Leadership Aspects of the Music Business: Comparison of Atlantic Records and EMI Music - Essay Example

Table of Contents Rationale for Current View of Business……………………………….2 Business Planning……………………………………………………….4 Investment versus Salary ………………………………………………5 CEO versus Employee …………………………………………………7 Tools and Forms ……………………………………………………….10 Strategic Decision Making …………………………………………….11 Awareness of Market …………………………………………………..13 Conclusion ………………………………………………………………14 Leadership Aspects of the Music Business: Comparison of Atlantic Records and EMI Music Rationale for Current View of Businesses Atlantic Records and EMI Music are both interesting record companies and they have both found a niche in the music world. Atlantic Records is an international record company and EMI Music has three components of their company that are also worldwide. Atlantic Records is a large business while EMI Music is the only privately owned "major music company" in the world (EMI Website). After doing research on the two companies I still see that each one is very successful. Both companies are strong leaders in their communities and they are helping a variety of musicians. These companies have a long history and they have a strong reputation with their competitors. Both strive to publish new talent and both have digital partnerships with a variety of companies around the world. EMI is known for its innovation in music and sound. According to their website, they have been in business from the moment that recorded sound began. In fact one of their businesses was found by the gramophone inventor, Emile Berliner. In this respect they are older than Atlantic Records. EMI considers itself a leader in technology and they believe themselves to be change agents. They look at the music industry through a very long lens and they find ways to keep up with new trends. As an example, the scientists at EMI helped bring about magnetic tape development. They also invented stereo recording. As they saw the digital music was becoming popular, they built a website and were one of the first companies to have streaming audio with the first album ever heard across the Internet (EMI Website). EMI has taken the stance that they would move forward as a "brand" in not only new products but new processes that were important to the growth of the music industry as a whole. Atlantic Records sells many products to keep them involved in the music industry. They have a long history and they saw that by developing packages that allowed consumers to receive music in a variety of ways, they could corner the market on these products. They sell CDs and DVDs in addition to ring tones and they spend time handling and developing a small group of artists; they are famous for artists like Ray Charles, John Coltrane, and Led Zeppelin. All of these artists are recognized by most people. Atlantic Records is also a unit of Warner Music Group so they have a variety of options when it comes to making music. Atlantic also understood that they needed to provide music in a variety of formats for a changing and fast paced world. Today, more than half of their music sales come from their digital products that are as varied as iTunes and ring tones that consumers can bring right to their cell phones. This is a very important aspect of getting new business and keeping their older customers. When looking at their websites it is apparent that they are selling music to different customers. Atlantic Records seems to be focused on a variety of artists to help them become well known in music. They boast young and older artists and they seem to have music for any taste. EMI Music seems to focus on a younger group of people who are interested in a few of the younger ones. They are successful because they are not only keeping up with what is currently happening in the music world, but they are also looking towards the future. One of the issues that make both companies strong is that they understand their customers. They provide their customers with current news from around the world and their websites are user friendly. In both situations a customer can create their own playlists and talk about the music they enjoy. Business Planning In order for a business to become successful they must have a solid business plan that is flexible. Although the business plan is not available to the general public there are many changes that both companies have done to move forward. As an example, Atlantic Records decided to work with their artists and create fewer releases so that customers would wait for new artists to appear. They put their emphasis in digital strategies, joint ventures with other companies and they developed a variety of hits both in pop and in rock ("Atlantic Rock Steady" 2006). According to the managers of Atlantic Records, "we look for brand alliance opportunities from the beginning" ("Atlantic Rock Steady"). They do television commercials and they show artists in these commercials so that their customers will begin to connect with the companies. Atlantic also maintains a "hands on" way of working with their artists and they make them very successful instead of spreading their expertise too thin. EMI was faltering for awhile until they were taken over by Terra Firma which was a move that began to help them move forward again. With the take over, the company realized that they could not allow their digital products to be on their own anymore and they were able to create a stronger set of products (Andrews 2007). Terra Firma has shown that their intention is to build a stronger EMI by streamlining their products. Investment versus salary If I were going to invest money into one of the companies I would definitely invest in EMI. The basic reason is because they have shown they are on the cutting edge of the industry and they are always moving forward. Their decision to let Terra Firma take them over was definitely a strategic move. They talked to other companies about merging or takeovers but Terra Firma had the best reputation and they had the money to invest (Andrews 2007). I would know that my investment was sound because they have always been ahead of other music companies and Terra Firma stated it wants to “build on EMI’s current position as one of the world’s leading music companies and accelerate the development of its digital and online strategy” (Andrews 2007). In fact, when they made the announcement their stock went up again. EMI is already positioned as one of the top music companies and they are smaller than Atlantic Records. They are continuing in the digital field and this is one that is important for them to continue. They may be stopping their music publishing business and this may also be a strategic move depending on what they will do next. According to Gallo, there has been a massive restructuring of the company since 2007 and they have become a smaller company. In this way, they can concentrate on a few titles and continue those that are most popular. Most people want to back a winning company and an investment in this one will give a solid foundation which will create a profit in these uncertain economic times. There is one caution here that I will be mindful about and that is that EMI has been acquired by Terra Firma. Although their stock went up initially, it could go down. Mintzberg et al (1998) suggest that working with a company that has recently been acquired by a bigger company could be a detriment to invest in because studies have shown that large changes can happen within the first five years that will affect the stock (p. 164). If I was going to work for one of the companies it would be Atlantic because I could be an employee and have my bases covered with steady money and money from my investment in a different company. If the company was to lose money I would not have to worry about bankruptcy or any other problems. I believe it is good business to have money in more than one place. If I lost my job I would still be in a good position financially. Since Atlantic Records has been around for a long time and people are familiar with their brands being involved as an employee may yield a different status with them than it would if I was working for EMI. It seems to me that there would be more opportunity for growth in Atlantic Records because they are not going through a restructuring at this time. As I was deciding on my choice between the two companies I came across information from class and I asked myself what I would want from a company that I worked with in the music industry. I realized that the answer to this question was that I would want to be successful. In Atlantic Records it seems that success may come quicker than in EMI. Most people want to work for a company that is successful and they will look for many things before they decide to commit to a job. To be a success as an individual or as a company it will be important to be able to take risks. In fact, most successful people are risk takers. I made my choices according to the following principles: If you invest money and want to be first and lead the market, you need to be forward thinking and choose the market where you can realize this option. EMI is a solid investment and it is a progressive company that is always moving forward. If you want stable income it is better to be in a company that allows quick growth. This will help you become more successful and become a leader and you will have a hand in helping the company stay successful. Atlantic has been in business for a very long time and they have a reputation of keeping their employees happy. From my point of view the decision that one must make in any successful business situation depends on the type of character and the type of leadership they want to develop within themselves. CEO versus Employee If I were a new CEO at Atlantic records I would start with basic questions that the new CEOs probably wanted to understand. I would want to know where they were going to be in the future, I would look at the current successes and I would want to factor in how I could lead the company to be the best in the industry. I would want to implement the type of strategy that Harris talks about that is "real time." This basically means that I would stay in contact with my customers to make sure that we were providing the services they needed and that they would continue to buy. We would make it easy for customers to order online and to receive topnotch customer service from them. I would have an online customer service staff that would be able to answer questions 24 hours a day so that customers never had to "wonder" when they had a question. I would also make sure that the company continued to offer a "portfolio of products" that had different "growth rates" and carried different aspects of the market. (Mintzberg et al, p. 94). We would also have to stay flexible so that we could continue within the market and stay valuable in the industry; we would also start looking towards innovative ways to reach customers. A very important aspect of the business as quoted by Harris is building customer relationships. Many businesses fail because they sell to customers but they do not build relationships. This situation creates one time sales but it does not insure that people will come back for more. The point would be to study top customers and provide them with the products and services they need. This would be helped through implementing a customer relationship management (CRM) program (Harris, p. 175). As head of Atlantic I would make sure that we knew what customers were buying and which products were most popular. Atlantic is already on that track and I would just make sure that we were more diligent in working with our top customers. A customer management system would help me analyze the current market system and help us prepare for the future. Politics pay a role in any business and the music industry has many turns and twists that must be taken into consideration. There can be changes in economics also so we would have to prepare for that situation. As an example, offering products at various prices would allow people to purchase music whether there was a global economic crisis or not. This would insure that the company always has sales because some people will buy music no matter what the circumstances. Another are I would be involved with is to insure that the company understood diversity. There are many different types of people who purchase music and this must be taken into consideration when doing customer service or in offering special deals. According to Branson, Barnevic and Simon (1999), those who understand diversity are "nonjudgmental, acknowledging and valuing peoples differences. They also appreciate what is common among various nationalities." (p. xvi). This is an important piece to any business because you will also have employees from different backgrounds and ethnicities. Today, technology is also an important aspect in business and the top CEOs will keep an eye on technological advances. A music company will need to pay attention to the global appeal of technology so they can keep track of what the digital market continues to develop. The main approach I would use as CEO would be to think in real time. This attitude would make me think about what how the company looked in the current moment and what to do in the future. I would have my hand on the future of the music industry as well. According to Pfeffer and Sutton (2006) it is wise for a manager who wants to say on top and show that they are confident to stay in touch with the present and the future. This helps the individual talk about the future in a positive way (p. 205). Great leadership means great attention to what is most important. Tools and Forms As stated before one tool would be a customer management system. This would provide all the information we need about the customer and what they are purchasing. It could be customized to offer specials for holidays or birthday for our top customers. It would also provide data about what we needed to keep an eye on in the market. It would also be important to keep a business plan and actually look at it from time to time to make sure the company was moving in the direction that the business plan states. We would want to link our strategies to the business plan so that employees would understand where we were headed. All employees must understand that the business plan is a flexible tool and it is ordered in such a way that everyone can understand how to use it and contribute to it. A strategic plan should grow out of the business plan so that the company is forwarding their mission through the work of employees who are part of the plan. This plan also is flexible so that it can change as time goes on. The strategic plan would start out by identifying the businesses vision, objectives and mission. Everyone in the company should have a part in shaping the plan and some of the strategy will be based on the business plan; the strategic plan should look at every aspect of the business. There are many business models and it is a good idea that everyone in the company understands what that model is and how it works. A financial business model provides a virtual framework for a company so that the CEO and others can examine strategies, tactics and operating plans to make sure that the business will meet its financial goals (Friend and Zehle, 2004). Many people think that a music business could operate without all of these tools but the music business will be affected by internal and external change. I think that every business should have a "can do" attitude and we would use a "think than do" form. This is important to make sure that everyone in the business is on the same page in terms of what we are doing and how we are moving forward. This still allows for innovation and suggestions from everyone involved. Any "good" business will want to have many tools it can use that will move it forward and keep it afloat. Companies in the music market know that it can be a very rough and unpredictable industry and those that are successful understand they must be flexible with their plans but that they also must stay with the business plan in order to keep moving forward. Atlantic Records is a very good example of using the right tools. Their urban A&R department is one of the most successful in the world. By paying attention to their strategies they have been able to launch a higher status in the hip-hop movement. I think that Atlantic will eventually have to focus on breaking in more talent instead of only doing a few each year in order to stay competitive. I believe they are feeling some of that need today with so many different ways. Focusing on new talent is a part of the "brand" that Atlantic Records has created and it would be essential towards helping them break in more talent. Strategic Decision Making Running a music business must be based on a variety if methods and strategic decision making is one of those methods. It is important for any business to understand that the business is always changing whether this is in the employees or in the customers. The market will also hold flexibility because customers are always looking for the best buy in anything they purchase. The Reversal Theory helps a business keep up with this change by carefully helping the company look at on motivation and emotion. In other words, it helps a business understand the emotions that are involved with purchases and the motivation in which people purchase items. Reversal Theory has been researched by several universities and it is used in many different industries; many people use it to do market research. The theory says that we are motivated by different things on different days and that " our experience is shaped by a set of alternative ways of seeing the world" (Apter Development, 2009). This way of seeing is driven by the following eight core motivational traits: (Reference: Apter Development, 2009). These states are categorized into four opposite states. On the chart above the different states are shown in color. As an example, playful is the opposite of serious. The theory says that people are constantly moving through one of these states all of the time. People who are healthy are able to experience all of the states and discern when they should use each one. The point to this theory in business is to understand the theory so that you can always make changes in your business. This may start as simply changing website choices on a regular basis to appeal to different people at different times. A company that shows that they are always changing within reason will be one to stay on top. As a CEO of a company it is also a good idea to watch the competition. In some ways this can work for the business but it can also work against it. The challenge for some businesses is that they tend to try and copy what the competitor is doing rather than thinking strategically for themselves. Each business will have a different way of looking at competition which will depend on the nature of the industry and the market a business is in. It is a good idea to remember the overall vision and specific objectives that are present in each business. Awareness of The Market Having a keen awareness of the industry on a global basis will help a business identify where they are in the industry. In one sense it will show them the sources of competition and whether they are at an advantage or disadvantage over their competition. They can build upon their strengths and minimize their weaknesses. By developing a keen market sense they will be able to keep up-to-date on changes and trends in the industry All of these strategies will come together to move a business forward. In the music business it is important to watch the competition but not be swayed by it because it is constantly changing. The competition should be used as a reference rather than it becoming the only thing that the business does to know in which direction to go. Conclusion There are many different ways to show leadership in any business and this paper has explored many of them for the music industry. There are many labels that have gone out of business but the one thing that is clear is that those that follow some type of strategy are usually able to stay on top. The competition can help a business understand what other people are doing but it does not show them how to move forward; only the business plan and the strategic plan can help them stay afloat. To be a successful leader in a company the CEO must be able to relate to all employees and they must be flexible. In each of the readings they talked about how it is essential that the head of a company will help their employees invest in the company by investing in themselves. In the music business it is imperative that the CEO and the board of directors will be able to think about the current situation as well as the future by keeping an eye on the competition while their own products. References Andrews, R. 2007. "EMI Finally Agrees To Takeover; Terra Firma Plans Online Acceleration". Paid Content. < http://paidcontent.org/article/419-emi-finally-agrees-to-takeover-terra-firma-plans-online-acceleration/>. [Accessed 21 June 2009]. Apter International. 2009. "Reversal Theory." 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