Manage for Success: More Current News, Newsletter #95, March 2009


"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 2009 by Keith Holzman, Solutions Unlimited. All rights reserved.


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Since my newsletter readers seem to like it when I devote the occasional issue to what's currently happening of note that affects our industry, here's another devoted to recent events.


Of particular interest to those of us who've circuited the sun a few dozen times, its rather startling to realize that the Compact Disc is celebrating -- if that's the right word -- its thirtieth birthday. That's right, the CD was introduced by Philips in Eindhoven, Holland on March 8, 1979, and the following week at an Audio Engineering Society meeting in Brussels. The prototype disc was codenamed "Pinkeltje" -- more or less "pinky" in English, although that's also the name, translated as "Fingerling" or fingerling potato, of a much beloved fictional character in a series of 29 books by Dutch author Dick Laan. (See what a little time spent with Google and Wikipedia can do to one's knowledge of trivia?) Sony had at the time been working on a parallel technology, so both companies eventually pooled their ideas and developed the disc we've since become accustomed to.


Some people feel that the life of the Compact Disc is coming to an end, but I don't foresee it's imminent demise. Until someone comes up with a better music carrier (and the MP3 is far from being it) I think it'll be around for at least another decade, if not longer. With all the music I've got sitting around my office I still manage to end up purchasing a lot of CDs.


Album sales continue their decline and, as of the end of February, sales were off almost 12 percent from the first two months of last year, and almost 29 percent from the same period in 2007. At the end of 2008, annual album sales dropped more than 54 percent since the peak year of 2000.


There continues to be lots of discussion about Radio Stations paying artists and labels for the use of their music when broadcast over the air. As I've noted previously, the U.S. is one of very few nations where over-the-air broadcasters don't compensate "creatives" for the use of recorded performances. On March 10th Billy Corgan of The Smashing Pumpkins testified before Congress in support of the proposed Performance Rights Act, following many other artists who've also testified recently. Enactment of the Act could result in more money becoming available to artists and their labels, and broadcasters may reluctantly realize that it will inevitably be in their best long-range interest.


The Wall Street Journal reported last week that concert tickets are being resold by performing artists. "Less than a minute after tickets for last August's Neil Diamond concerts at New York's Madison Square

Garden went on sale, more than 100 seats were available for hundreds of dollars more than their normal

face value on premium-ticket site TicketExchange.com. The seller? Neil Diamond."


TicketExchange is owned by Ticketmaster Entertainment and concert promoter AEG Live. The majority of tickets are sold by artists and their promoters with Ticketmaster's cooperation. This practice might be considered to be "scalping" which is surprisingly legal in most states even though it "takes advantage of fans while enriching third party speculators."


On a positive note, ASCAP announced collections totaling $933 million in 2008, representing nearly 350,000 lyricists, songwriters, composers and music publishers from every genre. They made royalty payments of more than $817 million. The 11 percent difference is devoted to operating expenses.


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I endeavor to keep current on all matters affecting our industry, and if you need sage advice on how to make your label successful, then let me help you as I've helped so many other firms "manage for success." Email me at <mailto:keith@holzmansolutions.com> so we can discuss how I can improve your business.


In addition, I recommend my book "The Complete Guide To Starting A Record Company," The Second Edition can be ordered as a downloadable eBook in PDF form, or as a printed, spiral-bound volume. Read the complete Table of Contents and download the Introduction at <http://www.recordcompanystartup.com/>.


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Would you want to be the head of one of the four remaining major labels at this time? Well, it seems that Terra Firma, the private equity firm that owns EMI, has just written down more than 1.36 billion Euros ($1.7 billion) -- approximately half of its April 2007 investment!


All the majors are losing money, but UMG is bleeding less than the other three, having had a mere six percent decline during their recent quarter, according to Vivendi, their parent company.


And Business Week reported (I wonder what took them so long!) that a growing number of music listeners are making use of free music sites such as Imeem, Last.fm, Pandora, and Spotify (U.K. only at this time) -- all of whom have freely accessible content as a substitute for the purchase of music. What at one time had been considered to be a catalyst for potential music buying has instead become an excuse for passivity and saving money.


Last week Apple introduced their new iPod Shuffle, also known as "Small Talk." This minuscule device, that's not much larger than a human finger, has no knobs or dials on it. Instead it's controlled by a little switch on the cord of the earbuds. Its 4GB of storage amounts to about 1000 songs, but how do you know what you're playing? It "talks" to you! "VoiceOver" is a feature that, with the press of the switch, tells you what song you're playing and who's performing it, giving you a new way to navigate your music.


Why introduce such a technology in a $79 thumb-drive-sized player? A technology scribe for CNET suspects that this may be leading to a company-wide shift for Apple using voice as a new interface mode. You tell the computer what you want it to do, and the computer talks back to you. Just what we need! Apple has always been in the advance by inventing innovative user interfaces, and in fact has used voice technology in Macs for many years. But this new development represents a considerable advance.


Apple is expected to announce details this week of its latest iteration of the iPhone software -- update 3.0. Will this include use of VoiceOver?


Actually you can talk to the iPhone now. Using GoogleMobileApp, tell it what information you're seeking, and in a moment you get the results. Voice search for the web!


Speaking of the iPhone, Sirius Satellite Radio will soon be releasing an iPhone application that turns it into a radio capable of listening to Sirius' broadcasts.


Finally, in a March 12th article, New York Times writer David Pogue described Google Voice, a technology that will revolutionize telephones. "It unifies your phone numbers, transcribes your voice mail, blocks telemarketers and elevates text messages to first-class communication citizens. And that’s just the warm-up."


Big Brother anybody?


Until next month,

Keith Holzman -- Solutions Unlimited

Helping Record Labels Manage for Success.

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Copyright 2009 by Keith Holzman, Solutions Unlimited. All rights reserved.