Lessons For Procurement From The Music Licensing World

We wrote a couple of weeks ago about Big Sync and the fascinating business of music licensing and more widely how brands are using music as a strategic tool to drive customer approval and sales. It is no longer literally just “background music” but a key element of how brands create their image and sell themselves to the consumer.

Whilst this is a very specific area in many ways, there were a number of aspects that we felt highlighted more general lessons for procurement. So here are our four points arising from the Big Sync situation that have a wider implication for procurement.

Specifications – In the case of music licensing and buying for marketing services, often the internal client doesn’t know what they want. It is the job of procurement (and / or external experts who are playing a “quasi procurement” role) to bring options to the table, to explain what the market can deliver, and help the budget holder understand the market. It is the brand manager’s ultimate decision on the specification, but procurement can support, educate and assist in the process.

Transparency, as Caisley said, this is vital when it comes to marketing services expenditure, where a process such as making an advertisement is complex and has many different elements and costs. Basically it allows the buyer to understand the cost structures of the provider. The budget line for music for instance is often used as a dumping ground for other costs.

That issue of understanding cost structures, particularly where you have some complexity in the supply chain, is key. What is your prime contractor buying, from whom? Are there hidden payments in the process, with prime contractors not owning up to inherent conflicts of interest?  is everything you want to be disclosed being disclosed? That principle of transparency is key way beyond the music of agency world.

Negotiation is still important even in the connected, automated, digital world. Big Sync explained how they might be able to negotiate a surprisingly good deal with a mega-artist to use her track in South-East Asia if she is about to tour the region and is perhaps not as well-known as in her home territory. But this requires negotiation skills – and the same still applies in much that is bought by most organisations. AI has not yet replaced the need and opportunity to be able to handle face-to-face discussions about value creation and distribution (which is what negotiation means).

Who was it said think global, act local? Brands follow many global principles, but have realised you must be flexible to succeed in different markets. The artist that the teenage consumers in Turkey love is unknown in Benelux. So the brand managers need to be flexible and know that simply imposing global “solutions” often doesn’t work. Procurement executives in large international organisations need to have the same sensitivity. Concepts of global category management are fine, but few suppliers for instance can really service every country in the world equally well. Procurement executives also need to be flexible and ensure solutions work where they are implemented.

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