Bad idea.  

I was called with a request to confirm my address–apparently my debit card didn’t have the appropriate billing address. I called back immediately and was transferred around several times, carrying my basic questions in hand, only to get…answering machines.  Yes, answering machines!  What kind of customer service department has answering machines–with personal voicemail away messages to boot!!  I should have known something was amiss.  I hate the automatic recording that so many other companies have, but I’d be less annoyed by it than the “Hi, you’ve reached Mr. X.  I’m not here right now to answer your call, but please leave a message and I’ll get back to you.  Make it a happy and blessed day.”  I’d even prefer an overseas rep–at least I’d get a “sorry, ma’am” out of it.  Mr. X never did call me back and while my day was blessed, I sure wasn’t happy!  Not only that, but when I finally got a live person, I was told “I don’t handle this. If you got a call from Mr. X, you have to call him back.”  But you’re customer service!?!  At this point, my face is hot and tight (a little urban vernacular for you!); my credit card is still holding an “authorized” charge; and, I’ve spent 2 days trying to finalize an order.   So, I canceled my order–they didn’t deserve my hard earned money.

My biggest pet peeve is poor customer service.  When will businesses learn that it’s not the “widget” you sell, but how you sell it that gives you the best customers and highest returns?  

Jim Logan, founder of JS Logan, a Business to Business sales acceleration company wrote “Customer loyalty is important to a business because of the predictable and stable revenue associated with it – loyal customers spend money and refer more new sales than non-loyal customers.” 

Too often companies forget the concept of loyalty, but today is not the time to do so.  In an economy as crappy as this, the biggest things companies can control is how they treat the customers.  Invest in that now and you’re sure to reap the benefits later.

As a consumer, please don’t let the low price and free shipping trick you into purchasing from businesses with poor customer service.  Times are hard and money is tight, but, in this environment, businesses need you more than you need them

Until next time,

stay open, stay tuned, stay amped!

Expand Public/Private Partnerships Between Schools and Arts Organizations:  Barack Obama and Joe Biden will increase resources for the U.S. Department of Education’s Arts Education Model Development and Dissemination Grants, which develop public/private partnerships between schools and arts organizations.  They will also engage the foundation and corporate community to increase support for public/private partnerships. 

Create an Artist Corps:  Barack Obama and Joe Biden support the creation of an “Artists Corps” of young artists trained to work in low-income schools and their communities.  Studies in Chicago have demonstrated that test scores improved faster for students enrolled in low-income schools that link arts across the curriculum than scores for students in schools lacking such programs. 

Publicly Champion the Importance of Arts Education:  As president, Barack Obama will use the bully pulpit and the example he will set in the White House to promote the importance of arts and arts education in America.  Not only is arts education indispensable for success in a rapidly changing, high skill, information economy, but studies show that arts education raises test scores in other subject areas as well.      

I am completely in favor of these moves because of the well documented statistics on arts’ benefits to students and society.  According to National Assembly of State Arts Agencies (NASAA) wrote: “Students who participate in arts learning experiences often improve their achievement in other realms of learning and life. In a well-documented national study using a federal database of over 25,000 middle and high school students, researchers from the University of California at Los Angeles found students with high arts involvement performed better on standardized achievement tests than students with low arts involvement. Moreover, the high arts-involved students also watched fewer hours of TV, participated in more community service and reported less boredom in school.”

In my own life, music and the arts keep me out of tons of trouble;  I pray that younger generations will continue to be afforded the same benefits.  Although I look forward to seeing if this initiative takes hold,  I honestly feel there are more pressing issues drawing attention away.  

Until next time,

stay open, stay tuned, stay amped!

Today, the Wall Street Journal published an article about EMI Group Ltd, the smallest of the major labels. Apparently, and as I expected, EMI is running into trouble with cash to repay its $4.0Bn debt obligation to Citigroup. According to the article, Terra Firma Capital Partners, the investment company that bought EMI, infused $25 million into the company 3 months ago to prevent it from defaulting on its loan.

Although EMI has seen some improvements as a result of cost cutting, I don’t think it will pull out of this one unscathed or intact.  With dismal holiday sales forecasts and EMI’s weak catalogue of songs, when compared to Universal Music Group, EMI will most certainly need to sell assets to stay afloat or sell itself. This is sad news for an already depressing music industry, but shouldn’t be a surprise. Expect more of this, as the economy continues fight in quicksand.

Until next time,
stay open, stay tuned, stay amped!

As a musician, you might be wondering “why should I care about what happens to automakers?” The answer: CDs.  We already know that CDs are a slowly dying Tyrannosaurus Rex, just looking for a nice soft patch of grass to take its final breathe. But if the autos go down, trust me, it won’t take the estimated 2-3 years for CDs to croak.  It will be almost instantaneous.

Think about it.  People who buy the most CDs (outside of those like me, and some of you, who still like the experience of holding the jacket and reading the credits) are people who drive.  Now, if the autos pull back production and thus, force up the price of cars, which will then lower demand, you better bet people won’t have the same need to buy CDs because they’re not driving.  And they’re certainly not going to invest in that old cd player walkman thing we used to carry.  

Digital sales have not yet outstripped sales of physical CDs at music labels (except Atlantic, which announced in its latest earnings release, that digital is now 51% of revenues). Therefore, an instant evaporation of CD sales will cause labels to implode.  For you, that means: no more deals, no more A&R, less good music (and bad music)—it’s not good.

I might be painting a bit of a doomsday scenario here, but with everything else happening in the world (e.g., the implosion of venerable hundred year-old banks, terrorists strikes in Mumbai, and people losing there jobs in droves), it seems anything is possible.  Am I really that far off?

Until next time,

stay open, stay tuned, stay amped!

I met Janis Klein in line on Election Day.  The air was crisp, buzzing with energy and excitement.  The sun, strong.  You would never know by her petite 5’ 2ish frame that inside lay a courageous and rebellious spirit.  But there she stood, a woman who never finished the last few weeks of her senior year at New York University in 1970 because she was protesting the Vietnam War, along with thousands of other students across the country.  Little did she know that she’d produce a show commemorating the 30-year anniversary of the national student protest with which she was so intimately involved. 

After 5 years of casualty-free protests, the anti-war movement bubbled to a boil in May 1970, leading to the death of four students on the campus of Kent State University in Kent, Ohio.  The cause: a 13-second fusillade by the Ohio National Guard.  A single photo of 20 year-old Kent State University student, Jeffery Miller, lying face down in a pool of his blood, the result of a gun-shot wound to the head, propelled the student protests to the national stage.  John Filo, a student photographer, shot the photo, which would eventually win a Pulitzer prize, and submitted it to the Associated Press.  Soon after, the image was on the front pages of newspapers and magazines across the country.

It took 20 years for Kent State University to memorialize the murdered students.  CBS News took the next step by producing a one-hour 30^th Anniversary show of the Kent State University protests for the History Channel in the year 2000.  In her 10 years as a TV producer for CBS News, Janis, now 60, is most proud of producing this piece.

IA: How did you get the idea for this story?

JK:  The History Channel approached CBS to do the 30^th anniversary of the protests at Kent State University in Ohio for its show “The 20^th Century with Mike Wallace.”

IA: Why did the History Channel choose CBS over another network?

JK: As a cable network,  the History Channel doesn’t produce its own programming and The History Channel was a long-time client of ours.

IA: Why was this your proudest moment to date in your broadcasting career?

JK: I was a senior at NYU at the time of the Kent State protests.  I was among the students around the country protesting the Vietnam War.  My brother, Steven, was draft-age at the time and my parents were against the war.  So, we were all heavily involved.  Those four students who were killed at Kent State…  I just kept thinking, it could’ve been me, anyone of us.  The 30^th anniversary show intersected with my own life. 

IA: Tell me more about the process of producing this type of show.  Was it difficult, given the lengthy time lapse?

JK:  The process involved a lot of people and a lot of input from editors and network executives.  We started by pulling old news coverage and footage archives from 1970.  We actually had to buy footage from NBC News because we didn’t have it.  We also did a lot of research on Lexis-Nexis.  After the research period, which took about 3 weeks, we sought a cast of characters to be the voices of the documentary.  We ended up with four interviews, including 2 historians, which is small by today’s standards.  But we did things differently then.

IA: Were you able to find people from 1970?  Were they still living?

JK:  Surprisingly, yes.  We searched for Jeffery Miller’s mother because it was the photo of her song that made the Kent State protests a national event.  That one image.  Eilene Holstein, was 70 years old, still living in Long Island.  We sought people whose names we saw either in transcripts of news pieces, actual news pieces or from print accounts at the time.  We saw where they lived and then my associate producer found phone numbers…she was very talented at that.

IA: What was next in the production process?

JK:  Questions.  You have to develop a line of good interview questions.  This is the most important part.   Then, after the interview and research, we picked out sound bites and developed a narrative, which, much like in film-making were then broken into Acts.

IA: Was it difficult for you to interview her?

JK: Yes. Once we tossed around and agreed upon the line of questioning, we brought Mrs. Holstein to CBS for the interview and I’ll never forget…we held hands the entire time.  We cried and just held hands. It’s always hard to do a story like this because you open old wounds.  But in the end, we did something special for her by telling the story in a way nobody else had.  Others did short news or print stories, but we were the first to do a full length documentary. She told us that she felt she could rest now—she didn’t have to do another one of these interviews again.

IA: How many Acts are typical and how long did this process take?

JK: Usually a show would get 5-6 Acts (each network has their own form), but the Kent State anniversary program had 4.  It takes about 2-3 days.  Once the Acts are down, we wrote a script and entered the editing stage.  That’s the time when your work is torn apart.  You definitely feel like you’re subpar!   The goal of this stage is to find strong visual angles.  I still think print journalists are God!

IA: Why?

JK: Because they have to tell the story without visuals, which is much harder.  TV writing is easier, simpler writing.  Short sentences, a quicker rhythm.    It’s more active.

JK: The editing process is long and taxing.  Executive producers, the client, everyone critiques your work.  The editor reads the narrative and then, inserts the “bites” and the music.  We basically develop the skeleton of the show.   This took about 5 weeks. 

IA: What did you learn from producing the show?

JK: I learned that I like doing the tougher stuff, documentaries.  I met some extraordinary people during the process, some of the finest people I’ve ever met.  It was a chance to revisit an event that played such an important part in my life.  I came to peace with it, having learned that all our demonstrations against the war helped end it.  I learned that with cable shows, there’s generally no big impact.  These shows take a lot of time and work and then go into this sort of abyss on the cable networks! [laughter]  Ultimately, the impact has to be personal.

According to a report in the Wall Street journal, junk bond yields are up to 20%, which means typical music labels would have to pay 20% interest on loans they use to fund their businesses.  And with sales of CDs continuously falling, driven by the increasing effect of the Internet and piracy, and people spending less on ancillary goods/services like concert tickets in this economy, music labels may have no choice but to seek more debt.

This is not a good sign because banks are not lending.  According to the Kate Haywood report,  Wall Street firms only sold $16.9Bn of leveraged loans in November, compared to $77.4Bn the same time last year. The $750 billion junk bond market is nothing to scoff at, given approximately 50% of U.S. companies have below investment grade ratings, according to the report, and rely on this market to sustain their business.

U.S. auto makers, among the aforementioned 50% of below investment grade companies, have already approached the U.S. government for help.  While a “rescue” may be in the works for these companies, don’t bet on a bailout for flashy music labels.  At best, the government would advise marriages or simply allow failures.

Something big is going to happen.  EMI, the most fledgling of the labels, will likely be swallowed by a stronger Warner Music, as it tries to contend with the ubiquitous Universal Music.  

What this means for independent artists is that the competition for deals will get stiffer.  Less cash will be available for development (yes, even less than there is today).  There is likely to be 3 remaining labels, like the Big 3 auto manufacturers, controlling what we listen to and setting musical trends and we all know less competition is always dangerous for consumers in terms of quality and price of product.

It’s not all bad news, though.  Perhaps by the time the labels completely implode, artists, on a larger scale, will have developed the backbone and marketing prowess necessary to force the labels to them, instead of drooling on the shoes of record executives for scarce record deals.

Until next time,

Stay open, Stay Tuned, Stay amped!

I just realized, after seeing my friend’s tricked-out in-home studio, that I can’t be cheap, if I have a passion and a goal for this music thing.  There’s no room for cheapness, although frugality is encouraged.  I gave in by ordering my first Mbox, a machine used to record songs via Protools software.  I purchased a $400 “bundle” (there’s my frugality kicking in!!!), which included the mbox 2 mini machine, Protools software, a microphone, and two speakers.  I have to admit it was a steal, when you consider the retail value is $750!!  

Ultimately, the benefit far outweighs the cost.  The benefit is that I can finally record whatever comes to my mind and will no longer lose, as I’m sure you’ve all done at some point in time, my song ideas because I don’t readily have something on which to record my idea.  No more excuses now!   Another benefit is the amount of time and money I will save on the studio.  The mbox bundle provides me the opportunity to record the skeleton of a song: melodies, drum beat, and vocals, that I can then bring into the studio to edit. The alternative (and what I’ve been doing) is figuring it out as I went, which has wasted valuable time and money.   

I’m so excited!!  I urge you all to look at a purchase like this as an investment, rather than a lost cost.

Until next time,

RECORD LIKE THERE’S NO TOMORROW, stay tuned, stay amped!

I can’t help but think that we, as musicians, should do the same.  We’ve traded complexity and profundity for simplicity and shallowness, much like bankers traded sensible lending for high leverage, high risk and record profits.

What happened to us?  Money happened.  In all 3 cases, money forced us to sell our souls.  Today a “catchy”-repetitive song wins the day.  Despite your style, you’re forced to “dumb it down” a bit for all us silly listeners (me, included!)

Bear Stearns-gone, Lehman Brothers-gone.  And Goldman Sachs, a venerable investment bank with a tight partnership culture, is now a lowly bank holding company, all because the smell of money forced them off a cliff.  In terms of journalists, the industry missed the opportunity to uncover the current financial crisis earlier by not asking the tough questions sooner.  Money and over-exuberance got the best of us all!

So, what do you do if you’re the only one swimming upstream when others are swimming downstream? Well, keep swimming in your direction.  There’s no sense in blindly following the crowd because, like many banks and some journalists, you’ll end up splattered on the rocks below.  Follow your instincts and the listeners will follow (easier said than done, but totally possible) 

Moral: It pays to follow you’re own instincts because trends and fads are just that, trends and fads–they inherently move and when they do, the shift is swift and relentless.

Until next time,

Stay open, stay tuned, stay amped!

Historically, films were funded by rich individuals or insurance companies, but today, hedge funds and investment bankers have taken over as saviors for the industry. 

The film market is expected to continue growing, boosting the likelihood that Wall Street will return to invest in high quality (and some low quality films).  According to PricewaterhouseCoopers’ “Global Entertainment and Media Outlook: 2005-2009”, “modernized theaters, additional movie screens, rising DVD and high-definition DVD and DVD recorders, and the continued emergence of online DVD rental subscription services will all help the worldwide filmed entertainment market achieve sales of $118.9 billion in 2009 at a 7.1% compound annual growth rate (CAGR).”   Although the current economic crisis may reduce some of the aforementioned forecasts, it is not expected to have a dramatic effect, as films have historically been resilient even in down markets.

In the U.S., the PWC report forecasts box-office growth of 4.0% CAGR, driven by slight admission gains and accelerated price increases. Admissions are not expected to reach the level set in the 2002 boom year, however.  According to the study, studios will continue to extend their brands in terms of both franchise films and studio brands, as well as their marketing to enhance a mature box office market.

These trends bode well for film makers will prowess and patience.  When the market returns to normal, the film industry will benefit from Wall Street’s larger appetite for asset-backed deals.  Over the last decade, Wall Street has favored asset-backed transactions, as reflected in the last real estate boom which fueled heightened investment in mortgage backed securities (MBS) and other collateralized debt obligations (CDOs).  Investing in film assets is just an extension of this trend. Although the craze over asset-backed structures spurred the current economic crisis and left investors reeling, the days of investing in film assets are not over because investors will continue to seek the beta, a measure of investment risk, and the higher level of transparency that film investing provides.  Investors have a reasonable sense of future cash flows, and unlike investing in CDOs, will know that their investment will not be chopped into bite-sized tranches and sold around the world. 

In five years, the audience will be the primary focus for music labels, not units of CDs, and musicians will become the product.  The former paradigm will be replaced by a more intimate connection with the audience, by the combined use of digital downloads and distribution and in conjunction with social networking sites.  The ultimate goal for music labels and the artist is not to market to the audience once, but over and over again.  In this way, music labels will begin to resemble advertising firms and the Amazon.com’s of the world, using information (e.g., fan names, email addresses, and preferences) to sell music, merchandise, and tours.  Ultimately, this direct access to fans will be worth more than that which is earned from the $0.99 ITunes charges per download. 

The new record label will serve more as an aid to artists, rather than an owner, as the artist replaces music as the primary product.  The new label will continue to help with marketing, networking, and promotions.  Musicians will pay labels for their assistance , not the rights the complete rights of the artist. The most successful labels will be those who become experts at online marketing by optimizing the usage of Google and other search engines and social networking sites.  This new model will leave the industry more nimble, while bolstering its competitive advantages.

Labels will need to develop content management systems (CMS) around artists that incorporate all forms of media, including social networking sites (e.g., Facebook or label sponsored ones).  CMS, a term most recognized in technology spheres, is simply a more organized and systematic approach to creating, managing, and publishing content, a tool that will allow music labels to put their competitive advantage in marketing and A&R to work.  Through CMS, labels can return to prominence by revamping themselves as creators of the musical “experience”.  CMS will help to companies regain some control of the content, combat piracy, and extend the life cycle (and thus, enhance the return on investment) of the music.  Labels can regain some control over distribution by releasing music exclusively through the artists’ websites and making it downloadable to all types of digital devices, thus slowly removing ITunes from the value chain.

Live Nation 360 degree deals are a prime example of CMS.  Madonna left Warner Music and signed with Live Nation for a $120 million 10-year deal, which covers everything from TV, music and film projects.  While the deal requires Madonna to create more albums, the goal is to increase fan-focused items such as touring and merchandise.  It is content management at its most basic and major music labels have the reach and financial wherewithal to design these same types of deals.

New technology does not always make the older obsolete.  CDs have survived the electronic age this far because of the way in which it allows consumers to experience music.  The artwork, lyrics, and song credits, for many, including myself, are more useful and satisfying than the music alone.  For that reason, part of the experience would also revolve around the monetization of CD-only perks, such as lyrics and artwork.  This could come in the form of digitizing these effects on the artists’ website or by offering “special edition” CDs and downloads containing them.

While CMS can potentially bring the industry back from passive consumption of a commoditized product, it is not without its challenges.  The first obstacle would be to deal with artists, who would need to be convinced that CMS is, indeed, a better deal than going it alone.  Music labels’ approach must be one of a partner, not that of the traditional patriarch.   Cost may also prove challenging, as artist contracts would need to be extended in line with a longer music life cycle.   Labels would have to pay for a longer commitment.  To combat these obstacles, the labels would need to shore up their marketing divisions and construct solid cost benefit analysis for individual artists or bands.  

Competition will continue to be fierce, comprised not only of traditional music labels, but also digital media sites such as Youtube, Myspace, Facebook, and ITunes, which have all placed content distribution into the hands of the consumer.   As stated earlier, touring management companies, such as Live Nation have also joined the foray.  To combat this intense competition, the music industry must adopt an “if you can’t beat ‘em, join ‘em” mentality and stay on the offensive by focusing on developing its own social networking sites or meaningful partnerships with existing companies.  The industry can also ward off competition by enhancing relationships with artists.  Artists, such as Prince, successful took advantage of the digital trend.  In 1994, after leaving Warner Music, he was one of the first to market and sell his music from his own website.  To maintain relationships with strong artists, labels can use their marketing expertise to advise them and charge a fee for the service.  This results in labels maintaining strong bonds in a business still driven by relationships, monetizing a service that only music labels could provide on a grand scale, and also giving artists a recognizable sense of autonomy.

The downturn in the music industry should not be a surprise to anyone.  As with any business, there will be peaks and troughs, but this slump feels worse.  According to Entertainment and Media professor C. Samuel Craig of the Stern School of Business, “the 1990’s marked a tremendous decade for the music industry, which makes this decade feel a lot worse than it otherwise would be.”  The Internet has exacerbated the problem and marks a fundamental and more difficult challenge to the business model because, for the first time, control over content is in the hands of the consumers, not music labels.  For that reason, adjusting will take more time and more radical transformation than ever before.

The first step in any rehabilitation program is to acknowledge there is a problem.   Hubris must be put aside and dramatic cultural shifts must take place in order for the music industry to adapt and return to profitability.  Change is happening, albeit slowly.  For example, partnerships with mobile phone companies like Verizon are gaining traction.  Through products such as VCast, Mr. John Harrobin, SVP of Marketing and Digital media at Verizon, is among the forerunners of packaging content in new innovative ways.  Also, music labels are becoming more comfortable with the idea of partnerships with social networking sites (e.g. major music labels and Myspace). While not perfect, products like these that are focused on the future—innovation, personalization, access, and mobility—are a step in the right direction.

Although the industry will never again control music distribution as it once did, the music labels still have a competitive advantage in the areas of marketing and A&R.  Fortunately, technology, when embraced, can enhance these strengths, as long as industry insiders are open and willing to accept the new paradigm.  This is the music industry’s most formidable foe—changing hearts and minds.  Those who accept the tide has shifted, stay at the helm of digital innovation, and commit to transforming music from a product to an experience, will be present to witness the industry’s inevitable turnaround.

Until next time,

Stay open, stay tuned, stay amped