The Nine Inch Nails Theory of Entrepreneurship

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Mashable has a great post today about how Nine Inch Nails continues to be on the cutting edge in the way it treats its fans in the new digital area. For those of you unfamiliar with the industrial rockers, Nine Inch Nails is one of the groups that in the last few years has experimented with alternative music pricing schemes.

In March, they skipped the major labels and self-released a 36-track instrumental album called "Ghosts I-IV" for free under a Creative Commons license. In addition to file sharing networks like BitTorrent, the MP3 album was also available for $5 on Amazon. Last week, Amazon announced that despite the fact that it was available for free elsewhere, Ghosts I-IV was their top-selling MP3 album of the year. And just yesterday, NIN frontman Trent Reznor announced on their official blog that some brigands had managed to capture more than 400 GB of illegal HD footage from the most recent NIN tour.  Instead of threatening legal action, he posted a link to the site where fans could download it.

Reznor's conversion to a totally different model of music business was the product of his utter revulsion with the way the industry treated fans. Last year, he wrote on his blog:

As the climate grows more and more desperate for record labels, their answer to their mostly self-inflicted wounds seems to be to screw the consumer over even more. [An example] that quickly come[s] to mind:

* The ABSURD retail pricing of Year Zero (a NIN album) in Australia. Shame on you, UMG. Year Zero is selling for $34.99 Australian dollars ($29.10 US). No wonder people steal music. Avril Lavigne's record in the same store was $21.99 ($18.21 US). By the way, when I asked a label rep about this his response was: "It's because we know you have a real core audience that will pay whatever it costs when you put something out – you know, true fans. It's the pop stuff we have to discount to get people to buy."

So… I guess as a reward for being a "true fan" you get ripped off.

I think this warrants the coining of the "Nine Inch Nails Theory of Entrepreneurship":

  1. Love your clients/customers/stakeholders
    The first and most important lesson in the NIN Theory of Entrepreneurship is to love your clients, customers, or stakeholders. For NIN, this love means treating their most devoted fans with respect, trust and transparency when it comes to pricing. For other types of enterprise, this respect, trust and transparency will mean different things, but will be essential everywhere.
  2. Find business models that accurately capture the value you're trying to create in ways that people respond to with joy
    The value an organization or a business creates is not static. In the music world, the way value is priced (the cost of music) has stayed largely static, despite the costs involved in reproduction and distribution dropping to almost nothing. This has (clearly) produced a back lash. What NIN and others are experimenting with is new ways to capture value that feel legitimate. Fans are still happy to pay for concerts, live DVDs, and even the convenience of smartly-priced digital audio files. They don't like antagonism and exploitation.
  3. Turn possible threats to opportunities to amplify brand love
    Brands matter. People like doing things, buying things, and being a part of things that make them feel good and that make them feel connected. The NIN brand has become even more attractive to fans because of the way that Reznor treats them. The high quality live footage could be percieved as a financial threat to NIN (in that it has the potential to undercut sales of the next live DVD), but instead, Reznor's playful link to the footage and suggestion that a talented fan edit it just increases the pleasant emotional aftertaste of your NIN experience. He gets it, and I'll betcha the long-term financial payoff is significant.
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