Hindsight is a wonderful thing. If only we could re-run past experiences, knowing what we know now.
Picture the scene. It's 1986 and you've just taken the decision to open the world's largest record store on Oxford Street, London. Your store is so popular that the entire street (one of Europe's best known) is completely closed for the crowds, and you're waiting for the arrival of two of the most famous musicians of the moment, Bob Geldof and Michael Hutchence, to preside over the opening. Things could not be better.
This goes on for years; your brand is completely front of mind for any music lover. You sell millions of records, cassettes and now the new Compact Discs. Whenever you open a store, there's a ruckus. Everybody wants you on their high street and all of the best acts want to help promote you. It's almost like the record industry was invented for this.
Taking an entire company trip to the Turkish coast for target-setting and corporate announcements, you pause to breathe. The accounts are looking extremely healthy, you're making massive margins, you're seriously considering an IPO and cashing in on all the excitement of becoming a publicly listed company. Cashing in. That would be very nice indeed...
But there's a niggle. It's 1998 and you're nervous about something. You keep reading about how little music artists are actually paid for the £16 you're charging for a CD. You don't run the artist, you don't run the labels, but it makes you think. People complain about it a bit, but it's really not hitting you financially anywhere at all. But you think it just might, maybe not this year, but soon.
In parallel, there's this new thing called the World Wide Web. Some enterprising souls even have 'websites' and there's Real Player that lets you listen to music and watch video - if you can stand to wait for the buffering to pass.
As the sun sets, you get some of your team together. You ask them - do they think we should do something on the Web? Do they think there's an alternative reality that might one day come to pass? After all, you haven't just been counting the profits - you've had a couple of clever people help you under the radar with running some alternative numbers, some different metrics. They've told you about what happens to CDs once people have bought them, how many are copied, what the trade in bootleg could be worth if it was commercialised. They've also been keeping an eye on some crazy stuff happening in far-flung parts of California, rumours of some really bright new companies that might even do something called e-Commerce.
Your colleagues think you're nuts, but they don't dismiss you either. You agree between you that you're not going to take the company public. You don't want the hassle of quarterly reporting for a start, and you're not particularly keen on having to justify every investment to a bunch of suits that just represent how the music industry is now, not what it might become in the future. That's it. You're going to set up a skunk works team to do something called dot-com.
Fast forward. It's 2002. The ashes and destruction are everywhere from the dotcom fallout. It's been brutal. Of course, your business is shielded from it - you're still getting pressure to IPO, you're still making a ton of money from all your high street stores. You haven't stood stationary - you've acquired booksellers and a bunch of catalogue sales companies. And you haven't lost the faith.
There's this new site in your stores and on the web where some very enthusiastic music lovers are spending a lot of time. They share gossip, tour dates, band histories, and even set up their own band pages where they can host their music. If it gets enough attention from the community, you introduce them to the execs and subsidise a CD, which you then launch in the store local to that artist, which in turn leads more people to try out the website. It's early days - only the serious guys have this new 'broadband' connection to access it, but let's say it's gone slightly beyond the 'early adopters'.
You're glad you never went public - this web stuff was exactly what your competitors ran away screaming from. They still think you're a maverick but frankly your numbers say otherwise and this is getting you phone calls from some unlikely people, particularly from a company called Apple. You've liked their more recent computers so you entertain a meeting with them.
They pitch you the idea that they could create an online catalogue of music where people could upload and buy music. This is a bit of a meeting of minds. You can imagine people in your stores - your early adopter guys - getting quite excited by this. You could also imagine selling these devices and using your high street stores as the hubs. People could come and charge up with music, if they didn't want to spend ages on dial-up or even just hang out at home and buy music from you.
You're a savvy guy so in 2004 you sign an exclusive arrangement where, across Europe, you're the sole agent for this new 'iPod' technology, in stores and online. People still think you're mad, but you have enough respect in the industry to convince the record label execs that this is actually not a bad idea. Within two years, nearly 30% of your music sales are via your online channels. You're backing the right horse here - the record companies are starting to complain but your sales are still fantastic. There is a problem though: you're not as profitable as you once were on music alone. But luckily, your high street stores have become music community centres - you invested pretty heavily during 2005-2008 in making them venues as well as stores, with places to hang out and recording studios. As a result, you still have a strong connection with local artists and a strong fan base. Selling the local stuff, as well as the merchandise and the tickets, is becoming a big part of your revenues by about 2008.
Meanwhile, Apple is getting to be huge. Your exclusivity deal has run out but luckily you've copied your strategy from ten years earlier and decided to have a small team doing interesting technology stuff in the background and they've been scoping out other activities in different companies.
So just at the point when exclusivity runs out, you hit on a fantastic new business model that you think is going to be huge. Your customer base is totally digitally savvy now, and they all have mobile phones or even BlackBerries. You've been talking with this guy in Sweden, Daniel Ek, who's got this idea called 'Spotify'. It's basically music rental. Total genius - no need for complex single-purpose devices any more, and they seem to have cracked the DRM problem. You sign another exclusivity deal, which means that you reinvent the industry, again. Due to your local community feel, you're starting to become the hub for discovering new music that people can just listen to without buying. Your sales of online credit and the number of people signing up to 'free trials' are becoming quite significant.
You sit back and contemplate. Your career has gone from the wild fortunes of physical music sales into something altogether more fragmented but completely aligned with the changing times around you. You've successfully adapted to become a large high street business that nurtures the local community around it, through music discovery and venues, whilst building the right partnerships to navigate the internet. Not just once with personal player devices, but twice as you've gone for an access-based model. Your case study is all over the business schools and your book 'Go with it' is an inspiration for many.
You retire happy, but still hungry, and form a start up incubator with your good friends Saul Klein and Guy Kawasaki. Your goal? To spot the very best talent and build bridges with traditional companies to make sure they didn't make the same mistake Kodak made.
Suggested For You
SUBSCRIBE AND FOLLOW
Get top stories and blog posts emailed to me each day. Newsletters may offer personalized content or advertisements.Learn more