As an industry, entertainment and media has gone through over a decade of incredible change, mostly as a result of the advent of the world-wide-web. These changes continue at an accelerated pace, as the industry continues to expand along with the use of mobile devices. There is a bewildering array of platforms available, and it is projected that within the foreseeable future every human on the planet will be connected to the internet (Bloomberg Radio News).As we examine this landscape, whether as consumers or entertainment executive, it is imperative that we envision and discover models that will help us thrive, while making sense of the whirlwind of product options.
Whatever entertainment media development models we choose, they need to help us make sense of the opportunities presented by emerging growth countries. They should also be flexible and apply to all other industries, related or unrelated. I have developed such a model for product development, based on what we do in the entertainment media business. It has five steps, and is very easy to understand. Like most relevant models, it has a simple elegance, but one must be wary of over-simplification in its application. I’ll use the rest of this space to briefly describe the five stages to my model.
The first two steps have to do with belief. Before we start we must first believe that a market exists, or could be created. After all, why would anyone undertake a venture if they didn’t believe in the existence of a market? For the second step of my model, there has to be a belief that access can be gained to the market. This could entail surpassing hurdles having to do with regulatory environments or logistics; regardless, we need to believe that we can reach the market with our products or services prior to moving forward.
So, the first two steps are:
- Belief in the Market
- Belief in Access to the Market
The third step is the most extensive and involves three distinct sub-stages. Wemust now consider the design, production and packaging of the product. It can be helpful to think in terms familiar to media creative types: pre-production, production, and post-production. It is at this third stage that we must also consider how marketing will be accomplished. For example, image creation, channels, demographics, market psychology, pricing, graphics, packaging, public relations strategies, and the creation of a digital footprint through social media are all topics that might be included in the planning during this third stage. Stage three might look something like this:
- Pre-production/Production/Post-production (Add in Marketing Considerations)
The fourth stage is fulfillment. There should be a plan devised for filling orders on a timely basis and getting product to the consumer exactly when they want it, and at the right price point. Distribution and customer relationship management (CRM) are two key considerations at the fulfillment stage. We must devise a plan to have product on hand for delivery when it is ordered, without incurring losses from overproduction or excess inventory storage. We should ideally have made just the right amount of product at the moment it is needed. One solution to this problem might be a “pre-ordering” scheme, where products are quickly produced only when there are orders. (This is easy in the electronic world of media products.)
When we handle fulfillment and all previous steps properly we will have successful sales, leading to revenues. The fourth and fifth steps are thus:
- Fulfillment (Satisfy the customer efficiently)
- Revenue
The final revenue stage of this model can be seen as the reward, and it is the reason for creating the business model in the first place. If the venture is it will produce revenues and hopefully a profit.The reason I view revenue as the final stage (in addition to a primary goal), is that it must be managed carefully in order for the enterprise to succeed. Not only is the revenue the driver behind the entire process, but it must be distributed equitably to the participants and stakeholders in order for the venture to be sustainable and equitable.
After all the bills are paid, we are of course expecting a profit from our efforts. This is the reason we are in business. Or is it? Don’t we also want to leave the world a better place than we found it? While our product or service can accomplish that to some degree, there is also the responsibility we have as business leaders to maintain a healthy society, culture and community if we want to have a sustainable business model. Aside from only profits, we need satisfied consumers for our products, and we desire contented employees and grateful suppliers. This will lead to long-term profits.
When it comes to the final (revenue) stage of my model, I am advocating corporate social responsibility (CSR). A portion of profits can be used to enhance our collective existence through supporting worthwhile causes, such as education, social justice, hunger, the environment, fair trade, or similar. Not only is it right for industry leaders to give back to society, charitable giving can also be useful to boost marketing efforts. I’ll cover this aspect of CSR more in-depth in a future article. I call it “doing well, while doing good”, and many quality companies are on board with the concept.
What I have presented here in the most simplistic of terms is a business model for the entertainment industry that could be applied to just about any other industry. Take and use it, and may you become wealthy, healthy and wise.
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Tom Stein is senior Professor of Professional Music at Berklee College of Music in Boston, MA and a consultant in the entertainment and education industries. The opinions expressed in this article are his own and do not necessarily reflect those of the editorial board at the Turkey Tribune.
Comments, responses and questions can be directed to the author at tom.stein@turkiyetribune.com
