Saul Kaplan: Innovation Lessons From Taylor Swift

I’m not a fan of pop music but I am an innovation junkie. My daughter Alyssa, a self- professed Swiftie, has been pestering me to pay attention, if not to Taylor Swift’s music at least to her business model. She wore me down. Turns out, there’s a lot we innovation junkies can learn from Taylor Swift. Whether her music is your thing or not (I have to admit its growing on me!), you can’t help but be impressed with Taylor Swift’s business savvy during a time when the music industry is being disrupted to smithereens. I’m most impressed with her social media presence to catalyze a growing army of Swifties and her aggressive stand against Spotify as the business model war between mp3 sales and streaming services rages on.

The most successful businesses today are movements more than companies. Movements don’t market. Movements inspire and engage. They create an emotional connection through storytelling. Not stories to be enjoyed passively but stories we see ourselves in, stories we can actively participate in. What Taylor Swift realizes, that most businesses haven’t figured out, is that “social” isn’t an extension to an existing business model, it is an entirely new business model. Social isn’t a bolt on, its central to how movements start and grow.

Over the last two years the bottom has fallen out of the U.S. album market with sales plummeting 20%. Taylor Swift’s new album 1989 defies gravity with amazing launch week sales of 1.28 million copies exceeding all expectations according to Nielsen SoundScan. Swifties everywhere mobilized to make it so. My daughter, the fangirl, drove this innovation lesson home for me. Alyssa maintains a tumblr site dedicated to all things Taylor Swift. I didn’t pay attention until the day she called home proclaiming that the pop star had followed her and had actually responded to her question about all important lipstick choices. My daughter was so excited you would think it was a national holiday! That’s what I call fan engagement.

As if that wasn’t enough to lock in a fan for life, my daughter’s next post was a video of her 3 year-old twin nieces (our granddaughters) dancing to Shake It Off. Cute, aren’t they? When Taylor Swift tweeted out the video to her 46 million followers, our granddaughters went viral. Now everyone in our family is a Swiftie!

Multiply the ripple effect from this example of personal engagement thousands and thousands of times and you begin to see how social isn’t about pushing a message out to potential customers, its about pulling people into a movement. Talk about force multipliers. Social business is redundant. All business is social.

There is also an important innovation lesson in the way Taylor Swift has staked out her position in the music industry business model wars. Album sales are declining rapidly because consumers are flocking to free streaming services like Spotify with over 40 million active users. Only about 25% of those active users pay for a premium service without ads, the rest stream for free. 40 million streamers can put a serious dent in album sales. Spotify pays per stream royalties of between $0.006 and $0.0084 which is significantly less than an artist can make through mp3 sales.

Not many artists have Taylor Swift’s market clout but when she announced she was pulling her music off of Spotify it sent a clear message to the market. Content matters and should be paid for. In a Wall Street Journal op-ed and in a Yahoo interview she makes her point of view clear.

“Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for”.

“I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music”.

In a world where content can be digitized and the marginal cost of global distribution is virtually zero consumers have been conditioned to get content for free. It’s a business model free for all. Content producers have been squeezed mercilessly. Journalists, authors, and musicians are being decimated. Newspaper and magazine journalists have been let go in droves left to scramble to make ends meet as free agents. Authors bear the brunt of collateral damage from the battle between Hachette and Amazon. Fewer and fewer musicians can make a living pursuing their passion.

A dangerous narrative has emerged in which content creators are supposed to just accept that their content will be free. Authors are expected to write articles and books for free so they can make money giving speeches and doing consulting work. Musicians are expected to release music for peanuts so they can make money on the road doing concerts.

I have personally fallen into this trap as a steady content producer including tweets, blogs, articles, and even a book. How many of us keep pumping out content for free or very little money in the hopes that it will translate into value in other ways? Taylor Swift is taking an impressive stand. Yes it is in her best interest to do so but it is also in the interest of content creators everywhere.

Many new business models will emerge in the digital era. It will be messy while the market sorts out and balances consumer, platform, and content creator interests. Business models that don’t recognize the power of customer engagement and fully value the contribution of content creators are unsustainable. This new Swiftie is rooting for Taylor Swift’s continued success.