11. Epilogue: Don’t be Hansje Brinker
The entertainment business is shifting from analog to digital; it is a digital industry in a digital economy with analog facets like performances, events and festivals.
Estimated reading time 11 minutes
Many years ago, there lived in Haarlem, one of the principal cities of Holland, a sunny-haired boy of gentle disposition; Hansje Brinker was his name.
As a great portion of Holland is lower than the level of the sea, the waters are kept from flooding the land only by means of strong dikes. Even the little children in Holland know that constant watchfulness is required to keep the rivers and ocean from flooding the country.
Trudging stoutly along the canal, the eight year old Hansje Brinker noticed how the autumn rains had swollen the waters. He thought, ‘If they gave way, where would Father and Mother be? These pretty fields would all be covered with the angry waters.’
He was startled by the sound of trickling water. Whence did it come? He looked up and saw a small hole in the dike through which a tiny stream was flowing. The boy understood the danger at a glance.
Quick as a flash, he saw his duty. His chubby little finger was thrust in the hole. The flowing was stopped! If he drew away that tiny finger, the angry waters, grown angrier still, would rush forth, and never stop until they had swept over the town. He would hold it there till daylight – if he lived!
At daybreak a clergyman thought he heard groans as he walked along on the top of the dike. Bending, he saw, far down on the side, a child apparently writhing with pain.
‘In the name of wonder, boy,’ he exclaimed, ‘what are you doing there?’
‘I am keeping the water from running out,’ was the simple answer of the little hero. ‘Tell them to come quick.’
It is needless to add that they did come quickly.
The saga of Hansje Brinker — better known in the United States than in his home country — is a metaphor for DJs and event producers who implement short-term digital solutions in their organization. Is Hansje’s solution, his finger plugging the hole, a structural solution? Not really. A bigger and better dyke would stem the rising tide. Most of the DJs and event producers realize that internet and social media are important to their business. Most of them have set up a website and use various social media channels. Moreover, they use all sorts of online services, such as ticketing, merchandising, streaming and download services. Meanwhile, a number of event producers is experimenting with cashless, digital payments as an alternative to paying with ‘event coins’, and other forms of digital innovation. Digital change is turning the analog world inside out.
Over 95% of the DJs and event producers is, digitally, too busy to get organized. It shows in the numbers, among others those that gauge the performance of Facebook pages, Twitter channels, YouTube channels, Instagram profiles and the website: most DJs and event producers don’t have a clue what they are doing. The fan or client visiting his website, likes his Facebook page, posts a comment and possibly buys a ticket is not regarded as a relation. The thing is, it could very well be the same person doing all this.
Fans and clients of DJs and event producers experience on a daily basis that newsletters are not personalized, that the questions posted on social media are not answered and that it is not acknowledged that you probably have been at a DJ’s performance or an event more than once. To top it off, organizations mail a message to fans and clients who bought a ticket to their event and proudly present the option of following the event via live streaming. It does not offer the optimum experience fans expect and in the long run it will damage more than it will do any good. What is lacking is a digital strategy.
It is crystal clear, DJs and event producers have a number of reasons not to invest in a digital strategy:
- It is harmful to productivity (no time);
- We don’t have a clue how it will evolve;
- We are already up to our eyeballs in information;
- Online conversations are very shallow (no added value);
- We are doing fine, so we focus on what is doing fine;
- We lack the time and the means to contribute our bit;
- Traditional media are still leading, digital media are not our first concern;
- It does not fit within our organization;
- Commercial and financial results are not a given;
- The measuring and analyzing tools are not reliable;
- Management does not provide the required tools;
- We wait for others to reap the benefits;
- We don’t know how to get started;
- Frankly, we don’t want to show our true face;
- There is no budget available;
- We lack the expertise to handle this;
- We are short of vision and policy;
- We are very curious … so we wait and see;
- We are outright skeptical of this subject.
It appears that DJs and event producers – and certainly those who have been in the business for five years or more – do not want to see or acknowledge the bigger picture. It results in DJs and event producers that outsource the job to social media management agencies; this is not the structural solution of a strategic issue that has to be addressed right away. Experience learns that this ‘solution’ can be more harmful than beneficial.
When you do not acknowledge the digital domain’s system of interaction you are really clueless about the online world; this means you are carrying coal to Newcastle or, like Hansje Brinker, who uses his finger to stop the rising waters. In this digital day and age, the fan or client is part of the digital chain – and every time it is the very same person. You have to acknowledge this reality and service the fan or client accordingly, using networks and devices, in order to initiate a long-term relationship that works on multi levels.
You, as DJ or event producer, have to adapt continuously to online devices, how they work and how users use them. Shifts in the landscape, providing proper content, establishing connection and data harvesting are part of the transition you will make. When you realize that the digital chain has a massive impact on the culture and processes of your organization or business, you have to take action and adapt to the rules and customs of the internet ecosystem.
When you see what links devices, landscapes, content, connection and information, it will be easier for you to reconfigure the way your business is managed and simpler to develop products and services that better complement the desires of fans and clients. So follow the needs you can fulfill, in order to become successful in the internet ecosystem. After all, as a DJ or event producer you are part of an ecosystem of devices, networks, content, people and information. This means you have to adjust your business management to this environment and thus become a digital mature organization.
In the United States, management agencies such as Scooter Braun’s (who manages Justin Bieber, among others), Troy Carter’s (who manages Lady Gaga, among others) and Guy Oseary’s (who manages Madonna, among others), cooperate intensively with technology companies and digital strategists. They understand that the entertainment business has changed. Remember this: the entertainment business is shifting from analog to digital; it is a digital industry in a digital economy with analog facets like performances, events and festivals. Any connection to the fan or client is digital; after all, one links up to the digital domain even in offline situations like performances, events and festivals.
For organizations that operate in the EDM industry, the digital domain will have to be a strategic priority. Like Andrew McAfee, professor at Massachusetts Institute of Technology and co-author of The Second Machine Age, pointed out: ‘I can’t think of any business or business sector that will be immune to digital transformation’. The entertainment industry and the music business in particular is at the forefront of this unstoppable development and has become a digital business.
Via the dominant presence of social media, mobile applications and cloud computing, digital technology enables the more efficient deployment of marketing and sales, a more scientific approach to decision-making, and the establishment of new types of relationships with fans and clients. The options for competitive distinction are limitless – yet at the same time the greatest challenge. DJs and event producers have to attract the proper talents to their organization and mobilize them in a strategic fashion for support of multi-platform initiatives in the internet ecosystem.
The results are dependent on the actions that typify a DJ or event producer; actions that attract fans or clients as well as opinion leaders and creating experiences. Klout (influence) has shifted from experts and brands to people whose opinion is valued in the digital domain, as a result of which fans and clients initiate a relationship for more personal reasons than before. This requires content that overwhelms, so the fan or client is drawn into your realm of the digital domain and starts to interact with you.
The dividing lines between marketing, sales, communication/PR and ICT functions have blurred into a state in which they have become almost interchangeable, causing consensus and cooperation to play a fundamental role in achieving your company’s objectives. It is all about cultivating communication and the management of all aspects of the company’s digital landscape. This requires a new function in your organization. After all, analog-oriented people are of little use in an organization that is an integrated part of the digital domain.
A Chief Digital Officer is a key figure who directly works with the owner or CEO of the company. His main task is to influence the company’s strategy and management. Technical proficiency in emerging technologies is an absolute necessity. The chief digital officer must have the skills to inspire teams and assimilate the digital domain into the company culture, in order to become top priority. A Chief Digital Officer is not a Hansje Brinker.
A Chief Digital Officer tackles the task at hand in a structural fashion:
- He (or she) thinks in terms of results and gives business matters top priority;
- He (or she) has insight into the complexities and interdependencies of the company in relation to the digital domain;
- He (or she) provides measurable economic added value and competitive distinction;
- He (or she) helps everyone understand what elements or aspects of the company need to be invested in;
- He (or she) has long-term strategies on creating awareness, commitment, fans and clients experience, generating value for the company, planning streams of revenue and executing these plans;
- He (or she) encourages change beyond functions and sections of the organization;
- He (or she) designs requirements that are essential to the operation of the organization, and implements these requirements;
- His (or her) aim is to influence and align all parties concerned of (with) the organization;
- The Chief Digital Officer supervises the DLCCI-principle;
- The developments of the digital domain on macro level, the devices and the landscape;
- The manner in which users connect in the digital domain, and what type of content matters;
- The information that supports him in decision-making and helps him to secure the company value.
New forms of collaboration
The only relationship to maintain is the relationship between the DJ and his fans or clients, or the event/festival producer and his fans or clients. This implies that the relationship between the players in the entertainment industry will change. All players who are not part of the direct relationship are by definition service providers.
Not too long ago records companies and music publishers dominated the music business. DJs needed the records companies and music publishers to underwrite their venture and to reach their audience. Those days are over. The power of self-published content is bigger than many folks (people) think. This self-published content can work as the springboard to a career as a DJ. The first order of the day is to create fans and following, before the DJ’s (copy)rights can be capitalized. In the music industry, it is not clear who is responsible for or should invest in the DJ’s digital strategy. All parties – record labels, music publishers, management agencies, booking agencies – point to other parties and nothing really happens.
Suppose you would start out as a DJ, what should you do?
- Instigate a company that administers your (copy)rights. This company makes it easier to enter into new types of agreements with all parties – including record labels, music publishers, booking agencies– involved with you. The implementation and management of the DJ’s internet ecosystem will be simpler.
- Apart from administration, this company represents all your (copy)rights. This means: all aspects relating to the exploitation of the DJ (copy)rights. The company will take stock of the exploitation of the DJ (copy)rights at the end of each fiscal year. Profit and dividend will be distributed according to the agreement between the participating parties. This can be the manager, or the record label, or the music publisher who functions as banker.
Now that service providers, such as ticket vendors (providers), are no longer leading, event producers too have to redirect their course of action. Working with a different ticket vendor (provider) will not sell one extra ticket. What will, though, is the ticket-system’s seamless integration into your ecosystem. This set-up generates data that will make a difference. The same applies to cashless-system providers and other parties that are introducing new digital services.
The valuation of so-called ‘social capital’ is on the rise. This type of capital is created via fan and client information that is generated within the internet ecosystem. But how to value a digital environment where both fans and clients are present? Some years ago, specialists initiated studies into the rating of social media and its users by the world of finance. This question became opportune when internet companies such as Facebook, Twitter and LinkedIn went public. These companies were valued – in terms of share prices – based on their users and their online presence.
The value of a digital network of fans and clients is established by adding up existing and projected future cash flows. The long-term value of your network, i.e. your digital ecosystem, is predominantly determined by the value of its relationships; the relationships between the network’s users and the company, as well as the relationships between the users themselves. Future revenues (cash flow) are determined by existing and future relationships with fans and clients. These future cash flows are expressed in cash against demanded return, which results in the so-called customer capital (Rust 2004) and thus the basis for valuation. Numeric examples of additional potential valuations of well-known labels and DJs are shown in the appendices.
Since 2012, DDMCA and PIM are of the opinion that investors, bankers and other forms of money provision such as crowdfunding will get acquainted with this additional type of valuation. The traditional way of valuing, practiced by bankers or investors, will not fully stipulate the value of a company. Customer capital is not accounted for in the books, so therefore neglected. The simple valuation on the basis of assets is outdated. This method of valuing will not disappear; it will be integrated in the new method of valuing. The world is growing fast, the digital world is growing even faster.
The entertainment industry’s new business model is actually there for the taking. The change in perception of data – generated by social media as well as services such as Spotify and iTunes – representing monetary value will have managers and parties who exploits DJ rights look at their operations with a different view. Contracts must be reviewed or supplemented, so the data benefit the DJ (too). In order to successfully add value to a DJ, management must work on its expertise in data harvesting and data analysis, since this can produce new future revenue. What applies to DJs applies to event producers and festival producers as well.
Raw data harvested from, among others, social media do not have direct value. Only after making meaningful correlations, analysis and designing additional earning models on the basis of validated ‘fan’, ‘tweet’ and ‘like’ data, is it possible to generate direct cash flow. This will lead to an increase of the total cash flow and, moreover, will boost the value of the DJ or event producer via potential goodwill.
Entertainment companies, i.e. DJs and event producers, are digital by definition. Not having a digital strategy and the lack of a digital network and its contextualized interaction will limit the growth in value of you, the DJ or event producer, and your company. Not working from a solid digital strategy and not having adequate contracts with service providers means that you are simply pissing in the wind. Time is not on your side, you are well on your way to becoming a Hansje Brinker.
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