Madonna: A Case Study. Sebastiano Mereu, September 2009
The Business Strategy Analysis class of the fall semester 2009 for the MSc in Innovation Management at FFHS required us to read the book Contemporary Strategy Analysis by Robert M. Grant and work on different cases from the additional cases-book. The first case we discussed is about Madonna and the successful strategy she employed to become a popstar.
Introduction By now, everyone involved or just slightly interested in the music business knows that Madonna is a hardworking, disciplined, and successful businesswoman. She got to New York in 1977, at age 19, with only $35 in her pocket, and 31 years later, in 2008, her “Sticky & Sweet” tour brings in $230 million in revenue, making her the biggest moneymaker in the music industry, according to Billboard Magazine. Madonna didn’t become who she is today by simply being lucky. When she started off, she had a vision (long-term goals), a deep knowledge and understanding of the music industry (the competitive environment), she knew exactly how to exploit her strengths and how to protect her weaknesses (objective appraisal of resources), and she knew how to effectively implement her strategy and respond to changes in the music industry.
Madonna’s vision Dick Clark, American Bandstand’s presenter, asked Madonna at the beginning of her career, “What do you really want to do when you grow up?” “Rule the world,” Madonna replied. That is a rather bold statement, or vision, for a newcomer with basically no connections and financial power. Back then no one would have thought that that grungy mid-twenties rebel would become the Queen of Pop one decade later. Madonna had a clear vision. She wanted to rule the world, or at least the world of entertainment, and in order to reach the throne of the Queen of Pop she knew that she had to be disciplined, continuously driven, and other dimensions of her life had to be either subordinate or absorbed into her career goals.
Deep knowledge and understanding of the competitive environment In order for Madonna to get fished out of the vast pool of new-coming music artists, she had to understand how the music industry works. There was no Internet with MySpace and YouTube in the 1980s and the “Big 5” record companies ruled the music business. If an artist
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wanted to become a popular act, she needed a record deal and it was key to know influential people and being introduced to powerful executives. But that alone would not be enough to persuade major labels to give you shot. A remarkable product was (and still is) a key ingredient for success. After the disco era, flashy and colorful pop artists such as Cyndi Lauper, The Cure, and Culture Club defined the music landscape of the 1980s. Madonna understood the trend and created a grungy, rebellious, and sexy pop singer look with room for adaption. Hence, Madonna was perfect for MTV. With MTV becoming the heartbeat of the pop culture of the 80s, it was crucial for any artist to be played, liked, and especially talked about on MTV. Madonna pushed the limits of sex and pornography with every video she made. Finally in 1990, enough was enough and MTV banned her video Justify My Love. When artists hope to turn MTV airplay into a small profit, Madonna turned a MTV video ban into a very large profit. Justify My Love was rushreleased into retail for fans to buy on VHS right after the ban. Obviously, the ban and the sale of the video was great promotion for the single that topped the charts after that. Another remarkable product was Madonna’s photographic art book that came in an unusual size and package, and included her then-latest CD Erotica. Madonna understood her competitive environment very well and played with what marketing-whiz Seth Godin would call Purple Cows, which are remarkable products that make early adopters stop to get a closer look at them and spread the word. Furthermore, she knew exactly whom to work with to value-up her product.
Objective appraisal of resources and effective implementation Right from the start, Madonna teamed up with the right musicians and producers and with popular DJs. Steve Bray developed the first demos and dance club singles with Madonna, DJ Mark Kamins introduced her to the Sire Records executives, where she landed her first record deal, and John “Jellybean” Benitez, the hottest DJ in New York in the mid-80s, was central for the promotion plan of Madonna’s music. Her willingness to make it ‘no-matter-what’ without compromising her ideas is shown by her ruthless decisions. As soon as Warner Bros. showed interest in her music and character, she dumped Steve Bray and Mark Kamins, and teamed up with Warner Records’ house producer, Reggie Lucas, for further releases. Also, she brought Freddie DeMann, who was managing Michael Jackson, to drop the future King of Pop in favor of managing Madonna.
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Madonna knew exactly whom to choose to add value not only to her music but also to her glamorous image as a star. She started very early to develop her look with the help of jewelry designer Maripole. The “Boy Toy” belt buckle she used in her beginning years, was an eye-catcher and a symbol of her grungy, rebellious, and sexy pop singer look. Jean-Paul Gaultier’s metallic, cone-breasted costumes, made exclusively for the 1990 Blonde Ambition tour, became an iconic symbol for the tour and for that whole period of Madonna’s career. In addition, her relationships with actors Warren Beatty and Sean Penn, and director Guy Ritchie gave a heavy touch of glamorous Hollywood to her image. Another milestone in Madonna’s quest for stardom was her role of Eva Peron in Andrew Lloyd Webber’s 1996 big-screen adaption of the musical Evita. Robert Grant writes, “Madonna achieved a status that was no longer defined by her work. By the 1990s, Madonna was no longer famous as a rock singer or an actress — she was famous for being Madonna.” After her roles in the movies Desperately Seeking Susan, Dick Tracy, and Body of Evidence, where she always incorporated the character she was promoting at that specific point in time with her music, she finally persuaded critics with her singing and acting ability. But most important, she was able to project her own life in the character of Eva Peron. Madonna came from the worker class, like Eva Peron, and had to fight all her life to make it to the top. Both Madonna and Eva made it from rags to riches. With every new album release and tour, Madonna reinvented herself. If electronic beats were hip, she went dance. If world music was trendy, she used henna temporary tattoos and incorporated world music instruments in her music. And she did it in such an authentic way that not only her old fans would keep following her, but also new ones that were not even around when she released her first album would start following her.
A good hand for business Madonna is known for being a great entertainer and for having a good hand for interesting and (for her) great business deals. Her remarkable ideas with the banning of the Justify My Love video and her unusual book release with the name ‘sex’ are prove that Madonna is not afraid to try new things, and that she can recognize a good deal. In April 1992, Madonna founds Maverick Records in collaboration with Time Warner. She signs deals with Alanis Morissette, The Prodigy, Michelle Branch, and Sasha Cohen Baron, among others. The roster shows a wide variety of talents from the entertainment business, who were successful thanks to strategic planning from Madonna’s Maverick team. 3
In 2007, Madonna ditched her record label, Warner Music Company Corp., to sign a $120 million, 10 year deal with concert promoter Live Nation, because, “The paradigm in the music business has shifted and as an artist and a business woman, I have to move with that shift,” she said. She recognized the trend of the changing music business. Artists are not making any money from CD sales anymore. The money is made with experience packages including live concerts, merchandising, and exclusive releases. The old guard of record labels can only offer distribution and traditional marketing and promotion, where as the new breed of live promoters like Live Nation know exactly what music consumers want and how to entice artists and their following to create a unique, so-called 360 degree experience. Madonna’s deal with Live Nation is once again proving her intuition for trends and business opportunities. And as if all of this wasn’t enough, she published two children’s books, and one of them was printed in 42 languages and distributed through Gap stores.
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