How would you describe Beyonce’s brand – brand positioning concept? Use the 5 categories – consumer insight, POD, reason to belie
1. Beyoncé’s Brand:
1.1 How would you describe Beyonce's brand – brand positioning concept? Use the 5 categories – consumer insight, POD, reason to believe, emotional benefit, functional benefit.
1.2 Present Beyoncé’s positioning statement
2. Entertainment Marketing 4 Cs: Describe the “4 Cs” of entertainment and explain how they apply to the case of “The Visual Album” launch. Explain.
3. Entertainment Marketing 3 Ps: Describe how the “3 Ps of entertainment hierarchy played out for this specific case of “The Visual Album” launch. Explain
9 – 5 1 5 – 0 3 6
R E V : O C T O B E R 2 0 , 2 0 1 4
Professor Anita Elberse and Stacie Smith (MBA 2014) prepared this case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2014 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
A N I T A E L B E R S E
S T A C I E S M I T H
Beyoncé
I remember seeing [Michael Jackson’s] Thriller on television with my family. It was an event. We all sat around the TV and I’m now looking back, I’m so lucky I was born around that time. I miss that immersive experience. Now people only listen to a few seconds of a song on their iPods. They don’t really invest in a whole album. It’s all about the single and the hype. It’s so much that gets between the music and the artist and the fans. I felt like ‘I don’t want anybody to give the message when my record is coming out. I just want this to come out when it’s ready, and from me to my fans.’ I told my team ‘I want to shoot a video for every song and put them all out at the same time.’ Everyone thought I was crazy, but we’re actually doing it. It’s happening.
— Beyoncé, explaining her December 2013 album release
It was a few minutes after midnight on December 13, 2013. While Parkwood Entertainment president and chief executive officer Beyoncé Knowles—known simply as Beyoncé, and one of the music world’s biggest superstars—was on a flight to Chicago from Louisville where she had given a concert, her company’s Manhattan office was still buzzing with activity. Lee Anne Callahan-Longo, Parkwood’s general manager, was staring at her computer screen and hit ‘refresh’ one more time. And that’s when she finally saw the change she and her colleagues had been eagerly anticipating: Beyoncé’s new, self-titled album was now available for downloading via the Apple iTunes Store. Within minutes, Callahan-Longo would give the green light to share the news that everyone involved had kept a closely guarded secret for so long, using an AutoPlay video on Beyoncé’s Facebook account and a simple, one-word message on her Instagram account (see Exhibit 1): “Surprise!”
The release was likely to do just that. It was the result of a set of criteria that Beyoncé herself had set for her fifth solo album, explained Callahan-Longo: “She told us, ‘I want my fans to be able to listen to it first without any filters, and I want it to be a visual album that has a video for every song, and I don’t want the album to leak.’” The team at Parkwood, which Callahan-Longo described as “a management, music, and production company that is owned and at the highest level operated by an artist,” had chosen to release the entire album at once and exclusively via iTunes, without any prior promotion—a significant, and potentially very risky, departure from how music was traditionally released. Sony Music’s label Columbia Records, with whom Parkwood partnered on recorded-music activities, shared the costs—and therefore also the risk—of the album, which had been one-and-a-half years in development and was a particularly expensive proposition because of the many videos.
Tonight, the two dozen Parkwood and Sony employees who had been at Parkwood’s offices all evening to help execute the daring launch would get a first glimpse at the market’s response. How would fans and music industry insiders react? Would the album be able to find a large enough audience even without traditional promotional activities? And would there be any adverse reactions, for instance from traditional music retailers refusing to carry the physical album later? As Beyoncé’s plane descended into Chicago, she would soon learn whether her big gamble was paying off.
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The Music Industry in 2013
The Market for Recorded Music—Physical and Digital By some estimates, the total music market in the United States, covering both live and recorded
music sales, was worth $15 billion in 2013. Already the largest segment at close to 60% of revenues, live music revenues were expected to grow. As far as recorded music was concerned, revenues from physical sales had been declining steadily in recent years, and only accounted for 15% of total music revenues in 2013, with digital sales making up the remaining 25%. Within digital music, downloads (offered by retailers such as Apple’s iTunes Store) were expected to remain dominant, but streaming (for instance through Spotify) was expected to show double-digit growth. Globally, recorded music alone was a $20 billion market, with physical revenues also being in danger of being overtaken by digital revenues (see Exhibit 2 for various industry statistics).1
In the market for paid downloads, iTunes was the market leader in the US with an estimated share of close to 65%.2 After enabling its 25-billionth download in February 2013, Apple revealed that its store averaged 15,000 downloaded songs per minute, totaling $1.7 billion in revenues in the last quarter of 2012 alone.3 Apple was thought to have 600 million iTunes user accounts, the lion’s share enabling “one-click buying” without the need to re-enter credit-card information. In June 2013, Apple had introduced a free, advertising-supported Internet radio service, iTunes Radio.4 Many industry insiders believed the move to be a competitive response to the rapid rise of streaming services such Spotify, which gave users access to an assortment of millions of songs, either supported by an advertising model or by a subscription model with a user fee of around $10 a month.
The iTunes Store’s dominant position in digital music made it also the biggest player in the overall market for recorded music. Apple’s share was estimated to be around 40%, followed by Walmart with 10%, Amazon with 9% and Target with 5%.5 The rise of online distribution channels facilitated the ‘unbundling’ of music, allowing music consumers to download or stream individual songs rather than full albums. That, in turn, had hurt album sales. So far in 2013, Justin Timberlake’s The 20/20 Experience – 1 of 2 was the only album to sell over two million copies, marking it the lowest top-seller since Nielsen SoundScan began tracking recorded-music sales.6
Releasing Music
Most up-and-coming and established artists of some popularity were signed to record companies that helped them record, distribute, and market music. In 2013, after years of industry consolidation, there were three large-scale, ‘major’ record companies left: Universal Music Group, Sony Music Entertainment, and Warner Music. Each covered various so-called imprints or ‘labels’ with their own rosters of oftentimes dozens of artists. Sony, for instance, had three premier labels: Columbia Records, Epic, and RCA.
When marketing new albums, the major labels often relied on what Rob Stringer, chairman of Columbia Records, referred to as “the machinery to launch a record,” which typically included securing “promotional appearances, radio airplay, and other ways to generate hype before the record comes out.” He explained: “You go to radio with one or more singles three months before the album release date, you launch a video, and you pick one or more big television benchmarks like the MTV Awards or the American Idol finale.” Once the album was out, the labels relied on additional single releases to trigger radio airplay and on other promotional opportunities to sustain interest. “A big opening is crucial, but the typical cycle for a Beyoncé album is at least 52 weeks,” said Jim Sabey, Parkwood’s head of worldwide marketing.
In recent years, however, artists and their labels had on occasion deviated from this blueprint— even for very high-profile albums (also see Exhibit 3). Earlier in 2013, for example, superstar rapper JAY Z—Beyoncé’s husband of five years—released his album Magna Carta… Holy Grail by making a deal with electronics giant Samsung. On July 4, one million Samsung Galaxy cell-phone and tablet users could download the album free of charge, 72 hours before the album was available in physical
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and digital stores. The first-of-its-kind partnership, rumored to have cost Samsung $5 million, was announced with a lengthy commercial that ran during the National Basketball Association (NBA) Finals in June.7 A month earlier, hip-hop artist Kanye West opted not to release a single to radio for his new album, Yeezus, released in June. Instead, he promoted his album by unveiling the song New Slaves through video projections in over sixty locations around the world. He also chose not to offer pre-orders, which normally counted towards first-week sales.8
Beyoncé, the Artist
Described as “the most important and compelling popular musician of the twenty-first century”9 by The New Yorker in 2013, Beyoncé Giselle Knowles was born on September 4, 1981. She grew up in the Third Ward district of Houston, Texas, and was raised in an upper-middle class family by her parents Mathew Knowles, a sales manager, and Tina Beyincé, a hair salon owner. It was a dance instructor, Darlette Johnson, who first discovered Beyoncé’s singing talents. Recognizing that Beyoncé lit up when she took the stage, her parents went to great strides to nurture her passion. At age seven, she began performing at local singing and dancing competitions. Two years later, she joined a girls group named Girl’s Tyme. After making a name for themselves in the Houston area, they debuted nationally in 1992 on the television show Star Search with what host Ed McMahon described as “a hip-hop rapping” performance. (They did not win).
Although the early years were very much a Knowles’ family affair, with Beyoncé’s father managing, her mother providing wardrobe and styling, her sister Solange dancing backup, and rehearsals often taking place at the Knowles’ family home, the group—by then evolved into Destiny’s Child—got professional support when they signed with Columbia Records in 1996. Destiny’s Child self-titled debut album, released in 1998, generated one major hit with No, No, No, Part 2. But the group truly conquered the music charts with the 1999 follow-up release, The Writing’s on the Wall, that featured singles like Bug a Boo, Jumpin’ Jumpin’, Bills, Bills, Bills, and Say My Name. Beyoncé’s hip-hop- inspired vocals on the latter song in particular were credited with more fully positioning her at center stage. Despite rapid shifts in the group’s membership, the hits kept coming, turning Destiny’s Child into the best-selling female group of all time.10 In 2001, Beyoncé and her fellow group members decided to pursue solo careers.
Studio Albums
Beyoncé released four Billboard-chart-topping studio albums between 2003 and 2011 (see Exhibit 4 for her discography and Exhibit 5 for more information on her solo albums).11
Dangerously In Love. Beyoncé’s highly anticipated first solo album, which she co-executive produced and largely wrote herself, was launched on June 24, 2003—Columbia hastened to release it two weeks before its original due date because several tracks leaked early.12 The album featured a mixture of ballads, mid-tempo and up-tempo songs, some hip-hop collaborations, and lyrics that centered on romance. The addictive “uh-oh” hook and high-profile collaboration with her then- rumored boyfriend JAY Z made Crazy in Love an obvious choice for lead-off single. The album was promoted through heavy radio airplay and televised performances such as Saturday Night Live, The Today Show and even a pay-per-view television special in the weeks leading up to the launch. The efforts paid off: Dangerously in Love debuted at number one on the Billboard Top 200 album chart, and went on to sell eleven million copies worldwide. Hit single Crazy in Love spent eight consecutive weeks at number one on the Billboard Hot 100. In addition, although some critics had challenged the maturity of her ballad style and cited missteps in the latter half of the album,13 Dangerously in Love earned Beyoncé five Grammys. 14
B’Day. Released in September 2006 on her twenty-fifth birthday, Beyoncé’s sophomore solo album was inspired by her starring role in the Hollywood film Dreamgirls, which captured the evolution of R&B music in the 1960s and 1970s through the perspective of one of its bestselling acts, The Supremes.15 She recorded the album shortly after filming ended. “I had so many things bottled
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up, so many emotions, so many ideas, that while I was supposed to be on vacation I snuck into the studio and recorded this album in two weeks,” she remembered. “I had a lot to say."16 The album included catchy songs such as Déjà Vu (a song, featuring JAY Z, which would become the first single), Irreplaceable, and Beautiful Liar. Helped by the promotion and buzz around the film, the three songs became bona fide hits, and the album again debuted on the Billboard chart’s top position. It went on to sell eight million copies worldwide, and was nominated for seven Grammys. Seven months after B’Day’s original launch, Beyoncé released a double-disc deluxe edition that included three new tracks, as well as the B’Day Anthology Video Album DVD. The latter showcased thirteen videos and was initially sold exclusively at retail chain Walmart.17
I AM… Sasha Fierce. Beyoncé took more time to record her third solo album, which was released in November 2008. She co-wrote or co-produced all sixteen songs that appeared on the album. It was formatted as a dual disc album with one I AM… side and one Sasha Fierce alter ego side, showing the contrasts within Beyoncé and her artistry: “The music is upbeat for the dance, fun side, and it is reflective, passionate and serious for the personal side,” she said.18 In the weeks preceding the release, Beyoncé performed the album’s first two singles, Single Ladies (Put A Ring On It) and If I Were a Boy, at the MTV Europe Music Awards, on The Oprah Winfrey Show, and during other television appearances. The promotion frenzy continued after the album hit stores, for instance with a parody of the Single Ladies music video on NBC’s Saturday Night Live (with Andy Samberg, Bobby Moynihan and Justin Timberlake as her hilarious backup dancers). The album again topped the charts and even received a Grammy nod for Album of the Year.19 In fact, Beyoncé became the first female artist to win six Grammys in one year in 2009 (including the Song of the Year award for her smash hit Single Ladies), and tied the record for most awards won in a decade by a female artist with sixteen in total in the 2000s. Billboard named her Woman of the Year in 2009.
4. Beyoncé’s fourth album—fittingly named 4—was released in late June 2011. “It was recorded over a-year-and-a-half period while she was on tour,” said Sabey. Beyoncé delivered dozens of songs and ultimately chose twelve for an album that was a mix of sassy up-tempo and mid-tempo tracks and soft ballads, based in rhythm and blues but with funk, hip hop, and soul influences. She performed on a series of television shows in April and May, most notably on The Oprah Winfrey Show’s final episode, the Billboard Music Awards, and on American Idol. MTV aired a television special, Beyoncé: Year of 4. A deluxe edition was sold exclusively at retail chain Target. Although the full album leaked online more than two weeks before the scheduled release and did not produce a number-one single, it was Beyoncé’s fourth consecutive solo album to debut at number one on the Billboard chart. And 4 was received favorably: critics praised the album for its fusion of genres, excellent tracks, Beyoncé’s strong vocal ability, and the creative exploration of her talents.20 It also gave Beyoncé her 17th Grammy, for Best Traditional R&B Performance (for Love on Top).
Touring
In addition to releasing recorded music, Beyoncé toured frequently (see Exhibit 6). “At the core of her being, she is a performer,” said Sabey. She toured Europe in 2003 in support of her first solo album, Dangerously in Love. By 2007, she played close to a hundred shows across the world as part of her The Beyoncé Experience tour, grossing $90 million. Six years later, her resume included more 350 shows performed on six continents, drawing an estimated ten million fans. Her fifth world tour, The Mrs. Carter Show World Tour, had commenced in April 2013 and covered 132 shows in 69 cities in 27 countries over an eleven-month period. “It takes about a hundred people to put the stage up each night and make sure everything is safe before they take things down and move them to another city to start the process over again” said Callahan-Longo, adding: “And what it takes for her to do these shows… most fans have no idea. It’s like running a marathon every night. The stamina it takes to sing, dance, remember all of that, do it all in a cohesive fashion—and make it look effortless—is the gift of a truly talented and well-rehearsed performer.”
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Beyoncé in 2013
By 2013, living up to her nickname “Queen Bey,” Beyoncé was one of the most accomplished and recognized entertainers globally. The year had been full of highlights. She performed the Star- Spangled Banner for the nation at President Barack Obama’s 2013 Inaugural Ceremony. Less than two weeks later, she performed in the coveted halftime show at the 2013 NFL Super Bowl, a performance that drew an estimated 104 million television viewers in the United States.21 “She did a ton of research for that show alone,” said Sabey. “She watched every Super Bowl performance to see what made some great and others not.” A few weeks later, Beyoncé’s self-directed and self-produced documentary, Life is But a Dream, aired on HBO along with a corresponding interview with Oprah Winfrey on the OWN network. The Mrs. Carter Show World Tour, announced less than an hour after her Super Bowl performance, sold out in minutes.22 It was on track to collect more than $200 million in revenues, making it the highest-grossing female solo tour of the year (also see Exhibit 6).
Beyoncé, the Chief Executive Officer
Establishing Parkwood Entertainment
In 2008, Beyoncé established her own company, Parkwood Entertainment, named after the street she grew up on in Houston. Initially primarily a production vehicle, by 2011 it had become a fully- staffed entertainment company with management, production, digital, marketing, and publicity departments. “She had been managed by her father her entire career,” said Callahan-Longo. “But after fourteen years in the business she felt it was time for her to really go out on her own. So she assembled a team and built a support system that could execute her decisions.”
A logical choice for Parkwood’s general manager was Callahan-Longo, with whom Beyoncé had worked at Sony and subsequently at Music World, Mathew Knowles’ management firm. “Our goals here at Parkwood are to, at any means possible, accomplish what she wants to do,” Callahan-Longo said. “She always comes up with big ideas.” Callahan-Longo described herself as “a dream maker,” adding: “It is amazing to line up behind someone who is so incredibly gifted.” Also a member of the team from the start was Jim Sabey, who previously had served as senior vice president of international marketing at Sony and had worked for Mariah Carey. At Parkwood, he took on the role of head of worldwide marketing. He clarified: “My role in the organization is to be analytical—to understand and present the facts behind decisions, and to know what is happening in the marketplace.”
Sabey recalled the early days: “At the beginning it was all about taking control of the relationships —to work on getting our arms around the existing contracts, agreements, partnerships, and so on… You can imagine the number of arrangements that exists for a superstar at her level.” He added: “The goal was for the company to assume full control of brand Beyoncé.”
The Boss
Beyoncé took on the role of president and chief executive officer at Parkwood Entertainment. It wasn’t just an honorary title; she led and was intimately involved in all major initiatives. “Make no mistake—she really is the boss,” remarked Sabey. Callahan-Longo agreed: “It is disheartening that there are still stories written where people assume that just because she is a woman, there is a person other than herself running her business.”
When she was not on tour, Beyoncé could regularly be found at Parkwood’s offices in Manhattan. “She doesn’t often sit in her office, though,” noted Callahan-Longo. “She usually walks from one office to the other, speaking with the staff. She’ll come to my office and talk to me, or she will sit in the back and give notes on projects we are working on. Or she’ll sit in Jim’s office and talk about marketing opportunities.” She remained an artist first and foremost, said Callahan-Longo: “She has got a really good sense of the business side, but she doesn’t like to live there always. We often laugh
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about how an hour into a business meeting she will get up and will start walking around. I can see it then—that I’ve lost her, and that I have satiated the amount of business that she wants to discuss that day. I’ll usually say something like ‘Let’s stop. You are going to say ‘yes’, but you are not listening to me anymore.’ She knows herself, will laugh, and say ‘You are absolutely right, I am done.’ Because at the end of the day she is an artist, and her passion for art drives her.”
Asked to describe Beyoncé the business woman, Callahan-Longo noted: “She is smart, reasonable, clear on what she likes and doesn’t like, very open to input, a great listener, and someone who sets super high standards. She challenges every single person who works for her. It is always ‘Well, why can’t we? Let’s try.’” “She is sure enough of her own place in the artistic pendulum that she is willing to take risks,” added Sabey. “We work for a woman who has no fear.“
Over the years, Beyoncé had learned to delegate more, explained Callahan-Longo: “She used to be able to work eighteen hours a day. But she is a mother now, so that doesn’t suit her schedule anymore.” New Parkwood employees were encouraged to not mindlessly follow instructions and instead voice their own opinions. “We are very proud of our staff,” Callahan-Longo said. “We have a team that is intelligent and capable of contributing to Beyoncé’s creativity, and executing her plans.”
Joint Venture with Columbia Records
Parkwood was in a joint venture with Sony Music’s Columbia Records, Beyoncé’s long-time label. Its chairman Stringer had first met Beyoncé when she was still in her teens. As part of the joint venture, Parkwood and Columbia agreed to equally share the costs of recorded-music production, distribution, and marketing, and also share the resulting revenues, while Parkwood was fully responsible for the creative execution. “We agree on a budget beforehand, but they produce the album,” said Stringer. “At some point Beyoncé will present us with the album she wants to release, and that’s when our work distributing and marketing it begins.”
The two parties worked closely together on those tasks, Stringer indicated: “We discuss how we get the record to fans, on a global basis, and how we engage our media and retail partners around the world. That is what we are best at—we have the closest links, and we know what is required in each market. Parkwood obviously has those links, too—they are a fully functioning company, with a lot of in-house capabilities, from video editing to publicity and marketing—but it’s impossible for her staff to reach the scale to cover the entire world.”
“We have an amazing partnership with Columbia,” noted Callahan-Longo. “They are our boots on the ground—they help us to go global. They also help us with a number of practical matters. For instance, when we shoot videos and need insurance, they are already completely set up, and we can simply use their contracts or accounts. We don’t have to reinvent the wheel. Plus, Rob Stringer is a big believer in Beyoncé as an artist. More so than ever before, it takes a lot of guts to get behind an artist and make an investment in them.” The Parkwood team connected with Columbia on a daily basis, not just with Stringer but also with the label’s marketing department, those who oversaw dealings with radio stations, and sales people who were in touch with retailers. “There is quite a lot of communication between us,” said Sabey.
Parkwood Entertainment in 2013
By December 2013, Parkwood employed a staff of around twenty people (see Exhibit 7 for an overview of the organization). General manager Callahan-Longo oversaw all departments and activities. “My goal is to make sure whatever has to get done gets done, and figure out what I have to put on Beyoncé’s plate and what I don’t have to put on her plate,” she said. As head of marketing, Sabey was responsible for all outward facing business activities, including marketing and brand partnerships. Angela Beyincé served as the vice president of operations and often handled human resources for the company. “She works with the brand managers, the art department, and the other creative people,” said Sabey. There were also more unusual roles, said Sabey: “We hired an archivist
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who is in charge of collecting Beyoncé’s photos, videos, and audio tracks. We film everything and have thousands of hours of footage to be stored and cared for.”
Parkwood had in-house production capabilities. “We develop most of the content that we put on our website, and we produce all the content for our brand partners—we produced webisodes and even a Super Bowl commercial for Pepsi, with whom we had a partnership,” said Sabey. He explained that Parkwood was a full-service company: “We also do all of our merchandising ourselves, and we even oversee concert tours from here. It may be old-school style, but we like to find the right promoter in each country to work with. Lee Anne runs the overall planning of the tour, hiring people, and moving stuff around, while I focus on ticket sales and merchandising.”
In 2013, Beyoncé’s star power was perhaps stronger than ever. “She is the most sure of her brand of any artist I have worked with,” said Sabey. Describing what her brand stood for, he said: “It’s about allowing women to be who they are and to feel empowered by who they are. That’s the true core. You can be different and powerful. You can be sexual and non-compromising. You can be feminine and strong. All of those juxtaposed values can co-exist in one person, in one woman.” He gave an example: “There is something very real about Beyoncé that people connect with. She embodies that you can wear a Givenchy dress to the Met Ball and jean shorts and a tank-top to Walmart—and be just as comfortable in both places.”
The brand strength came with unique commercial opportunities. ”This is the decade to build her business,” said Callahan-Longo. In her early years, Beyoncé had endorsed L’Oreal, Tommy Hilfiger, and Giorgio Armani, among other brands. But by 2013, priorities had shifted to more independent initiatives and collaborative partnerships. For instance, Beyoncé had her own fragrance line with fragrance company Coty. She had also signed on to a multi-year collaboration with Pepsi, which included promotional support as well as a fund to aid Beyoncé’s chosen creative projects. Pepsi ran a Beyoncé-themed Super Bowl commercial in 2013, printed her face on a limited-edition line of Pepsi cans, and sponsored an upcoming film series.23 “They were willing to allow her to be the creative curator,” said Callahan-Longo. All such partnerships were coordinated by Parkwood and not by Columbia Records, explained Stringer: “She doesn’t need me to tell her how to do a brand- sponsorship deal. She has
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