Django Django, alt-J, King Charles, and What Procurement People Can Learn From Musicians

I spent three days last long weekend at the Reading (rhymes with bedding) Music Festival, 30 miles west of London, probably the biggest and most full-on rock music festival in the world. And Reading's definition of "rock" spans everything from the dance electronica of Canada's Grimes, to the Foo Fighters: from (currently) fairly unknown sweet Scottish folk singer Rachel Sermanni, to veteran US punk band Social Distortion; from Scottish-Irish surf-pop dance kids Django Django to the Caribbean tinged indie-glam of classically trained King Charles, and from new English dubstep/plainsong/indie band alt-J to Icelandic folk/rock sensations Of Monsters and Men.

But today I'm not going to review the event – you can get that here, here and here if you want. Rather, I wanted to discuss the global economic significance of popular music – and what procurement might learn from some of the key trends in that industry.

The first point is the sheer size of the industry, estimated at around $70 billion annual value. Just look at the Reading event. Along with the parallel and contemporaneous Leeds Festival, it makes around $60 million a year just in ticket sales, never mind the £20 a day I spent on food and drink in the arena on top of the £200 weekend ticket.

Then, not included in the industry figure, we have the huge value of the ancillary and support system around music. Hotels, shops, and bars in and around Reading make millions from the 90,000 visitors to the Festival on each of the three days. There's transport revenue, and sales pre-event of tents, sleeping bags, torches, toilet paper and condoms to the 50,000 plus who camp at the site (average age about 19). Take into account those extras for every live music event, plus, for instance, the fashion expenditure driven by music stars, merchandising and so on, and you can see why this is one of the largest global industries.

It also has some interesting characteristics from a business perspective that might teach us something about the future of Western economies. Whilst there are thousands of hopeful musicians who never make it for every one who does, once you have a successful "business," your competitive advantage is actually quite hard to replicate. Unlike in the case of many manufactured goods, or even software, developing countries aren't going to easily replicate your intellectual property. There is no Chinese copy of Lady Gaga or indeed alt-J.

Sure, your music may get downloaded illegally, you may even get pirated CDs – although one suspects that as disposable income rises in developing countries, there will be an appetite for the real product. And we shouldn't disregard "traditional" album sales. Mumford and Sons have sold over a million copies of their debut album "Sigh No More" in the /UK and over 2.5 million in the USA over the last two years or so. That's probably $40M in retail value revenues. Not bad for a band I saw as the second support act and backing band for Laura Marling in 2008 in a small venue. (I loved them but would have given them no chance of success. Four guys singing English folk songs with an accordion and stand up double bass – no chance)!

But in any case, what that downloading problem has done is moved the artist's income stream into new areas – like incensing for TV shows and films, or income from Spotify, Pandora and similar streaming services. Even more important is the re-invigoration of the very oldest way musicians make money. Yes, playing live is now at the core of most musician's existence and earnings potential, just as it was for hundreds of years before the invention of sound recording technology. (Incidentally, rumours suggest the Reading/Leeds headliners are each paid something around the £1 million, or $1.6 million mark).

So the first possible learning for us in procurement is around what we might call the "live" paradox – that even though everything now is digitised, online and available, and I can see fifty videos of my favourite singer on YouTube within seconds, the value and importance of live performance has actually increased.

Might this apply in our business lives as well (procurement, in our case)? As everyone can access the same information and data instantly online, what you might call our personal "academic" knowledge of procurement material may become less important. But the determining success factor for us may be how good we are at putting this over personally, how we express our opinions and analysis of situations, in person, how we interact with colleagues or suppliers. In a sense: our own live performance.

It's an interesting thought anyway. And if Jason will allow it, I'll be back with another lesson from the music industry next week. Oh, and here are alt-J from Reading (this was an additional acoustic set – not their main performance. But it gives you an idea of their rather wonderful oddness). Another music video is below in case the BBC hasn't fixed their video link!

And if you're into new UK music, can I also recommend King Charles, Django Django, Dog is Dead, Rachel Serrammi, Citizens!, and Theme Park. All worth a listen!

- Peter Smith

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