DMEC

UMG: The largest record label in the world

Maybe you all heard that Universal Music Group will be dropping all of their CD prices to $6 to $10 shortly as a “pricing experiment” for the US. What are this guys doing? Is it enough with the suffering this dying format is getting?

“We think it will really bring new life into the physical format,” Universal Music Group Distribution president/CEO Jim Urie told Billboard.

Numbers: CD sales are down 15.4% this year, 18.2% last year, and 19.7% in 2008, when CD sold were 360 million, as opposed to the 706 million units sold in 2000, the historic peak.

UMG been busy the last couple of years. With their digital sales rising 8.4% for 2009 and with the launch of their online video music

Will this image exist in the future?

site VEVO it seems that the biggest record label is betting big time on digital. Then why dropping CD prices? Maybe they just want to kill the format as fast as they can and continue toward digital? My first guess is no. There are a few facts that we need to consider in order to come up with the reasons why they are doing this.

First: though everyone refers to CD as a dying format, I believe that is not. It’s been declining but I would say that besides that the new generations prefer the portability and immediateness of MP3s, there are advantages that the CD has and that over a long period of time digital files won;t be able to replace: sound quality, freedom of ripping at whatever quality I want, cover art, etc. If you truly love an artist you prefer to have their CD and then rip it to your portable devices. That’s the only explanation of why I having the complete Beatles collection in MP3 still bought the CD collection of mastered recordings. I just loved them too much. I need something more than bytes. The recommendation comes from too close but I would say that I’m not the only one with that strange behavior. Why vinyl haven’t died yet and even saw in increment in sales last year? Mystique and fanaticism, pure and simple.

Second: price itself it’s been a cause of CD’s declining tendency. We all think that CDs are too expensive compared to the digital version of albums. Despite all the advantages that we discussed before, the price difference it’s too much. If I can get the music (which is the most important thing by the way) for half the price I don;t care about some extra quality and artwork.

Third: UMG plans are not only to lower prices (Rashi would kill me!). They still plan to sell CDs for $20, but premium CDs or deluxe editions for fans like the ones I described before). Also they currently make 25% profit per CD on average and they stated that they plan to keep that figure. That means that all the usual costs of promoting and marketing artists will go down or shift channels to less expensive ones to maintain that profitability.

Final result that UMG is looking for: Maintain their profitability but increasing the quantity of CDs sold. It’s an experiment by the way, remember? What they are trying to test. I would say the possibility of having a longer life for CDs as a profitable product and using different formats for one products to capture the value from a broad universe of customers. New generations and cost sensistive buyers will choose cheaper digital files, the CD lover will buy the new 10 bucks CD and fanatics will buy deluxe editions if they want too. A much more better picture for what they were expecting when MP3s appeared years ago.

What will retailers think?

Not everyone believes this is going to work, especially CD retailers. It will depend a lot on what other labels will do. Follow? Stay? UMG is the bigger player in the music industry worldwide. I can assure one thing: others labels are nervous about what UMG is doing but as annoyed as they can be, they will have to choose what to do and it won’t be easy.

For the sake of music, let’s hope this idea works.

Cross posted on Miguel’s Blog

Life it’s weird. Almost one month after the DMEC LA trek I’m writing this blog from LA itself.

The city of entertainment had the honor of receiving 21 MBA students (between 1st and years plus EWMBAs) between February 26th and 27th. We visited studios, digital media marketeers and record labels. An perfect mix of the entertainment industry for us.

A classical image from Warner Bros. Studios

Guided by our dear VP of careers Della Huff we started our trek in Warner Bros. at Burbank on Thursday morning. Half of the trekkers were traveling packed in a massive white van driven by Della herself. Once in WB we got some insights about the similarities and differences in career paths for MBAs in a major studio. Differently from what most people think, studios, film and TV are businesses after all. All the executives we spoke with ended up there without suspecting that they would. After an amazing studio tour with Della as our guide that included the theater where employees see exclusive premieres, an outdoor studio that resembles a city downtown and even a jungle, we enjoyed lunch in the cafeteria and drank some coffee at Central Perk. We stopped by Ellen’s parking spot and got some stuff from the WB store. Nice!

Later that day we headed to Universal City, headquarters of the newly acquired by Comcast NBC Universal. There we also talked whit three executives about their experiences in such an especial industry and with all the challenges they are facing with the Comcast deal. They put especial interest in the distribution and online challenges of films and TV in the future. Trekkers were truly interested in this subject.

We finished that day in a happy hour with Haas alumni at “Cat and Fiddle” in the middle of Sunset Blvd. Later we ended at Roscoe’s

Trekkers at Roescoe's: Waffles and Chicken

where I had by first (and probably last time) waffles and chicken (?). Bottom line, he had a great time and we have arrived to LA less than 24 hours ago. Good start. All to bed and get some rest for next day.

Friday morning was really cool. We visited Digisynd where Haas MBA alum Steve Felter is the COO. They received us incredibly: a tour showing us all the cool stuff that a multi-tiered digital studio has like high tech cameras, props, studios, etc. We had an amazing presentation with Steve about careers in entertainment followed by a talk with Digisynd’s president Rob Maigret. We even got a demonstration on how visual effects and green background work! We also learned how powerful

Steve Felter during his presentation at Digisynd

social media marketing is in conjunction with creating exclusive content. Recently purchased by Disney, Digisynd is in charge of managing and analyzing results for all of Disney’s social media pages and interactions. Check out their site and you’ll see why they are so cool.

In the afternoon an interesting a cool finish: Universal Music Group at Santa Monica. For those of you who don;t know UMG is the biggest record label in the music industry. Artists like Lady Gaga and The Who are part of their catalog. There we met with the eLabs team. They are in charge of all the digital distribution strategy of UMG (which actually is working: almost 9% increase of digital sales on 2009. Not bad for a “dying industry” isn’t it?). All trekkers were really interested during UMG executives presentations since who’s not a music consumer? Some really interesting ideas popped out in that conversations.

The trek was approaching it’s end ans I was already sad. 48 hours were not enough to get to know my classmates better (1st and 2nd

The Van on its way to Digisynd

years) and get soaked with some entertainment knowledge but it had to end at some point.

We headed to a bar in Santa Monica where we had beer and appetizers toasting for the amazing trek that was ending. We learned, we networked creating opportunities for future internships or full time jobs and, most important, we had a really good time!

I want to thank Della and all the DMEC leadership who made this 2010 Annual LA trek possible. It went smoothly, we represented Haas well and it was a great opportunity for mixing our career search and learning process in entertainment with DMEC’s social activities.

Great work guys!!!

Miguel Martinez / TV and Music Expert – DMEC

Cross posted on Miguel’s Blog

by DMEC Careers Della Huff and Chris Finegold

Internet and Social Networks

Content and Distribution

Mobile

Hardware

Greetings from your new DMEC music industry expert. As a musician, I’d like to kick off my first blog posting with some information around how musicians currently use technology to increase attendance at shows, promote their music, and break into the industry…without the hassle of actually having to play in front of a studio executive. Let’s start from the beginning…say you are a new artist, just wrote and recorded your first few songs (using these iPhone apps), and want to let your friends know about your talents. Where can you post them? Well, myspace and a facebook fan page are the obvious places to start. But assuming you have decided to monetize this hobby and have published a CD with a bar code (through discmakers.com), you can work through cdbaby.com to stream your songs on lala.com, amazon, zune, rhapsody, and itunes, and even have your songs appear at the top of a google search (through lala). Yeah, if you have a bar code, it’s just that easy. In fact, you could probably belch into a microphone 35 different ways and those unique sounds could appear on itunes within a month. If you would like a review of those belches to show up on itunes, you could drop $75 and have radioindy.com write one for you. (It is important to note that you do actually have to apply to get your songs on pandora or most other radio programs.)

Now, say you actually recorded legitimate music and aspired to perform at a bar or club …where should you start? Well, you could always conduct a google search to find the local venues, and email the bar managers individually (then harass them in person when they don’t respond), or you could pay a small monthly fee to sonicbids.com to conduct an extensive search of not only local venues looking for musicians, but also festivals and competitions. If you were successful in securing a gig and wanted to inform all of your closest virtual friends on facebook, myspace, and twitter of this momentous occasion, you could set up an account on artistdata.com, enter the date, time and location of the event, and artistdata would automatically send an announcement to all of these sites and update any music calendar you may have.

And success! You have made it! Or have you? “I’m tired of the bar scene,” you say after 3 shows. “It’s time to take it to the next level.” As an impatient musician, overconfident in your abilities, you can then pay an annual subscription of $300 to taxi.com to have the opportunity to submit your songs ($5 for each song) to music industry executives looking to sign you (or a more talented version of you) and place your music in ads, movies, and TV shows.

So good luck and remember that if after 2 or 3 submissions, you still haven’t made it, there’s always the magic of a viral youtube video…

Since we started our Haas business school experience we dare to say that the 5th San Francisco Music and Technology Summit last week is the best experience we had so far. Why? Simply because it has absolutely everything we love: music, entertainment, entrepreneurship, music legends, independent musicians and much more.

Our ambassadors having a good time at the sfmusictech mixer

We, Jason Dolan, Adithya Jayachandran and Miguel Martinez went to the event in the Hotel Kabuki at SanFran as Haas and DMEC ambassadors. As soon as we arrived we felt that warmth and cool vibe of the music industry mixed with the dynamics of technology and entrepreneurship.

Brian Zisk and his production team pulled together an amazing event with high quality panelists and public.

The keynote of the day was the presentation of the just released Google Music, a music discovery helper. It’s a search feature of Google which allow users to access songs, videos or lyrics directly with a simple search input like a band’s name, lyrics or any other info that relates to what you are looking for. The content is provided by different partners that where present in that keynote such as My Space, Gracenote, Pandora and You Tube (it’s really cool. Check it out!). One phrase that caught our attention in this panel were the words of RJ Pittman, Google’s Director of Product Management: “in Google our most important metric is ‘customer happiness’ “. This is the reason why they are doing this. Besides, we think is the least invasive way to enter into the music market. Interesting.

The audience during one of the many panels of the day

One of the main discussions among the public was that if this was another way to get free music easier, but the consensus was the benefits are greater than the costs, especially because the search considers a few protections such as only reproducing a song once between a given period of time.

Other important topic that was present across almost every panel was how bands use My Space these days. The previous consensus was that My Space is basically dead when it comes to promoting a band. But the new partnership with Google Music ignited the idea that updating and using a My Space site would be again a useful tool for band promotion. Although the idea is consistent, all panelists agreed that if a band’s website appears below a band’s My Space site, they are doing something wrong.

A third interesting discussion was generated in the live events panel with members like Zack Darling, organizer of Burning Man. While the panel was having a discussion about the use of mobile devices in concerts by the audience to influence the performance, interact with the musicians and to inform friends and other people what is happening trough tools such as Twitter and Facebook, they also debated about the problems with coverage from mobile carriers. Obviously, there are economic and technical issues with increasing bandwidth and coverage for specific events or locations, but this tendency is seen as a potential for future massive use. Still, question remains unanswered.

One of the panels during the summit

Finally we just want to mention that being in the Producing and Mastering panel was simply amazing. Legends that worked with artists like Santana, the Death Kennedys, Neil Young and Janis Joplin were in it. Even though it was a technical conversation, some really interesting insights were discussed. For example the historical shift between pro audio and home studios because of technology. This new way of doing things is here to stay. At the same side, avoiding the classic mentoring/teaching system will mean the end of some of the greatest techniques in the music industry. Efforts like educational interactive material could somehow diminish this problem and there are current efforts in that direction.

You can listen to all the panels in the summit’s website.

Stephan Jenkins, Third Eye Blind 3eb! / True Meaning

The last speaker of the day was Stephen Jenkins, musician from Third Eye Blind, who was also present in the last summit in May of 2009. He talked (a better description would be tried to talk) about the latest release of his band, which was made without any major label behind it using all the technology available nowadays. He also commented on his charity project, true meaning.

The day ended with the cocktail party where we all relaxed and had a few drinks in honor of DMEC and the opportunity of being there. At the end of this blog you’ll a find a few photos that illustrate the good time we had.

For the end and according to us, the best quotes from all the panels:

1. “You’ve got 7 seconds to impress your audience” – Jay Frank

2. “Music consumption is higher than ever” – Jeff Sass

3. “What is popular enough? – not having a day job” – The ‘Getting to Popular’ Panel

4. “Every piece of content is abstracted and available via API” – Lee Martin

5. “Gone are the days you are going to build something and figure out how to monetize later” – Mark Sugarman

6. To musicians: “Get your own URL” – The ‘Social Networking: The Future For Musicians’ Panel

7. “Play live. Meet people. Make direct connections.” – Stephan Jenkins

8. “Pro tools killed big studios” – Ken Walden

9. “Greatest marketing tool: live show” – Zoe Keating

10. “Life is too short not to pursue what you are passionate about” – Jeff Yasuda

We are just looking forward for the next summit! We’ll surely be there.

Jason, Adithya and Miguel, Music Industry Experts of DMEC

Cross posted on Miguel’s Blog

Summit featured on NBC Bay Area News 12/7/09