DON'T STOP THE MUSIC BUSINESS

Would it be PURE BLISS to have a room full of people “in love” with the music business despite the trade’s financial woes during the last decade?

The question has been ringing in my mind since attending the NARM convention in Chicago a year ago. Is it the nostalgia of being in the mist of music retailers wrangling over how they need more marketing attention from major labels and large independents? Was it networking in the hallways with reps from entertainment marketers, international record companies, local music labels, or the owner of a popular St. Louis record store who lamented: “I made more money last year than most of the people in that room” (music retailers conference)? Could it have been attending a Sony Music sponsored artist showcase like those written about in Clive Davis’ memoirs as if it just jumped out of the book?

Although the answers to the aforementioned questions do not resolve the question of pure bliss, they contribute to a certain truth. The kind of truth that would inspire hardcore music business professionals in a stormy commercial season where financial trade associates shy away or forsake the music industry;  the type of partial truths in a group of reasons why students are courageously pursuing a formal music “business” education on undergraduate and graduate levels (despite amassing school debt in a tough economy).

Attendees of the NARM convention and students of higher education do share a commonality – a willingness to evolve, problem solve, and keep the music trade revolving like a CD in a disc player. A similar component found in the minds of the music professional and the student is identical in function as a part in a disc player – a laser focus! It is like no other time in my personal journey in the music business during the last fifteen years that such an intense attention for the trade has existed.

Has the analysis of a stagnating music industry caused my focus to intensify? Did the reality of having to settle the investment in music business education strengthen my foresight? Is the constant news reporting about the downsizing of giant record companies and record store bankruptcies enhancing my resolve to succeed?

Whatever the reasons illuminating my laser-beam focus, it is with confidence in the skills gained from pursuing a music business bachelor degree at Columbia College of Chicago and entertainment master degree from Full Sail University that my will is to DON’T STOP THE MUSIC BUSINESS!

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REFERENCES:

1)   NARM 2010 Conference in Chicago; http://www.narm.com/events/happenings-recaps/

2)   Clive: Inside The Record Business; Clive Davis with James Willwerth; Chapter 5, Section 4, pp. 81-83

SHOW MUSIC STORES THE MONEY!

Funding a music business record store comes with familiar start-up challenges.  The types of financing available for a music store are generally identical as those for other business.  Several of the options for generating monies for a business venture involve getting loans from a bank.  Asset-backed or equity loans require a guarantee of some form of collateral (i.e. equipment, property, etc.); however, since equipment used for operating the business could be jeopardized in the event of defaulting the loan, then, an asset-backed loan may be risky.  If sharing ownership or administrative control with investors is an option, then, venture capitalist or business angels may be another funding option. A split of the profits from the business revenues, as well as, managerial or operational support for the business is what venture capitalist will exchange for financing. The SBA or Small Business Administration of the U.S. Government offers several grants and loans for qualifying business owners.  Although grants awarded by the SBA do not have to be rapid, a loan must be repaid on a time schedule and with a predetermined interest amount. A few innovative approaches towards getting funding for a record store could be explored outside of traditional loans. If there are supporters from among relatives and peers, then, another alternative for financing may be borrowing money from family and friends.  If securing a loan from banks, venture capitalist or friends and family is not a preferred route, then, offering supporters of independent record stores a chance for ownership is another option.  Patrons or enthusiast of music stores may be willing to jump at the chance to invest in a genuine interest. Ultimately, if it’s a bank loan, venture capitalists, loans from personal supporters, or community investors, a time will come when realizing the vision of a music store will mean asking someone to show you the start-up money.
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REFERENCES:

1)   How to Open A record Store; http://www.ehow.com/how_4465183_open-record-store.html?ref=Track2&utm_source=ask; Lynda Moultry Belcher.

2)   Record Shop: How To Get Your Own Record Shop on Track; http://www.startups.co.uk/record-shop.html

CORE BUSINESS PLAN FACTORS FOR MUSIC VENTURE

The company marketing approach and the financial data are the most important sections of the business for investors to read. A revelation from the marketing highlights the opportunities in a “stagnate” music retail environment. Industry reports from reputable trade publications like Billboard magazine will help highlight how our business concept will gain a favorable response in the marketplace. In addition to an effective business concept, the marketing data will reveal how our brand logo and slogan –AMPER: Music Mobile and More! - will inspire consumers to purchase our products and services. The successful branding entrepreneur and Shark Tank television personality - Daymond John – emphasizes how controlling the perception of your brand, product and self is integral to success¹.

In addition to controlling our image for branding the company, the marketing section will demonstrate how to take advantage of the standard successes for our business market, as well as, the opportunities from weaknesses in our present market (i.e. our niche). Daymond John points out how one must understand the weaknesses and plan around them².

Our financial section of the business plan will demonstrate the revenue potential in our target market.  How investment dollars will be allocated for inventory and strategic marketing will demonstrate the efficiency in our marketing plans. By assuring the investors of our ability to convert financing into profits, a justification for funding our venture will be made.

Ultimately, by concentrating on “how” we plan to improve on industry weaknesses in order to generate revenue, our marketing section will appeal to investors.  Since, a new approach to a successful music retail venture is still appealing to many music-loving investors and business owners, then, we must justify the love for music I which investors are eager to share in funding. Ultimately, the financial section will provide the clarity for returning an investment on the financial capital, therefore, this section will be of particular interest to the investors.

REFERENCES:

1)   Becoming An Icon; http://www.daymondjohn.com/power_journal/becoming-an-icon/; Dayomond John; March 31, 2010.

2)   Professional Ability; http://www.daymondjohn.com/power_journal/professional-ability/;

Daymond John; September 13, 2010

HUMILITY FOR LEARNING TO ENDURE MUSIC BUSINESS

Some significant points for business development from the three interviews of Jayson Whitmore includes how humility enables one to balance passions in order to learn; how business plans aid in forecasting potential market trends; and how demonstrating a self-respect for quality is a mark of professionalism.  

Remaining humble during the journey of a career in entertainment will foster creativity, personality and self-confidence. According to Jayson Whitmore, the aforementioned characteristics are “huge” factors for how he determines the caliber of potential employees or partners. In addition to identifying potential associates, humility is essential to my being able to learn during my career.  Instead of being passionate for an immediate gain, humility will enable me to temper my passion in order to gain invaluable hands-on and theoretical learning opportunities.

Forecasting potential business trends in a marketplace is an invaluable benefit of developing a business plan. Accurately, Jason pointed out how mission statements, business forecast, and market research are some essential benefits from developing a business plan. Critical to achieving any fund raising goals is the ability to present a correct and sound business plan for capital investors; moreover, developing a sound business plan can also indicate the level of professionalism or commitment to one’s own ideas and positions.  In other words, how a person represents their own self-interest is an indication of how a person may represent the business, investment, or another company. The development of a business plan is refining my ability to shape a mission statement by understanding the forecast of a business venture, 

A parallel exists between how his company operates in a “small circle” and how the entertainment industry as a whole has a tight-knit community.  My career goals for operating in the music industry will require an ability to maximize the “one-person degree of separation” within the industry’s network; therefore, my professionalism must show a respect for the trade’s standards of quality.  

REFERENCES

1) Jason Whitmore interview at Full Sail University; Selling Yourself, Business Plan Development, and Professionalism.

TODAY'S MARKET HAS DIGITAL MUSIC & MORE

During the era of vinyl records, cassette tapes and eventually compact discs, who would have imagined that the computers being used for academic and video game usage would someday revolutionize the music industry?  Moreover, who would have imagined that one day record labels like Warner Music Group or Sony/BMG would incorporate technology updates alongside the latest music album release?  Probably not many of the consumers and maybe only a few trades people (especially record company executives).   However, since CBS records is planning to re-launch a former music recording nemesis by the name of MP3.com, the remote future is now the present reality.  According to a report in Billboard magazine back in June 2011, the CBS Interactive Music Group (even the name denotes change has arrived!) announced that alongside new music recordings, the web site of the new MP3.com will feature a tech blog.  The blog will feature updates about new gadgets and music related technology as well from the CBS sister company CNET.  Citing the early days of the digital music revolution when MP3.com was a “cornerstone” in the music business, CBS is positioned to build on that tradition. Although the new technology is exciting for fans and music trade opportunities in publishing and content development, many in the trade wonder if these changes are too furious for the music industry?  Whatever the final results of this latest endeavor by CBS and MP3.com, one thing for certain is that today’s music market is relying on more than just music in order to survive.  

REFERNCES

1) CBS Relaunches MP3.COM: http://www.billboard.biz/bbbiz/industry/digital-and-mobile/cbs-interactive-relaunches-mp3-com-1005243372.story ; Antony Bruno; June 21, 2011

TOO FAST, TOO FURIOUS FOR THE MUSIC INDUSTRY

Since 1999, the music industry has been rapidly moving to define, keep up, and maintain the drastic changes in the trade.  A change driven by such factors as an inevitable consumer revolution for digital media, technological advancement in media formats, and preserving traditional revenue streams in the midst of momentous shift. The rate of speed in which the restructuring of the music industry has been lightning fast – maybe too fast for consumers and trade professionals. In the case of consumer demands, the desire for MP3 format music in the form of peer—to-peer use on the inter-net was tsunami like (literally prompting many in the music biz to declare a state of emergency). During the consumer demands, the digital companies of 1999 decided to launch MP3 players into the marketplace (remember the first MP3 player – the Diamond Rio); however, according to music analyst at the major music conferences like Midem in France, the present day music listener between the ages of 21 and 35 were ‘a lost cause’ and efforts should focus on the emerging market audience (i.e. tweens and teens). True to the cause of preserving traditional revenue streams were those music companies who supported the RIAA’s campaigns of legal prosecution of high school, colleges and adults for downloading music illegally. Changes in the music business still seem to be moving a bit too fast and furious; although the consumer attitudes towards purchasing music has shifted since the advent of Apple iTunes store, real music ringtones, and other new technologies like social media or music cloud services. A recent case in point was the marketing collaboration between Target stores and Beyonce for her latest album entitled “4”. The physical release of CD albums began with a promise of providing digital content for purchasers of the deluxe album, however, the digital video and features were not ready by the release date, therefore, a sort of IOU had to be given to customers in order to redeem the content at a later date.  Yes, there has been a lot of progress in the last decade of the music industry, even so, there are constant reminders that customers, technology and new revenue streams are moving a bit too fast and furious for the music industry to keep up.

REFERENCES:

1) Beyonce, Target’s ‘4’ Plan: Exec. Explains Exclusive Deluxe Album, Store Shortage; BILLBOARD Magazine; Shirley Halperin – Hollywood reporter; July 1, 2011; http://www.billboard.biz/bbbiz/industry/record-labels/beyonce-target-s-4-plan-exec-explains-exclusive-1005260962.story

AN OUNCE OF MUSIC BUSINESS PREVENTION

The digital distribution and manufacturing services, plus the multi-media manufacturing offers by Creative Space, are alluring; however, the options for book and film production raises some questions about the details of these offers from the POD service provider. Since maintaining inventory levels for published books can be tricky in the event of slow book sales, then, the inventory control by way of manufacturing is a bonus; moreover, despite the added services, a further investigation of their basis for calculating the price tag on these services requires further investigation - at least for the physical CDs. Although digital audio downloads account for 40% of sales, there is a lot of grey area in those figures when it comes to independent or emerging artist album sales (especially since live performances are where the bulk of the money for an artist will be made). The Creative Space reasoning of $25 per CD in order to justify their costs seems a bit off the target by ten years with current market prices of $9.99 to 14.99 per album. Actually, Creative Space is an Amazon company and may be not be needed for music production. Since 2008, following over 7 years of strategic market observations, two of the most effective digital download, CD inventory warehousing and CD manufacturing services for independent artists or labels have merged (i.e. Disc Makers, CD Baby, Amazon, iTunes, etc.).  These companies’ track records are more convincing for a small record company or artist with a skeleton budget. The financial risk is more secured with theses established companies than with the alluring offers of a new service with a dazzling array of one-stop shop services. Therefore, in order to get a bang for the buck, consider the quality of music production and distribution services from a long-time professional music business company like Disc Makers and their partners.

REFERENCES:

1) Digital Distribution; http://discmakers.com/services/WebDistribution.asp

2) Creative Space Distribute and Selling Index: http://www.createspace.com

3) Managing The Artist’s Tour; The Business of Artists Management 4^th Edition; Xavier M. Frascogna, Jr., H. Lee Hetherington; pp. 204-205