Startup Call
Eric Ries’s book The Lean Startup has taken the business world by storm in the way that only books that sum up complicated ideas in an elegant manner can.1 Sadly, while readers from many industries are referencing the book and applying its principles, musicians, and in general the music business, are not. The apparent indifference is disheartening, especially because the strategies and tactics that Ries lays forth are so applicable both to the business of music and its artists.
This article will summarize three key points from Lean Startup that artists, especially, should understand and apply.
Products are Experiments
Harping back to high school chemistry, it was standard to go to the lab for an experiment and test a hypothesis (with safety goggles!). There was a well-defined procedure that we understood as scientific. We can learn from that. Regardless of whether a product is released into the marketplace as a tangible good or a marketing campaign, results need be contrasted against a forecast just like our lab experiment. Improvement is only possible if there is a definite set of expectations before the product is deployed. Results can then be measured and compared. Finally, a new plan can refine the approach and increase the chances of success of the next iteration.
Music businesses, and musicians, like other industry players, should reduce risk to be successful. Yet SWAG analysis, the ‘sophisticated wild a** guess’ kind, tends to prevail, and ‘gut’ based decisions, rather than careful consideration of the facts, are the norm. For instance, if a forecast can be made of how many people will attend an upcoming live performance with some degree of accuracy, the amount of merchandise needed for the show can be determined. This decreases waste, and increases revenue.
Also, with fact based forecasting, tactics can be developed to build success. Say, for example, a band played a club gig in September and two hundred people turned up. The band is then asked to play again at the club two months later and they wish to drive more attendance. The goal would lead them to create an experiment — a tactic. The band would know if the experiment worked or not soon after the gig. The dynamic of ‘building, measuring, and learning’ as advocated by Ries, will tell them if their experiment worked or not.
In the above case, ‘building’ is the hypothesis: “if X tactic is executed, the number of people who will come to the show will increase from 200 to 200 + Y”. ‘Measuring’ confirms whether or not more than 200 people attended the show. The next step, ‘learning’ is absolutely essential. A post-mortem must be performed in order to assess success or failure relative to the initial hypothesis. It is far easier to dismiss failure, and move on than it is to analyze what happened in order to learn from it. And yet, this is the road to success: to strive to understand what caused the hypothesis to be flawed in execution, and then refine the approach, based on the findings, and so increase the odds of success the next time. Here is the lesson for the music industry.
Minimum Viable Product (MVP)
Of course, testing prompts the question of what to test. On this point, Ries’s insights are perhaps the most important in the book. Business, he says, should adhere to a market based philosophy of product trial-and-error, not just reliance on customer feedback. He contends, correctly in this writer’s opinion, that most firms spend far too much time and money attempting to discern what the market wants through R&D, focus groups, and other means. Companies should get to market as quickly and efficiently as possible because the most useful feedback they will get is about the product itself (or the business service in question).
Access to quick market feedback begets the idea of the ‘minimum viable product’ (MVP), a key concept for Ries. A product or service should take the least amount of money and time to develop, but it must be viable, i.e. at the very least it must be of a quality level that allows for actionable feedback.
For musicians, the idea of an MVP is refreshing. Today, anyone can create an MVP, i.e. a demo. The days of sub-par MVPs are in fact long gone. There is less need to spend a lot of money on a studio prior to testing the hypothesis that a song will be well received in the marketplace.
Consider, for example, the ease with which an artist could create two songs, put them up on Bandcamp or other website, and immediately begin the collection of feedback. An artist, of course, can elect to do whatever they want with the information. However, even the mere act of gathering download and streaming quants or collecting qualitative comments should be enough to break a habit of ‘random acts of improvement’ — actions which, while not bad in and of themselves, do not adhere to any type of concerted, measured plan. The goal is to move towards a more thorough and tested approach.
Metrics of Success
There is a need for a new type of “report card” for artists. Many analysts agree that sources like SoundScan (for digital and physical transactions of recorded music) or BDS (radio airplay quants) have less relevance to artists today. Ries reminds the reader that the metrics used to judge startup companies are, indeed, never based on diagnostic reports like the income sheet, the balance sheet, or a cash flow analysis. Startup entrepreneurs produce nothing more than informed guesses about a company’s future and yet investors bet on a return on investment.
Musicians should take notice, for the old and tested methods of placing music are now up in the air. In this context, the importance of a new metrics “dashboard”, so to speak, is paramount. The dashboard would not just include the number of song downloads and streams, but the quantity of Twitter followers and website analytics, i.e. traffic, time on site, bounce rate, and other features.
Measuring such activities will redefine artist success—and help with the development of appropriate tactics in the marketplace. Statistics about engaging and retaining fans will likely return value to artists over the long-term more than sales can. Random acts of improvement do not create a sustainable career.
By George Howard
Endnote
1. Ries, E., The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses (Crown Business, 2011).
Nice article. I would only add a note regarding Ries’ concept of pivot vs. persevere. When discussing artistic works in the avant garde in commerce, it can be difficult to determine whether to change your style or to continue until it gets recognition.