Manage for Success: Trends and Thoughts, Newsletter #89, September 2008

"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 2008 by Keith Holzman, Solutions Unlimited. All rights reserved.


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The hardest part about writing these monthly newsletters is coming up with interesting and thought-provoking topics. It's particularly difficult this month because there haven't been any significant music industry news-making events recently.


I do, however, see a few minor developing trends.


More and more websites are offering legal music downloads, and most of these are supplying tracks without the "dreaded" DRM, or digital rights managements, methods that have tended to stifle sales to some potential customers.


Apple's iTunes, now at version 8 for both Macs and PCs, remains the strongest retailer, having sold more than five billion tracks through June of this year. This has resulted in iTunes becoming the largest purveyor of commercial music in the U.S., with Wal-Mart coming in second, followed by Best Buy, Amazon and Target, in that order.


The day this newsletter is released, the new MySpace Music is expected to be launched. What it will look like is open to speculation, but I doubt that it will provide much competition to Apple, or in fact be of much interest to music fans, unless MySpace has been able to come up with something really novel and exciting. Three of the majors are participating (Warners, Universal and SonyBMG) but EMI has reportedly not yet signed an agreement. What this may mean to independent labels and possible customers is a matter of considerable conjecture.


I keep reading articles about a so-called "vinyl revolution," meaning that sales of LPs have made some inroads during the last many months. In most cases these are audiophile products for the golden ears set, but there seems to be a developing trend to sell rock LPs that include complimentary CDs in the packaging, or with gratis access to MP3 versions. In other cases there may be special collector editions which include large-format graphics or other fan memorabilia.


Rumors have it that Warner Music, reportedly with the help of Cisco Systems, is developing some form of site to sell directly to its customers. If successful, that could be one way for the label to control a little more of its destiny.


Amazon's music site has apparently made some inroads in the digital download market, and Yahoo Music is expected to be revamping and expanding its site some time in the next few weeks.


As the famed Jimmy Durante used to say "everybody wants to get into the act!"


There's still no word from Congress about any revisions to copyright laws that might further protect the music industry, authors, and composers, nor has there been any further news about labels getting compensation from broadcasters for music they play on the air.


We also haven't heard from the Copyright Royalty Board about changes -- up or down -- to statutory rates that labels pay publishers for use of copyrights.


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Need advice on how to profitably run your label, or are you suffering from too much work and day-to-day problems that you no longer have perspective on your label?


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 should you be thinking of starting your own label, I suggest you get the Second Edition of 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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Do I see any significant developing trends? Frankly, no.


The industry appears to have painted itself into a corner by taking way too much time to develop workable alternatives to the old Napster, and have for too long been at the mercy of illegal downloaders who pirate music without compensation to its creators.


And although there are now many ways for consumers to legally purchase the music of their choice (see above), the industry has still not been fully able to get its message across to much of the public that pirating is an evil and immoral practice.


While sound systems have improved many-fold over the last few decades, and true audiophile sound is available at modest prices, much of the public doesn't really seem to care. The "lossy" MP3 process is far from being "high fidelity," but its poor and compromised quality goes unnoticed by a great portion of the public.


Many audiophiles consider the CD medium to be inferior to LPs, and there's no question that both of these longstanding carriers are compromises at best. Better sound has been available for a number of years by way of DVD-Audio and SACD formats, but the public has taken dim notice and they're now considered to be failed technologies.


And though moviegoers have become accustomed to surround sound in theatres for a couple of decades, and though DVDs of most films made during recent years are recorded and sold with surround sound capability, only a small portion of home owners have installed surround sound systems, despite the fact that many are available at reasonable cost.


The majors continue to chase their tails as they attempt to seize market share and sign numerous acts on whom they spend too much money. Meanwhile they moan about loss of CD sales and argue about who and what's at fault.


Smart independent labels "stick to their last" and record and market music for customer bases that they've developed and nurtured over a period of years. Most are niche labels, but it's concentrating on such core audiences and music that have kept them healthy and modestly profitable.


To my way of thinking, its been the labels who record such music, and market carefully to their core constituencies, that have made the indie sector a reasonably healthy one.


Until next month,

Keith Holzman -- Solutions Unlimited

Helping Record Labels Manage for Success.

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Copyright 2008 by Keith Holzman, Solutions Unlimited. All rights reserved.