The Digital Future

Recently, I spoke with a colleague and fellow musician about the growth and ever-consistent change in the digital music era, in which we live. He mentioned that there was a deficiency in the music industry; a deficiency whereby we are affected due to the fact that know one person nor business knows the instrument needed to bridge the gap that has caused the decline in revenue, in record sales, by over 50% in the last decade.  His words were as follows: “I am working on it and when I find it it will change the industry forever.”

In an article entitled “Can the Music Industry Adapt to the Digital Future?” Writer Ross Lawrence summarizes the change that has taken place over the last 30 years from vinyl to cassette and CD’s. He then goes on to explain the decline in record sales that has not only affected the emoluments for the musicians or “artists” but the record labels as well, causing many labels to fold. In the article Lawrence tells how “Napster, an online community for sharing MP3 files free of charge” was a beacon for the decline in record sales for many reasons:

-The introduction to illegal downloading

-Opened doors and generated new ideas for other websites to commit piracy

-The lackluster feel for the consumer to not have to go out and actually purchase music

Although Apple has monopolized the digital downloading era with their 99 cent per song sold option, there still has been nothing to stop the illegal downloading of music. According to Tim Siglin, in an article entitled “The Changing Digital Music Landscape,” Apple “currently dominates-to the tune of almost 80% market share-a market that has now risen to an annual rate of 353 million songs. This now only leaves us with the issue of illegal downloading.

Realizing that the future of music and film, whether it be marketing or sales, is leaning toward digital and mobile facility we must embrace this new culture of technology and utilize it. With the masters program of entertainment business that my colleague and I have recently matriculated through, we are well equipped with the knowledge of how to go about doing so.

http://www.richmondfed.org/publications/research/region_focus/2010/q3/pdf/feature4.pdf

http://www.streamingmedia.com/Articles/ReadArticle.aspx?ArticleID=64812&PageNum=1

A Successful Music Group

Universal Music Group

Universal Music Group, also known as “UMG is a subsidiary of French telecom giant Vivendi. The company has a distribution company, a publishing group, a record label with more than twenty well known subsidiary labels and owns the copyrights to more than 1 million songs.

In 2011 the Universal Music Group Corporation received 4.5 billion dollars in sales employing 7000 employees across the globe. The corporation is not a publicly traded company and has not been since it’s founding as Decca Record in 1934, solely because it is a subsidiary company of Vivendi. The Headquarters in the United States is currently in Santa Monica, California.

Universal has some of the world’s biggest mega entertainers such as Sheryl Crow, Sting, U2 and several others. They have three main people running the company, it’s chairman: Lucien Grainge, President and Chief Operating Officer: Max Hole, and Vice Chairman and CFO: Marinus N. (Nick) Henry.

In 2007 it’s parent company bought the Bertellsman Music publishing Company for a purchase of 2.4 billion U.S. dollars. It is needless to say that this corporation generates and disseminates a large part of the world’s finances as far as entertainment goes.

In 2011 after an intense bid with other Entertainment moguls UMG won the bid for EMI’s recorded music operations, a British Music Company and formerly one of Universals major competitors, which now allows for more growth for the company due to having an entirely new conglomerate of companies. With Vivendi’s stock currently standing at $17.05 per share and up 0.71%, it’s safe to say that Universal is not going anywhere as a company any time soon.

http://biz.yahoo.com/ic/100/100557.html

News.BBC.co.uk (BBC News). 6 September 2006.

http://investing.money.msn.com/investments/stock-price?Symbol=VIVEF

Business Development

Just a few weeks back I had the wonderful opportunity to research the works of business moguls Steven A. Gedeon, Ph.D., MBA. and Mexican mobile tycoon Carlos Slim. In doing so I have discovered ways of approaching and incorporating the ways of both Carlos Slim and Steven A. Gedeon into my own business plan. Equipped with tact and knowledge of how to, most likely, create a successful business. They each express how they have a set of questions that are their guidelines in knowing whether this will be a successful venture or not.

Most of all it was Carlos Slims’ detailed set of questions that I have incorporated into my own business and is the same set of question that during my development I can revert back to in an effort to ensure.

•       “[What did you initially think your initial business model was? (Initial business model hypotheses)

•       What did you build/do? (Built first product, talked to users, etc.)

•       What did you learn outside the building? (Parts of our feature set/business model were wrong)

•       Then what did you do? (iterated product, changed business model, etc.)

Repeat steps 1-4.]”

Although I was most baffled about what I thought my initial business model was, I shaped, molded and soon discovered just exactly what it is I should be developing. Although I know that I have created something for the world to see, I also know that t begins with a start: That start being the investors that are going to invest in my company. I believe the most important thing to the investor is not just what they will get back from the company but what exactly my niche will be, as well as the projected financial report. Anyone can develop a business plan but it takes detail to put it into position.

http://bragmedia.com/blog/?tag=music-industry-talk

www.ryerson.ca/tedrogersschool/bm/faculty_staff/bios/gedeon.html

Carlos Slim Helu & family". Forbes. Retrieved June 5, 2013.

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_wright

Business Moguls

Recently I have reviewed the strategies of successful business moguls and entrepreneurs. In doing so, it was the ways of Business Steven A. Gedeon, PhD, MBA. Gedeon received his PhD from the world renown Massachusetts Institute of Technology and is currently a professor of Entrepreneurship and Strategy at the Ted Rogers School of Management. Gedeon himself has developed and created a great host of businesses. He also writes and reviews the works of other businesses as well.

Thing I have come to be so fond of in his work is his set of questioning that he has in which he feels is quintessential for a successful business. Although none of them can be proven as facts, a man with such a level of establishments and credentials, one should watch carefully when attempting to develop a business. For further detailon Gedeons writings visit www.ryerson.ca/tedrogersschool/bm/faculty_staff/bios/gedeon.html.

Another successful business mogul that caught my attention was Mexico’s telecommunications mogul Carlos Slim. Slim is the chief executive officer of Telemex and America Movil. From 2010 to 2013 Slim was the richest person in the world, due to his large number of share holdings in several conglomerates, until Bill Gates took the throne.

Like Gedeon Slim has a business model with a set of four questions that he asks when developing a business:

•       “[What did you initially think your initial business model was? (Initial business model hypotheses)

•       What did you build/do? (Built first product, talked to users, etc.)

•       What did you learn outside the building? (Parts of our feature set/business model were wrong)

•       Then what did you do? (iterated product, changed business model, etc.)

Repeat steps 1-4.]”

It is arguably this concept that has kept Carlos slim one the wealthiest men in the world for the last few decades. As aforementioned, although these moguls’ method for success may not be fact, one should listen when a repeated billionaire speaks.

Carlos Slim Helu & family". Forbes. Retrieved June 5, 2013.

www.ryerson.ca/tedrogersschool/bm/faculty_staff/bios/gedeon.html

http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_wright

Music Management Risks

The music business in itself is a tough business to work with. When working in this business as a manager or management company one has to consider all music management risks and prepare proper reaction when an unwarranted action occurs. For instance, over the last decade the music management risks have been extreme due to the excess of piracy via the Internet. These types of music management risks are those that any management team in today’s industry has to work extra man-hours to diminish the inevitable ability to illegally copy music from the artist.

 

There are even more music management risks to 

be discussed with the ubiquitous distribution of digital music. Some older artists have an issue of whether or not digital music should be treated as a license or sale. According to Ben Sisario (2011), in an article published by the NY Times “Four years ago, the producers who discovered Eminem sued his record label, the Universal Music Group, over the way royalties are computed for digital music, which boils down to whether an individual song sold online should be considered a license or sale. The decision made was one that would benefit the production company and Eminem millions of dollars for years to come, as well as set precedents for other artists. As stated by Sisario, “Eminem’s contract stipulates he gets 50 percent of the royalties for a license but only 12 percent for a sale.” In layman terms, if this were to remain the standard, there would be an injustice for the artist signed to a label more than a decade ago, with music sold online, due to the fact that digital music was not in use back then. Hence, the artist and production team makes a lot less money for a technology that wasn’t developed during the time of the signing to the label. The result of this case ruled in favor of the production company ruling digital music to be considered a license. This is more music management risks and precaution for any manager or management team to consider when working with an artist signed before the commencement of the sale of digital music to insure adequate revenue is received for the artist as is rightfully so.

 

In more recent news, like the popular band “Radiohead,” “R&B singer “The Weekend” suggests a new business model based on free music. The weekend released a new and very popular album via the Internet for free. Some would consider this a nightmare for the manager because of the lack in music sales, ergo lack in revenue.

Needless to say, there are several music management risks that a manager and or management company can encounter when maneuvering about in this business. 

http://www.nytimes.com/2011/03/28/business/media/28eminem.html?pagewanted=all

http://bragmedia.com/blog/?tag=music-industry-talk