Business Plan (Record Company) free essay sample

There are three of us: The Label manager (who is responsible for running the label), an AR (the talent scout who mentors the artist through to final recording) and a business developer (who is responsible for the business deals). Although every one of us has a specific title, being a small Independent label, we all work on every Issue. The funding of the label came from our personal funding (representing 85% of our funding). , the head of the label brought 55% of the full funding, the two other equally brought 15% each of personal funding into the label. Three of our friends (5% each) came in for the last 15% to help us as we had trouble finding a bank which would loan us the money for an Independent record label! There Is no Interest on this loan and we have an oral agreement that we have five (5) years to pay back the loan. We have raised a budget of IEEE to start our record label There are no office costs as we all already own a computer and are working in my living room which has been transformed for the occasion into an office. Our Income forecast, which will be more detailed In our scofflaws document, Record sales (worldwide and different formats: CD, Vinyl). Broadcast comprises: Income (income from our records being broadcasted on radio or TV, or played in public places which will be paid to us once we have joined PL). Licensing (giving a license to other companies to put our tracks on compilations or for licensing the whole album on a said territory). Synchronization (which would be great though we cant directly count on It though we will be pitching as much as possible as there Is some Important Income from this type of license). Merchandising (we take care of he merchandising of our artist which is an Interesting revenue stream) ; Digital sales ring tones (this is a very new market to us, we are looking into at the moment so we cannot fully count on this revenue stream either as we havent yet found all the right partners to work with). On the expense side: Overheads which shouldnt be too Important as rent, electricity, telephone and computers etc. .. Are already dealt with as we do not need a new office. ; Staff cost (though we have all agreed on a percentage based payment for the moment we do have to take into account our legal costs here). Taxes National Insurance. AMPS bills. Recording, mixing and mastering recordings. Producers fees Manufacturing costs Artwork Design (including pack design, photography, websites, logos, promotional materials). Videos Radio TV promotion for records or videos (plugging) press (PR) Advertising Direct marketing promotion of our product. Distribution fees Sales costs. En are trying to keep our fixed costs such as our overheads as low as possible and are taking great care of our cash flow as many costs have to be paid in advance even though the income will come in much later so we have to b very careful on this issue.En have to of course Join Collection societies; this is to say AMPS, PRE and PL. As a record company, we have to Join PL as they will be collecting royalties from broadcasts of our recordings. We will register our first recording with PL through their database (Catch). This does not need to go into our expenses as it is free to Join. Irish is also why we need to have ownership of the copyright in the recording. We will also Join a trade association, most probably AIM; this on the other side will enter our expenses as a subscription fee is to be paid.Most of our work will be done in-house though we will have to bring in some specialists when needed such as a lawyer and maybe a PR company. En do not have our own publishing company for the moment but we hope to get it set up after three (3) years. Ere ARTIST En have Just signed our artist, Mandarin, for a five (5) year exclusive agreement for the release of a four (4) track PEP and their debut album. The contract can be found at the end of the document, Appendix A. So we own the copyright in the recordings for minimum of five (5) years.RECORDING ere album will be recorded at Urchin Studios in London (wry. Orchestrations. Co. UK), new studios since 2007, price remains affordable without letting go of the quality side. They are operating with Strokes producer Gordon Raphael. As past clients they have had Emmy The Great, Skin, Jeremy Warmly, Transgressing Records. We will operate on a daily fee of IEEE for a 9 hour day inclusive of all equipment and engineer; we have to look at problems such as overtime which will cost us EWE per hour or such as additional cost hours after pm which are at engineers discretion.It would be lovely to work in Piano Studios (www. Pontifications. Com) but much Model but the costs are much higher so they will be hopefully used as future reference. Just to SE the differences, their daily rate is IEEE all services included but only for an eight hour day. Another solution would be recording the album in Paris as the Band is French at studios (http://studios. Free. FRR/). They are a new studio and the daily costs would be 280? with engineer for an eight hour day which roughly represents IEEE. Hough that recording was going to be much cheaper if done in France but after having a good look round, I will be going with Urchin Studios as the prices are pretty such the same! Hopefully, Mandarin shouldnt take more than ten days to record their album. After meeting Gordon Raphael, we have managed to agree that, as we have no money to put forward, that he will receive a percentage of the income of the recording. The label has agreed to give him twenty percent (20%) of their share. Two extra musicians have to come in for the recording at an hourly cost of EWE an hour each. Equines Model, Marketing Promotion Now the album has been recorded, the labels efforts will be put into the marketing. En have a good month to dedicate to the release of this album working day-in day- UT. As we dont have much money, the cheapest way of doing this, will be by using internet and all that it offers. We know that the record industry is in trouble and the major record companies know it all too well. According to the Pupils most recent figures, physical music sales were down 11% to $17. Ban in 2007, and, blaming piracy -? both CD copying and online file-sharing -? the IF says that overall music sales have fallen for the seventh year running. So how are we going to make money today as a small independent label? Well everything is open! Any business model will o as there are no business models that are leading the way today. En could go free! It sounds insane as we are here to earn money but if music is becoming ubiquitous, through illegal file-sharing and supported by mass storage MPH players, then why not Just give it away?The free model doesnt mean not making money from music of course b ut in a certain way the tracks themselves are treated as a loss and are only designed to promote the artist and drive sales of other associated products, such as concert tickets and merchandise. A good example of this is Examined which is a web service that embraces the free model by helping artists to distribute their music for free, under a Creative Commons license, on peer- to-peer file sharing networks such as Bit Torrent or mule. Jameson users can also discuss and rate tracks, as well as make a donation directly to the artists whose music theyre fans of.Additionally, Jameson has an ad-revenue scheme for artists No set-up-shop on the site. Launched in September 2007, Spirogyra lets users download music for free, in return downloading music, the service requires users to log in to the site and view ads at least once every 30 days, or the downloaded music for the account becomes disabled. Spirogyra is built on a revenue-sharing agreement with participating labels, and currently offers a catalogue of 800,000 songs and 3,500 music videos. The catch, of course, is that you must view advertising in order to download DRY- protected music and video.Tracks from Spirogyra also ca nnot be burned too CD or transferred to an pod, the top-selling digital music player, which is a big problem, although files can be sent to two Windows Media Player-compatible devices or cell phones. Signing up for Spirogyra is easy. You provide basic information, and Spirogyra sends you a link and password to access the site. There Spirogyra inspects your computer to determine if your system meets its requirements. If you use a Mac, find a PC! Which is contrary to the music industry in general!Spirogyra is available only for PCs running Windows XP or Vista and the browsers Internet Explorer and Firebox. You also will need to have Microsofts Windows Media Player 11 installed as the Spirogyra files are packed full of DRY. Once all is in order, you can start browsing, downloading, and most importantly to Spirogyra viewing ads. The first thing you notice about Spirogyra is the advertising. Theres a slender manner ad at the top, a larger display ad along the right side, and when you are browsing for songs, ads for artists like Sonic Youth and Beck appear. The ads are more for the labels than they are for the artists.Even with the ads, Spirogyra site is relatively clean and has many community and recommendation features found in tunes. There are tabs for Genres, Artists, New Releases, Top Downloads, Videos, News, Help, and Your Profile. Prominently featured are listings for New This Week! , Video, Buzz of the Day, What Were Listening To, Breakout Bands, Top Downloads This Week, Featured Artist, We Recommend, and Music News. But Spirogyra doesnt feel like a digital record store like tunes but rather like a music database that returns bland results in the linked 1-9, A-Z format.Searching for bands and artists is very slow. Spirogyra has a $3. 2 million dollar deal with the largest music label in the world, the Universal Music Group, and a few Indies labels. When you finally find the song you want to listen to, you can play it in Windows Media Player but not in tunes! Spirogyra is a nice alternative to tunes and the pay-to-own-your-music model and Rhapsody subscriber alternative. Despite the Arias efforts, people still trade music ND download from sites such as tunes or from peer-to-peer networks.Many of these people have pods, and Spirogyra music will not play on Apple devices! The Pay what you want model: Arrowheads model: Similar to free, the pay what you want model came into the play most recently when Radioed released their new album, In Rainbows, with a voluntary price tag. Only a band such as Radioed can do this, this is out of the question for Mandarin. So an alternative to this would be to make a very similar offer to fans with the difference that they can choose what they like to pay, after t heyve already unloaded and listened to the album first. Magnate is an online music service which has built much of its business around the pay what you want model. Albums carry a low minimum price, with fans able to decide how much more to pay after that. But their contract is not interesting at all as we have seen but they are part of the new business models in the industry Mainstream which is a Pay by popularity model: Mainstream, of which Amazon is a recent investor, is a social market place for artists to connect with fans and promote and sell their music.The site has pioneered a pay y popularity model, whereby transparent market forces dictate the price of music. All tracks on Mainstream start off free, then the more the track gets downloaded, the more the price increases in increments, all the way up to the industry standard of accents. This is in complete contrast to tunes, whereby all tracks are priced the same, irrespective of how popular or obscure they are. The Subscription model: Legendary music producer, Rick Rubin, recently told the New York Times that subscription services are the way forward. Mound pay, say, $19. 5 a month, and the music will come anywhere youd like. In this new world, there will be a virtual library that will be accessible from your car, from your cell phone, from your computer, from your television. Anywhere. The pod will b obsolete, but there would be a Walkway-like device you could plug into speakers at home. Youll say, Today I want to listen to Simon and Garfield, and there they are The service can have demos, bootlegs, concerts, whatever context the artist wants to put out. And once that model is put into place, the industry will grow 10 times the size it is now. However, despite what Rubin says, services such as Rhapsody havent reached mass adoption yet, as it is definitely not clear that people are ready to rent their music. A music tax Model: Its an old idea and one that MUG was rumored to be pushing quite recently: some sort of music tax, possibly collected via an Internet Service Provider. The idea is to charge the customers of Sips and cell-phone carriers a flat-rate fee as part of their data service plan, in exchange for the right to download and share the major record labels music over an Sips network.That way, file sharing is decentralized and the recording industry is guaranteed revenue. Some countries tax blank CDC, or direct taxation through government. All three variations would require the different parties -? including all four major labels and government -? to agree to work together, something which is very unlikely to happen. Through my readings I found a possible interesting idea that I have changed a little. As fans DO want to be closer to the artist, the label could create a kind of fan club, but that has connotations.So calling it Just a subscription to the band seems better. When the band is still young and small, the subscription should remain pretty cheap and flexible. People would pay E/year (less than the cost of a current CD), and hey would of course get benefits such as the following non exhaustive list: direct contact with band members, early access to recordings, ability to request songs at shows or even the possibility to intervene in the creation/recording of a new album as a lyric contest for example where the best lyrics would be made into a song by the band to go on the next album.The label should give the fans their own special IRS news feed so they can be alerted every time the band has a new song for them to hear or whatever kind of news. The subscribers would also get discounts on tangible odds such as T-shirts with a 25% discount. Actual CDC (with bonus features mo vies even games) maybe at a small higher price. Easy access to recorded concerts right after the show they have Just seen, that they can download could be an interesting idea. En the band grows even more, and hopefully expands the fan club; they will be playing larger venues, so they could reserve the best seats for their members.The subscribers could get backstage passes. The membership prices would then be able to rise as the band gets larger. A tour for the subscribers only could be done with 6 venues in the UK for example, reading exclusive gigs only for the true fan. ere label and band are now making money from (a) concerts (b) fans who are subscribed to their service and (c) still from selling tangible merchandise. Fans get to directly support the bands they like. Based on all of this, there is a variety of different business models.What is important is that they are based on (1) using the music as a promotional good to get a lot more attention in a crowded market (2) offering customers what they want, and offering them plenty of different ways to get it and (3) building tremendous loyalty from pappy customers who feel much closer to the musicians and are much more willing to spend money on secondary products (merchandise, concerts, access). Nowadays a label or an artist must Just think about selling the music but have to think about selling the entire experience of the music.When you look at things that way, it means [o dont worry if some of the music is heard for free, because that Just encourages ere first and foremost important act to do on the artists side is to gig as much as possible! What will we do as the label to enhance the awareness that can be generated through these live gigs? Before even thinking of selling merchandise as it co sts money, we would put out a limited 7, 10 or 12 inch vinyl off good live recording. There would be no artwork on the cover so the cost would be very low.It Mould amount to about 1 I.E. for 500 12 inch vinyl. This would be done by Totality Inch is a UK based company. Five hundred to start off is enough as it would be difficult to say how many exactly we will be giving away but as the band is going to be gigging quite a lot to create awareness, hopefully we should have giving them all away in a month on the basis of about three gigs a week which amounts to twelve a onto, hopefully collecting around fifty emails per gig. We will be giving this out for free. Why?Of course to create awareness and give out rich content but we are going to ask something from the people who want this exclusive vinyl, we are going to ask them for their e-mails. Can this be done without giving out something free at a loss cost on the labels side? Well yes, I have looked at both possibilities, why do I choose to put some money into a vinyl? Well I had a look at unsigned bands because they are JNI-known like Mandarin, who only left a mailing list somewhere in the venue for people to sign and there were some emails on the list but to me, not enough.I want for my band that over 50% of the people attending the gig to sign my mailing list. Is this feasible, from my predictions, and what I have seen yes it is! First of all, everybody likes to receive a free gift, it will also make them remember the gig. Instead of Just a piece of paper lying there, I will ask the band to do this after their gig, fans or general attendees will be able to interact with the band and this is the model to follow nowadays. Fans want to feel much closer to the band/artist than ever before, why now?I personally think that it is for the simple reason that it is possible through the internet. What happens if there arent enough vinyl to give away, the fans will be able to sign another mailing list, but they will want something free too, so as I will not want to send a vinyl to them as the postage will be more expensive than the manufacturing of the vinyl itself, they will receive another exclusive gift, this can be anything from the possibility of downloading the same live track or an exclusive died of the song.I will possibly go for the first id ea, as here again I will save money UT I must say I like the idea of giving away different gifts to different fans, it creates a kind of collectors model right from the start though the band still hasnt released an album. Nat is to be done with this mailing list? Will have of course set up my own website for the label, registering my own domain name, and I will of course register with a company that allows me to capture email addresses from email lists to promote further shows, to send a monthly newsletter and different information that will be useful for my marketing.As a gift for my subscribers, a week before the release of the album I will be selling exclusively to them one track for 59 pence instead of the usual 79 to 99 pence. This exclusive one coming out a week before the release, it will remind everybody that the album is coming out in a nicer way than Just a brief reminder email and it will hopefully generate a sense of awareness not only around the artist but around the label itself as one that takes care of its subscribers and fans.Viral marketing over the net would be the easiest and cheapest way of doing the marketing, developing different social network tools such as Namespace, Verb, Faceable, like, Hi for example. Once has of course to monitor as much as possible all the date coming from these tools through Agglutinations for example. As a label, using Last. Fm too is very important, being on as many blobs as possible. Another very interesting tool in the UK is Sub. Tv. For this of course, a video will be needed which costs vary.So for the release of our video, we organized a contest that we advertised in different Film Schools in partnership with the Film schools so that they would provide the necessary equipment for the video to be recorded. The school will have a link on our Infinite for a full year and will get recognition on the video for their partnership. The student which will have won the contest will of course have the chance to record his first professional video and get his name on the video of course and an article on him on our website.We have gone to different schools such as Care International in Paris :http://www. Care-international. Com/), SOAP in London (http://www. Soap. Org/) and The London film School (http://www. Life. Org. UK/). This will be at no particular financial cost for us and will show that we are forward thinking and helping not only Eng music artists but also the other arts! This Video will be used on our waste, social network tools, as the official video for the release. Coming back to Sub. TV, we Nail set a page up for our artist over the net to begin this experience. Sub. TV is an interactive entertainment channel that has created a unique connection with 18-24 Hear olds and is an integral part of todays youth culture. Sub. TV connects with students throughout the day through its screens, website, mobile messaging and events, allowing students to interact and broadcast music, sport and other entertainment content across university campuses. The interactive channel began broadcasting in Students Unions in 2003 and now reaches 1. 5 million students Meekly- thats 32% of all 18-24 year olds. This is at no cost for us either as they are financed by advertisement. So the video will also be on this support. Why is it so important? For the simple fact that this is the age group we are looking at, as the one listening to most of the music and which is in line with the musical genre of Mandarin. En will help Mandarin get some gigs in the UK as they are from France. The venues En will be selecting will range from the Electrostatic club playing at TheSlaughtered Lamb to the Water Rat to The George Tavern to The Borderline and The Ship maybe even the Luminance and the Filthy Mainstay. En will be pitching all the radios from the national ones to the regional ones and of course not forgetting the weaverbirds too specialized and more mainstream. For instance: Brickwork Radio, NAME Radio, CFML. En will get some press coverage, calling music magazines such as The Stool Pigeon, MAJOR. Mandarins music will also be available to purchase on the internet through our website and online stores such as Amazon. Com, Cicada, Coded and of course tunes.