Manage for Success: Do It Yourself, Newsletter #36, April 2004
"Manage for Success" is a free monthly newsletter for record label executives who want to operate their companies efficiently and successfully, and who have indicated their desire to receive it. 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 2004 by Keith Holzman, Solutions Unlimited. All rights reserved.
Before we delve into DIY, here are a few recent news items of import to independent labels.
The first is the dissolution of AFIM, the Association for Independent Music, on April 15. This isn't a surprise since the organization was getting smaller and smaller, and essentially lost its effectiveness a few years ago after the departure of former executive director, Pat Martin. AFIM was once a thriving group and was very helpful to its members. I'm hearing rumors of a new indie trade group being established, so let's hope that it's developed in such a way that it benefits the entire independent sector.
More bad news comes from IFPI, The International Federation of the Phonographic Industry, which stated that international music sales for 2003 fell 7.6 percent to $32 billion, the steepest decline since the advent of the CD. This was the fourth consecutive year of decline, and is blamed on "rampant piracy, poor economic conditions and competition from video games and DVDs."
In contrast to the international scene is news that U.S. music sales actually improved during the first quarter of 2004 by just over 9 percent from the same period last year. I think this is due in part to the release of a few blockbuster titles such as the new Norah Jones CD, but is also due to the selling of legal downloads on such sites as the Apple iMusic Store.
UMG, Universal Music Group, maintained its enormous market share of just over 25 percent of the U.S. music industry. Even more recently it announced that it was rolling back its attempt at reducing prices, which had been met by poor acceptance from retailers and hadn't resulted in a significant increase in volume.
I've become extremely aware lately that many musicians are taking a DIY (Do It Yourself) approach to making and releasing their own records. Perhaps that's because I've spent part of the last year working on my book, "The Complete Guide to Starting A Record Company." But I keep seeing articles about it in both general and music publications. The latest piece appeared in a recent Sunday edition of the Los Angeles Times. It's by Gina Piccalo and is titled ìGetting Played."
http://www.latimes.com/la-ca-piccalo4apr04,1,2324468.story (free registration required)
The article starts with a story about songwriter Marc Godfrey and what happened after DreamWorks Records dropped him six months after he landed a deal with them. Instead of taking $100,000 for rights to his album, and despite advice from his attorney, he left with the music instead. As a result of his song "More Bounce in California" getting traded significantly on online peer-to-peer networks, it became a "sports anthem at the NBA All-Stars' slam-dunk contest, ESPN's X Games broadcast, the Dodgers' batting practice and the San Diego Chargers' cheerleader shows. It landed on two movie soundtracks ("Legally Blonde 2" and "Win a Date with Tad Hamilton!"), in the Fox TV show "The O.C." and in heavy rotation at a New York Marc Jacobs boutique." He's almost doubled what DreamWorks was willing to pay to buy out his deal.
As the major multi-national labels contract and combine, they run the risk of turning into black holes, gaining extreme critical mass but without the attendant sales. In short, they've become so large and unwieldy that they constantly have to fire "excess" personnel, yet their profits don't seem to rise accordingly.
This implosion provides a tremendous opportunity for independent labels, and especially for musicians who prefer to roll their own by creating a platform for their music. And, with the exception of the early Fifties, it's probably never been easier.
Why, because it's never been cheaper, and a high-quality recording can be made with minimal and readily available equipment. Access to the public, and building and reaching a fan base, have been facilitated by the universality of the Internet, and improved distribution for unaffiliated artists.
Quality recording equipment is reasonably affordable and you can record in your own living room or garage. It doesn't take a lot of fancy gear to make an excellent-sounding recording -- perhaps as few as two microphones, recording directly to a computer hard drive or DAT machine. And the cost (except for the computer which you probably already have) can be under $1000 if you shop around. Or you might borrow recording equipment from a friend or fellow musician.
Mixing and editing on personal computers has become routine, excellent software can be purchased for modest sums, and the quality can be state-of-the-art if you're careful and you know what you're doing.
If you, too, want to Do It Yourself, buy my new book, "The Complete Guide to Starting a Record Company."
Carl Caprioglio, President of Oglio Entertainment says "The Complete Guide To Starting A Record Company" is absolutely the best place to start when considering the plunge into the music business. Keith's style is fun, friendly and informative making the book an easy read. I only wish Keith had published this book 10 years ago when I started my label!"
Chris Morris of Billboard writes "Holzman's 235-page tome is a crisply written and comprehensive look at label basics, from creating a business plan to putting records on the street."
Bob Feldman, President of Red House Records writes "Keith has been an invaluable mentor to my label and me for over twenty years. He has finally put that knowledge and integrity into a book that I still find to be indispensable as a road map through the intricacies and complexity of the business of music. This is a common sense guide that could only be written by a true veteran. I'll refer to mine often."
The book is an indispensable text for musicians and entrepreneurs who want to start and manage their own independent record labels, a primer that takes them by the hand and guides them through the many steps involved, and includes numerous checklists, charts, diagrams, forms, and an index, with URLs for more than 100 resources.
"The Complete Guide To Starting A Record Company" can be ordered as a downloadable eBook (in Adobe AcrobatÆ PDF form) at $29.95, or as a printed, spiral-bound book at $44.95. You can read the complete Table of Contents and download the Introduction for free at http://www.recordcompanystartup.com/.
Continuing with DIY --
You'll need to come up with a name and Internet domain for your label, and confer with an attorney as to the best form of business set-up for you. Should it be a Sole Proprietorship, an LLC, a Subchapter S Corporation, or something else? The first is the easiest to establish, and the third the most expensive and complex, but it offers the highest protection from liability.
You should also write a business plan and include a realistic budget, even if you're planning to use your own money. The reason is that the process of writing it will make you think carefully about all aspects of what it is you're planning to do.
As for "product," you can duplicate CDs one by one in your own computer, or buy a relatively inexpensive duplicator. For larger quantities, use the services of an independent pressing plant to manufacture CDs. Many of these suppliers can also print the graphics, or you can use a local printer. Just don't manufacture more than you can afford and are reasonably certain you can sell.
Which involves marketing, about which many books have been written. The role of marketing is to encourage sales of your music through media awareness -- publicity, radio airplay, print and radio interviews, etc. It's much easier to say than to do, and requires a thoughtfully developed marketing plan. It's not necessary that you do this by yourself since there are a number of independent marketing experts who can assist you for reasonable fees.
Be sure to launch a web site. It needn't be complex, and simpler is better, but it must contain the salient facts about the label and its recordings. Make short, highly compressed samples of the music available for people to listen to and display the cover art. If you're a touring artist -- strongly recommended for all musicians -- post performance itineraries and photos.
Certainly make it possible for interested customers to buy your music from your site. There are many companies that can handle the process offering online ìshopping cartî services at modest fees. You might also want to make your music available for sale at Amazon.com. And without fail, sell your records at all performances, showcases, etc.
Until you've amassed a few titles and can consider working with one of the larger distributors, you can make your CDs available for purchase at CD Baby.
Success in starting a label is not guaranteed, but if you keep the costs under control, there's little to lose, but much to gain.
Until next month,
Keith Holzman -- Solutions Unlimited
Helping Record Labels Manage for Success.
You may use or reprint the above article provided that you include complete copyright and attribution with a link to this web site. Please let me know when and where the material might appear.
You can subscribe to "Manage for Success" by clicking here .
Most important, should you have a topic you'd like me to address in future newsletters, please email: mailto:email@example.com
Copyright 2004 by Keith Holzman, Solutions Unlimited. All rights reserved.