Subject: Manage for Success: Newsletter #27 Opportunities for Indies, July 2003

"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, troubleshooter, and trusted advisor, and is based on his many years as a senior executive in the music industry.

Copyright 2003 by Keith Holzman, Solutions Unlimited. All rights reserved.


Sales of recorded music continue to decline -- more than eight percent during the first six months of this year. And it can't all be attributed to illegal downloading of hit songs. How else would you explain the remarkable success of Apple's on-line music store, which requires use of Apple's System OS X -- currently used by only about sixty percent of the small Macintosh user community? That's roughly sixty percent of four percent of all U.S. personal computer users. Apple reported that they sold more than five million individual tracks at 99 cents each during the early weeks of its operation.

News and speculation regarding further consolidation in the music industry continues. Rumors are rife of a proposed deal between the Warner Music Group (part of AOL Time Warner) and BMG (part of the huge Bertelsmann publishing operation) to form an alliance where they’d share operation of their labels -- supposedly in an attempt to eliminate duplication of effort, reduce staff, and create the ever-elusive "synergy."

Other rumors (yet again) have Warner Music acquiring EMI, or at least its record operations -- not necessarily its publishing. This is despite the fact that a few years ago the European Union had refused a merger of any two of the existing five majors.

I doubt both the virtue of such a combination or that it will come to pass; but whatever may happen with the big boys, the vacuum they've created leaves amazing opportunities for independent labels.

I'm not alone in this opinion. In fact, Frances W. Preston, CEO of BMI (Broadcast Music Inc.,) has the same idea. Preston was quoted by the Hollywood Reporter in a recent article wherein she says, "While we are complaining about how bad everything is, this is a great time for the independents. I think the newer companies coming along are looking at new ways of doing business. They don't have all the baggage that the larger companies have to carry. They can think about how are we going to present music out there in the best possible way with the use of new technologies. I think you'll be seeing exciting things happen."

How can you as an independent label take advantage of the problems of the majors and turn them to your advantage? And how can you make effective use of new technologies?

I'm always pleasantly amazed when one of my clients comes up with a new wrinkle to improve its impact and sales in the marketplace. And I've been in this business a long time! What are they doing?

Because of confidentiality I can't give you any specifics, but they're finding new ways to promote their music. They're finding alternative methods of gaining exposure for their artists. And they're coming up with clever ways to raise operating funds to finance their operations and their marketing.

What can you do to improve your business?

One way is to retain me as your trusted advisor, just as I've been to virtually all of my clients. I've had almost forty years of executive experience in the music industry, and there aren't many problems I haven't come across and had to solve during those years.

Another is to put your business house in order. Get lean and mean! Eliminate waste in both staff and how you operate. Are all of your employees operating at maximum efficiency, or do you find one or two to be spinning wheels just to appear to be busy? If so, replace them or give their responsibilities to someone who's proven he or she can do the job.

Make use of a "virtual" staff of outside free-lance specialists to aid you in graphics design, publicity, promotion, marketing, etc. You'll get the work done efficiently when you need it, without the overhead of too many permanent employees.

Simplify your various operations. I'd bet that you or your staff is unnecessarily duplicating certain tasks in their daily activities, or performing redundant functions. Try to find out if I'm right about this.

Simplify other things, such as your artist contracts and other agreements. My Newsletters #7 and 20 address this in some detail.

Consider other, perhaps radical, way, to increase sales.

For example, would lowering your suggested list prices sufficiently increase your sales volume so that you'd bring in more dollars? Why not try it on a selected new release or key catalog item for a pre-determined period of time. If it works -- great! If it doesn't, you'll probably find that you've learned something with little harm to the bottom line.

"Woodshed" with your staff to come up with other ways of marketing your music. For instance, consider selling to alternative "life style" retailers for certain releases that might be appropriate. That way you open up new markets and increase sales to stores your distributor doesn't call on. This applies particularly to niche music. Just find the right outlet for each artist.

Niche music appeals especially to the over 30 or 35 market, so find ways to expose your artists and their music to that key segment of the public.

Try various approaches to increase your on-line sales. Several of my clients have been remarkably successful at this. What's a scourge to the majors can be a boon to a resourceful and clever indie. In fact some people hypothesize that the future of the CD is limited, and that more and more people will want to acquire their music via on-line music stores.

Are you successful in placing your music in feature films, documentaries, television, or commercials? If not, I urge you to try. Read Newsletter #10 that deals with this and other useful ways to increase income.

Be sure to make good use of the email addresses of fans and satisfied customers that you've been collecting. Notify them when you're releasing music that might interest them from artists who they like or might want to know about. Of course, you are maintaining these addresses in a database!

Find ways to reduce your personal workload in order to balance your life between family and business. One way is to subscribe to "Balancing Act," a free monthly electronic newsletter discussing the blending of life, work, and relationships, based on the popular Balancing Act workshops and writing of Alan Weiss, Ph.D., the "guru" of management consultants.

Finally, give me a call to see how I might be able to guide you to your particular opportunities, so you can simplify your work and increase your bottom line.


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Copyright 2003 by Keith Holzman, Solutions Unlimited. All rights reserved.