Lesson from Rock and Roll: Give Away What You Used To Sell

Give away what you used to sell, and sell what you used to give away.

It sounds like a zen parable, but it’s also something that more of my clients are pondering, as their business models move into the cybersphere.

My career started at Rolling Stone, so I naturally think of the music industry as an example.  Years ago, if you were a rock and roll band, the way you made money was simple: you recorded an LP or CD, and when it was released, you went on tour to promote it.

You needed as much exposure as possible, so ticket prices were low and tours often didn’t make much money.  You nearly gave the t-shirts away, because when you left Philadelphia you wanted to make sure that every kid in town had Led Zeppelin Summer 1976 displayed on their backs.  Where you made your money was album sales, and everything else was marketing toward that end.

Now, for reasons ranging from online piracy to lower royalties for streaming services like Spotify, the value of recorded music has dropped precipitously.  So some bands actually give away their music and instead make money on tours and selling merchandise (like those t-shirts).   Baby boomers who haven’t been to a rock concert in a while are often stunned by $200 ticket prices and wonder: when did that start?  Well, it started when it became clear that nobody was ever again going to get rich on CDs.

Something similar happened in journalism: in the early days of the Internet we found it impossible to charge for online news--but people were happy to pay $4 or $5 for a single article from the archives.  Fresh news, it seemed, was supposed to be free, but once it was a few days old it was information and readers were willing to pay for it.  (Explaining that to a grizzled old newspaper editor was a real challenge.)  While more newspapers are now finally charging for news, some still use a business model wherein today’s news is free but you have to be a subscriber to see anything older than 24 hours.

Where else does this happen?  One client used to make excellent money as a clearing house for government environmental records that were otherwise hard to access.  But they recognized that sooner or later those records would be easily accessible online, so they turned their free Website into a for-pay community for environmental professionals.  Lawyers, also, are increasingly mulling a future in which basic legal services may be either automated or out-sourced--so perhaps the real value they offer is the advice they give away for free during those client lunches and dinners.  Lately I’ve even heard of corporate travel agencies who earn bonuses for NOT booking travel for employees but instead talking them into using telepresence.

Clearly one size doesn’t fit all--but it’s an interesting question for almost every intellectual property or services company to consider: Give away what you used to sell, and sell what you used to give away.