Last year about this time, I wrote an article which outlined changes in the business music world over a 20-year period and suggested that the industry needed to embrace change -- in both technology and markets -- as it looks to the future.
Since then, I had the pleasure of presenting the keynote address at the annual International Business Music Association (IBMA) conference in Scottsdale, AZ in October. I started with the premises stated in the SCN article, then quoted current market statistics showing that the industry has grown only slightly since 1999 (editor's note: see sidebar). This article suggests action steps that industry stakeholders can take to grow and unify the industry.
Current State Of Business Music
The business music industry in North America has grown in both number of subscriber locations and in dollar revenue since 1999. That growth, however, has been at less than the rate of inflation (see sidebar). That means that business music is not keeping up with other industries from an economic standpoint. Repercussions of stagnation include:
Music contractors have sold or merged their businesses faster than new competitors have come on the scene.
Monthly music subscription fees (paid by clients like specialty retailers and restaurants to programming companies like DMX, Muzak and PlayNetwork) have flattened or declined.
New competitors like XM and Sirius Satellite Radio threaten to change the business music paradigm, offering commercial-free licensed music at near-wholesale prices.
In addition to technical and economic challenges, the industry faces long-term strategic threats, including:
National chain business (from Taco Bell and Starbucks to The Gap and Macy's) is saturated, with the top three music brands occasionally "trading accounts" through
aggressive pricing or service programs.
"iPod Home Brew" represents a new form of competition.
Many traditional industry clients are satisfied with their current sound systems and are reluctant to upgrade, despite a better economy and increased consumer demand for high-quality music as the soundtrack for work, play, shopping and transportation.
Grow Or Die?
Is the business music industry dying? A casual observer (or Wall Street) would conclude that it is. Yet industry players that I talked to are steadfast in their belief that the future will be brighter.
If things are so bad, why are more new business music services entering the market today than there were five years ago?
What do XM, Sirius, AME, Crow's Nest and others know that the core of the industry doesn't? Something is attracting them...could it be the unfulfilled potential of the market that the traditional industry is not reaching?
About 10 years ago, the dairy industry was in a similar quandary. Rather than shrug off the situation, that industry created the now-famous "Got Milk?" campaign.
Now public awareness and milk sales are up. The downward trend was successfully reversed.
Here's the point. Rather than just pack up and go home, the milk industry made a conscious decision to unify, speak in one voice, educate new markets and promote its benefits together.
A Call To Action For Business Music
The business music industry has a similar need and a similar opportunity. At the IBMA conference, I suggested three action items for the industry:
1. Create business music programs for all viable customer profiles--not just national chains. Equip business music contractors to go after the "other 80 percent."
2. Develop a unified industry message to take to the market.
3. Focus on industry growth rather than just trading accounts.
The first step is to widen the dialogue. I encourage the systems contractors, programming companies, and gear suppliers that have a stake in the future of the business music industry to reach out to one another and identify common problems and potential solutions. This could start with a "Business Music Industry Summit": a one-day meeting of the minds, including representatives from the business music trade groups (IBMA and IPMA) and the performing rights organizations (ASCAP, BMI, SESAC).
This is a critical time -- a pivot point-for the business music industry. Let's isolate and deal with them head on. The opportunities are real. Let's use our collective resources to focus on growth. Industry unity is essential. Let's create opportunities for collaboration as we deal with the problems and the opportunities.