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What happened when Linkin Park asked Harvard for help with its business model?

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They tried so long, and worked so hard. But in the end, it really helped from Harvard. 

How do musicians make money today? Album sales are down 14%, single downloads are down 11%, and only the streaming services are up, 28%. Technology has forced music artists to completely rethink the way they approach their businesses. We’ve all had to adapt.

The most successful artists in this new landscape have begun to look at new business models and new industries to strengthen their existing brands. They’re extending their brand into areas like technology, gaming, fashion, and lifestyle content — essentially becoming entertainment platforms.

Here at Machine Shop, the wholly owned innovation company of the alternative rock band Linkin Park, we identified the need to think differently years ago. Machine Shop was born in drummer Rob Bourdon’s living room in 1999 when the band was packing CDs and stickers into boxes to send to their very first fans, long before any of their music had hit the radio waves. The band was distributing its self-produced first album, having created buzz for it in online forums and chat rooms and building a community there (this was several years before Facebook and Twitter transformed social media). Jessica Sklar, then the band’s intern and now Machine Shop’s Chief Strategy Officer, evolved the online discussions into in-person meet-ups and events at concerts, developing what came to be known as the “Linkin Park Underground.” This fan club gave the band a deep understanding of the importance of direct relationships. Today, Linkin Park is one of the biggest bands on Facebook, with over 63 million fans across the globe, and is particularly popular in Japan, India, Brazil, China, and Germany (and the U.S., of course).

Enter Harvard Business School... Amazing!

To help think through this critical strategic restructuring, we turned to a leading expert on marketing strategy for media and entertainment firms, Harvard Business School Professor Anita Elberse. In collaboration with Elberse and her students Blaire Lomasky, Neil Wusu, and Jingping Zhang, we conducted a semester-long independent study on the business of Linkin Park.

During Phase I of the study, we did extensive research into the businesses of music industry innovators: the merchandise strategies of Tyler, The Creator, the joint ventures of Jay Z, and the tech incubation and investing of actor Jared Leto. We unpacked the strength of Trent Reznor’s creative partnership with Beats Music, the diversification of Pharrell’s content platform i am Other, and the positioning of Beyonce’s management company, Parkwood Entertainent.

We also looked beyond music for insights. We examined innovative brands that have build strong affinities and ecosystems around core products. The evolution of VICE’s media platform from print to video content across fashion, tech, design, and ultimate fighting. The expansion of Red Bull’s brand affiliationacross multiple sports, and its integration into the worlds of racing and extreme sports. We also looked at niche creative studios like Staple Design and Surface To Air that have gained currency among the Fortune 500.

In this phase we learned that we need to:

  • 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

In Phase II, we dissected the Linkin Park ecosystem and architected a framework to execute our new long-term vision. We restructured Machine Shop, moving it from a brand agency model to a multi-pronged innovation model based on four verticals: video content, global brand partnerships, merchandise, and venture capital.

Beyond Music

Having completed the study in early May of this year, we’ve already started to implement key HBS strategies. In mid-May, we launched Machine Shop Ventures, our venture capital firm, which will focus on investing in early-to-growth-stage consumer-focused companies that align with the band’s ethos of connecting people and innovation through tech and design. We want to share with our portfolio companies what we know about maintaining a brand in the cultural zeitgeist; we look forward to learning from them about internal company culture, vision, and creating new business. So far we’ve invested in LyftShypRobinhood, and Blue Bottle Coffee to name a few.

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