10. Transforming into a digital mature company

When do you reach the status of digital maturity? And how do you, the DJ and the event producer, transform your organization into a digitally mature business venture?

Estimated reading time

Shopping streets boarded up. New business models like Uber that were unthinkable five years ago. Fans and clients cling to their smartphones. Social media can make or break an event or a DJ. These times are tumultuous for DJs and event producers. Everyone involved in the entertainment and music business is aware of the limitless options offered by digital technology, but how to navigate the world of disruptive innovation, big data, the internet of things, cloud computing, customer journeys and an array of related concepts.

The digital transformation affects some businesses earlier and/or harder than others. DJs and music event producers and the music business in general – were among the first to face competition originating in the digital domain. However, the digitization of the music business is still intensifying, with yet more and deeper changes on the horizon. It creates the need for DJs and event producers to assemble and integrate new roles and practices so people are better equipped to cooperate, distribute content and structure processes.

Stagnant water will rot, as we all know. Lasting success will primarily be determined by the efforts of music and entertainment companies to anticipate change in the digital domain. Innovation of products, services and business models is essential for the DJs and event producers professional continuity in an era of disruptive technology. Digital forces evolve overnight and disrupt the playing field, yet at the same time create opportunities for DJs and event producers to meet the changing demands of their fans, clients, employees and suppliers. The increase in interaction between daily reality and the virtual world of the internet creates massive change and new, digital opportunities. These are brought about by the rapid developments in social media, data analysis and mobile applications.

DJs and event producers make more and more use of the options offered by digital technology; some of them are restructuring their organization and its business practices to meet the new reality. Technology changes the way DJs and event producers relate to fans and clients; it touches upon nearly all internal business processes and it even results in a new business model (as outlined in Chapter 3) that will help to maximize the profits to be made from the new technology and the opportunities it creates. This can result in revenue growth, more efficient and effective business processes, and the development of new products and services for existing or new markets and fans and customers. When do you reach the status of digital maturity? And how do you, the DJ and the event producer, transform your organization into a digitally mature business venture?

EDM and the Digital Domain

Starbucks and digital change

For Starbucks, the digitizationof the company and brand is as essential to its continuing business success as the coffee it sell is the official line in the CEO-room of the coffee outlet. Responsible for the implementation of Starbucks digital strategy is the Chief Digital Officer, Adam Brotman. Linking to clients via the Starbucks Digital Network is Starbucks method of building the brand. Starbucks used to develop its brand via its employees. Smiling faces and green aprons largely defined the companys image, the brand and its mission.  

These days, the baristas are still at the center of Starbucks in-store experience, however the company employs its arsenal of digital tools to build a more lasting relationship with its clients. With its extensive product range and 18,000 stores in over 60 countries, Starbucks applies digital to stimulate growth. It is a radical decision to appoint a Chief Digital Officer.

Starbucks is dismantling its (stand-alone) data silos in order to connect to and build its position in the internet ecosystem. It has identified the domains, networks and devices it will serve within its ecosystem.  Moreover, Starbucks has identified the networks it will connect to. The company is able to collect data via its single sign-on button that enables clients to log in via the Starbucks stores Wi-Fi connection. Starbucks has integrated this single sign-onbutton in all its domains, and all existing and future Starbucks applications. The button is a standard function of future homepages, to be integrated with the various social channels. It is all a means to achieve the ultimate goal, which is linking the social identity of its fans and clients to the Starbucks identitythat fans and clients fabricate via Wi-Fi, the Starbucks domains or its apps.

Connections and information

The semantic web provides a framework and an infrastructure for linking online published information, thus facilitating the creation of new insights. Starbucks is building websites and applications specifically for its internet ecosystem, thus facilitating full access to the semantic web and its functionalities.

Starbucks offers its customers interesting digital incentives via the Starbucks Digital Network: free Wi-Fi and the in-depth knowledge of premium content. Since Starbucks does not hold back (goes all-in when it comes to its) on its digital strategy, it obtains insight into the desires and needs of the connected consumers, while the brand is and remains top of mind. Starbucks CDO, Adam Brotman says: We have developed a technology-rich hub, as powerful as the retailer itself. It is impossible to predict what the digital hub of the planets biggest coffee retailer will produce. Various combined digital teams are deep into innovation, to extend the base via social media, among others.Starbucksvision for innovation: One brand one digital strategy. Transforming from analog to digital, Starbucks is rapidly becoming a digital driven organization.

Digital driven organization

The journey through the digital domain has many routes, all leading to the ultimate goal. The organization must set as its aim: to become a digitally mature organization. Every DJ or event producer and his (or her) organization will travel its personal route. It is about matching your organization and its value proposition to the digital domain. After all, as a DJ or event producer  you are a decentralized network in the internet ecosystem, as we have previously established. In this way, you will travel the road to a digital driven business; in other words, a digital driven organization (business).

What you should not do is to radically overhaul your current business model right away. Ask yourself as a DJ or event producer first: how do I add value for my fans and clients? And what digital tools are at my disposal to service my fans and clients even better and more efficient?

The road to a digital driven business implies investing in the transformation to the new business model, or exploring the options of new earning models that can be added to your operation in order to make the change to the new business model. You and your organization want to apply the options of the digital domain in order to add value to your fans and clients. Some organizations offer their existing products and services; by adding an extra channel they add extra value to the fan or client. Some organizations opt for deploying digital services in addition to their existing products and services. Nike is a fine example of an organization that puts effort into a new business model without radically changing its practices. In addition to the traditional Nike product, sneakers, clients can customize the shoes to their liking and taste online.

EDM and the Digital Domain

No ICT

These days, most transformations within organizations have a digital dimension. The digitization of an organization is often the dominant driver of change. The daily lives of all of us are rapidly becoming more and more digital, since we interact via social media, mobile internet, smartphones and tablets more and more of the time.

Technology can have the effect of headlights on crossing wildlife: it captivates into a freeze. Most questions about digital change are about technology and systems. Is it about working with computers? Thats ICT,is a frequent line of thought. That is a mistake; one just focuses on computersand forgets about working . One forgets to ask the question: What effect will digitization have on emotion and sense of purpose?

In practice, digital change is often regarded in terms of software development and system automation. Yet most of the time it is the processes that have to change. The most important players in these processes are and always will be people, not the computers and software that are supposed to support people. The technology should fit the process, not vice versa. As we have concluded previously: technology is not the end, it is the means to this end.

People-centered

DJs and event producers who came to prominence in the 20th century are struggling to make the digital driven change that is necessary in order to have an impact in the 21st century. They getdigital technology and they have good ideas, yet they run into problems executing these ideas. Moreover, they have been used to working within an hierarchical frame, focused on the preservation of what exists and restricting risk. These two characteristics hinder adapting to change and acquiring new skills.

Digitization changes the behavior of fans and clients, the business model and the DJs or events producers position in the value chain. The technical implementation of new digital technologies is important, yet not crucial to success. After all, the transformation it initiates is people-centered. The transformation to a digital driven business or organization implies a fundamental change in thinking, acting and organizing. Managing transformation means to influence in a smart and sophisticated way. This means: not from a position of control and containment, but in allowing for room and direction, and creating space for innovation.

If an organization sets out to transform to a digital driven entity, it must focus on the strategic importance of information in the digital economy. This means that two new divisions will supplement the organization: data management and digital management. Digital management is responsible for the fans or digital client, and oversees both the digital strategy and the technology to create a positive digital experience. Data managements focus is data; it will use the exploding volume of data and analytics to test and improve decision-making, in order to create new opportunities.

Good to great

In his book, Good to Great, why some companies make the leap and others dont, Jim Collins pointed out that success is not an accident, but a conscious decision by the leader. Collins and his team examined what is different or special about companies that have gained a significant edge on the competition.

For years, a team of American scientists, led by Collins, examined various lines of business in-depth, both in terms of quantity and quality. It resulted in a model for transforming good companies into great companies. Collinsbook describes in detail the approach that led to his model. The result of his survey can be used as an action plan for any successful company, organization or brand.

Collinssurvey followed 1,435 goodcompanies for forty years and examined their performances. Collins was looking for the few companies that became distinctive as great. He wanted to provide insight into successful change. What his findings boil down to is this: forget everything you have ever learned about what it takes to be successful and how to create good results. Collins wants you to be aware that (nearly) all requirements for the creation of large-scale change are myths:

  • The myth of urgency: this myth poses that change only starts when a crisis is looming, a crisis that convinces unmotivatedemployees of the need to accept change;
  • The myth of stock options: stock options, top salaries and bonuses are incentives that lubricate the wheels of change;
  • The myth of fear-driven change: the fear to lag behind, the fear to see others win, the fear of monumental failurethese will drive change;
  • The fear of acquisitions: you can buy your way to growth, thus buying your way to greatness via numbers;
  • The myth of technology driven change: the breakthrough you are looking for can be effected by the implementation of technology that will give you the edge over the competition;
  • The myth of ´the revolution: great changes must be extreme, heart-stopping, painful and hugely disruptive events.

We can discern all of the myths mentioned by Collins in the practice of digital change, as well as the changes a DJ or event producer faces concerning his participation in the micro and macro internet ecosystem. However, forget about these myths. The internet ecosystem has its own rules of digital change, which change as they play out. Contrary to the technology driven changemyth and the revolutionmyth, the internet obviously is a technological change that is revolutionary in nature. The context of Collinsmyths is this: the DJ or event producers have to closely follow the changes that are the result of the implementation of technology; and institute disrupting processes step by step, with fans and clients, and the organization itself.

Mindset

It is important to execute the transformation to a digital mature company by moving in small steps in the right direction as opposed to getting stuck in large-scale, complex and difficult to manage implementation processes. The fundamental idea behind the implementation of desired change must be the reduction of complexity. The new simplicity is what you are aiming for.

The changes of our times are driven by technology, yet people make the difference. The digitization of the DJ or event producer requires a transformation of the organization, its processes and systems, yet above all it asks for a personal transformation, your mindset and overcoming fear.

Our mindset is a collection of principles and convictions, both conscious and subconscious. These principles and convictions determine what we do and what we dont. We have acquired them in the course of our lives by way of upbringing, education, peer groups, personal experiences, etc. Principles and convictions, our mindset, immensely affect learning and development, Carol Dweck writes in her book entitled Mindset. She distinguishes between the static mindset and the growing mindset. You will be amazed by how static our mindset can be and to what extent it stems our personal growth.

A digital growing mindset is the convictions that you, the DJ of event producer, are part of a digital economy, operating on a daily basis in a digital domain that connects you to fans and clients. This digital growing mindset has distanced itself from the static mindset.

It is scary to say goodbye to the analog mindset of old. It is the fear to lose what you know and what you have, and not knowing what you will get. Management is an important success factor when you decide to engage the organization in the process of digital transformation. It is vital to provide room (for consultation, for instance) and direction. It is preferable to link the transformation to the primary process of interacting with fans, clients, providers, partners and competitors. The motto is: make the organization responsible for the transformation and reduce complexity; it will make change easier and more natural.

Facts

Assumptions must be founded on facts, not speculation. It implies that the organization must be open to discussion, which helps to scrutinize the situation at hand: the data, and how to contextualize and interpret these data. It works as a reality check. Do the plan and the envisaged approach match with the facts? Check the market situation and the information the market supplies, and monitor the development of the internet and the tools for web analysis. In this day and age, the challenge to overcome for DJs and event producers is the lack of insights. Without uncorrupted, reliable information an organization is ill equipped to make proper decisions. This vital information is mandatory in order to survive, let alone thrive, on the rapidly evolving playing field of the digital domain and its competitive nature.

Data are in inexhaustible source and an excellent opportunity to drill for (critical) insights. This is the time to tap into, cultivate and refine the powerful opportunities of this essential and priceless sourcethe digital equivalent of oil. Data will help to map out blind spots in the strategic plan. You and your organization have to develop an attitude that welcomes facts-based discussion. This attitude is fitting for an digital driven business in the internet ecosystem.

Collinstips

Collins gives a couple of pointers which are translated for taking part in the internet ecosystem:

  1. Lead the organization by asking questions, not by giving answers. It works for employees, as well as fans and clients, and the available data.
  2. Use the ensuing discussion (with employees; fans and clients; data) to attain an adequate answer to the question, not to create a support base.
  3. Analyze problems and mistakes made by employees, fans and clients, and data, to learn from them, not for finding the culprit.
  4. Organize and set up red flags, linked to indicators that help to timely notice mistakes or bad decisions, in order to act upon them. Use data for guiding!

It is a subtle balance between assumption and reality. Collinsanalysis shows the trick is to keep faith in the ultimate success of the venture while being open to the harsh realities of business and life.

Digital natives

The organization of a DJ or event producer must meet the challenge to develop the skills digital skills and information skills that make it possible to fully exploit the opportunities of the digital domain. This role is suited for a new generation of managers who use information to support the new business model. They are primarily involved in the development of facilities concerning the digital infrastructure, taking advantage of the chances the digital domain offers. This generation of new managers will principally be millennials or digital natives: youngsters who grow up in our rapidly digitizing world for whom matters like internet access, globally available information sources, options to communicate with every possible device at any time of the day of night, from any location, are a given. These youngsters have a digital mindset.

In his book, Grow and think digital, Joris Merks-Benjaminsen maintains that millennials show up at work with fresh ideas and ideals, possessing a flexible, non-hierarchical way of thinking. Once on the job, they become aware that many aspects of the shop floor are outdated; that hierarchy is still relevant; that seniority often prevails over merit; that you have to build an in-house network in order to navigate the company politics. They see a shop floor where plans come about via formal processes, structures and meetings.

This mismatch between the shop floor and the mindset of millennials harms both parties. Frequently, digital natives will have a hard time adjusting to the traditional office culture; the company runs into the problem of attracting young talent and keeping them happy. As a result, the organization is less diverse in terms of human resources than it could and should be.

Moreover, Merks-Benjaminsen maintains that CEOs and entrepreneurs are aware that digital natives are crucial to the health of their company. The new generation can help companies keep up with the ever-increasing tempo of digital change. This means that the last thing young professionals should do is assimilate into the existing work culture and methods, rather they can help to bring these up to date. This requires a delicate balance. Too little adjustment results in inefficiency and conflict; too much adjustment dilutes the updatingrole of the digital native. Striking that balance is the key to tapping into, and profiting from, the mindset of the millennial.

Digital mature

Collins explains the success of greatcompanies by their passionate pursuit of the companys essence. This pursuit breaks down into two aspects: applying focus in its activities, and the simplification of the business model, the strategy and the organization. Focus and keep it simple. Organizations capable of determining their essence create a solid mental frame of reference an identity that enables employees to quickly make the right choices. It is not always easy to find the essence, it demands mulling in a disciplined manner over the question: Why does the organization exist? What is its purpose?Subsequently, the essence must be translated into a clear and easy to memorize account that is part of an action plan and a roadmap for the application in the companys ecosystem.

The goal is a digital mature organization that practices a communal digital strategy. It is about improving or re-designing company processes; most companies are challenged by any digital initiative. For example, the decision to deploy an extra channel for the sale of a product or service does not take into account if the additional process matches with the back office (the fan base or the data harvesting platform) or any other process that services fans and clients. Transforming into a digital mature organization breaks down into five steps or phases:

  1. Ad Hoc The phase in which the organization is (re)acting without focus or aim, nor any budget or dedicated employees, realizing one has to do somethingwith the internet and social media.
  2. Engaged The phase in which the organization has made its first tentative steps into the digital domain, mobilizing social media, apps and its website on a regular basis.
  3. Structured The phase in which the organization organizes and structures its ecosystem with a modicum of money (budget); a limited number of actions have been triggered.
  4. Managed The phase in which the organization operates seriously and consistently by means of an action plan that includes clear aims and objectives.
  5. Optimized The phase in which the organization optimizes its aims and objectives, and redefines budget, roadmap and organization in the context of the transformation to digital maturity.

Looking at the DJs who make up the Top 100 lists over 2013 and 2014, it is apparent that the vast majority of the most popular DJs on the planet is engagedin regard to the transformation to digital maturity. This can be demonstrated by analyzing their websites and their presence on social media channels like Facebook, Twitter, Instagram, YouTube and Google+. The data collected by Rankingz and the EDM Monitor make clear that most DJs have just set out on the road to digital maturity and still have a long way to go. The EB Live Festival Monitor 2015 shows that this also applies to festivals and events.

To summarize

Transformation is about change, whether it is a new manner of servicing your fans and clients, a new way of operating, or getting your digital mission up and running (because various parties, departments and partners have to cooperate intensively). Processes do change and people are at the center of processes. The transformation to a digital mature company hinges on the management of change, and the understanding that this is the biggest challenge. Remember that change is rarely welcome, unless it brings evident benefits.

Until recently, information was primarily a means to an end. This is exemplified by the position of ICT departments within organizations; it facilitates. Information should service an organizations processes and objectives. Since information has become the end, it determines more so than other factors the primary economic or public value of a DJ or event producer. If you are able to wrap your proposition in information, in a way that outdoes the competition, your market share will grow. On the other hand, if your competitor succeeds in enriching his proposition with information, he might nibble on your market share.

The misguided application of technology can bring down an entire organization. Technology in itself does not generate success; using technology the right way does. Only use new technology when it is clear how its implementation will add value to your organizations essence. Nowadays organizations can and have to innovate successfully, in a way that will contribute to their reason of existence. In his study, Collins emphasizes the catalyzing effect of technology; if successfully applied, it can enable the organization to grow considerably. Be convinced about the internet ecosystem as an application, and the fans or clients central position in it.

The goal is a digital mature organization that practices a communal digital strategy. It is about improving or re-designing company processes; most companies are challenged by any digital initiative. Transforming into a digital mature organization breaks down into five steps or phases (see illustration on page 108). These five steps will lead to a univocal digital strategy and digital maturity.

It takes time to transform good companiesinto great companies. Being present in the internet ecosystem is a process in itself. Part of this process is improving the organization step by step. Change looks more spectacular seen from the outside. When the flywheel catches on, all of a sudden success is manifested in an accelerated fashion. The sudden appearance of a great companyis therefore often viewed as a big bang. It signals that you, the DJ or event producer, have found your spot in the internet ecosystem; the transformation from analog to digital is a fact. You have become a digital mature company.

Go to the next chapter

—–

Proudly supported by

Proudly supported by DDMCA, Fanalists and Jibe Company

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

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.

EDM and the Digital Domain

Saga

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 Hansjes 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 dont 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 DJs 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.

Excuses

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 dont 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 dont know how to get started;
  • Frankly, we dont 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 solutioncan be more harmful than beneficial.

Recognition

When you do not acknowledge the digital domains 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 Brauns (who manages Justin Bieber, among others), Troy Carters (who manages Lady Gaga, among others) and Guy Osearys (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.

New function

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 cant 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 companys objectives. It is all about cultivating communication and the management of all aspects of the companys 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 companys 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 DJs (copy)rights can be capitalized. In the music industry, it is not clear who is responsible for or should invest in the DJs 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 agenciesinvolved with you. The implementation and management of the DJs 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-systems 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.

Investing

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 networks 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 industrys 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, tweetand likedata, 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.

Go to the next chapter

—–

Proudly supported by

Proudly supported by DDMCA, Fanalists and Jibe Company

12. Extra: Have some DJs reached their limit?

The right to exist of every company is based on the product life cycle. Each product has a life path, which consists of a growing phase and a phase of decreasing growth.

Estimated reading time

The right to exist of every company is based on the product life cycle. Each product has a life path, which consists of a growing phase and a phase of decreasing growth. Each company must keep responding to product developments to keep breathing new life into the cycle.

Does this cycle also apply to DJs? Can something be said about the digital life cycle based on the connections on Facebook and Twitter the level of connections and connectivity with fans and a DJs right to exist? Using the data of Rankingz, DDMCA and Jibe Company researched the cycles of DJs who have featured in the DJ Mag Top 100 over the last 10 years.

edm-and-the-digital-domain-new-15

Ipod

The sales development of the iPod, iPhone and iPad shown in the image above displays the growth and decrease of the sale at a certain time. With regard to the iPod, which has been on the market for 13 years, it can clearly be seen that an explosive growth took place from 2003, when iTunes was launched.

In the graphic below left you can see the decrease in iPod sales after 7 years. iPad sales are stagnating five years after its introduction. This is shown in the graphic below right. Slowly but surely, it seems that the iPod and iPad have had their best days. The sales development of all three products displays a curve, which can be traced back with statistics.

Gausse curve

In statistics there is a common graph, the standard normal distribution. With sufficient number of observations this displays a symmetrical distribution over a measuring criterion. By showing the distribution schematically a clock shaped curve is formed, also called the Gauss curve or Bell curve. When the iPod sales over the years are added up to calculate the average sales figure, there is also a standard normal distribution. In mathematics this is called the standard deviation, the distribution of a series of numbers around the average or the deviation to the average. With the iPod this is the deviation to the sales peak.

It seems fitting to use the clock graphic in the life cycle of a product. Issues such as standard deviation, modal class, median and variations can be deployed to explain and predict the life cycles of products.

Rogers theory

The innovation theory, as described in the Diffusion of Innovations book, is a theory that comments on the spread of an innovation, a new product or idea within a group. The original theory was conceived by Frenchman Gabriel Tarde, but made popular by Everett Rogers. The theory is well known specifically in the marketing world, where the description of the life cycle is central. Rogers distinguishes various stages, in which different groups are identified which accept a product or new idea. The theory is visually translated in a similar clock graphic.

Rogers presents a subdivision, in which he points out innovators, early adopters, early majority, late majority and laggards. Clients which are named as innovators buy newly launched products, and early adopters are the followers of the innovators.

edm-and-the-digital-domain-new-16

Product Life Cycle

On the basis of his theory it can be assumed that 2.5 percent of the total target group displays innovative behavior (innovators). The segment of the early adopters is estimated at 13.5 percent of the target group. The communication transfer of the innovators to the early adopters is critical for the success of a product in the future, also called chasm. Additional focus is given to this theory on vanAnaloognaarDigitaal.nu, in the chapter The Tipping Point as a guide’.

In communication to the market, innovators can be used as a means to stimulate the growth of a product. This application is called testimonial. The majority of the target group covers 68 percent (early and late majority). The remaining 16 percent of the target group is called laggards, those that lag behind.

Phases

Based on the above mentioned percentages the life cycle of a product can be broken down into four phases:

  • The introduction phase: the launch of the new product on the market requires attention from the management for the quality of the product (banishing start-up problems) and communicating about the product with the innovators.
  • The explosive growth phase: establishing the product in the market now requires strong communication with the early adopters (testimonial) and the quantitative distribution (available everywhere).
  • The ceiling phase: the majority buys the product, the distribution is qualitatively regulated and the price policy starts to become important to assist advancing its penetration.
  • The maturity phase: the laggards and the loyalists are the only ones who still buy the product. Marginal improvements to the product, together with price changes, keep the product in the air as long as possible. Until the moment where there is a loss, a product provides cash flow, which will enable new products to be financed.

Digital life cycle

The digital life cycle of a DJ shows, to a large extent, a resemblance with Rogerstheory. The phases in the cycle can be expressed in the following terms: introduction, growth, maturity, ceiling and regression. It is interesting to apply the theory to a DJ. As expected, generally the same developments which one normally sees with a productcan be predicted. The phases can be applied to the connections via Facebook and Twitter.

Every DJ who finds himself in the internet ecosystem passes the different phases in the cycle. The speed with which each DJ moves through this cycle depends on, among other things, the demand and the way in which he is able to connect with his or her fans and maintain this connection.

Rankingz has been collecting social media data of approximately 400 DJs for the last 4 years, including DJs who have featured in the DJ Mag Top 100 in the last 10 years. When you consult the graphics many of these DJs find themselves almost at the ceiling phase. The policy concerning the content which should maintain the connections is becoming increasingly important. Maintaining and advancing engagement with fans is central to this to remain in the maturity phase.

Most DJs appear to have hit their ceiling. Moreover, for a number of them the relative regression is no longer far off. When you look at the dynamic average of the number of page likes, the amount of connections on Facebook, then the graphics of Armin van Buuren and Carl Cox show strong indications they have had their day.

On Twitter it appears that for most DJs there is not a cloud in the sky. Most of them are still in the growth phase. Only ATB shows the first signs of a possible regression. However, the growth of three DJs is beginning to subside: Infected Mushroom, Richie Hawtin and, once again, Armin van Buuren.

edm-and-the-digital-domain-new-17

Increasingly faster

Tiresome, but at the same time also challenging is that the cycle is being completed increasingly faster. Looking at the cycle of Martin Garrix, it is evident that the introduction phase went quickly after arriving in the DJ Mag Top 100 in 2013. This phase led to an explosive period of growth in a shorter time than was experienced by Armin van Buuren, for instance. The last few months it seems that the ceiling phase for the DJ is already in sight. Also when you look at the other graphics, you see that the cycle with Martin Garrix is proceeding faster.

Has Martin Garrix already reached his ceiling? The DJ will quickly need to deliver a good new single and good content to get the curve on Facebook to rise again.

Scope

DDMCA and Jibe Company, together with Rankingz are scrutinizing more DJs. Not every DJ proceeds beyond every phase; some new DJs do not get past the introduction phase, while other DJs have been in the maturity phase for many years according to Rankingz data.

The model of the digital life cycle is still in a premature phase. However, it can be suggested that there is a relationship between the connections on Facebook and Twitter and the theory of Rogers. The data therefore has a predictive value, where something can be cautiously said regarding the right to exist of a DJ based on the connections he or she has on social media.

Various DJs show a decline, which can have consequences on the long term for the right to exist of such a DJ. When the decline continues there is less scope on the long term for the DJ.

Content strategy

What must you do to prevent decline? A good content strategy helps. A good strategy can allow you to create and curate content which is relevant for the target audience at the right time. This leads to strong relationships with fans. With good relevant content you distinguish yourself from your competition who do not follow a strategy.

In addition, such a strategy helps to discover who at which moment, requires what content to achieve your aim. Furthermore it also helps to discover what the best form and best method of offering this content is. Connecting the strategy to the aim of your organization and measuring the final result helps you to make clear what the added value of content is for your fans. The aim is to connect, and content is the method of connecting. By sharing the content consistently, and maintaining that in a disciplined way, you will see that you connect with increasingly more fans and get on the right path to win the trust of your fans. Result: the curve of the digital life cycle is rising and the ceiling is not yet in sight.

—–

Proudly supported by

Proudly supported by DDMCA, Fanalists and Jibe Company