A Tale of Two Industries...
Yo! This is officially the last SNOBHOP post for the year, and I wanna thank y’all for reading/sharing/subscribing, etc. There’s a lot in store for 2025!
Since we’re so close to Christmas, I thought that it was only right that this week’s post is a story… A Tale About Two Industries.
As the story goes…
There was once a man who had ambitions of starting his own company.
He started the small company in his garage with the help of a friend, and though their beginnings were humble, the company created formed some of the greatest tools known to man.
The man became known as a trailblazer, changing every industry he touched — to this very day, there is no one quite like him.
As the man’s company grew, so did his legend. And while his legend grew, the times changed.
One day, the man came up with an idea that would change the world. It was based on an idea he had about music consumption.
The man noticed that digital piracy was running rampant in the music industry because of the invention of the MP3.
In fact, the MP3 helped shape his belief in his industry-shifting idea. The man believed that someday, people would be able to fit their entire music libraries in their pockets, stop relying on CDs, and go digital.
It was a dream no one thought possible, but then he achieved it. And when his vision came to life, it completely disrupted the music industry and changed the way we consume media forever.
If you haven’t picked up on it by now, the man I’m talking about is Steve Jobs, and his invention was the iPod (backed by iTunes, of course).
You might be wondering why I’m telling this story, and it’s because, ladies and gentlemen, the ad industry is at a crossroads, much like the one the music industry experienced in 2005.
The only difference is that the music industry is already cooked, more or less. The ad industry still has a chance to figure its shit out before it experiences a seismic shift like the music industry.
Again, you might be saying to yourself, “This is great, but I don’t see the connection between these two industries.”
Aye… No worries.
Let’s continue the story.
In the Before Times…
The music business was booming. Every artist, from the one-hit wonders to the legacy acts, had platinum and gold albums (measured by physical units!), the video budgets were easily hundreds of thousands, and the greatest music producers in the world commanded $250k+ per song.
As for labels?
They’d never been more prosperous. Billions of dollars were coming in, and there were so many subsidiaries popping up that you could barely keep up.
Indeed, it was a glorious time…
THEN SHIT HIT THE FAN.
In the early 2000s, Napster was threatening to cripple the music industry. Bootlegs were eating into sales, and the writing was more or less on the wall.
Apple had a solution for this issue and approached music industry bigwigs to see if there was an amicable way to introduce its product while being fair to the industry.
However, the label heads were resistant.
They’d been making money hand-over first for decades and didn’t believe some Silicon Valley tech guy, or someone in their basement writing code, would eat their lunch.
But, yea… They did.
Once peer-to-peer technology became the easiest way to access music, it was a done deal. When paired with the power of iTunes & the iPod, the music industry tumbled.
What followed was a major consolidation effort. Labels folded, and the only ones left from the rubble were Sony, Warner, and UMG (each with a few key subsidiaries)
The music industry was able to adjust somewhat. Artists went from selling double and triple platinum albums to gold (and platinum if you were a bonafide star).
Things seemed stable-ish for a few years.
THEN SHIT HIT THE FAN (AGAIN)…
While the labels were still catching their breath after the blows delivered by Apple and the P2P sites, another man in Sweden had come up with a revolutionary idea…
This man studied how the tech scene evolved with time and was sure that the next best step for the music industry and consumers alike would be to allow fans to access an infinite on-demand library with every album they wanted.
Just like a decade earlier, shit hit the fan. The labels were again resistant.
BUT…
This time, they learned from their mistake.
They decided to let the man from Sweden have access to their music in exchange for an ownership percentage of the platform. He agreed and together they walked a murky new path together.
The man in this story is of course Daniel Ek, and his invention Spotify caused another seismic shift in the music industry. Artists and consumers alike are still navigating this shift.
In the years since Spotify jumped on the scene, it’s one of three major streaming services that serve as the primary means of music consumption. Universal Music Group is buying up everything and there are some well-funded indy labels out here, etc.
The music industry is essentially the Wild West these days. But did it have to be?
ALL ROADS POINT TO THE AD INDUSTRY…
Although this industry’s story is still being written in real-time, I think the moral is clear: DON’T DO WHAT THE MUSIC INDUSTRY DID!
A lofty statement, I know, but here’s what I mean:
1. Embrace AI & any new technology that comes next:
Initially, the labels shunned digital and tried to block its progress at every turn, and in return, all it did was make the upheaval that much worse.
At the time of iTunes, the worst any influential music figure could imagine was that consumers would now buy single songs instead of whole albums. Who would’ve known that, only a few years later, this would create the environment we see today?
Again, it begs the question… What if they bought in?
What if the label heads found a way to invest in Napster, or even partner with Apple on their digital store rather than attempting to prevent the inevitable? Maybe they’d have more control of the chessboard in the years to come.
2. PARTNERSHIP IS THE WAY FORWARD
In recent news, WPP announced that it signed a strategic alliance with UMG. I think that means both C-suites understand the landscape and realize that their strength will come from partnerships.
This was the lesson that the music industry learned with Daniel Ek. This time around, the music industry decided not to fight the future but to have an active state in how it comes to life.
You can even see this trickle down into how deals are structured these days and the types of services offered by distribution companies to artists who are major and indy alike.
With that said, I’ll leave it at this…
AI isn’t going anywhere, and it’s only going to get better.
The media landscape will continue to evolve.
Consumer interests will change.
LIFE GOES ON.
The ad industry is at an interesting crossroads. The best free game I can give anyone is to research what happened to the music industry in the early 2000s. See who’s still around and why. That will give you a hint at how to proceed.
Until then, let’s enjoy the holidays. 2025 is gonna be an amazing year.
I can feel it.
One.