Lady Gaga - a Business Model that works


By Darragh Worland

As fans insist on a National Lady Gaga Day, Gaga herself (and her "360" record contract) defines the new standard for a modern-day music-industry success story.

Fans have been going gaga for her ever since her bloody performance of the hit song "Paparazzi" at MTV's Video Music Awards in September, where she was named Best New Artist.

And now, just days before the Grammy Awards on Sunday night where she is nominated for five awards, dance/pop singer Lady Gaga has been granted her very own national holiday — sort of, anyway. What started as a goofy event page on Facebook marking National Lady Gaga Day now has over 100,000 followers, all of whom are honoring the singer with a day of emulation. According to the page, the "Night of Mayhem" is a day to celebrate your "inner freak."

"Dress like her, sing, dance, have themed parties, wear a Kermit the Frog jacket, ect. (sic) JUST HAVE FUN!" says the event page.

OK, so it isn't really National Lady Gaga Day, but according to the Wall Street Journal, the music industry could stand to learn a thing or two from Lady Gaga's "digital dominance, business savvy, niche-busting sound and 1,001 wardrobe changes" about how to build and maintain a fan base.

"Underneath Gaga's haystack wigs is a case study of what it takes to succeed in the music business today," writes WSJ's John Jurgensen. " [...] She is a product of a new kind of recording contract, which goes beyond just selling records to encompass everything from touring, merchandise — even her make-up deal. Though she writes her own material, she is as focused on visual theatrics, fashion, and global appeal as she is on the music."

Jurgensen goes on to list three major lessons to be learned from Gaga's success:

1. She's a Digital Phenomenon: Her debut album, "The Fame" generated four no. 1 songs, helping her to bring in massive digital sales, but much of her fan base got access her music for free and legally, says Jurgensen thanks to digital streams of her videos and music on sites like YouTube and MySpace, where she's had 321.5 million plays. That access, in Gaga's case, has translated into huge dividends in fan loyalty.

2. She's Got a 360-Degree View: Revenue losses in the digital age means record labels are going after money generated by artists outside of music sales in addition to their music revenues. The new model is what the industry calls the "360 deal" in which labels invest 100 percent up front for a cut of revenues from every aspect of the artist's business, including merchandising, which artists used to keep for themselves. Lady Gaga is one of the first major artists to have been launched under this model. A portion of her income from every concert she performs, to her deals with Polaroid, Estée Lauder's MAC and other corporate partners lands in Universal's Interscope Records' pockets.

3. She Could be the Next Madonna: Like Madonna, Gaga is a lover of the underbelly, making bold use of what Jurgensen calls "dark theatrics." She shape-shifting costumes and her playful use of language, such as referring to her fans as "monsters" have made her a hit in mainstream radio. She's a cross-over star who appeals to misfits in all spectra, including among gays, hipsters and boundary-pushing teens all with easy-to-sing lyrics, like "I want your ugly, I want your disease."

Basically, Gaga's got the full multimedia package, and these days, that's what it takes to get noticed.

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