"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.

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Although the compact disk as a music carrier is still far from dead, record labels must formulate a serious effort at making their music readily available for sale wherever possible, particularly online. It may take a fair amount of time on your part, but the upside potential is enormous. While most prognosticators, including Jupiter Research, project a future for the CD of another five years or so, an increasing shift to online sales is inevitable.

It seems that every day another online purveyor of downloadable music enters the picture. What was pretty much a wide open field before Apple launched its iTunes Music Store (iTMS) in April 2003, has become a very crowded pasture indeed.

Before iTMS there were just a few legal online stores -- eMusic was one -- but since Apple's launch we’ve had quite a few major, and many small, companies enter the scene. To list just a few, there’s MSN, RealMusic's Rhapsody, Yahoo Music, Napster (the legal version) AOL, Sony Connect (which requires that potential buyers use Microsoft’s Internet Explorer as their browser), Wal-Mart, and MySpace. The last has become a particularly important site for music lovers.

(DRM) to protect copyright owners. But it's remarkably permissive in what it allows buyers to do with the music. "You can copy each purchased song on up to five computers and to an unlimited number of iPods and burned CDs," per Walt Mossberg of The Wall Street Journal. One caveat, however, is that iTMS tracks can only be installed on Apple's iPod family of players, not on other MP3 devices.

An unfortunate concomitant of all the different stores is that they use conflicting and incompatible DRM systems. This means that music purchased form RealMusic is unsuited to iTunes and the iPod, and vice versa. The same is true with MSN who use a still different DRM method.

Some of the online purveyors sell subscriptions whereby one "leases" the music that is downloaded and installed on MP3 players. Yahoo's monthly subscription remains at $5.00 per month now that they've gone "live" after a lengthy "beta" test. Rhapsody and the legal version of Napster also charge a monthly subscription fee that's roughly $10.00, plus an additional $5.00 for portability. There's apparently no limit to the quantity of music one can download from the subscription services, but there's a major problem with this system. If a subscriber misses a monthly payment, all of their previously downloaded music will become useless and unplayable. That doesn't happen with non-subscription stores who've been paid for each track.

Record labels who've not yet made deals for downloadable sales have many choices. For example you can sell directly to each and every one of them. Apple, for instance now makes it much easier for indy labels to become affiliates. All of the information and an application are available at http://www.apple.com/itunes/musicmarketing/

MSN has also made it fairly easy to become a partner. The information is available at

http://music.msn.com/music/providers.aspx/.

Apple, and MSN as well, have adjusted their payment terms so that independent labels are now on a par with the majors. Apple and MSN now pay seventy cents for each individual track.

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Advice such as that given in these newsletters is just a small portion of what I do as a management consultant specializing in helping record labels manage for success. For more information on how I may be able to help your company, give me a call or visit my web site, http://www.HolzmanSolutions.com.

And if you're thinking of starting your own label I recommend my book, "The Complete Guide to Starting a Record Company," conveniently available at http://www.CGSRC.com.

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Please note that you can make non-exclusive deals with these online stores, permitting you to sell to as many as you wish. That's a lot of work, however, so small labels, and artists without label affiliation, might prefer to get paired with what I call an "aggregator." There are many of these, so I'll list just a few -- CD Baby, DMI (Digital Music Works), Ingrooves, I AM Music Online, The Orchard, SRI Entertainment Group and Artists First.

CD Baby is primarily a distributor, so small labels can kill two birds with a single stone by selling their CDs through them, taking advantage of their online distribution as well. CD Baby supplies digital tracks for their distributed labels to all the major online stores, and handles all the paperwork and creation of appropriate digital formats, taking a modest percentage to cover their costs. They do require exclusivity, however, in order to avoid confusion created by multiple aggregators attempting to sell to the same online account.

Certain online accounts specialize in specific genres of music. IODA (Independent Online Distribution Alliance,) for example, focuses on classical and world music.

In any thing connected with business, particularly the music industry, it's "caveat emptor." I suggest you check any firms out carefully by doing your homework. Look at their websites and talk to your network. Find out what the terms are, how much is collected in fees, and how often and how readily you'll get paid. Then decide which might be the best firm for you to work with.

Putting aside online music for a moment, and considering actual CDs, if for any reason your distributor is not selling to Amazon.com, or if you're an artist without a label, you can become an affiliate and sell directly to Amazon by joining their Advantage program. Details are on their website. "If you're looking for a way to promote and sell your products on Amazon.com and you have the North American distribution rights, you are a candidate for the Advantage program. The program is currently available for Books, Music, Video and DVDs," their website proclaims. Although Amazon takes a rather substantial percentage, I've considerably increased sales of my book, "The Complete Guide to Starting a Record Company," by also making it available through the Amazon program. I consider it a major plus.

Mobile Music is another, growing, potential for your sales. Some of the above-listed aggregators can supply your music to the companies that provide music for playing over cell phones or to be used as ringtones.

Of course don't neglect using your own website to sell your music. Be sure that every catalog item is listed, including a likeness of the cover, list of songs, useful information about accompanying musicians and other particulars that might entice sales, and most important, a list of songs -- each with at least a thirty-second audio sample.

Make it easy for visitors to your site to purchases whole CDs or downloaded tracks. Many online services can handle the money collection and paperwork on your behalf, taking the burden off you.

Finally, it's up to you to maximize exposure to your music and thereby achieve a significant increase in sales.

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.