How Harry Styles Turned Target into “Harry’s House”

Whose house? Harry’s house! It took just 72 hours for Harry Styles’s “Harry’s House” to break the record for the biggest vinyl sales week in the U.S. since data began being tracked in 1991. One reason why: he knows where his fans are – at places such as Target.

Vinyl is enjoying a renaissance, reaching $1 billion in sales in 2021, according to the RIAA. MusicWatch says that 25% of those shoppers are aged 13-24; if you factor in the 25-34 age bracket, that figure surges to roughly half. Target is a cultural touchstone for this demographic. Per ClickZ, Gen Z “loves Target. And according to C+R Research, college students, the oldest members of Gen Z, love it the most.”

Gen Z go on Target runs together. They talk about Target on social (on TikTok, posts with the #Target hashtag have been viewed 12.4 billion times and counting). And they’ve made Target Harry’s House. 

In 2020, his fans triggered a run on Cashmere Vanilla by Target’s Threshold candles when a rumor spread that the product smelled like his favorite perfume. Long before “Harry’s House” was available at Target, fans scoured the Target website for clues about the album’s release date and cover art. They talked up their findings on social media.  When the album dropped — via a translucent yello special edition only available at Target – fans rushed the store and snapped photos of themselves with their merchandise on social, giving new meaning to the term “Target Run.” Just search for “Target” and “Harry Styles” on Twitter to get a taste of the commentary, including:

Think about all this from Target’s perspective. By being at the epicenter of culture, Target does more than sell merchandise. Target builds brand loyalty. 

Harry Styles is a master of social media, but he also understands offline branding. Target is but one example. His pop-up shops that operated during the weekend of May 20 were packed (my wife and I were at the Chicago store. The line to get in was insane). 

By understanding where his audience is, and Harry Styles creates fandom and shapes culture. Target is right there with him. 

Why Olivia Rodrigo Is an Essential Gen Z Voice

The Grammy Awards are often maligned for being out of touch with mainstream culture. But the 2022 Grammys proved its cultural relevance by giving three awards to Olivia Rodrigo, including Best New Artist, Best Pop Solo Performance, and Best Pop Vocal Album for her breakout album Sour.

Along with Billie Eilish — who won four Grammys in 2021 — Olivia Rodrigo represents the attitudes, behaviors, and beliefs of the swelling Gen Z population. This is significant because Gen Z comprises 20.2% of the US population — 68.2 million tweens, teens, and young adults ages 9 to 24. As the third-largest cohort, Gen Z is the most racially, ethnically, and sexually diverse generation in history as well as the third-largest generation behind Millennials and Baby Boomers. They are also a generation shaped by trauma. According to the Pew Research center, 70% of teens across all gen­ders, races and fam­i­ly-income lev­els say that anx­i­ety and depres­sion are sig­nif­i­cant prob­lems among their peers.

Rodrigo’s Sour blew up in 2021 because it connected with Gen Zers traumatized by a pandemic, school shootings, and an uncertain economic future. She did not sing about those topics explicitly. Instead, she explored internal trauma in other ways — such as the insecurities of comparing herself to others on social media and always coming up short (in the song “jealousy, jealousy”) and the heartbreak of loss, most famously on the single “Drivers License.”

As Heather Phares of Allmusic wrote, “Rodrigo nails what it’s like to be 17, heartbroken, and frustrated, and updates the traditions of the sharp-eyed and sharp-tongued songwriters before her for Generation Z.” That heartbreak is deeply traumatic in its own way. And she is not afraid to share it. “I’ll tell my Uber driver all of my deepest traumas and insecurities, and so I just think songwriting for me is an extension of that aspect of my personality,” she once told Nick Reilly of NME. Those deepest traumas were on full display in her show-stopping performance of “Drivers License” during the 2022 Grammy telecast.

She is known as a voice of a generation coming to terms with mental health unlike generations before them. As Sarah John of MSN noted, “As other Gen Z artists have stated, their generation is delivering more rawness than their predecessors. Rodrigo, a self-proclaimed oversharer and the child of a therapist and teacher, weaponizes that emotionally open generational rawness especially well. Rodrigo understands the demand for authenticity from her generation.”

Olivia Rodrigo is responding to Gen Z trauma in her own authentic way. The Grammys got it right.

Beware False Narratives

Beware false narratives. A false narrative is an unsubstantiated conclusion that snowballs (usually online). There might be kernels of truth in the narrative, but the viral nature of a false narrative makes the facts irrelevant. Case in point: Spotify’s financial performance.

During the week of January 24, Spotify’s stock value dropped amid the #BoycottSpotify backlash that happened after musician Neil Young demanded to have his music removed from Spotify because Spotify hosted Joe Rogan’s controversial podcast. A narrative rapidly spread that the controversy was hurting Spotify’s stock. But it was a false narrative.

In fact, Spotify’s stock price had been dropping 45% year over year amid disappointing quarterly results. What happened the week of January 24 was not exactly an aberration. It was also difficult to untangle Spotify’s declining stock price from factors such as an overall market cooling off, political instability abroad (e.g., the Ukraine/Russia crisis), economic uncertainty in the United States (e.g., inflation), and the ripple effect of Netflix’s gloomy forecast in its own disappointing quarterly earnings (Netflix is a bellwether for digital-first stocks).

The questionable nature of the “Neil Young crushed Spotify’s stock” narrative that proliferated among news media was underscored when the value of Spotify’s stock soared on January 31 — only to plummet again on February 2.

So what happened on January 31 and February 2?

Well, on January 31, an analyst issued a bullish analyst rating on the company. And we also possibly witnessed opportunistic investors “buying the dip” following the previous week’s stock plunge. But then on February 2, Spotify reported another quarter of underwhelming financial results, leading to another big drop in the company’s performance. 

I’m not ignoring the potential for the Neil Young Joe/Rogan controversy to affect Spotify’s stock price, too. Hey, the controversy could be a factor. But we just don’t know to what extent the matter has played a role due to the other factors cited above. I suspect the false narrative with Spotify happened for a few reasons:

  • It is a compelling story. David versus Goliath. The hippie versus the evil corporation. The truth seeker versus the spreader of false information.
  • It is a negative story. People love to pile on when they see someone stumble and when stocks tumble.
  • Digital, well . . . digital spreads narratives like brushfire. All takes is one retweet to keep the narrative snowballing.

Spotify hasn’t commented on the potential impact of #BoycottSpotify. We don’t know, for example, how many people who use Spotify for free simply deleted the app (versus paid subscribers fleeing, which would be more serious). From a financial standpoint, we may not get any fact-based insight from Spotify for another quarter yet. Sometimes it takes time for the to facts to emerge. 

One narrative you can be sure of: quarterly earnings move stock prices. It’s why disclosure rules exist.

Neil Young: the Perils of Taking a Stand

When your brand takes a stand, brace for impact. Case in point: Neil Young versus Spotify.

Neil Young is both an artist (whose work I admire and listen to often) and a multimillion-dollar brand. At age 78, he keeps cranking out new music and taking care of business. He was the 11th-highest paid musician in 2021, pulling down $78 million as a result of selling half his song catalog to Hipgnosis. He’s built a loyal following through his music and a personal brand that embodies the hippie idealism and social consciousness of the 1960s. So when, on January 24, he criticized Spotify for hosting the controversial podcast The Joe Rogan Experience, no one who knows what Neil Young stands for was surprised. The Joe Rogan Experience has been accused of spreading misinformation about the coronavirus and vaccines. Young angrily demanded that his record label and management team take Young’s music off Spotify unless Spotify dropped Joe Rogan’s content.

“They can have [Joe] Rogan or Young,” he wrote in an open letter on his website (which he later deleted). “Not both. I am doing this because Spotify is spreading fake information about vaccines — potentially causing death to those who believe the disinformation being spread by them. Please act on this immediately today and keep me informed of the time schedule.”

By January 26, Spotify responded by dropping Neil Young’s music and keeping Joe Rogan’s podcast.

Young, who had more than 6 million monthly Spotify listeners, was hailed as a hero and brave tilter of windmills for taking a stand although he was also accused of being a censorious person. Spotify was cast as a villain for siding with Rogan, whose December interview with vaccine skeptic Dr. Robert Malone had been condemned widely by physicians. #DeleteSpotify began trending as customers (we don’t know how many) ditched Spotify.

Spotify’s stock price tumbled, too. The decline was widely attributed to the Neil Young controversy even though the cause-effect wasn’t as clearcut as the popular narrative would have us believe. In fact, Spotify’s stock price had lost 45 percent of its value over the past year amid a general market pullback, disappointing financial results, a slowdown in subscriber growth, and a declining market share. It was certainly possible that skittish investors were selling their Spotify stock for fear of a boycott and the possibility that other musicians would make similar demands. It was also certainly possible that Spotify’s stock was affected by a January slump across the tech sector, political instability in the Ukraine, and a ripple effect caused by Netflix’s disappointing earnings report.

Two notable musicians followed Neil Young’s lead, including the beloved Joni Mitchell and guitarist Nils Lofgren. Both said they wanted their music removed from Spotify in solidarity with Young.

And then things got complicated.

On January 28, Neil Young posted a public letter in which he doubled down on his stance on Joe Rogan and curiously reintroduced a longstanding beef he has had with how streaming services degradate sound quality of music. The letter was a confusing and poorly written diatribe that seemingly elevated sound fidelity in the digital age to the same level of importance as free speech.

He wrote, “AMAZON, APPLE MUSIC and Quobuz deliver up to 100% of the music today and it sounds a lot better than the s — — y degraded and neutered sound of SPOTIFY . . . AMAZON, APPLE MUSIC and Quobuz now deliver the real thing. SPOTIFY is ripping you off and has been since day 1. Switch to one of the alternatives — companies that support the arts. Real sound is available there. AMAZON, APPLE Music and Quobuz. You just have to leave Spotify and go to a new place that truly cares about music quality.”

That Young would complain about the sound degradation was entirely consistent with his brand. He has been raging against the evils of digital sound for years, taking all streaming services (not just Spotify) to task in the process.

But the January 28 letter diluted his message and made him come across as an out-of-touch elitist. Most people who stream music don’t care about the compression of sound on Spotify. It’s not a hill they’re going to die on. Young also buried the lead — a passionate articulation of his position on free speech — at the end of the note. There would be no #DeleteSpotify if he had come out of the gate with the letter, shown below:

The letter was also noteworthy for what it omitted: the ongoing controversy about how little Spotify compensates musicians who earn far less than Young does. It seemed like a natural issue for firebrand Young to tackle, and it’s one that has been in the public eye for quite some time. Now was the time for him to elevate the issue. But he was surprisingly silent on the matter.

Things got even more interesting on January 31 when he announced an apparent partnership with Amazon Music. “All folks looking for my music can easily head to AMAZON MUSIC and click here https://bit.ly/NYA_AmazonMusic” he tweeted. “all new listeners will get four months free.”

The announcement was greeted with some skepticism. Wren Graves of Consequence of Sound wrote:

As Young’s advertisement for Amazon makes clear, labor rights are not his chief concern. He also does not seem bothered that Amazon recently cut paid COVID leave time for infected workers, or that the company reportedly massively underreported employee infections at work, even as some of its warehouses suffered prolonged outbreaks for over a year. Young also doesn’t seem perturbed by the fact that Amazon Music provides a platform to other sources of COVID-19 misinformation, such as Fox News and Breitbart Podcasts.

Young is fighting the battle that he thinks is most important. He seems to be winning, too; Spotify has added “content advisories” on COVID-19 content, and on Sunday, Rogan posted a video responding to the controversy, pledging to “balance things out” and “research topics.” But if Young’s fans and Spotify’s detractors want to accomplish more than that, even as the platform pushes ever lower payout rates, we’ll have to do it ourselves.

And social media dunked on him, too, as some of these tweets demonstrate:

But Neil Young Inc. is a brand, too. He has a business to run, and being a multimillionaire in the music industry has meant making trade-offs: like no longer owning all his music. Selling half his catalog to Hipgnosis meant giving up total control over his music. And because technically he does not call the shots on where his music can be streamed, anyway (he needed to work with his record label to demand that his music be taken down from Spotify), it is unlikely that he could take his music off streaming completely and, say, distribute it all on his website even if he wanted to do so. He was going to need to make a deal with another streaming platform. He must have known that all along based on the conciliatory nature of his January 28 letter in which he cozied up to Spotify’s rivals seven years after condeming all streaming services when he tried to take down his music from multiple platforms (a move he rescinded).

Meanwhile, on January 30, Spotify CEO Daniel Ek vowed that the company would become more transparent about its content guidelines although he did not address Joe Rogan specifically. “We haven’t been transparent around the policies that guide our content more broadly,” he wrote in a blog post Sunday. “It’s become clear to me that we have an obligation to do more to provide balance and access to widely accepted information from the medical and scientific communities guiding us through this unprecedented time.”

As for Joe Rogan, he posted an Instagram video pledging to be more balanced and informed about controversial topics and guests. “If I pissed you off, I’m sorry,” he said. ““It’s a strange responsibility to have this many viewers and listeners,” he said. “It’s nothing that I’ve prepared for. I’m going to do my best to balance things out.”

The next day, January 31, Spotify’s beleaguered stock roared back, more than recovering its losses from the previous week.

Was this rebound a result of Spotify publishing a policy and Joe Rogan speaking out? Not likely. In fact, the rebound happened after an analyst issued a bullish report saying that Spotify stock is undervalued and worthy of investment. In any event, the “Neil Young dragon slayer” narrative was losing its luster given Spotify’s strong rebound.

I see three lessons learned here:

  • Beware runaway narratives. The runaway narrative here was that Neil Young was unleashing hell on Spotify’s stock value.
  • Taking a stand is never easy. Neil Young chose to focus on a podcaster accused of spreading misinformation, an understandable stance as the world remains in the grip of the COVID-19 pandemic. He has done so imperfectly and set himself up for criticism. Any brand that takes a stand needs to assess the risks, prepare for blowback, and stand firm unless new information comes to light that would affect their stance. To his credit, Neil Young has stuck by his guns.
  • Someone always benefits from controversy. Neil Young has emerged a winner. His public visibility has skyrocketed, and his songs have a new home on Amazon Music. Joe Rogan is also enjoying increased visibility; but I hesitate to say he has emerged as a winner yet. Let’s see what happens to his subscribership and support from Spotify, especially as the glare of the spotlight draws attention to comments he has made about race.

Spotify is also winning — for today. But the longer-term challenges that have caused the company’s stock to decline remain.

How about Joni Mitchell and Nils Lofgren? They’ve stood in solidarity with Neil Young, but will their music also find a home?

Neil Young will keep rebelling and biting the hand that feeds him. The truth of the matter is that for years, he’s exposed himself to criticism by taking a public stand on social issues. He sticks by his guns. He does not apologize for his actions. In that sense, the Neil Young brand possesses an important attribute: consistency. You may not agree with him, but you know what’s coming.

Should Spotify Worry about Neil Young and Joni Mitchell?

Two leading voices of their generation, Neil Young and Joni Mitchell, are leaving Spotify because the streaming service hosts controversial podcaster Joe Rogan. On January 26, Spotify took down Young’s music after he issued an “either Rogan goes, or I go” ultimatum regarding Spotify’s most popular podcast “The Joe Rogan Experience.” The podcast has been accused of spreading misinformation about the coronavirus and vaccines.

Mitchell, a kindred spirit of Young whose roots with the rocker go back decades, then posted the following statement on January 28: “I’ve decided to remove all my music from Spotify. Irresponsible people are spreading lies that are costing people their lives. I stand in solidarity with Neil Young and the global scientific and medical communities on this issue.” 

It is premature to conclude that dropping Neil Young and Joni Mitchell is hurting Spotify’s bottom line. Between them, their monthly listeners total 9.8 million (6.1 million for Young and 3.7 million for Mitchell) — a sizable number, but nowhere near the 47 million+ monthly listeners that Spotify’s Top 20 artists have as of January 2022. And it remains to be seen how many listeners will #boycottSpotify. My guess is that the boycott will have less impact on among the coveted Millennial and Gen Z listeners, who care more about the Weeknd and Dua Lopa than Neil Young and Joni Mitchell. The super users will be reluctant to delete their carefully curated playlists, too.

To be sure, rivals such as Apple Music are going to benefit by luring disenfranchised listeners, which Apple is currently doing by cleverly stepping up the promotion of its Neil Young catalog (and most certainly its Joni Mitchell library now). 

Now, what would happen if Gen Z and Millennial friendly artists pulled their music? Like The Weeknd, the most popular artist on Spotify with 86.3 million monthly listeners? Or Taylor Swift, with 53.8 million monthly listeners – and plenty of clout in the music industry? Keep an eye on these heavy hitters. If they stand up to Spotify (as Top 5 artist Adele has done twice throughout her career for other reasons), then Neil Young will have sparked a fire.

Spotify’s biggest threat consists of a stock price that has lost 45 percent of its value over the past year amid a general market pullback, disappointing financial results, a slowdown in subscriber growth, and a declining marketshare. The company’s stock price dropped the week of l’affaire Neil Young, but I am always cautious about attaching a stock price fluctuation to a single event. On any given day, many factors influence a stock price, including forces outside the control of a business, such as the larger market slowdown occurring in January amid inflation and the Ukraine/Russia crisis. I put little credence in news media stories assigning immediate cause and effect. If we are going to conclude that the Neil Young/Joe Rogan controversy caused Spotify’s stock price to drop, then what are we to make of the fact that the company’s stock began to climb in after-hours trading after Joni Mitchell made her announcement? We do not yet know the long-term impact of what is happening. For now, Spotify has a growing PR battle on its hands going into its February 3 earnings announcement.

And for Neil Young, who sparked the firestorm? His next move appears to be to expand his argument. On January 29, he posted an update in which he doubled down on his stance on Joe Rogan and then re-introduced a longstanding beef he has had with the sound degradation on streaming services. Here is his letter:

I believe Neil Young risks overplaying his hand. He has been complaining about digital sound quality for years, and frankly most of the world does not care. He risks diluting his original message and coming across as an out-of-touch elitist. The above letter is a case in point. He literally buried the lead — a passionate articulation of his position on free speech — at the end of a convoluted, poorly written diatribe about sound fidelity. Also, in his letter, he praises Apple Music’s sound fidelity, and a casual Google search shows that he has taken shots at Apple Music, too, which now creates a distracting question about why Apple Music is now acceptable — thus detracting from his original position. Put it this way: there would be no #DeleteSpotify if he had come out of the gate with the above letter. If Neil Young wants to expand his argument, how about taking on Spotify’s notoriously poor compensation of artists?

Let us see what happens next.

Memorable Album Covers of 2021

The vinyl resurgence continued at a furious pace in 2021. By midyear, vinyl sales were up 94 percent from the year before. The week ending December 2 (which included Black Friday) marked second-largest week of vinyl sales since MRC Data began tracking sales in 1991. The popularity of vinyl also underlined the importance album cover art, with online sites such as Our Culture and Exclaim devoting articles to the best and worst album covers of the year.

Album sleeve design plays an essential role in expressing a musician’s vision and sparking curiosity through visual storytelling. In the digital age, album cover art is even more valuable. The cover art is like a totem that appears in both the physical world (the album itself, merchandise, clothing, billboards, etc.) and digital (an artist’s website, Facebook, Instagram, Snapchat, TikTok, Tumblr, Twitter, etc.) Album cover art can also inspire a musician’s followers to create their own fan art based on the original sleeve. The cover becomes a digital totem.

As I have done for the past few years, I’ve created my entirely subjective round-up of the most memorable album covers of 2021. These are neither the worst nor the best. The simply made a powerful impression and stuck with me like a musical earworm. The memorable covers of 2021 reflected a pervasive sober realism. The covers reflected many artists who emerged from the oppressive isolation and tumult of 2020 by facing the world head-on, such as Cautious Clay’s portrait on the cover of Deadpan Love . . . .

. . . Or Lily Konigsberg’s Lily We Need to Talk Now.

Billie Eilish’s Happier Than Ever, focusing on Eilish’s tear-stained face, expressed Gen Z angst perfectly. 

Happier Than Ever also inspired a cottage industry of fan art. Here are a few examples:

Source: https://www.artstation.com/jowerly
Source https://www.deviantart.com/sk-graphix/gallery

But there was plenty of room for whimsy and humor, such as Baby Queen’s The Yearbook and Lil Nas X’s Montero.

Lorde’s Solar Power expressed a carefree spirit that spoke to the album’s theme.

St. Vincent’s Daddy’s Home was awash with provocative retro.

But on the whole, the albums that stayed with me felt simple, direct, and sometimes humble, like Joy Orbison’s Still Slipping Volume 1, which looked like a scene from a Charles Bukowski short story. 

For more memorable album covers of 2021, check out my SlideShare presentation. All these covers spoke to me. I hope they speak to you, too.

Why Adele’s Victory over Spotify Matters

Adele fought Spotify. And Adele won.

As the world knows, Adele recently unleashed her new album, 30, amid the fanfare and fan love that we are accustomed to seeing whenever she records new music. Adele is an artist who understands the power of big moments to create awareness and to build loyalty. She also cares about how her music is shared and sold — which is why she has clashed with streaming services over the years. For instance, in 2015, she initially restricted her album 25 from Apple Music and Spotify because she believed that they devalue music by giving too much of it away for free. This time around, she’s taken Spotify to task for how it serves up albums to listeners through random shuffle play. And she has enacted a change that will benefit artist and fans.

Adele’s Victory Explained

For some time, when we listen to albums on Spotify, the app has defaulted to playing the entire album on auto shuffle. This means that Spotify has prompted listeners to experience songs in some random order dictated by Spotify instead of people listening to songs in the sequence that the artist intended. Well, until Adele put her foot down.

She tweeted that she has convinced Spotify to disable the default auto shuffle mode. Going forward, an album can still be played on shuffle mode if a listener chooses that. But Spotify will default to playing an album in its intended order of songs.

She tweeted, “We don’t create albums with so much care and thought into our track listing for no reason. Our art tells a story and our stories should be listened to as we intended.”

Now that’s what I call leverage. One artist enacts a change that will affect all artists.

Why Adele’s Victory Matters

So, why does all this matter? When I shared an article about the demise of default auto shuffle on Facebook, my post inspired several comments. They fell into two camps:

1 It’s high time that Spotify respects musicians and fans.

One of my Facebook friends put it best, “Spotify strongly discourages users from listening to albums: its absurd, mystifying UX design makes that very clear. The service wants me to shuffle and graze an infinite playlist, and I refuse to do that, for the same reason I won’t read a single chapter of a novel or memoir and then set it aside to read another chapter by another writer with similar background or influences. I listen to music the way Adele makes and releases it.”

Here’s another representative comment: “GOOD. I hate spotify for that very reason. Artists create their albums in a certain way for a reason.”

2 Music listeners really don’t care.

On the other hand, I noticed a number of comments asking whether music listeners will even notice or care about Spotify presenting albums in their original order of songs the way artists intend.

One writer commented that people who actually listen to albums from start to finish are a vanishing breed. “ . . . our style of listening is disappearing, as surely as 8-track tape,” wrote one Facebook friend who grew up in the era of album-oriented music.

Another commented, “Modern and younger listeners are single-driven and the current pop scene generates singles and assembles album listing order aesthetically, with no underlying theme or concept. It is almost non-existent to have a concept record. Last popular one that comes to mind is Green Day’s American Idiot record.”

My take: Adele’s victory over Spotify matters. Here’s why:

  • Human beings matter more than algorithms. A machine no longer decides for you. A human being does. That’s a victory for humanity in my book.
  • Music listeners and artists win. Yeah, we like to remix music. Customized playlists are fun! In fact, music listeners have been making their own mixes since the days of cassette tapes. But it’s important that listeners have a choice by having access to the original source material recorded and shared the way the artist intended rather than have an app choose for them. Adele did something right for the listener. She restored the integrity of the artist/fan relationship.
  • ”Singles first” is neither new nor permanent. It’s true that today listeners are conditioned to consume music in bite-sized morsels while we go about our days exercising, working, and playing — which means we gravitate toward singles. But this behavior is not new. People consumed music mostly through singles decades ago until artists such as Bob Dylan and the Beatles ushered in a new era of album-oriented music, aided by the popularity of FM radio. But the resurgence of vinyl record sales underscores the reality that people do care about listening to albums. The point is that Spotify needs to allow listeners to adapt their preferences to their lifestyles, and that’s what Adele is forcing Spotify to do.

There are times when artists respond to fans. There are times when artists lead fans. Adele is leading through her actions.

How Netflix Is Becoming a Retailer

This is what agility looks like: Netflix launched Squid Game globally on September 17. By October 4, Netflix was selling official Squid Game merchandise on Netflix.shop, Netflix’s e-commerce site. By October 11, Netflix and Walmart had launched a Netflix Hub on Walmart.com, where shoppers could find merch based on Netflix shows, including Squid Game. Netflix has always had a knack for creating culturally relevant shows that connect with people through their beliefs and behaviors. Now Netflix is reading the pulse of culture and cashing in through retail.

Netflix.shop Launches a New Revenue Stream

Netflix launched Netflix.shop on June 10 to sell merchandise based on Netflix shows (as Disney has done so well with entertainment since the dawn of time). With the help of Shopify, Netflix uses artificial intelligence to quickly spot trends in consumer tastes and sell culturally relevant merchandise — which is exactly what is happening with Squid Game, the most popular debut show ever on Netflix.

Netflix.shop is an important foray into e-commerce for Netflix. The existence of the store represents a shift in thinking for the company that has define New Hollywood success. Netflix’s stock continues to eclipse previous all-time highs, but the company is spending $13.6 billion on content in 2021. Rising costs, coupled with a decline in subscriber growth, has led to ongoing speculation that the company will adopt advertising in some form. But so far Netflix has resisted an ad-supported tier as its competitors have done.

Selling licensed products is a revenue opportunity too big for a content creator to ignore. Sales of licensed products tied to shows, films and characters were about $49 billion in the United States in 2019, and $128 billion globally, according tothe most recent study of the industry by Licensing International, a trade group.

In fact, Netflix actually been in the merchandising business for a few years now. In 2019, Netflix and bike maker Mongoose agreed to offer a limited edition Mongoose based on a fictional bicycle used in Stranger Things, which was followed by the licensing of more Stranger Things-inspired bikes. Netflix also launched 75 co-brands, including those with Burger KingCoca-ColaH&M, and Nike.

These relationships — hybrid in-show product placements plus real-world merchandising — offered a glimpse of how Netflix would monetize its titles more broadly. Notably, the tie-in capitalized on the growing popularity of Stranger Things, which was a turning point for Netflix’s commitment to merchandising.

But even then, Netflix viewed merchandising and co-brands as a way to gain exposure Netflix shows as opposed to being a serious revenue stream. CEO Reed Hastings said that Netflix did not want to “get distracted with alternative revenue sources,” because its subscriber engine is what drives revenue, Hastings said in the earnings interview.

“The core focus is, create all these merchandising opportunities, tie-ins, touch points, so that you feel the ‘Stranger Things’ energy so that more people join,” Hastings said. “We do monetize all that. It’s just we’re monetizing it through our giant engine rather than through little sidecar vehicles.

A Change in Strategy

That’s not the case now. In 2020, Netflix hired Nike and Disney veteran Josh Simon to lead its Consumer Products division. Since he came aboard, Simon has tripled the size of the Consumer Products team. In addition to the partnering with Walmart, he’s been behind Netflix arranging distribution deals with Targetand Amazon to sell Netflix-inspired clothes, toys, beauty supplies and housewares.

Simon told The New York Times that Netflix.shop operates as a boutique, with Netflix instead focusing its efforts on more deals with store chains and fashion brands. “Practically speaking, the revenue will come more from those partners around the world in terms of sheer footprint and number of locations and magnitude,” he said.

And this is where Walmart comes into play. The online hub is Netflix’s first such site on another retailer’s site. A dedicated hub makes it easier for shoppers to find Netflix merchandise and also raises Netflix’s profile with customers of the world’s largest retailer. In addition, Walmart said that an initiative known as Netflix Fan Select will make it possible for fans to vote for the merchandise they would like to see from favored Netflix shows. Steven Mallas of Seeking Alpha says the relationship gives Netflix two pricing tiers:

First, the Netflix shop destination at its own site could focus on higher-priced items, including limited editions and other collectibles. Higher price points allow the company to more efficiently sell its items: i.e., take more money per unit and carry less units, which reduces risk compared to a mass-merchandise production plan.

The other side of the coin, the Walmart deal, will presumably focus on the latter merchandise model. These will be items that are priced to sell for a wider swath of the Netflix fandom.

Indeed, for Squid Game, Netflix and Shopify have unveiled merchandise ranging from $50 hoodies to $35 custom tees.

The products capture some of the iconic moments and characters in the violent show about people playing for their lives in a deadly series of games. The Netflix Hub on Walmart sells similar Squid Game merchandise, including tees and caps, but at a lower price.

Mallas also says that Netflix Fan Select opens up some intriguing possibilities:

Crowd-funding is something I always believed Amazon (AMZN) would have pursued to an effective degree/scale by now, but Netflix/Walmart easily could exploit this form of funding. It would reduce risk of production by collecting capital upfront from the very consumers who want to buy the product. And if both companies are serious about taking this website beyond online shopping carts and search engines, perhaps special exclusive filmed entertainment content could be crowd-funded and sold.

Imagine a short film based on the Stranger Things universe brought into existence by the fans, and then sold as a digital download, or even as an NFT… it just depends on how far the two partners want to go. It would be an easy way to create brand extensions at attractive economics; consider a toy company such as Hasbro (HAS), which has a history of seeking financing from fans for crowd-funded projects. Why simply vote for a product when you can also pay for it too? There does exist a consumer willingness to help corporations out in this regard, so long as there is sufficient demand for a certain concept.

Meanwhile Netflix has now engineered a way to stoke the fires of cultural relevance with its content and brand. If Netflix sees a show trending on social media, it can move nimbly — an approach Nike is taking by building its Nothing But Gold site. The need for speed influenced Netflix’s decision to work with Shopify to run Netflix.shop. Shopify President Harley Finkelstein told The New York Times that Shopify understand how to handle big merchandise drops ranging Taylor Swift albums to sneaker releases, “We’ve been battle-hardened around some of the largest flash sales on the planet,” he said.

Well Positioned to Grow

That Netflix could launch Squid Game merchandise so quickly is remarkable. Squid Game seemingly emerged from out of nowhere to take the world by storm, with its popularity based on word-of-mouth marketing.

Netflix is well positioned to grow its e-commerce business. But the company also as challenge: it’s one thing to cash in on a show such as Squid Game that builds enormous buzz early on. But other shows can take time to build the kind of fan loyalty that translates to a steady stream of merchandise sales. And lately Netflix has been quick to cancel shows in their infancy. In 2020 alone, Netflix canceled 18 original series, prompting Ken Renfro of Insider.com to note that “Netflix has a TV-show problem.” The company may need to be more patient to allow shows to become merchandise-friendly brands.

The Adele Mystique

Adele demonstrates the power of mystique. Merriam-Webster defines mystique as “an air or attitude of mystery and reverence developing around something or someone.” Adele creates that air of mystery by holding back. She avoids TikTok. She has tweeted only nine times in 2021, and her tweets consist of bland announcements probably written by someone on Team Adele. On Instagram, she has shared 14 posts in 2021 (and a recent Instagram Live chat with her fans). Avoiding social media is the wrong move for anyone trying to build a brand in our hyper-social attention economy. And yet, Adele’s new song “Easy on Me” has broken a Spotify record for most single-day streams even though she has not released any new music for six years.

Adele’s approach works for her. But why? Crucially, she built a devoted fan base when her breakthrough album, 21, took off in 2011. She attracted fans who were (and are) not necessarily into following music trends, social media, and pop culture — but who are into Adele. As Nielsen analyst Dave Bakula commented when Adele’s 25 was released in 2015, “[Adele is] an outlier of outliers because she brings in people who are not regular music buyers,” he told Billboard. “Maybe they haven’t bought a record since Adele’s 21.”

Adele has inherited the mantel of heartfelt singer-songwriter from the likes of Carole King and Joni Mitchell. Her fans connect with her songs at an intensely personal level. She is known to draw from her real-life relationships, which gives those songs an authenticity that resonates even more. “Easy on Me” is reportedly based on her divorce from Simon Konecki, as is her forthcoming album, 30.

Having a low profile on social strengthens that connection by keeping her fans focused on understanding Adele through her music, not through her social posts. Being on social risks exposing cracks in the Adele persona and can distract from her narrative. In 2020, she posted on Instagram a rare unguarded photo of herself wearing her hair styled in Bantu knots while she wore a Jamaican flag bikini. The post sparked accusations of cultural appropriation, a rare moment of public shaming. This was not the kind of attention that suits her narrative.

Social media is about creating impressions — little moments that create a steady stream of visibility. But Adele is in her element when she creates The Moment. Like hosting Saturday Night Live.

Or becoming the first person to appear simultaeously on the cover of both the U.S. and British Vogue.

She can control these moments. And then she can retreat behind the veil of mystique. She is like Steve Jobs with his big product reveals when he ran Apple. Adele’s latest big reveal is 30, being dropped on November 19. On Adele’s terms.

The Passion of the Rolling Stones

I swore I would never write one of those “Lessons I Learned from the Rolling Stones” blog posts.

And yet, here I am doing just that.

Why?

Well, a few nights ago, I came upon a YouTube video of them performing “Jumpin’ Jack Flash” onstage September 30 in Charlotte, North Carolina. I decided to watch it even though I already know the song well, and I’ve seen them perform it live. Frankly, I was curious to know how they sounded. After all, they’d just lost an essential member of the band, drummer Charlie Watts, who died August 24 after being their backbone for 60 years. On the other hand, they’d been holed up for months, grounded by the pandemic. The Charlotte concert was only the second show of their No Filter Tour. Would they sound energized by the road after all this time? Would they perform in sync with their replacement drummer, Steve Jordan?

Within seconds, I had my answer. These guys were on fire. Mick Jagger sliced through the air and skipped across the stage like a kid on a playground. Ron Wood and Keith Richards traded guitar licks like a garage band with something to prove. Richards crouched, twirled around, glanced at the heavens, and laughed. Wood swiveled his hips, tilted his guitar, and spat out lick after lick.

This was a moment of passion.

Then I came across them performing “Satisfaction” a few nights later in Pittsburgh. Here was an eight-minute version of a three-minute song we’ve heard countless times — and yet, every second felt fresh and exciting, with the band building up to an explosion of energy.

I have reflected on these moments. These guys are pushing 80 — Mick Jagger is 78, Keith Richards, 77, and Ron Wood, 74. Now, I don’t point out their age in a “Wow, they can still play into their 70s!” way. Their age matters because when you see someone several years older than you exuding that kind of joy and passion, well, you cannot help but feel encouraged that you can keep your inner flame alive, too, year after year.

I mean, it’s one thing to find your passion. But how do you keep it? Make it stronger? It’s easy when you’re just starting out in your career, whatever that is for you. You’re flush with the excitement of learning your craft. Of figuring out how to collaborate with a team. But then, the responsibilities of life start to compete for your energy. Professionally, you encounter hassles. Maybe you have a run of bad bosses or deal with a toxic co-worker. Maybe your job gets cut, and you need to learn a new gig with someone else. And then, there are the personal distractions that creep up on you, like monthly rents, student loans, and the endless minutiae of adulting. At some point, more serious personal setbacks that can crush your spirit enter the picture: like losing loved ones or handling a health issue of your own. All those things happen, and if you’ve somehow been spared and cannot relate to what I’m writing, well, just give it some time.

The Rolling Stones have endured all those setbacks. The loss of Charlie Watts is the latest. They’ve also lost other band members before Charlie, sometimes tragically. They’ve endured the same pressures that less-famous people like you and me face, including serious financial issues (they were broke in the early 1970s), legal scrapes, self-inflicted problems such as drug addiction and health scares (including heart surgery for Mick Jagger in 2019). Any of those obstacles could have sapped their spirit.

But not the Stones. They’ve released dozens of albums. Their work includes some of the greatest rock music ever recorded, and some not-so-great albums, too. But all of their music matters. Their most recent single, “Living in a Ghost Town,” was powerfully relevant to pandemic life.

And they keep touring.

On the surface, they don’t need to tour. They have all the money they need. Touring means travel. Being away from families. Enduring the rigors of road life. But I believe those video clips on YouTube say something else: touring is what fuels their passion. Touring means performing, and performing onstage ignites an inner spark. If you’ve ever performed onstage — whether acting, singing, or presenting at a conference in front of an audience — you know how that live dynamic feels. The energy. The nervousness. The “What if I suck?” doubts. Well, all that energy — both the nervousness and the excitement — creates a spark. And that spark keeps them vital.

Mick Jagger recently commented on performance when he was asked how and why he keeps touring into his 70s:

I’m very passionate about touring. Every time you go onstage it’s a very exciting moment, because you never know what’s going to happen. It’s always different. A lot of unexpected things happen. Each show is a new event. You’re in a different place with a different audience. It’s a very exciting couple of hours and it’s a very intense relationship with the audience.

Keith Richards was more succinct in a Rolling Stone interview: “It’s what I do, man. Give me 50,000 people and I feel right at home. The whole band does.”

It’s what they do. What do you do to keep your passion alive?