Just now in her mid-twenties, Lady Gaga has taken the music world by storm with a unique blend of business savvy, interesting hair and wardrobe choices, and a fabulous sound with a “spacey Euro vibe.”41 Five years ago, Lady Gaga did not exist. But the individual who is Lady Gaga, Stefani Germanotta, was waitressing and singing in drab and dingy New York clubs. She was ambitious and had bigger goals. After being signed and dropped from one label, Def Jam (turns out that may not have been the best decision by them), she joined forces with a hand-picked core team of creative advisers she called “Haus of Gaga.” Behind all that glitz, glamour, and unusual fashion choices is a “case study of what it takes to succeed in the music business today.” Gaga’s impact on the music world in the span of a year has been nothing short of phenomenal. Writing her own material, she’s sold more than 10 million albums. Her debut album generated four No.1 songs. She also topped the digital sales chart in 2009 with 15.3 million tracks sold, most on iTunes. She’s had more than 1 billion Web views. Some 3.8 million “Little Monsters”—Gaga’s nickname for her fans—follow her on Twitter and she has over 6.4 million “fans” on Facebook. She was the most-Googled image in 2009. And then in recognition of the fact that she’s been deemed worthy of the success she’s had, she opened the Grammy’s award show in early 2010 with music legend Sir Elton John. She “reigns over a brand that spans music, video, design, and marketing.” One advertising executive said, “No other artist commands the kind of attention that Gaga does. If she does something with your brand, it’s like bam!—a million eyeballs.” For instance, together with MAC Cosmetics, she created a shade of Viva Glam lipstick that has raised $2.2 million for AIDS awareness—Viva Glam’s most successful launch ever. What strategies has she used to navigate the turbulent industry and become a star?

One important component to her success is her savvy awareness of the power of digital media and her exceptional ability to exploit it. “Her persona is built for the online generation.” Even though much of Gaga’s audience has got her music online legally for free, “being embedded on the Web can pay dividends in exposure and the loyalty of fans.” Gaga keeps her Little Monsters engaged with personal musings and real-time thank-yous. Another important aspect to Gaga’s success is what’s called in the music business the 360-degree deal. The major upheaval in the music industry over the last decade led major record companies to look for ways to replace declining revenues. In a 360-degree deal, a label invests more money upfront—on marketing, for example—but in return, gets a piece of merchandise sales, touring revenue, and other earnings artists usually kept for themselves. This arrangement has been wildly successful for Gaga. Finally, Gaga’s persona has been a calculated strategy. “Gaga’s allure is that of a misfit run amok in the system, a role that has helped her cut across disparate subcultures, including teens, finicky hipsters and gays.” Her look isn’t considered shocking like it was say, for instance, when rockers Alice Cooper or Gene Simmons first appeared. It’s unique and keeps her audiences eager to see what her next image might be. Gaga is determined to not be a niche artist. However, her “now-trendy sound won’t last forever.” Her ability to remain a music industry mainstay will depend on her ability to evolve.

Discussion Questions:

1. How is strategic management illustrated by this case story?

2. How might SWOT analysis be helpful to Lady Gaga as she and her advisors manage her career?

3. What competitive advantage do you think Lady Gaga is pursuing? How is she exploiting that competitive advantage?

4. Do you think Lady Gaga’s success is due to external or internal factors or both? Explain.

5. What strategic implications does the suggestion that her ability to remain a music industry mainstay depends on her ability to evolve have?