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The Original Disruptor of the Music Industry
- The Wu-Tang Clan introduced unbundling into the music industry 6 years earlier in 1993 when Bobby Diggs insisted upon each individual artist retaining the option to sign as independent artists at any other label.
- Diggs integrated a key capability of his supplier by mastering the skills necessary for music production and used guerrilla marketing tactics to get his music in front of listeners and create proven demand.
- This contract structure was stunning in that it allowed all the artists involved (including himself) to be free agents outside of the group who had the right to negotiate and sign deals with other record companies.
- Diggs wanted to control the pricing power and leverage of their key suppliers (the record companies) and retain the “wholesale transfer pricing power” advantage for all the artists within the Wu-Tang umbrella.
- The Wu-Tang artists and the music industry as a whole won through the success of the Wu-Tang Clan, which was a pivotal event in creating what has now become the most popular selling genre of music.
- The sheer amount of amazing content that was created as a result of a small yet powerful nuance in the original contract of the Wu-Tang Clan leaves but one question: Can it all be so simple?
- Diggs’ courage and confidence were on full display when he sacrificed short-term revenue to gain long-term leverage.
- In the recent past, cable TV providers bundled all of the individual networks and programs into one simple offering that consumers could buy. In the current world, unbreakable rules and legacy best practices are no longer rock-solid concepts that can be relied upon to deliver business results.
- Optionality in financial markets is a concept that has been gaining traction in recent years thanks to the work of Nassim Nicholas Taleb. In the digital business context, optionality can be described as having a choice within your control but not the obligation to pursue it.
- The RZA created and retained optionality for the members of The Wu-Tang Clan and also utilized convex and serial optionality to capture immense revenue gains from the marketplace in music, concerts, merchandise, and now streaming video.
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