Manage for Success: 10 Common Mistakes (Newsletter #12, April 2002)

Welcome to Newsletter #12: 10 Common Mistakes that Labels Frequently Make.

* * * * * * * * * * * * * * * * * * * * * * * * * *

"Manage for Success" is a free monthly newsletter for record label
executives who want to operate their companies efficiently and successfully.

It's published by Keith Holzman of Solutions Unlimited, a management
consultant, trusted advisor, and troubleshooter, and is based on his
many years of senior management experience in the music industry.

Copyright 2002 by Keith Holzman, Solutions Unlimited. All rights reserved.

* * * * * * * * * * * * * * * * * * * * * * * * * *

It's occurred to me after writing this newsletter for almost a year that many record labels create the same problems for themselves time and again. This is a summing up of my thoughts and observations on these common errors, in no particular order.

1. Insufficient Capitalization.

This is likely the single biggest mistake made by people planning to start their own labels. They don't project their needs carefully and start operating their business with little cash reserve. Be sure you have sufficient cash available at the outset to be able to survive for two to three years with little prospect of a lot of money coming in. Remember, it takes time to build artists, their careers, and your label.

2. Poor or no Budgeting.

A label's entire operations should be carefully budgeted. This is the financial road map for how you do business. And remember, it IS a business! You should create annual budgets, which should be modified and refined as the year progresses based on how well (or not) you are succeeding. (See my Newsletter #1 "Budgets" of May 2001)

The making of each recording should be budgeted to include all aspects of what it takes to come up with a completed, mastered project. (See my Newsletter #6 "A&R Administration" of October 2001)

Additionally, the marketing of each project should be carefully budgeted to include all related costs: publicity, radio promotion, advertising, tour support, etc. (See my Newsletter #9 "Marketing" of January 2002)

3. Poor Planning.

Every aspect of how you operate needs to be planned out in detail, not just budgets. You should have a grand plan that looks ahead at least two to three years. If not, you'll most likely find that you're reacting to events rather than making events happen when and how you want them to. This includes the number and kinds of recordings you want to release, future staff, infrastructure, space needs, etc.

4. Poor Marketing.

You won't succeed if you make your marketing up as you go along. You should lay the groundwork well in advance of a release as to how you're going to go about creating success for an artist and his music. Again, plan -- don't just react. This includes not only budgets (see above) but requires careful and thoughtful creation of a strategy tailored to the specific release. And don’t wait until a recording is completed to think about how you'll market it. Start while the artist is in the studio (or even at the contract signing stage.) You need to be sure that the recording is not only truthful to the artist's intent, but is one that you can market appropriately. Don't forget that the CD cover and packaging should be a part of the marketing effort. The more time you spend with the artist, and understand his or her music, the better your marketing plan is likely to be. And be sure all departments (and the artist) are tuned in to the concept.

5. Unreasonable expectations of what a distributor should or will do, and relying too much on the distributor to do the work.

The marketing and selling of music begins and ends with the label. You shouldn't expect your distributor to do it for you. Its expertise is in selling your music to retailers -- not marketing or promotion. It's not like many years ago when regional distributors had local promotion and marketing staffs to help pitch your product. Today, the distributor is the primary pipeline to your customer -- nothing more, and nothing less. It's essential that YOU be in control of your marketing.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

All of these pitfalls are ones Solutions Unlimited is particularly good at avoiding or solving. We have decades of experience planning, budgeting, and fixing record industry management problems. And we especially like to work with start-ups. Don't hesitate to call us to discuss your particular situation and how we can help you.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

6. Spend more money than necessary.

Many labels frequently spend too much to make a recording. This is usually because the project was not planned in detail prior to going into the studio. A label's responsibility is to see that the artist is well prepared and knows what he wants to do in the studio, which at $100 to $250 per hour is no place for rehearsals. And don't use a single musician more than is necessary to fulfill the artist's intent. It takes lots of planning and careful budgeting, but that's part of my philosophy of running a successful label.

Also, don’t spend more on marketing than is necessary to fulfill your plan. Newspaper and magazine ads, for example, are a waste of money for an emerging artist no one knows about yet. Save those funds until you've succeeded in building a name and some public recognition for your new face. That's when you should consider spending money -- to further artist recognition -- and then not just for letting the public know about your recording, but to let them know when and where the artist can be seen in performance.

7. Insufficient exploitation of music as a source of ancillary revenue.

Don't leave money on the table. Exploit your catalog and copyrights to the fullest. This subject was covered to considerable degree in a prior message. (See Newsletter #10 "Ancillary Income" of February 2002)

8. Overstaffing.

Don't employ more staff than you absolutely must have to function properly and efficiently. This is not to say that everyone must spend twelve-to-fourteen hour days, six days a week. If the work and responsibilities are clearly defined, the company's goals are known to the entire staff, and they work cooperatively, no one should be over-burdened. It's important that the style and manner of work be created at the top. The label owners and principle officers must establish well-defined goals and set good examples for the employees.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

If you have a topic you'd like me to discuss in a future newsletter, please feel free to email.

I welcome your suggestions and feedback.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


9. Improper supervision of internal staff and outside (non-employee) services.

This relates to the above pitfall. Your staff must understand their responsibilities, and the company's goals must be clear to all. Then it's management's job to see that tasks are being handled properly by staff. Not only must the job be done, but on time and efficiently. If a weak management doesn’t supervise its staff, time and money will be wasted. The same is true for outside (non-employee) freelances. I'm a firm believer in outsourcing wherever possible. This reduces payroll and you pay for assistance only as needed. But the work of these people needs to be supervised as well. It's not necessary to be looking over someone's shoulder all the time, but managers must be sure that the work will be completed on schedule and on budget.

10. Poor web sites.

All record labels must have a web presence. The web has been in existence for almost a decade, and not to have a good site is nothing short of negligence. It needn't be expensive, and don't attempt complexity to show how creative your designers are.

For example, flash animation, although very clever, is a pain for people who use a dial-up modem. The same goes for use of too many graphics on a single page. Cover minis and artist photos are a given, but be sure they're optimized for the web, making them use as little download time as possible. If a page takes too long to load, your prospective customer is liable to give up and not navigate any further on your site.

Be sure the site is loaded with useful information, not dazzle. Your entire catalog should be available for perusal and inspection. Add artist bios, tour information and fun facts about them. Consider establishing a prize (free stuff)) for a simple quiz for viewers who've surfed your site and properly answered questions.

Also be sure you give your visitor sufficient opportunity to listen to samples of your music. There should be thirty-to-sixty second samples of at least three or four selections per artist. And these should be available in at least one -- if not all -- of the standard browser audio media: QuickTime Player (Apple), RealPlayer (RealAudio), and Windows Media Player (Microsoft). You might also provide links to these companies, so that a visitor to your site can download these utilities if they don't already have them.

Finally, make it easy for a customer to buy your music -- either as downloadable files, via purchase of CDs and cassettes at your site, or by way of a link to an established on-line retailer such as Amazon.com. After all, the idea is to sell your music.

* * * * * * * * * * * * * * * * * * * * * * * * * * *

I encourage you to forward this newsletter to friends or colleagues so they can join the list. Please include copyright and attribution. They can subscribe by sending a blank message to
join-solutionsunltd@mh.databack.com

* * * * * * * * * * * * * * * * * * * * * * * * * * *
Copyright 2002 by Keith Holzman, Solutions Unlimited. All rights reserved.