Case of U2. 4 people changed the Music Industry and the World

in u2 •  6 years ago 

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  1. Between May 2010 and May 2011, U2 Earned $195mm. In 2005, the
    members of U2 and their manager earned $250million without touring,
    releasing an album, or creating any new offerings. What is the business
    strategy behind this constant wealth generation and how has this strategy
    evolved in the face of disruptive change in the music industry? Describe
    how the bands revenue streams have evolved.

In 2005, Bono was “Time” Magazine’s person of the year along with philanthropists, Bill and Melinda Gates. That is not a bad company. He received the TED prize and co-launched RED, among other achievements. His social activist work had given him a revered place in the world of music. Activism was alive in the songs U2 wrote and released as well.
From the beginning, they have written their own material, understood the importance of touring and providing outstanding shows to their fans, as well as sharing the concept of supporting each other in their unified endeavor as a rock band.
They were smart to position themselves well on the ground floor of MTV’s original success with the release of their video “Gloria.” They went on to continue to make money through videos of their songs and albums.
They had the opportunity to leave Island Records but realized their revenues would be significantly more if they could get back their copyrights from Island, and so they did.
In leading up to the success of 2005, U2 agreed to a collaboration with Apple and its iTunes. They would promote iPods through releasing “How to Dismantle an Atomic Bomb.” U2 allowed the use of their single and video in exchange for their own branded iPods and $20 million Apple paid for airtime for their song. “How to Dismantle an Atomic Bomb” sold eight million copies within a month in 2014. It became U2’s fastest-selling record to date. In addition, Bono became a co-founder and managing director in a venture capital firm. The name of the firm is Elevation Partners.
In keeping with today’s trends, the band struck a 12-year deal with Live Nation. They would now be responsible for handling U2’s “merchandising, digital, and brand rights,” as well as their tours. Opposite Live Nation holding much of the marketing and distribution rights to U2, the band would now have stock options in Live Nation valued at $25 million.
These were the significant events that took place around 2005; however, as aforementioned, they were smart to stay with Island and gain their copyrights back. This would benefit them with any record sales in the future. Hence, in 1998, they released “The Best of U2,” 1980-1990, and in 2002, a second album featuring their music from 1990-2000.
Brian Eno, the producer, and recent collaborator postulated that “One of the reasons for U2’s longevity is that they are not in music for entirely selfish reasons. … I do believe that they really think that what they do serves some greater purpose than simply filling their bank accounts.” (P.41)

  1. How has U2 stayed relevant musically as well as technologically

U2 developed in areas of music partly by learning from mistakes. Pushing the creative limits of the genre in respects to the time period they were in but always realized, by mistake or on purpose, their core identity as the original artists and group they were spanning the decades.
Staying technologically relevant, U2 firstly collaborated with Apple. It collaborates with iTunes site after iTunes was launched 2 years. The agreement between U2 and Apple is U2 to help Apple promote its iPod music players by allowing Apple to use the first single from the album and a music video that the band produced for the iPod sales campaign. And about how Apple help U2, the band will receive royalties on U2-branded iPods. Apple also paid 20 million to purchase U2 song for the airtime. U2 noticed the new technology which is iPod and iTunes and seeking the chance to collaborate with Apple for better compete in the market.
Other than Apple, U2 has another collaboration. It says in the article that in 2004, Bono became a co-founder and managing director in a venture capital firm, which focuses on investing in “market-leading media, entertainment, and consumer-related businesses.” This collaboration helped U2 survived when the digital age coming and the record sale falling. Then U2 signed the contract with Live Nation and let Live Nation deal with its merchandising, digital and brand rights.

  1. Discuss how the bands business strategy over time allowed them to gain both financial and artistic control. What were the personal strengths that allowed them to do this?

Zoo TV. Incorporated the latest audio and visual technologies. This was coupled with their rebranding of personal personas. The Zoo Tv tour went on for 22 months which signified the capabilities of the artistic reinvention U2 achieved.
U2 worked with innovative producers like Brian Eno and Daniel Lanois to change their music style. They aim to change the impression of the public. This is one kind of the artistic control that U2 has. They have the power to change their music style and they know who they should work with. Meanwhile, U2 also consider changing the record label, but after they considered, they decided to stay in Island record but regain the copyrights of their songs as part of their compensation. This decision is brilliant because changing to the bigger record label may bring them more opportunities and attractions, but stay in Island record and regain the copyrights will let them keep earning money from those songs that they own the copyrights. Based on the article, it says “the band would now own the publishing rights to all their original songs, past, present, and future.” This is incredible. This is how U2 control their financial part. They not only have the financial benefit from this agreement, but they also have more creative freedom since they own their songs.
By regaining their copyright and working with the right producers, U2 showed they have the power to control their artistic and finance.

  1. Discuss the role of managers/mentors in the success and longevity of U2. What could have been handled better by the band or its advisors?

Paul Hewson’s first major influence was his parents. Losing his mom and wanting to prove something in defiance to his father, undoubtedly influenced his musical beginning.
A New York Times article written by David Carr in 2005 quoted Paul McGuinness the band’s manager since the beginning as saying, “We always said it would be pathetic to be good at the music and bad at the business.” From classmates forming a rock band in 1976 to being a steadfast multi-million dollar sensation and multinational media company today, U2 continues to put a considerable amount of thought into their music and actions. Originally, they were wary of McGuinness’s intentions. He was older, acted and dressed professionally, and didn’t try to be “the teenagers’ friend.” (P.10) Perhaps this could be equated with good parenting in that parents hope to guide their children and help them make the right choices even if that is the more difficult path to take. McGuinness was smart to encourage them to “own their own work.” (P. 13) This is a smart and significant goal for any artist/band. Furthermore, U2 was different than some other groups in that they were prepared to put their own profits back into the band in order to buy equipment, recordings, and demo tapes. They invested in themselves.
Chris Blackwell from Island Records wasn’t a fan of their music but believed in their personalities and Bono’s charisma. His support in signing the band was vital.
Island Record Producer Steve Lillywhite inspired the band with new ways of creating such as overdubbing or playing percussion using the wheels of an upside-down bicycle. Perhaps Lillywhite helped to lead U2 in finding their signature sound.
Bono’s activism, whether it be political or social, has created some issues, even though he has done outstanding work. Band colleague Larry Mullen, described Bono as a figure “prepared to use his weight as a celebrity at great cost to himself and his family, to help other people,” and added that “as an outsider looking in, I cringe” at the politicians he saw Bono becoming “friendly” within his humanitarian pursuits. (P.38). The turning point was Jubilee 2000. Perhaps some would argue that Bono should have stayed out of politics. Often managers are not fond of their clients taking any political side.
One paramount mistake was the release and forced the download of their 2014 album entitled, “Songs of Innocence.” Apple, paid an estimated $100 million for the album, so in that sense U2 made money, but they also inherited some unhappy Apple users. So, Apple had to create software that would delete only those songs from a user’s iTunes library. It is unclear if the band or a manager made this questionable marketing decision. Most likely, it was a combination of both.
Currently, they are involving more women behind the scenes of their shows. Sarah O’Herlihy commented on this in a 2018 Vogue article. She personally has been handling management and logistic duties for over a decade. Therefore, she has also influenced the band over a period of time.
U2 has done an amazing job at supporting each other and surrounding themselves with intelligent business minds and talented creative artists. Another point could be that they have not always been consistent with releasing new recordings at the right time and speed, possibly resulting in a fear they could lose their audience if they didn’t focus on the music, rather than the activism world.

  1. Discuss how U2 has combined commercial and financial success with
    humanitarian and social impact. If you were a financial investor in U2,
    how would you feel about this dual focus

Bono has used his status as a Global rock star to provide the influence needed to take on humanitarian change. His most prominent humanitarian projects were DATA (Debt, Aids, Trade, Africa) and his involvement in the Jubilee 2000 movement. Bono more than anyone was able to balance the roles of both Rock Star and a humanitarian/political activist. These jobs did produce difficulties for the band members but it also dissipated some musical stressors.
Bono’s involvement in DATA was troublesome to the members of U2. Although Bono had his own organization, his At least now [Bono] had his own organization, DATA,” McGuiness explained, “to look after that side of his affair”. This did not come without the feelings from the members of U2 that the band was second place. “As a result of his increasing humanitarian work, Bono, and his image were both becoming increasingly separate from the rest of the band”.
The commercial and financial success of U2 coupled with Bono’s Christian upbringing, political knowledge, passion and drive for global relief and change, provided the platform for Bono to, as is said, “ unite vastly different constituencies in the service of a common goal.”
As an investor in U2, I would be adamant in understanding Bono’s goals, values, morals, efficiency, and understanding. History has proven that Bono operated at a higher degree than most in these areas regarding music, poverty, debt, aids, politics, faith and much more. As an investor, an increased worry would not stem from Bono’s dual purpose but from the band members commitment to the non-music related purposes. As the drummer for U2 commented, “danger….. That people start to perceive U2 as part of the Bono show”.

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