue source experience declines and the newer revenue source is smaller than the one it’s starting to replace. The companies that see these problems as opportunities are more quickly able to adapt and embrace the new, often smaller, revenue.

To understand how a record company might implement change, it is helpful to understand how the divisions work together. A large record company is much more than just a record label. You have the actual record label that is responsible for signing artists and releasing music. You have a publishing division that is responsible for signing writers and can funnel new songs to the label for recording consideration. You have a distribution division that is responsible for selling product into stores or securing positioning at digital retailers like iTunes.

All of the divisions and departments within the record company are very interdependent. The label needs new songs from publishing to record. The distribution division needs new songs and albums from the label to sell. The label and publisher depend on the sales revenue from distribution.

Record company flow
*This is a very simplistic look at a record company.

The organization chart will probably look very familiar to you as it mirrors other large companies.

[Organizational chart graphic unavailable]

Organizational change ideas and proposals can be floated up, but the decision power resides with the division leaders and the CEO. Initiatives that are embraced are ones that re-align the company with the ever-changing music industry and move the company forward in a competitive environment. Initiatives that were embrace originally can die when the industry changes before the change can fully be implemented. I’ve seen a few ideas hit the trashcan because the industry shifted.

So how does an idea get implemented at record company? Let’s revisit streaming music and the launch of a new brand for an example. Many record companies are embracing streaming platforms. If that’s where the music listeners are, they want to be there and maximize revenue opportunities. Streaming platforms often create playlist for their customers to listen to, but they don’t always know the best songs to use for our genre or care about our priorities. What if we created our own brand where we could build the best playlists for our genre and maximize the use of our songs? (To understand the value of playlists, see my post Music At Your Fingertips…Now What or check out this article on Pitchfork.)

What started as an idea by a department manager in the distribution division, was vetted with colleagues and the division leader. Since the idea was in line with company priorities and there was initial support, it was escalated to the next level. To be successful, the department manager needed buy-in from the label division who would be able to help promote the new brand through their artists. With the label on board, final approval for the brand launch was sought from the CEO who was also a part of earlier conversations with the division leaders.

Once the idea was given the green light, the work began to name the brand. In a cross-divisional brainstorm, 50+ names were generated. A few weeks later, a smaller team gathered to narrow down the options. With a possible name decided on, it was time for the logo.

The logo options were tested in a variety of uses to ensure that the design was flexible for a variety of uses. The legal department completed final vetting of the name and logo. A preliminary marketing plan was developed, profiles were created on the streaming platforms, playlists were built, a budget was approved, and a website was built. In less than 6 month, this little idea became a brand and started having success stories.

Cross-divisional support is key in launching initiatives at record companies. The interdependence among these divisions will also allow for synergies that would be harder to create if these three divisions stood on their own. Find your opportunity, build your support team, and go make music.