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

What A Difference In A Decade Of Music Business

One thing was clear when a news headline in 2003 reported that $1 million dollars worth of digital downloads for music MP3 files were sold by Apple Music’s iTunes: music business history had ‘OFFICIALLY’ been changed. Following the 7-year strategic partnership between CD Baby and Discmakers, it is no surprise that a ‘formal’ merger between the two companies would occur.  Although this business deal would happen in 2008, by looking back on the digital change in the industry, the commercial shift in the process of music distribution ‘officially’ began between 1999 and 2000 with the selling of the first MP3 device – the Diamond Rio Player.  Those of us following and participating in the music business trade at that time knew that the copyright lawsuits of Napster with BMG, creation of consumer MP3 players, challenges to make viable digital rights management systems, text voting of American Idol, and the commercial advancement of digital satellite radios were legs in a race to monetize MP3 music files or digital downloads of music and entertainment. Ten years ago it was crystal clear for music business professionals that everyone besides the giant music business companies, warehouse retail stores, and computer technology businesses would be watching the on going battle for supremacy in the music business. As a matter of fact, following the 2003 revelation of Apple’s digital gold rush with iTunes, the subsequent 7 years have really been similar to the epic battles between the giant creatures like Godzilla and King Kong on Monster Island. Anyone familiar with those classic monster films already knew that in this music industry version of Monsters Island that the supporting roles of the tiny militarized armies with civilian onlookers would be played by the undercapitalized independent record companies, music retail stores, and general consumers. A decade later, now that the dust from the giant’s fighting is settled, we can describe how the monetization of music in the digital age made a difference in this past decade of the music business.  

RFERENCES (Blog 1):

1)   Bye, Bye, Baby: Discmakers Buys CD Baby…, ;Digital Music News;  http://www.digitalmusicnews.com/stories/081508disc ; Presnikoff, August 15, 2008

2)   Discmakers Acquires CD Baby; Billboard Magazine;  http://www.billboard.biz/bbbiz/content_display/industry/news/e3iba088905bb5e4048f0693d160e5a346e ; Cortney Harding; August 5, 2008.

THE LEGACY OF LOCAL RADIO

If supporters of community radio have anything to say about it, then, the legacy of low power radio may experience a revival as a result of the Local Community Radio Act.  Recently signed by President Barack Obama, the Act is intended to increase the number of local radio stations on the FM dial to as many as 2000 within the next couple of years. In order to better understand why the development of local radio stations as an alternative to large corporate controlled stations like those operated by Clear Channel is important, read some of the negotiation aspects of LPFM station general manager, programmer and attorney Efia Nwangaza of WMXP 95.5 FM in Greenville, SC. In our discussion about some of the factors during negotiation, we covered the areas of affiliation, autonomy and mutual benefits:

The type of affiliation in which a deal is made is critical for LPFM stations because partners make the LPFM station more valuable.  For example, Pacifica radio network is reputable for having 5 radio stations in key markets, and, they are focusing on important social issues (like human rights, the economy, etc.); moreover, Pacifica provides popular programs for syndication like Tavis Smiley and Cornell West in order for WMXP to provide sophisticated programming, thus, enabling the LPFM with the ability to generate more sponsorship funding. When considering autonomy as a general manager and programmer, a more specific tupe of content can be developed in accord with the program’s mission, as well as, the community needs; otherwise, program would have to be bought, or pigeon held with local programming. Regarding mutual benefit, an alliance with a developer like Pacifica provides an outlet for content providers to sell their programming, while the company (WMXP) gets quality programs or hard to develop content (i.e. the US President’s Inaugural address).  In the end, the factors of affiliation, autonomy, and and mutual benefit are key elements in negotiations, as well as, the evolving legacy of LPFM radio.

REFERENCES:

1) “New law could foster community radio boom”; Reuters; By John Hurdle; Jan. 29, 2011; http://www.reuters.com/article/2011/01/30/us-community-radio-idUSTRE70T00F20110130

2) “Low-Power FM Radio to Gain Space on the Dial”; The New York Times; by Brian Stelter; Jan. 24, 2011; http://www.nytimes.com/2011/01/25/arts/25radio.html?_r=3&adxnnl=1&adxnnlx=1295932235-3bFUj0ul3scO4LekFF50ug

3) Prometheus Radio Project; About Us Section; http://www.prometheusradio.org/about_us

THE MUSIC INDUSTRY'S GROUNDHOG DAY!

During the highly publicized Limewire trial, there was an unforgettable use of a tool as old as a vinyl record or even eight track tape (social networkers hang tight for a moment!). The tool was called a chart an this chart had an arrow pointing upwards to indicate the potential recorded music profit that may have been if file sharing companies like Napster and Limewire did not exist.  Immediately, since the news of this graft in a courtroom lit up the internet like a comet in the night sky, one question was echoed throughout many podcast and web articles: “why can’t the music industry move on already?”.¹ Although it has been over 12 years since the arrival of Napster and mass usage of P2P sharing systems, the music industry has yet to embrace the new technology instead of treating it like a commercial pariah.² According to MP3.com founder Michael Robertson, record labels are stuck in a “past era” and they will remain that way until a new management team changes the entire system. (Reporter’s Roundtable, March 4, 2011, Ray Thidelman). Despite the customer’s clamor for more music interactivity on social network sites like Facebook, according to Michael Robertson, consumer demand doesn’t affect royalty rates that are codified into law, therefore, what the consumer wants is not the ultimate factor. Companies like Spotify or Pandora provide a great technological service, however, royalty rates as determined by law strangle the profitability of these companies and may even threaten their existence.² The option of getting free music on You Tube is making recorded music customers more “careful” about purchasing entire albums at retail stores.² (Reporter’s Roundtable, 2011).  However, other media industries like Hollywood are facing the pressure of internet media streaming technology.³ Greg Santos of the Media Maverick blog believes that if theatres become more concerned about patrons leaving the movie theater for alternatives like patrons in Spain, then Hollywood could have more problems;³ Furthermore, Greg believes that Disney channel’s recent movie streaming service at $30 per movie is a sign that company’s are realizing that giving consumers what they want when they want it is good for customer access.³ All of the podcast reports shared a common conclusion regarding the music business and its relationship with technology: “Wake up and get over Napster already. Embrace technology instead of increasing royalty rates and the number of lawsuits”.  

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REFERENCES:

1) What would the Music Business Look like Without Napster; Music Biz Weekly Podcast; Michael Brandvold / Brian Thompson; April 8, 2011

http://michaelbrandvold.com/blog/2011/04/the-music-biz-weekly-podcast-episode-4-what-would-the-music-industry-look-like-without-napster/

2) Michael Robertson on Today’s Music Industry; Reporter’s Roundtable, March 4, 2011, Ray Thidelman; http://www.cnet.com/8301-30976_1-20039456-10348864.html

3) The Internet vs. Hollywood; Reporter’s Roundtable on CNET.com; Hosted by Rafe Needleman w/ guest Steven Gaitos, Executive Editor of Variety & Greg Santos of CNET.com’s Media Maverick Blog; October 1, 2010; http://www.cnet.com/8301-30976_1-20018347-10348864.html?tag=contentMain;contentBody;1n

NEW TRADE FOUNDATIONS FROM EFFECTIVE OLD METHODS

A new drink from an old well is what the 21st century music consumer and trade professionals are experiencing in this age of digital music.  The new drink is the digital format for recordings and means of distribution.  The old well is the sea of legal issues surrounding the changes in the music business.  It was during the change from music on piano rolls to public performance on radio and vinyl records that organizations championing the "rights" and "royalty" interest of artists emerged in the start of the twentieth century; therefore, it is no surprise that the legal frontline is where an intense battle to control the direction of commercial music is intense.  Admittedly, the RIAA is throwing any "violator" under the bus for "illegal downloads of music".  Students, parents, college administrators and music pirates were all subjected to the lawsuits. Citing a $55 billion dollar loss over the last ten years due to piracy, lawyers for the RIAA and major record companies are heralding the value of the lawsuits for the long-term good of the music industry.  However, critics of the lawsuit strategies of the RIAA and music executives are crying enough with the blame game. The effect of Napster, Limewire, and, other digital download services on the music industry has been advantageous for technology companies like iTunes, cell phone companies and MP3 device manufacturers. On the other hand, the emphasis on the “challenges” of technological change has seemed to eclipse the “creative” side of the trade.  The over emphasis on digital technology as a tool for corruption instead of an ally for change is part of the problem, according to critics of the lawsuit strategies. Moreover, critics assert that embracing digital services like Spotify peer-sharing services would bring the type of success being experienced in other countries.  The closing of record stores, massive layoffs at music companies, and anti-development perceptions seem to foster the consumer revolts against the corporate record companies’ traditional processes.  Critics may be wary of the “blame game” from the RIAA and major record labels, however, the legal battle was always the frontline for establishing the systems for a century of trade.    

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REFERENCES:

1) Downloading Music Illegally and the Role of the RIAA; Legal Talk Network; November 16, 2007;

http://legaltalknetwork.com/podcasts/lawyer-2-lawyer/2007/11/downloading-music-illegally-and-the-role-of-the-riaa/

2) Greg Kot interview; The Sound of Young America; August 10, 2009;

http://www.maximumfun.org/sound-young-america/greg-kot-interview-sound-young-america

3) Music Industry Still Blaming Napster; April 8, 2011: http://www.thornybleeder.com/index_files/episode4_the_music_biz_weekly_podcast.html

THE PERFECT MUSIC BUSINESS STORM

Queen could be heard singing the theme song in a too familiar scenario of the indie and major music business – another one bites the dust!  According to a recent Rolling Stone article, as revealed in the Billboard magazine, the Arc Music Factory production team and the artistic/management duo of Rebecca Black plus her mother are in a copyright infringement tug-of-war.  Despite a #38 ranking on the Billboard charts, an increase in web video views, and rising popularity of the song ‘Friday’, a struggle over the ownership of master recordings, videos and music compositions of the hit song rages.  In terms of the “meat” of some sort of legal agreement, the article fails to mention whether some formal agreement exists, thus, leaving one to ask “where’s the beef” in this legal matter? The meat being the question: was there ever a formal agreement regarding the song’s publishing ownership split, music video as a work for hire, or ownership over the composition? Actually, the article makes it seem as though this was some sort of handshake deal where the bridges of music legality would be crossed “when they got there”.  How else could one explain the implosion inside the Arc production team, and the charges of an “illegal exploitation” of the image of their artist – who, by the way, paid $4,000 to produce the video instead of the label or production team¹.  During the peaking success of the music on the charts, the internal conflict is occurring at an inappropriate time (when all hands should be focused on enhancing the value of the song instead of fighting over the song).  MUSIC ASPIRANTS TAKE HEED TO THIS LESSON!  A similar discrepancy in an understanding of terms in a music agreement is occurring between the Christian music group P.O.D. and its label INO Records.  Citing P.O.D.’ s “abandonment” of the contractual obligations it was under, the INO record label did not provide $400,000 in order for P.O.D. to begin production on a new album².  The importance of understanding the terms in a music recording agreement is being impacted by the dynamics of physical music sales versus digital music sales. if data revealed in the Nielson SoundScan, Strategy Analytics, and the IFPI Global Music Industry Reports has any merit, then, artists need to make certain that they secure favorable terms in order to maximize the benefits of physical and digital publishing royalties.  The data suggests that digital sells presently accounts for 40% of all music sold, and, sales of physical music will have an even split of 50% with digital music selling the other 50% of all music sales by 2012.³ Therefore, aspiring artist and record labels seeking to gain the most from future music sales, and, avoid the pitfalls of a lack for understanding the terms of a music contract, should stay clear of these music industry storms (or prepare to adopt the Queen’s anthem for losers).  

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REFERENCES:

1)   Rebecca Black Reportedly Threatens Legal Action Against ‘Friday’ Producer Arc Music Factory; Billboard Magazine, April 1, 2011; by Phil Gallo;  http://www.billboard.biz/bbbiz/industry/legal-and-management/rebecca-black-reportedly-threatens-legal-1005109432.story

2)   P.O.D. Files Lawsuit Against Record Label; Billboard Magazine, April 1, 2011; by Gary Graft;   http://www.billboard.biz/bbbiz/industry/record-labels/p-o-d-files-lawsuit-against-record-label-1005108712.story

3)   When Will recorded Music Be 50% Digital?; Billboard Magazine, March 31, 2011; by Glenn Peoples; http://www.billboard.biz/bbbiz/industry/digital-and-mobile/when-will-recorded-music-revenue-be-50-digital-1005106392.story

Don't Like Dreaming 'Bout Getting Paid!

Is there any surprise that the results of the Artist Compensation of the Future panel at the recent SXSW Conference was virtually nada, zip, or nothing? In other words, according to a recent report in Billboard, the attendees in the jam-packed room heard ideas that ultimately came from “familiar territory”. The story of how today’s 360 deals are complicated, signing a record deal is relative to circumstances, and, publishing deals are a matter of short and long term funding considerations were the main “takeaways” from the panel. ¹ A concern about profitability in the music business for those outside the “chosen few at the top” of the charts, is a legitimate concern in light of a recent decrease in profit growth gains from 2006-2010, according to a recent report from Earnst and Young as reported in Billboard; Moreover, a gradual 11% increase in the profit margins of the music and film industries reflected a better marketplace yield than some stocks.²   The curiosity about profitability in the music, thus, the ability for artist to make some money from retail, is enhanced by the recent report of sales declines for those Best Buy stores that have been open for over 14 months.³  Buying music from retail stores has been considered a “dying slow” customer habit, however, the music business savior – digital downloads – has yet to deliver the trade from its sales slump either; furthermore, companies like EMI have successfully began offering past and present songs from their catalogs at .69 each on iTunes.⁴ Realities of cheaper downloads, slower retail sales, and overall declines in profit growth can give artist enough reasons for concern; therefore, in regards to earning sufficient money in the music business, many artist are feeling like they too – like the legendary MC Rakim – “Don’t like to dream bout getting paid”.    

REFERENCES:

1) Panelists On SXSW's 'Artist Compensation Of The Future' Don't Know What's Next, Either; Billboard Magazine; Cortney Harding, New York, March 17, 2011

http://www.billboard.biz/bbbiz/industry/record-labels/panelists-on-sxsw-s-artist-compensation-1005079602.story

2) Music, Film Industries Average Lowest Profit Margins Among Media Sectors; Billboard Magazine; THR; March 15, 2011

http://www.billboard.biz/bbbiz/industry/record-labels/music-film-industries-average-lowest-profit-1005073962.story

3) Best Buy’s Same Store Sales Fall Again; Billboard Magazine; Reuturs, March 24, 2011

http://www.billboard.biz/bbbiz/industry/digital-and-mobile/best-buy-s-same-store-sales-fall-again-1005089972.story

4) Business Matters: EMI/iTunes '69-Cent Songs' Promotion A Hit At iTunes; Billboard Magazine; Glenn Peoples, March 18, 2011

http://www.billboard.biz/bbbiz/industry/digital-and-mobile/business-matters-emi-itunes-69-cent-songs-1005081222.story

A Triple Threat in the Music Business

The executive management, music publishing, and music technology (a triple threat) are some of the areas in which constant change is occurring in the music business.  Weekly reporting in music trade magazines exposes the array of management resignations or executive level shifts in staff, lawsuits over copyright infringements, and the impact of rapid changes in digital technology.  A recent announcement of the resignation of former DEF Jam president L.A. Reid was a reminder of how opportunities at another major label like Sony, or alternative avenues like reality T.V. shows are being taken by music executives¹.  In the case of music publishing, a copyright infringement suit has been filed against CBS records for the improper use without payment of a rapper’s popular song during televised basketball games and promotional activities; moreover, the heavy usage of viral videos on YouTube and social networking sites hastened the popularity of the usage of the rapper’s song for the benefit of CBS².  The recent release of the Twitter top 140 people to follow on-line by Billboard Magazine is an apparent result from digital technology’s impact on the music business³.  The transitional season of the business ensures that changes in the music industry for executive management, varying forms of copyright infringements, and digital technology’s impact will continue to be a rapidly shifting triple threat.

References:

1) Billboard’s Twitter 140: Music-Industry Characters You Need To Follow; Billboard Magazine; March 18, 2011.

http://www.billboard.biz/bbbiz/industry/digital-and-mobile/billboard-s-twitter-140-music-industry-characters-1005079252.story

2) L.A. Reid’s Farewell Letter To The Def Jam Staff; Billboard Magazine; March 17, 2011

http://www.billboard.biz/bbbiz/industry/record-labels/read-l-a-reid-s-farewell-letter-to-the-island-1005078892.story

3) Rapper Kenzo Sues CBS Over College Basketball Coverage; Billboard Magazine; March 16, 2011; By Eriq Gardner, THR

http://www.billboard.biz/bbbiz/industry/legal-and-management/john-wall-dance-rapper-kenzo-sues-cbs-over-1005075182.story

BE LEGIT OR QUIT THE MUSIC BUSINESS!

During my tenure at the Columbia College of Chicago for Music Business Management, LEGITIMACY was one of my most vital lessons in professional development from professors like Jhune Mhoon.  If it was artist management, music publishing or the art and business of recording, then, determining the legitimacy of a prospective manager, music of a recording artist, or a work under copyright was one of the first steps of a "professional".  The importance of legitimacy was a matter taken lightly by someone engaging the music business as a hobby, however, legitimate matters of the music business were NEVER overlooked by the professional.  If it is not legit, then, quit doing it - period!  Since credibility in the music trade is hard fought for and protected, then, trade integrity should never be taken lightly.   During a negotiation with I AM Entertainment and potentially Sony Music Entertainment in 2001-2002, Jhune asked me to present some neo-soul and spoken word artist at his downtown Chicago office.  My professional activity as a spoken word producer, publisher, distributor, and disc jockey with terrestrial and digital satellite radio provided me with access to talent throughout the Windy City.  Although the excitement was obvious to Jhune Mhoon, he pierced the emotionalism of the moment by asking every artist, producer or production team if they had the "legitimate" rights to their creative works or could represent works from another artist.  When questioning him about this process, he reminded me of how a deal with Sony Music, Warner Brother Records or any major record company could only be made with the "legitimate rights" to negotiate on behalf of the artist. During this process, despite the popularity of the prospective artists, every top spoken word candidate under consideration was either partially or completely NON-LEGIT!  During my over 15 years in professional music business, the factor of legitimacy has proven to be the difference between being prepared for meeting the "one degree or person" for success.  Whether it was my securing a publishing deal with Warner Bros. Records artist Talib Kweli, a multi-media deal with HBO / Russell Simmon's DEF Poetry Jam, or an "Album of the Year" award managing an independent record label, my adherence to professional standards determined if I would should be legit or quit.  

Open-Mic Evolution

During the peak years of the open-mic poetry phenomenon of the late nineties and early two thousands, the open-mic poetry venues were a nomadic and seasonal operations with a life span of 6 months to a few years.  However, there was rarely any improvement in the size of the venue. Kijijis Coffee House in Nashville, Tennessee was a venue which shattered this tradition by expanding from a 800 square foot facility to an over 3,000 square foot retail complex.  Ultimately, the business provided proof that a venue could make open-mic activities a regular part of its regular services and continue to grow.  Mr. Edward and Linda Stevenson are the founders of Kijijis Coffee House.  According to the Stevensons, the autonomy to provide the type of after work entertainment and environment for which they wanted was a driving force behind starting Kijijis. The status of being the first minority-owned business to provide food services in the newly constructed NFL stadium for the Tennessee titans was a major stimulus for their company’s growth.  Leveraging their concession stands and catering in the Titan’s LP Field expanded their viability and credibility as a business.  Proving that their business was a worthy investment, the Stevensons secured bank financing to improve their business and several years later would break ground on a building three-times the size of their first building.  Since they were always showcasing various music and arts like poetry, jazz and live music, then, their role as cultural leaders in Nashville helped increase their business clientele and profile.  Ultimately, the community support, customer patronage, and a supportive business network made it possible for the Stevensons to evolve from one store and a concession stand to over 13 different operations today.

FINDING HARMONY IN MUSIC BUSINESS

The music business of old is a dead beat?  Oh really? In light of the oft-repeated talk about generational clashes, a paradigm shift is purported to be occurring due to an evolutionary battle between the old music business Titans and the young tech savvy Gods of today's entertainment trade. Many of the changes occurring in the music business are a result of technological development during the last decade (i.e Apple iTunes, MP3, Napster, consumer demand shifts, etc.); however, the more things change-the more things remain the same, thus, a need to appreciate the wisdom of the elder Titans of the music business.  Let's take for example the need for identifying a niche market; moreover, let's examine the value of market research instead of assuming that the global use of computers and mobile devices translates into a need to merely focus on producing a digital song file for iTunes. A recent discussion about the value of understanding a distinct market was discussed during the opening of this year's Midem Music Conference in Cannes, France.  According to Saul Klein of Index Ventures, staying in your special market instead of going global was successful for Netflix, Pandora, and other companies. By focusing on one sector, oppose to trying to function in other countries like the U.S.A., companies like Spotify, Deezer of France, and Simfy of Germany are raising eyebrows in their respective territories without enterting the US marketplace. Furthermore, Klein noted that consumers in different markets respond to different offerings, therefore, a music offered within the iTunes America store may not be successful in the iTunes store of a different country (the same principle of consumer tastes could apply to different regions in the U.S.). The example of marketing is one of many traditional aspects of the music business - music publishing, touring, and merchandising being others - that has not been fundamentally altered by technological development.  The need for identifying, understanding, and maximizing other aspects of the traditional music business model is why companies like Live Nation are making 360 deals a standard practice in today's music business.


REFERENCES:
1) Generational Clash @MIDEM 2011: Can The Old Guard And The Young Guns Get Along?, by Antony Bruno; Billbaord Magazine,  January 23, 2011;
http://www.billboard.biz/bbbiz/industry/digital-and-mobile/generational-clash-midem-2011-can-the-old-1005009072.story

2) Pick Your Battles & Your Market, Says Index Ventures' Saul Kelin @ MIDEM, by Glenn Peoples; Billboard Magazine; January 23, 2011;  
http://www.billboard.biz/bbbiz/industry/digital-and-mobile/pick-your-battles-your-market-says-index-1005008962.story

MAGIC OF THE MUSIC BUSINESS

SHAZAAM! Instant downloads, viral videos, and reality television shows are a few of the electronic elixirs being consumed by aspiring music stars and consumers.  More often than not, popular songs or artists who are benefiting from this alchemy for success are missing some key ingredients. Vital factors for long-term success in building a music career are music publishing and market strategy or development. The ‘long-term’ is the operative word opposed to ‘instant’ success. Whereas, the music business is NOT an instant result, the opportunity for popularity and ‘fifteen minutes’ of fame is possible. Distinguishing between instant and long-term music business success will help one more successfully navigate a career. Examining a similarity between music and magic can help to clarify the instant and long-term career approaches. The thrill from a magic trick and viral video is the instant product, understanding how to ‘consistently’ produce the mechanisms (operating systems), consumer audience (target market), and magic (publishing or intellectual property) is the long-term business. An addition of the Social 50 charts in the Billboard magazine for the music trade is another reminder about a new “trick of the trade” (note: the magazine did not cease reporting publishing or marketing).  Not understanding how the instant popularity of songs can convert into sales, market share, and stock investments is to only see the tricks without the trade; therefore, the consumption of many popular music offerings is like enjoying the tricks in a great magic show – entertaining illusions.   

REFERENCES:

1)  Billboard Magazine; Social 50 charts; http://www.billboard.com/#/charts/social-50   

2) Clive Davis: Inside The Record Business; Clive Davis with James Willworth, 1975.