MARKETING

The Brilliant Business Theory Behind Wu-Tang Clan's Disruptive Plan

With their radical idea for distributing a new album, the rap group is illustrating what B-school professors have long-praised as "consumption chain" differentiation.
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When you consider the concept of differentiation, you might be tempted to think of it only in terms of end products for consumers: The qualities and traits that distinguish brands of cars, deodorants, and sports drinks from each other. 

But there's another way to think about differentiation. It's to ask yourself: How might my company differentiate itself from its competitors before the product reaches customer hands? 

Columbia Business School professor Rita Gunther McGrath calls this the habit of thinking creatively about differentiation. She first espoused this theory in her classic Harvard Business Review article, "Discovering New Points of Differentiation," which she coauthored with Wharton's Ian C. MacMillan in 1997.

McGrath and MacMillian noted that companies, in seeking to differentiate themselves, had become too focused on end products or services and, as a result, were missing other opportunities to interact with customers. "We believe that if companies open up their creative thinking to their customers' entire experience with a product or service--what we call the consumption chain--they can uncover opportunities to position their offerings in ways that they, and their competitors, would never have thought possible," they wrote.

That was 17 years ago. Later this year, the rap group Wu-Tang Clan will put these theories to the test. While it's too early to assess the results, you can certainly take a lesson from the group's innovative thinking about how to differentiate yourself through radical distribution methods.

The Wu-Tang Clan's Plan

As reported yesterday in an interview with Forbes' Zack O'Malley Greenburg, Wu-Tang Clan has revealed a plan to release only one copy of a forthcoming album. The idea is to sell it for a multi-million dollar price tag to a high bidder; before which time, the band will organize a museum-gallery tour for the album, with ticket fees for viewing and listening at $30-$50 per head. The "viewing" of a music product is significant. According to Forbes the album will come encased in a customized silver and nickel box made by the vaunted British-Moroccan artist Yahya.

It's easy to see how this distribution plan is differentiated from industry norms. To begin with, there's only one album, potentally priced at seven digits; typically the idea in the music business is selling a volume of seven digits, at a sub-$20-per-unit price tag. 

Moreover, the initial promotion of the album is radical in its conceit. Typically new music gets promoted via television, radio, and concert tour. This album, called The Wu: Once Upon a Time in Shaolin, is aiming for the more elevated branding of museums and galleries. 

If you think that sounds like a classic attempt by practioners of pop art to elevate their work into the highbrow stratosphere of opera and painting, you're right. Here's how Wu-Tang member Robert "RZA" Diggs explained it to Forbes

We're about to sell an album like nobody else sold it before....We're about to put out a piece of art like nobody else has done in the history of [modern] music. We're making a single-sale collector's item. This is like somebody having the scepter of an Egyptian king.

He's partially right. There are some aspects to the Wu-Tang Clan's idea that are new. But there are some  you've probably seen before. 

How Differentiated Is It, Really? 

As Greenburg points out, Wu-Tang had already witnessed a few differentiated attempts to disrupt traditional album distribution. "After watching Jay Z debut his album in partnership with Samsung last summer--and buy 100 copies of Nipsey Hussle's $100 mixtape--Cilvaringz and his Wu-Tang compatriots had something resembling proof of concept for Once Upon A Time In Shaolin," he writes. 

Moreover, the idea of selling pop music as traditional high art is not new one. The Who famously spent 1969 and 1970 touring in opera houses to promote Tommy, an album that they audaciously called a "rock opera," because it told a narrative story in a manner that few albums before (but many since) had ever attempted. 

But if the overall concept is hardly novel, there's still plenty about the Wu-Tang's idea that differentiates it from typical musical releases: namely the museum-based promotion and the aim to fetch a high price for a single unit of music. 

Will It Work? 

To the extent that fans are already discussing the album, the Wu-Tang Clan's plan has already paid off in terms of marketing. 

What's also fascinating--and potentially instructive, for businesses--is that the Wu-Tang Clan are also releasing an album through traditional means later this year. That album, called A Better Tomorrow, is scheduled for release this summer. What this means is that Wu-Tang will potentially be able to run an A/B test of sorts, with a control album (A Better Tomorrow) and a variable one (Once Upon a Time in Shaolin). Which release will generate more revenue? Which will fans like better? The group will find out and learn from it. 

What no one knows, at this point, is how good the music will be. The main reason Wu-Tang Clan is even in the position to take this risk is because their first album, 1993's Enter the Wu-Tang, was an irreverent fan and critic favorite. It had sold more than one million copies by 1995. Perhaps more importantly, it's hard not to dance when you hear the opening piano notes of "Method Man." 

In other words, as interesting as the distribution plan is, what will most likely determine the success and longevity of the the new albums is the quality of their music.

The larger lesson that you, as a business leader, can take from the Wu-Tang Clan is the spirit of experimentation. Wu-Tang producer Tarik "Cilvaringz" Azzougarh articulated this spirit to Greenburg: "I know it sounds crazy....It might totally flop, and we might be completely ridiculed. But the essence and core of our ideas is to inspire creation and originality and debate, and save the music album from dying."

IMAGE: Getty Images
Last updated: Mar 27, 2014




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