Manage for Success: Whither the Music Industry, Newsletter #58, February 200


"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 2006 by Keith Holzman, Solutions Unlimited. All rights reserved.

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There's a great deal of concern in our business about the future direction of music and of our industry. Has it become a quagmire? Has retail distribution as we've known it for the last fifty years become like the buggy whip -- a once very useful tool that may now be obsolete? Is there any really good music out there and if so, how easy is it for the public to get to it? Who, if anyone, really controls the business?


Let me venture my own opinions, and if you strongly agree or disagree I’d like to know about it -- so long as you grant me permission to convey the most interesting and thoughtful emails to "Manage for Success" subscribers in a future newsletter.


My computer's dictionary defines "quagmire" as "an awkward, complicated, or dangerous situation from which it is difficult to escape," and I think that's exactly where we are right now as an industry. I place a lot of the fault with the multi-national majors who no longer seem to have a clue about what's good music, or for that matter, what's good business practice.


A great deal of what's released is what I call "shovelware" -- dreck that's put out there with the hope that a gullible public will buy it in tonnage quantities. For tonnage is what's needed to keep the megalithic and oversized and inefficient majors in business.


There was a time -- and not that many years ago -- when most of the larger record labels were run by creative people who had strong musical instincts and taste, but who were also good businessmen. They not only had the pulse of their audience, but more important, had an instinct for what the next new sound or artist could be. They then signed and nurtured such musicians, working with them until the music was ready to be introduced to an avid and hungry public. These executives frequently led their audiences into exciting new directions. And their artist development departments continued working with their artists helping them shape lasting careers.


Do you see that happening now?


The majors built huge and, at one time, very efficient distribution facilities, but over-expansion of the labels and their distribution divisions meant that they had to have a great quantity of high-selling releases in order to keep the machine going, yet be highly profitable for their parent conglomerates.


A dearth of quality releases from the majors has contributed to a steady decline in sales of CDs, and an implicit encouragement of much illegal downloading. Decreasing CD sales have led many retailers to replace CDs with DVDs or other commodities.


More important, we've lost a great many small, local, and idiosyncratic music retailers throughout the country because they had trouble making a reasonable profit. Many people used to visit their friendly neighborhood record stores at frequent intervals, searching out the latest hot new releases by artists whose music they heard about from friends, or on the radio. Now however, with many of these "maven" stores out of business, we just don't enjoy the experience of buying music from the large mega-chains that remain, such as Best Buy and Wal-Mart.


And as for radio -- there are very few terrestrial stations that broadcast a wide variety of music.


While sales of legally downloaded music have increased steadily, it is not enough to replace the lost volume of CDs.


So what can or should we do about it?


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A brief interruption from your correspondent.


Record label executives must deal with a great many problems, crises, and responsibilities. That's why they should contact me when they're having difficulty. I've had many years of record industry experience at labels large and small, so I can guide management over the many shoals and submerged dangers that the business is prone to.


Let me help you as I've helped so many other labels "manage for success." Email me at <mailto:keith@holzmansolutions.com> so we can discuss how I can improve your business.


Or, if you're thinking of starting your own label, I suggest you look at my book "The Complete Guide To Starting A Record Company" which can be ordered as a downloadable eBook in PDF form, or as a printed, spiral-bound volume. Download the Introduction and read the complete Table of Contents at <http://www.recordcompanystartup.com/>.


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But it's not completely a doom and gloom situation.


In fact there's quite a good deal of really good music being issued, with most of it coming from small, creative, and business-like independent labels.


The task of these labels is many-fold.


They need to find or develop new ways to tell the public about their releases. Yes, the internet is a great tool, but labels have to find a way to inform and motivate the public to go to their websites to listen to their music. Labels also have to encourage their artists to tour and perform often in front of paying audiences, building fans -- and careers.


Since what we've come to think of as record retail is in such a sorry state, labels have to develop new outlets for sales -- lifestyle stores, for example. Who ever thought that you'd be able to buy CDs at your local Starbucks? Where else do potential music buyers spend their time? That's where you might be able to get their attention.


It's progressive indie labels who are likely to lead the public to an exciting future -- both from a music-making standpoint, but also in marketing and distribution.


And it's these labels who are likely to head our industry in profitable new directions. This includes making maximum use of HD Digital Radio stations, focused podcasts from label websites featuring the latest releases, pitching more music to Sirius and XM for appropriate niche channels, and making maximum use of music-specific blogs, fanzines, and music websites.


No entity really controls the music business at this time, and I truly believe its future and ultimate success will lie with the independent sector.


What do you think about the future of our industry? Do you agree or disagree? Feel free to submit your own thoughts for possible publishing in the next newsletter.


Until next month,

Keith Holzman -- Solutions Unlimited

Helping Record Labels Manage for Success.


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Copyright 2006 by Keith Holzman, Solutions Unlimited. All rights reserved.