A Case Study In Disruption: Linkin Park And The Music Industry

A Case Study In Disruption: Linkin Park And The Music Industry

Prior to the advent and spread of streaming services, selling albums comprised the mainstay of a musician’s income. However, the simultaneous rise of technology and the sharing economy have disrupted this once-profitable model. With album sales and (legal) downloads reaching all-time lows, some musicians are rethinking the way they approach business.

Beyond the Music

In this evolving landscape, successful innovators are artists who can leverage their brand to break into any number of diverse industries, such as tech, gaming, fashion, and lifestyle. Beyonce and Jay Z—two of the most financially successful performers year after year—have transformed themselves from musicians to moguls by essentially creating entertainment platforms.

Linkin Park, aware that producing music was not a sufficient long-term strategy, went to Harvard Business School to ask for help with their business model. Co-lead vocalist Mike Shinoda said “Our goal was to build an internal team of diverse talent to support the non-traditional endeavors the band plans to pursue in the coming years.” The band’s own entertainment company, Machine Shop, had already been re-structured to focus on innovation and non-traditional partnerships prior to the collaboration with HBS, but according to Kiel Barry, the Executive Vice President of Machine Shop, he could still see plenty of “blue ocean” for the band.

Phase one of the HBS collaboration consisted of extensive research into the innovators of the music industry, as well as innovative brands that have built entire ecosystems around a core product. The second phase involved engineering a framework that encapsulated the desired long-term vision for the company. In this phase, Machine Shop was restructured once again, from a brand agency to a “multi-pronged innovation model based on four verticals: video content, global brand partnerships, merchandise, and venture capital.” As a result of their HBS collaboration, Machine Shop has launched a venture capital firm, ramped up brand and merchandise expansion and has plans to meet up with tech companies and other venture capital firms to discuss partnership opportunities.

The Takeaways

Disruption is not consigned to any one particular industry. The simultaneous rise of a number of powerful social and economic forces means that “business as usual” is a model that no longer has meaning. But what can other businesses (in diverse industries) take away from Linkin Park’s example?

  • Build a differentiated brand ecosystem—Transforming their business model from music production to a full out “innovation” platform gave Linkin Park the financial stability and global influence to build upon their established brand.
  • Consider the non-traditional—While musicians are probably more comfortable operating within the entertainment industry, Linkin Park’s expansion into venture capital has the potential to transform their business and insulate them from further disruption in their industry.
  • Leverage creative content—While creativity is a musician’s core business, considering their brand from a global perspective allowed them to leverage their content and capitalize on touchpoints to harness the full potential of their brand.
  • Engage with one’s partner community—A partner community gives businesses unprecedented scope and global influence. What is more, engaging with partners is a win-win formulation.
  • Diversify, Diversify, Diversify—The diversification of Linkin Park’s revenue streams across multiple verticals helped to mitigate potential financial risk and allowed them to focus on their core business.

While it is clear that Linkin Park is in no way giving up on their original business of making and selling music, they recognize the need to adapt to stay competitive in this ever-evolving business landscape.

Is your company well-versed in disruptive thinking? Can any of these takeaways be used to transform your business?