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MUSIC BIZ INSIGHT #2 Power Reading for Busy Music Professionals Hope you're hungry! MUSIC BIZ INSIGHT is published for musicians, songwriters, managers, label reps, booking agents, entertainment attorneys, studio owners, music publishers, and all others involved in the music business. Its purpose is to help boost your business, find new markets, make the right connections, develop professionally, work smarter and improve your bottom line. "As a general rule, the most successful people in life are those who have the best information." Benjamin Disraeli Published bi-monthly by Peter Spellman, Director MUSIC BUSINESS SOLUTIONS: Turning Music Business Data into Useful Knowledge. Career and Business-building books, articles, consulting and more. P.O. Box 230266, Astor Station, Boston, MA 02123-0266, USA Phone: 978-887-8041 Email: success@mbsolutions.com Website: www.mbsolutions.com © 1997 - 2003, Peter Spellman, Music Business Solutions
Includes topics on:
The #1 Key to Business Success People who start their own businesses are often portrayed as risk takers, bold entrepreneurs who have a vision, who are unafraid to plunge into untested and unproven markets. But the statistics tell the real story: 75 to 80 percent of all new businesses sink within a year ( a year being about all it takes for the risk taker's money to vanish). The most interesting and important aspect of the 75 to 80 percent failure rate is the 20 to 25 percent success rate. What sets successful businesses apart? Over the past few years, I have worked with dozens of new businesses and can't help but notice a very important pattern. The people who succeed in business are not the risk takers. Those who succeed are the ones I call the risk minimizers, the ones who proceed slowly and cautiously, who keep their investment to a minimum, who learn as they go. Strategic planning is the key to business success. Its advantages are numerous. Planning:
The successful new-business owner has a vision too, but this person is smart enough to ask-- and try to answer--the most important questions every new business person should ask: Is anyone else interested in this vision? Is there anyone out there who wants what I have to offer? Where are my customers? How will I find them? How will I convince them to buy from me? In other words, successful entrepreneurs do their homework before they get started. As the old saying goes: "No one ever plans to fail, but many fail to plan." Where are you?
Specialty Music Marketing: Tapping the Premium/Incentives Market Classical guitarist Stevan Pasero honed his craft through years of
hard work. He developed a style of classical guitar playing he felt
would appeal to large numbers of people. And he made a beautiful
recording of his music. Problem was, he wasn't interested in touring nor did he have the
money or interest required for the standard huge promotional push to
radio, press, retail, publishers, record companies, etc. He did,
however, want to earn his living as a musical artist. What's a
musician to do? Pasero had an idea. He formed his own label in 1985, calling it
Sugo Music (Sugo is an italian word that refers to a family's sauce
recipe). Pasero decided to target large businesses with his record,
"Heartsongs". Calling his plan an "executive gift program", he
started contacting large companies. Corporate executives were invited
to purchase discounted CDs and tapes to give as gifts and incentives
to employees and customers. One of Pasero's first clients was Apple
Computer, which was seeking a special musical gift for their
executives and partners. Their initial order? Nine -thousand please!
Since inking similar deals with other companies, the fiesty Sugo
label was picked up by Allegro for national retail distribution in
1993. The use of products as promotional items, give-aways, special
incentives and premiums has grown into a $28 billion dollar a year
industry. How often have you received a gift from a company for
subscribing to a certain magazine, or for making a large purchase the
previous year or for using a certain financial service? Though the
gifts' quality varies, they nevertheless work to establish goodwill
between customer and company. And that's the point. A whole industry has grown up around this market which does nothing more than purchase the appropriate premium and incentive items for any given promotion. Music, of course, makes a great gift and represents over 25% of all premium and incentive gift-giving. How to Get Involved in this Market First, think about who might want to use your music. Is it country? Maybe you can approach John Deere Tractors. Is it reggae? Perhaps a cruise company specializing in Caribbean tours. The possibilities are endless! Remember, while price, service, packaging, etc. are important in this market, the key ingredient is the motivational value to the target audience. What are this audience's needs, attitudes, desires, habits? What motivates them to take action? The more insight you can bring to these questions, the better your chances are of landing a deal. Next, you have a choice of approaching the company's incentive buyer yourself or hiring a sales representative specializing in this market. Either way, you should be creative and benefit-oriented when presenting your product-- clearly and convincingly pointing out how your music can help this business, that it is a lasting gift, that your style of music is perfect for itspotential customers, etc. To find out the names of company incentive and premium buyers check out The 1994 Premium, Incentive & Travel Buyers Directory, published by The Salesman's Guide (800/521-8110; $227.). A large public library should have it.
Getting Listed: Using Directories to Raise Awareness of Your Company Getting noticed is a continual challenge facing all small businesses. When budgets are tight (as they always are) it is necessary to seek out low-cost marketing strategies. Business directories provide just such an outlet and there are many in the music industry. Here are some general ones you can contact for listing forms. All listings are free. (Note: You may have a number of different components in you r company, each of which derserves a separate listing. For example, you may have a record label and a recording studio and a music publishing wing. Cover all your bases!)
How the U.S. Music Industry Performed in 1993 The 1993 U.S. sales statistics were recently released by the record companies' national body, the RIAA (Recording Industry Association of America). Here are some of the results with a five-year comparison: Sales by Genre (Out of a total pie of $10 billion)
What Does it All Mean?
(The RIAA "Annual Report and Statistical Overview" is available free to anyone by calling RIAA headquarters in Washington, D.C. at 202/775-0101. Reports are published each Spring).
BOOKS Business Mastery by Cherie Sohnen-Moe (SMA, 5th ed., 1993, 602/743-3936), $19.95. Written originally for wholistic health-care practicioners, but FULL of practical, humanized guidelines and advice for any small businessperson. Made even more helpful with the inclusion of exercises, checklists, charts and forms that help take the guesswork out of business planning. Self-published; call for ordering information. The Partnership Book: How to Write a Partnership Agreement by Dennis Clifford & Ralph Warner (Nolo Press, 1993, 510/549-1976), $24.95. As a small business you should be aware of Nolo Press' self-help law books. Their intent řis to take the mystery out of law and make it available to everyone. If business success means developing a strong team, this book will help you detail the necessary agreements. The authors are attorneys but, more importantly, they're partners. Full of experienced advice. Other recommended Nolo Press titles include, How to Write a Business Plan by Mike McKeever; Marketing Without Advertising by Michael Phillips & Salli Rasberry; and The Legal Guide for Starting & Running a Small Business by Fred S. Steingold. Some titles have accompanying software and books are updated regularlly (with discounts for previous edition owners and book recycling options). Give them a call. Nice people! The Art of Music Licensing by Al Kohn & Bob Kohn (Prentice Hall Law & Business, 5th ed., 1994), $95. Today, music is reproduced on record albums, CDs, tapes, video games, singing greeting cards and talking dolls. All of these uses are accomplished by a variet Ëy of licenses which must address a complicated set of legal and economic issues. This 1,000 page guide takes you through the process of granting licenses and obtaining permission to use music. But don't let its size (or price!) scare you. It's the best thing out there on the subject, and with all the emerging opportunities in multi-media and on-line music transmission, we'd better start getting a handle on the subject. The book also contains over 70 model forms and agreements adaptable for use in a wide variety of licensing transactions. Use it!!! Doing Business on the Internet: How the Electronic Highway is Transforming American Companies by Mary J. Cronin (Van Nostrand Reinhold, 1994, 212/254-3232), $29.95 pb. There's something wonderfully democratic about the Internet. It allows the emergence of "the virtual corporation" where a small company with available technology can have the look a nd efficiency of a major corporation yet still maintain the great values of being a small business : the personal touch, rapid response to change and lower overhead expenses. Cronin's book is a non-techie look at how companies of all sizes are customizing the Internet for product development, business partnerships, research, marketing and customer support. Tips for getting started on the Net along with practical advice for businesses on the most important Internet resources, services and technical developments. MAGAZINES Entrepreneur: The Small Business Authority (714/261-2325). Loaded with real-life stories of how small businesses raise money, manage projects, promote and publicize their services and products, hire employees and deal with the myriad of problems facing all entrepreneurs. A bit heavy with ads and probably 50% useless on any given month, but within the remaining 50% lies gold. ($19.97/yr.) Music Business International (US office: 212/779-1212). This bi-monthly magazine has come a long way since 1990. Published out of London, MBI endeavours to scope out the global music industry while illustrating larger currents with micro-studies of particular personalities within it. The current issue assesses Warner Brothers' future in light of recent executive re-structuring, an evaluation of the George Michael case against SONY, the burgeoning movie soundtracks market and a special 7-page spread on new music opportunities in South Africa. The executive focus in this issue is on Ken Berry, president and CEO of EMI Records Group International, who demonstrates that unique combination of hard-headed business sense and soft-skilled artistry. ($75./yr.). ON-LINE RESOURCES There are a number of exciting new on-line music services you should be aware of. Here is a sampling. Send for their free info-kits: The Internet Underground Music Archive (408/426-4862, Santa Cruz, CA). SonicNet (212/941-5912, New York, NY). Kaleidospace (310/399-4349, LA, CA).
About the Publisher PETER SPELLMAN is Director of MUSIC BUSINESS SOLUTIONS, a business and marketing consultancy to the music industry, and Director of Career Development at Berklee College of Music, Boston. He is the author of several books for music entrepreneurs and teaches music industry courses at Northeastern University (Boston) and the University of Massachusetts (Lowell). A musician since he was ten, Peter continues to spin riddims in the improvisational collective, Friend Planet and sing Cat Stevens' songs to his kids every night before bed. BLOOM WHERE YOU'RE PLANTED! Quote of the Month-- "If at first you don't succeed, you're running about average." --Anonymous E-mail: success@mbsolutions.com Copyright © 1997 - 2003 Peter Spellman P.O. Box 230266, Boston MA 02123-0266 978-887-8041 Rise up!
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