Sex, drugs, and rock and roll might sound more glamorous than a diversified business portfolio, but the returns are a little more shortsighted.
Having sold millions of albums since forming in the late 1990s, the nu metal rap rock band Linkin Park has achieved great success in mainstream music and in not such a “rock and roll” way. They always seemed to be thinking ahead.
The band’s members turned to investment banker Kiel Berry in 1999, just as they exploded on to the scene, and opened up an “innovation company” called Machine Shop as a way to drum up extra revenue.
After 16 years, Berry still works with Machine Shop, and Linkin Park is trying something new: venture capitalism.
The band, plus Berry, worked with Harvard Business School professor Anita Elberse and a group of students on a semester-long independent study to come up with additional revenue streams, according to Berry, who outlined the project in an article this week in Harvard Business Review.
According to Berry, Linkin Park and the school evaluated the financial success of industry peers like rapper/businessman Jay Z and Hollywood actor Jared Leto, and they also looked at Beats Music, Vice Media, and the expansion of energy drink company Red Bull.
After studying their options, Berry says the group of musicians and Ivy League students decided on the following strategies in May:
Build a differentiated brand ecosystem that partners want to buy into
Use creative content to communicate our brand’s point-of-view
Ensure that our brand ethos is clear and that it’s reflected in every brand touchpoint
Diversify revenue streams across multiple business verticals to mitigate financial risk and extend our brand message
Partner with a broader community or network of global influencers to remain tapped into bleeding-edge cultural trends
The group then created a framework to execute a new long-term vision and restructured Machine Shop from a brand agency model to a “multi-pronged innovation model” based on four separate verticals: video content, global brand partnerships, merchandise, and venture capital, per Berry.
While Berry stresses that music is still important to the band, it now plays more of a secondary role.
“To be clear, we are still in the music business, but creating and selling music now plays more of a supporting role in our overall business mix,” he writes.
As the band prepares for a tour in China, they are also planning to meet with technology companies, consumer brands, and venture capital firms to identify new business opportunities.
Berry says today’s Linkin Park is “now better positioned to operate in the ever-evolving cultural and business landscape.”
In an age where albums sell less and less, maybe rock music needed a new mantra. Sex and drugs might still sell, but rock and roll is free over at Pandora.