The non-profit music industry has been on steady growth until recently. The members promote and release music online for the public which individuals can download and listen for free. However, the right of ownership remains with the person who sings a song. This essay evaluates the business aspect of the sector and why it is growing at a slower rate than the commercial sector.
The nonprofit sector is known to be a non-business venture. However, some skills employed in business have to also be applied in the non-profit music industry in order to successfully achieve its goals. For instance, business managerial skills have to be employed to ensure the success of every program (Jiang 5). These include planning, budgeting and controlling. The non-profit music industry may, also, earn profits in music distribution for use in paying for various expenses and organizing other programs.
The non-profit organizations are known for providing charity to the community. The people or organizations, who act as donors, do so in order to build a good reputation and to give back to the society (Jiang 3). Therefore, they always expect that the organization’s leaders use the funds in a charitable program. However, the non-profit organization not only use its money on programs but also on overheads such as human resource and organizing events. This means that some of the funds and money used in charitable work must be used in payment of its expenses. This brings a dispute between the non-profit organization and its donors as they feel that their money is solely meant for charitable programs and not for upkeep of the organization. As a result, they either make demands to have their money used in charitable programs only or give their funds to another organization altogether. As the profit that the organization may earn from its activities may not be substantial for overheads, the lack of support from donors has led to stalling of growth of the nonprofit music industry.
The other challenge that faces the leadership of nonprofit sector of the music industry is the retirement of baby boomers. According to research, about a quarter of the leaders in nonprofit sector of the music industry want to leave their jobs (Jiang 7). What’s more, most of them are already in the process of leaving. However, the majority of those who plan to leave do not plan to inform the board of directors well in advance in order to prepare for succession. This is an indication of crisis as lack of training to incoming leaders by experienced individual results to a decline in the quality of new leadership. Consequently, the pace of growth that is left by the outgoing leaders declines, leading to an overall decline in pace of growth across the sector.
Moreover, the lines between the nonprofit and for-profit sectors of the music industry have blurred with time (Jiang 9). The commercial sector is able to provide quality music due to the fact that they have adequate finances gained from their profits. However, the leadership of the non-profit music sector find themselves with inadequate funds because of a reduction in the number of willing donors. In addition, donors like to benefit from the organizations’ programs in various ways such as advertisement of brands that they own. This leads to an increase in the expenses incurred in organizing. This has led the management of non-profit organizations to
result to profit-making endeavors in order to find enough funds to support their activities, stalling achievement of initial growth.
Moreover, the leaders required in the nonprofit sector must not only have the dedication to achieve goals, but also have adequate knowledge of both nonprofit and commercial sectors (Jiang 11). What’s more, the changing environment of the nonprofit sector of the music industry requires leaders who have work-experience of the commercial sector, unlike in the past when all a leader needed was passion for the venture. This need for cross-sector movement has led to a breed of leaders who know the strengths and weaknesses of both sectors. This has brought about a high turnover of leaders in the non-profit sector. The trend has been caused by the apparent success of the commercial sector and a desire for a higher income than that which is earned in the non-profit sector.
Further, the non-profit sector has experienced slow growth rate due to the complicated decision making process. The current leader finds themselves in a situation where the donors, consumers and directors must be involved in the decision making process (Jiang 9). In the past, donors were composed of people whose sole objective was charity. However, with the increasing demand on business enterprises to engage in corporate social responsibility, many act as funders for various non-profit organizations. However, they do so with, not only the need to give back to the community, but also to benefit in their pursuit for profits. In the music industry, if a leader plans to put up a concert, they find that the three stakeholders have to approve of the location, money to be spent and the size of the concert. The need to find consensus makes decision-making a time-consuming activity, a result of which progress is slowed down.
Finally, leaders in the sector are required to have greater leadership skills than those in the commercial sector. This stems from the fact that they have to give the labor force other motivations besides financial ones. In addition, the volunteers are never under obligation to stay on to the end of any project or to provide high quality services. This has resulted to projects of inferior quality, to the disappointment of consumers. This has led to a decreased popularity of the sector and slower growth rate.
In conclusion, the non-profit sector of the music industry has to engage in profit making ventures due to the need to find funds to pay for the increasing overheads. The slow growth of the sector results from the demands and challenges that the leadership face. Attempts to overcome the challenges only serve to further slow progress.
Jiang L. The Nonprofit Sector: Examining the Paths and Pathways to Leadership Development. Wharton Research Scholars Journal. 5.10. (2008). 2-64.