Opinion

What the likes of The Rolling Stones and Mötley Crüe could teach you about making a profit

3 min read

15 August 2016

The finance director is a pivotal role in every business, no matter what its size – and we recently came across an intriguing article that highlighted how rock legends could teach finance teams one key lesson.

Bands like the Blue Öyster Cult, whose tracks span numerous hits including the 1976 “(Don’t Fear} The Reaper,” have adopted the persona of zombies in the fact that they refuse to vanish and keep coming back for more.

This was the focus of an article written by Mike Rowell from Zocalo Public Square, who explained that even though the current lineup is down to just two of the original members, the Blue Öyster Cult is powering through in terms of world tours.

“More than ever, rock bands that saw their heyday decades ago are strapping on their guitars and squeezing into their leather pants in order to strut back on stages around the world,” Rowell said at the time – October 2015. “Groundbreaking British punks The Damned just completed a trek across America, playing to packed houses of rabidly moshing fans. Diehards Motörhead are powering their way through a US tour.

“The performers will say it’s because they love it and that they ‘don’t want to let the fans down.’ But there’s another hard-nosed reason to get their weary old bones back on the tour bus. And it’s this: touring boosts their profits in a way that digital music sales and royalties can no longer do.”

According to Peter Tschmuck, a professor at the University of Music and Performing Arts, the return on investment from selling a digital copy of a song is 12 per cent compared with about 36 per cent for CD’s – “and that’s before that revenue is carved up to various title holders”.

Concert tours are where the magic happens.

In the words of Forbes writer Peter Kafka in September 2015: “Graying geezer groups reap the biggest riches, bankrolled by baby boomers who can afford stiff ticket prices. You could see The Who for free at Woodstock in 1969; last year tickets to see the band’s two surviving members creak onstage sold for an average of $77 apiece. By the time the Eagles wrap up the 40-date first leg of their supposedly last tour, dubbed Farewell I (wink-wink), they will have earned at least $30 million in guarantees – before T-shirt sales.”

It may be cliché to say given that it’s part of business basics, but focus on the part of your business that brings the most profit. The basics often get overlooked as pressures and expectations mount, so it’s worth noting.

Take, for example, The Rolling Stones. The group could have retired a while ago and simply waited for album sales and royalties to trickle in. Instead, under three years their concert grosses topped $401m.

Meanwhile, American rock band Linkin Park has brought on board a “creative business executive” to help its move towards global brand partnerships and venture capital, with music taking a back seat.