"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 2005 by Keith Holzman, Solutions Unlimited. All rights reserved.
It appears that every day there's some updated news or information about the latest wrinkle in technology that affects our music industry. Such items include ringtones, music over cell phones, DRM, BitTorrent, podcasting, and a plethora of new approaches to downloading music from the web to your computer, portable music player, such as Apple's iPod, or cell phone.
How can you keep up with all of this chatter, and what impact might it have on your label's business?
The first question is easier to deal with. One way is to subscribe to such daily email newsletters as Digital Music News (http://www.digitalmusicnews.com/) and SXSW's Daily Chord (http://kudzu.sxsw.com/mailman/listinfo/dailychord). And of course there are such weekly industry trade publications as Billboard, etc.
The second question is quite a bit more difficult to answer. A lot depends on your label -- the kind of music you specialize in and offer, the demographics of your typical consumer, the size of your catalog, and how you go about marketing to your customers. I'll go into more detail later in this newsletter.
Ringtones have become one of the latest crazes in cell phones -- particularly with teenagers who love to customize their phones. Ringtones are simply snippets of music that sound when your phone rings. Some are monophonic and some are polyphonic. In other words, one may contain a simple, single melody line, or another may have more than one tone sounding simultaneously, such as with chords. Many of the latest cell phones allow for polyphonic ringtones, resulting in a more complex, but pleasant sound. You can even set the phone to sound different rings for different regular callers.
A simple Google search yielded screen after screen of hundreds of websites offering such tones. Most charge a one-time fee -- anywhere from 50 cents to $2.50 to download the snippet; others are free. In fact one site in the UK offers free ringtones from such artists as Green Day, Christina Aguilera, Snoop Dogg, Destiny's Child, Usher, and Eminem. A firm called Versaly Entertainment announced last week that they've sold more that 500,000 ringtones of its "Pick up the Phone" ringtone by Sir Mix-A-Lot. Such tones are particularly popular with urban consumers, and many ringtones feature current hip-hop artists. Billboard even maintains a Hot Ringtones chart.
Some of the newest cell phones, in addition to acting as a telephone and a digital camera, allow for the downloading and playing of music. Nokia, for example, has announced a line of "smart" phones that target the digital entertainment fan by combining support for various types of digital content.
Motorola has reported that some of its newest cell phones will permit downloading and playing of music via Apple's iTunes Music Store, although the latest scuttlebutt indicates that there may be a delay in its launch of the music service. When available, some of these phones will be able to store as much as eight hours of music.
As for iTunes, it seems that every day another service is being launched in competition with Apple's landmark music store. These include Rhapsody, Napster (now a "legal" service,) MSN, Yahoo, Sony and Wal-Mart. So far they're all struggling for customers and market share in competition with Apple, who recently announced that it has sold over 300 million songs!
How will you cope with the latest technology that affects your label? Call on me to help you sort through how best to deal with it, or with any of the other myriad of problems that may be giving you nightmares. With over four decades as a senior record industry executive I've learned many tricks of how to deal with and solve problems.
And if you're thinking of starting your own label, let me suggest you take a look at my book, "The Complete Guide to Starting a Record Label" available at http://www.recordcompanystartup.com/.
Another technology you should become familiar with is Digital Rights Management or DRM. Per Wikipedia, the free online encyclopedia, DRM "is an umbrella term for any of several arrangements which allows a vendor of content in electronic form to control the material and restrict its usage in various ways that can be specified by the vendor. Typically the content is a copyrighted digital work to which vendor holds rights."
Of course there's nothing wrong with the concept of protection for creative content, but an incompatibility between processes can cause considerable problems for consumers. This comes into play, for example, when someone who's paid for downloaded songs from MSN using MSN's own DRM process tries to transfer this material to Apple's iPod which uses a competing DRM process. The DRM protection keeps the songs from being transferred. On the other hand, Apple's DRM process allows a limited number of transfers of legally paid-for songs.
Wikipedia defines BitTorrent as "a peer-to-peer (P2P) file distribution tool…and is released under the BitTorrent Open Source License….With BitTorrent, files are broken into smaller fragments, typically a quarter of a megabyte each. As the fragments get distributed to the peers, they can be reassembled on a requesting machine in a random order. Each peer takes advantage of the best connections to the missing pieces while providing an upload connection to the pieces it already has. This scheme has proven particularly adept in trading large files such as videos and software source code."
As useful as BitTorrent technology can be when used legally, it's another way that consumers can exchange entire albums with each other, and not pay for them.
Then there's the newest craze -- podcasting. Per Wikipedia, "'Podcasting' is making audio files (most commonly in MP3 format) available online in a way that allows software to automatically download the files for listening at the user's convenience.
"The word 'podcasting' is a portmanteau of the words iPod and broadcating. A podcast is like an audio magazine subscription: a subscriber receives regular audio programs delivered via the internet, and they can listen to them at their leisure.
"Podcasts differ from traditional internet audio in two important ways. In the past, listeners have had to either tune in to web radio on a schedule, or they have had to search for and download individual files from webpages. Podcasts are much easier to get. They can be listened to at any time because a copy is on the listener's computer or portable music player (hence the "pod" in "podcasting"), and they are automatically delivered to subscribers, so no active downloading is required.
"Podcasting is functionally similar to the use of timeshift-capable digital video recorders (DVRs), such as TiVo, which let users record and store television programs for later viewing."
"Podcasting is different from broadcasting and webcasting in that it 'casts' audio not by a mechanism of centrally pushing audio out to listeners, but by the mechanism of the (distributed) listeners pulling (downloading) the audio files automatically. Podcasters publish (or 'podcast') audio files, even in the likeness of radio shows, but it is the individual listener who initiates the "cast" through their subscription and automatic download of the audio program."
In fact KCRW, the local public radio station transmitting to most of Southern California, offers podcasts of many of its most popular shows -- all for free. The BBC is also offering podcasts of some of its shows, and this past week Virgin Radio became one of the latest to take the podcasting plunge, offering some of its most popular shows, pared down to a half hour, but including commercial advertising.
A new service you might want to investigate is IndiePodcasting.com (http://www.indiepodcasting.com/.) Devoted to promoting unsigned and indie artists, it offers a combination of podcasting technology, syndication, webcasting, and viral marketing.
So, in addition to staying up to date on all the latest technology that impacts the music business, it's important that you as record label owners and managers think how best to monetize these new potential sources of revenue, while on the other hand protect your valuable assets and copyrights.
Until what I believe to be a temporary fad has faded out, determine how you can convert some of your songs to ringtones and make them available to a music-hungry public.
More important, work out how best to get your music to a potential audience of millions of people, many of whom may never go into a bricks-and-mortar record store or other music merchandiser, but who by now have gotten used to downloading music -- and paying for it! This is both a marketing challenge, and a business affairs matter. However, it's extremely important that you don't let your catalog lie fallow. Exploit it to the fullest. It can be richly rewarding to the label, and perhaps more important, to your artists and songwriters.
Until next month,
Keith Holzman -- Solutions Unlimited
Helping Record Labels Manage for Success.
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Copyright 2005 by Keith Holzman, Solutions Unlimited. All rights reserved.