Case study: Making money from music

The challenge
In 2007, Troy Carter signed Lady Gaga to his newly found talent agency Coalition Media. Although the global record industry was in turmoil, he was convinced he could make Lady Gaga into a huge star in the tradition of global artists of the 1980s such as Madonna, David Bowie, Michael Jackson and Boy George.

The context
Music industry revenues were shrinking because of digitalisation and the internet. In 2007, a survey conducted by the Recording Industry Association of America and Pollstar, which collects data from promoters and venues, found that revenues had fallen from almost $15bn in 2000 to $10bn in 2007.

The strategy
While others saw the internet as spelling the end for the music industry, Troy Carter, Lady Gaga and Vincent Herbert, her producer, believed they could harness the power of social media by investing heavily in building her global presence.

They hired the online marketing company ThinkTank Digital, which set up 50 interviews with online bloggers. This alone brought more than 10m impressions on Lady Gaga’s website.

Much of the early focus for her social media brand was on MySpace. By October 2009, Gaga had amassed more than 700,000 friends on the site. Key to this success were the constant news updates, as well as exclusives, interviews and special features.

Crucially, Lady Gaga was involved in all aspects of the social media campaign. She decided to handle her Twitter account herself, rather than outsource it to a PR team, and this authenticity meant that by August 20 2010 she had hit 5.7m followers, more than Britney Spears.

Lady Gaga celebrated this achievement with the release of an exclusive video on YouTube.

The results
Lady Gaga was named the artist of the year in 2010 by Billboard, just one year after she earned the title of top new artist. Her album Fame Monster was a global bestseller and the single “Born This Way” was the fastest-selling single in the history of iTunes, selling 1m copies in five days when it was released in May this year.

The key lessons
Lady Gaga’s team has demonstrated a deep understanding of the opportunities of new technologies to connect with customers. Her approach to achieving “mass-intimacy” through social media platforms can be summarised with four E’s: emotions, experiences, engagement and exclusivity.

Emotions
Lady Gaga engaged fans by personalising them, calling them “Little Monsters” and even tattooing the pet name on her arm. She has also been very open about her past, talking about being the weird girl at school. This meant that fans could relate to her and also be inspired by her.

Experiences
Many of Lady Gaga’s music videos appear to be custom-made for the online world. Some web-only videos are up to nine minutes long, in contrast to the typical four-minute clips produced for radio and television.

Engaging
Lady Gaga has created myths around herself, giving fans topics to discuss and prompting them to spread stories about the star. This storytelling has been a way of promoting her image and music, reaching new fans.

Exclusive
During concerts Lady Gaga tweets messages to her audience so even those standing at the back in the auditorium feel they are interacting with the star. She also announces her new singles and albums directly to her fans on social media sites – before the press is informed.

Understanding the key elements of a social media campaign is a necessity for companies and managers. Poor attention to the four E’s can result in companies being overtaken by their rivals. Authenticity and constant promotion are key to online success.

Nonetheless, social media campaigns are no good if the product is not appealing. Lady Gaga’s YouTube videos get millions of views and her songs millions of listeners because they are of a high quality. After all, content is king.
- Financial Times, 21 Sep 2011