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Independent versus the Enterprise
By Jerry Flattum - 07/24/2001 - 04:04 AM EDT

© 2001, Jerry Flattum.

Coalition for the Future of Music: "No longer will corporate media and big money be able to frame the discussion of music solely in terms of their industries, as we draw together the strongest voices in the technology and independent music communities to address questions of music in the marketplace with a clear-eyed focus on the interests of the artists."

Intro
The love/hate relationship between songwriters—or any artists—and the industry that supports them hinges largely on one major conflict: commercialism. Since the days of pleasing kings and queens, artists by nature are leery of needing anyone else to bring their “art” to the masses.

But popularity has its price. The concentration and focus it takes in devoting oneself to one’s art leaves little time for the demands of everyday life—the demands of business. If the goal is to reach the largest audience possible, it takes resources. It takes a team.

Many artists have achieved astounding success and it would not have been possible without the star making machinery, the media and a vast complex system designed to maximize sales and popularity—on a global scale. The check and balance system is one where the artist wants insurance against rip-offs, burns and bad deals, while at the same time reaping the rewards of what is sometimes phenomenal wealth.

Commercial or non-commercial, mainstream or underground—art needs to reach an audience and artists need to earn a living. Signing a deal with a major music company works just fine for many artists and using sex, soda commercials, product endorsements or huge fancy stadium shows is a perfectly acceptable way of doing business. So it’s a choice. An artist doesn’t have to do these things.

The same obstacles faced by an independent are no different than what a major conglomerate faces, from product development to marketing strategies, from distribution to copyright protection.

Learning the current strategies that corporate managers use in the current Digital marketplace is critical to understanding not only how the industry works but also how you must function as an independent, apart from your creative endeavors. The purpose here is to render the artist as more of an opportunist than a victim of corporate machinations, technological changes and industry shifts.

Introductory Terms
The following terms are introduced: Independent Content Creator, Content Provider (or Content Aggregator), Content and Content Management.

An Independent Content Creator (ICC) is any artist, writer, musician, filmmaker or designer determined to market and sell original work Direct-to-Consumer. The ICC’s goal is to achieve Inception-to-Market.

The ICC can be a single person or a group, such as a band or design firm. An ICC is an independent contractor—a one-person operation. However, an ICC can also run a small business, design team, recording staff, etc.

The ICC is differentiated from the major Enterprise or Content Provider (CP). Content Providers are also referred to as Content Aggregators. In the context of the entertainment industry a CP is an enterprise that owns, licenses or manages catalogs and/or archives of Content, such as a music company (music label and music publisher), movie studio or book publisher.

CA’s are also retailers and wholesalers or online distributors like Napster and Amazon.com. CA’s collect, store, process, develop, market and distribute Content. In the product-to-market life cycle, aggregators can be involved at any step in the cycle. Record companies, movie companies and publishers manage “rosters” which are stables or pools of talent that generate Content on a regular basis.

Content
Once called Product in the Industrial Age, original works of art—Intellectual Property—is now called Content in Digital Age parlance. Content Management exists on many levels depending on the nature of the Content. Enterprise Content is any information that can be transformed digitally, such as employee, legal, marketing or tax information. Content on the Internet includes websites and any information that can be distributed from one computer to another.

All of the mp3’s archived and distributed by Napster or other “Peer-to-Peer” file sharing distribution service is collectively known as Content. Content is also all the information contained within a single CD or video/movie and/or the information contained within a single song or book.

In print, Content ranges from a single character and its respective font to complex syndication solutions for major CP’s like newspapers, magazines and their respective digital counterparts. The Contents of this article are the words used to express ideas, illustrate concepts, present arguments and inform.

Content is one idea, feeling, image or sound put into fixed form such as text, graphic or recording. Documents, drawings, sound recordings and film is Content in fixed form. An idea cannot be copyrighted. It must be in fixed form.

Content Management falls under the umbrella of Information Management. Other forms are Asset Management, Media Asset Management, Data Management, Digital Rights Management and Knowledge Management.

Off To Market
For every rock star with a number one hit, every book writer on the Times best seller’s list and every script writer with the latest summer blockbuster hit, are 1000’s—if not millions—of musicians, writers and filmmakers wearing the label of unknown.
There are no shortage of films, CDs and books. The industrial models of bringing artistic works to market have worked just fine. The artistic gene pool—if you will—has evolutionarily “selected” the crème de la crème and netted countless audiences with treasures sometimes lasting lifetimes. The market bears its fruit and audiences pick from the vine caring less about what falls to the ground.

For every standard of what is great is a counter claim of trash. Is Mickey Mouse art? Is rock and roll the devil’s playground or a way of finding meaning and expressing love? Are movies life-changing in their impact or just an endless series of car chases and gunfire?

Billions of dollars are spent on what many believe to be junk. From candy bars to silly putty, from trinkets out of a penny arcade to pet rocks, the market does not operate exclusively on designing products and services that are meaningful or useful. Quality is defined in terms of sales, not necessarily its entertainment, emotional or educational value.

The Conservative Mask
The Enterprise goal is getting the product out there—getting it sold. Of course, Enterprises operate within moral and legal boundaries. Recording companies, Hollywood studios, major book publishers and other CA’s are controlled systems that allow questionable Content to flourish within while maintaining a relatively conservative and respectable outward appearance.

Accounting systems continuously pass audits, taxes are paid, charities are supported, and employees receive fair market salaries and benefits. The corporate culture is everything professional, from dressing appropriately to maintaining set routines and keeping conversations within the business domain.

The Artist’s Mask
Artist’s might dress funny and live unusual life styles but their goals of success are not any different than the goals of the Enterprise. The Enterprise is a projection of the artist, something akin to a split personality. Being artistically free means not having to handle the responsibilities of business.

Digital Options
The Digital Age is an age of role-playing. Artists become the Enterprise. Now artists can deliver a finished product Direct-to-Consumer without the need for any “middleman.”

Technology that once resided in the domain of expensive and hi-end recording studios is technology now available to the average consumer—all you need is a computer. The sophistication that goes into audio processing is readily available to the amateur musician in the form of software—the same software professionals use to generate finished product.

In the Digital realm you don’t need a fleet of trucks or a chain of radio stations. But, you do need a reliable website hosting solution. The musician can “stream” or broadcast via the Internet in the same manner as radio stations, without the limitations of signal range.

The Direct-to-Consumer Model
The Direct-to-Consumer model is the same as “On Demand.” This means a consumer can download Content without going through traditional 3rd party outlets like retailers.

Digitized entertainment is no longer fixed in a physical format, i.e., photos fixed on photographic paper, 35mm film transferred to VHS format, music recorded on one inch master recording tape, etc. Music (graphics and text) can be created, marketed, distributed and played back all within the digital domain. Even the human voice can now be sampled and manipulated in the digital realm.

Getting Big
Aggregation is the dominant force in the marketplace. In simple street terms, it is the goal of acquiring as many properties as possible. Publishers, media conglomerates and many other businesses and enterprises pride themselves on the size of their catalogs as well as the size of their operations. A larger enterprise means greater resources and it is assumed greater customer satisfaction.

If Madonna, Red Hot Chili Peppers and Ricky Martin decided to go independent, the entertainment industry would experience a total upheaval in infrastructure and in the ways of doing business. Elton John is one of many big names on his record label’s roster. Elton John is important to the company, but the roster is even more important. Being part of a roster increases the chances for sales because the “aggregate” feeds itself.

Barriers to Entry
Individuals rarely operate alone. A writer needs a publisher. A songwriter needs a band. A web designer needs outside hosting solutions. A moviemaker needs a cast and crew and a distributor.

Because an artist has access to all corners of the globe does not necessarily mean such connections are made. How is a listener made aware of a new CD being offered on a website in a vast network of millions of websites all competing for attention?

An artist—a filmmaker, for instance—has no less of a complex situation in making, marketing and distributing a single film than a CA has in selling 1000s of offerings via a catalog/database.

Risk
Risk is unavoidable. The excitement and glamour generated by the entertainment industry—whether it’s the launch of a new Broadway play, the release of a new band or the announcement of a movie premier—the anticipation comes from the question, “will it be accepted or will it be rejected?”

In Hollywood, there are tried and true methods of ensuring some degree of success. Using name actors and experienced writers and cinematographers significantly increases the chances that the final product will be something audiences will enjoy. Although relatively unknown to the public, both old and new recordings often feature top studio musicians, insuring the highest quality of musicianship.

But asking audiences what they would think of something before it happens is asking the impossible. It’s simply not their job. Using the band Police as an example, no one could’ve predicted the blend of rock and reggae would forge a new niche in genre creation. Who knew that Harrison Ford playing the role of an anthropologist in an action adventure would make movie history?

Risky New Blood
New artists do not have a proven track record. And proven track records are no guarantee of success. Big names are not either. New stars (writers, artists, etc.) are born every minute and the industry thrives on new blood while it tries to maintain status quo.

The industry is full of upsets. Very successful films and artists are initially rejected across the board by all the major studios all the time. From the Beatles to the Police, dozens of bands are famous for being rejected by the major record companies of their day. The saga continues where even big name actors who want to produce a certain movie are rejected by the very studios that made them stars. This kind of activity is what generates new work in pioneering ways and forces artists to seek new ways in bringing their creativity to market.

Often bands, writers, movies and live shows develop what is called “cult followings.” These are non-mainstream audiences who become devoted and dedicated fans of performers and works that are not considered mainstream or do not do well in mainstream markets. The Rocky Horror Show is a prime example. The now-extinct rock band The Grateful Dead is another.

Creating an Identity
Cher and Madonna would never be caught dead wearing the same thing twice. And actors are endlessly searching to stretch themselves in fear of being typecast. Musicians work hard to create live show line-ups that intersperse new songs with the old. Artists need to stretch and they need a security net when the risk is too great. But the unwillingness to take a risk can seriously inhibit artistic evolution.

The paradox is one of finding freedom within a niche. And many artists are happy working within a set of boundaries. The same applies online. A country-styled website is unlikely to have appeal to those in search of trance or gothic.

Bundling
So what gets marketed and sold and how risk is minimized centers around the competition for expendable income. But record company aggregators know that most people have CD, cassette and DVD collections that span across entire ranges and genres. They know they buy more than once and they know they buy on a regular basis. So they create a pool—a swirling pool of products that at any given time anyone can just reach in and grab something they like. It’s done at random. For the enterprise…bundling works.

CA’s that generate compilations under umbrella headings like genres or decades also do a disservice to those not included in the compilation. Those included will benefit and compilations are a way of moving product that has otherwise fallen out of favor. But for every one that gets included, dozens more are left out.

But in this competitive swirling pool of product, when you “bundle” yourself as an artist, song or CD on a site like mp3.com or Napster, you can get lost in the shuffle. There can only be 10 songs in a top 10 list at any given time.

Resources
Without the creators there would be no aggregators, managers or administrators. However, as the business of selling intellectual property became more sophisticated through the 20th century, the relationship between artist and enterprise became symbiotic. The line is essentially drawn in mass marketing.

Mass marketing resources are found in the areas of production (manufacturing), marketing and distribution. These areas traditionally require huge staffs and 100’s of employees to make possible. But, a clue for the Digital Age is that one single work can generate millions of dollars—a work created by one individual.

At a buck a pop—per mp3—this means an artist would need 1 million online customers to reach platinum sales.

Copyright and Licensing
In traditional copyright and licensing arrangements, authors retain the original copyright but must give up certain rights to a publishing and/or production company. The work is then licensed for use in other markets. Ultimately, agents, managers, publishers, producers and licensing companies all share in the profits generated from the sales of intellectual property. Also, copyrighting and licensing are major components of Content management requiring legal expertise and astute administrative skills.

In the Digital realm when selling Direct-to-Consumer, no one shares in cuts of the pie. There are, of course, hosting fees, merchant account fees, and any costs association with producing the mp3 and respective website. Also, protecting the music file means finding an encryption solution.

Local versus National
The entertainment industry markets locally, but only within the context of a national/international system or framework. Demographic variables in local marketing and distribution strategies are considered within the larger picture of a global market.

The same limitation an ICC faces in competition with major Content providers applies to Local Area Networks in competition with national and international Wide Area Networks. A local radio station does not have the production resources to generate programming that competes in terms of quality compared to national/international broadcasters.

Hi-speed digital transmission rates and increased global access will open up channels for a single location distribution scheme. Physical barriers are eliminated. The quest now becomes drawing customers to a single online location—a single website.

Tools for the Digital Trade
What are the tools a Content creator can use to create, market and deliver Content direct to consumer? First is the toolbox—a website. The website is first a storage bin for the display, storage and access point for the artist’s Content or service. How the site is designed is as crucial to the artist as any site is to any other kind of business or online venture. The site’s appeal, quality of Content and access to the site are critical value propositions. Once these tools are in place, the tools of marketing and advertising take over.

Websites can be designed and maintained by one individual. Today’s web site is a combination of a publication, a software application, and navigation system. A website is also a product. It is an information source. It is a marketing tool. It is a showcase. It is an entertainment vehicle. It is an interactive catalog. It is a multimedia extravaganza, incorporating and integrating virtually every media in existence, from text to photo, from film to CD.

Hosting solutions have become much more user-friendly, offering a wide range of services from eCommerce and business management solutions to design and access solutions.

Companies like Symantec—well known for Norton Anti-virus—provides suite of software solutions that are enterprise/ICC neutral. Both individuals and organizations benefit from Symantec’s suite of Content management software solutions. The customizability and scalability of Symantec products is a true indicator of how the lines between an enterprise organization and personal enterprise become obscured.

Rocket Network allows individual music creators to collaborate from all points global. It uses an audio production and session management system. At the same time, users (ICC or CA) are also able to search for and hire talent from a global talent pool and access online licensed music, sound effects and samples.

Licensemusic.com’s mission statement includes, “Our new, international affiliation program geared to web production companies, advertising agencies, internet application providers, software companies, production houses, sound editors and other companies in the Content creation business.”

Licensemusic.com has the same goals as an ICC, but at the enterprise level. They function like an ICC, but they also provide solutions for the ICC, i.e., web designers, agencies, software developers, game developers and web application service providers that have audio needs.

Check and Balance
The ICC needs a check and balance system or auditing system. Operating alone or with limited support, the ICC has the tendency to try and do everything. The strains on time, energy and resources can bring to ICC to critical states that can threaten the health of the business or even the ICC personally. Enterprises are pre-staffed with consultants, attorneys and advisors or varying sorts. Frequent staff meetings and coordinated communications keep management abreast of ongoing developments and changes.

While developing Content, an ICC can miss developments in other areas like technology or unforeseen changes in the marketplace. Information access is crucial and the ability to process and act on that information is critical. The president of an enterprise has many channels that feed information and the greater access and processing of information the better informed is the decision-making process.

Using the Media
The media is the handmaiden of CA’s. The media is also responsible for “shooting stars,” that is, artists that rise to popularity in a relatively short time. The media can catapult an artist or work into the limelight. After that, it’s up to the artist to maintain longevity. Artists must traverse the times. Trends and styles change whimsically.

The machinery that goes into making a star or megastar cannot be underestimated. It is highly unlikely for an artist to become as big and/or popular online as an artist with access to both online and physical resources. Artists like Brittney Spears, Pink Floyd and a host of others became icons not only because of their talent, but also because of the videos they made, the live radio and TV interviews, the endless global tours and full access to the media.

Stage shows are lavish, huge and very costly. The impact this kind of show has on an audience is not something that can be duplicated or replicated online.

Getting Personal
Therefore, if a product is to be finished and delivered direct to consumer online, it has to be marketed in a more personal way and not a broadcast way. The exception here is a “netcast” of a live performance where thousands of listeners tune-in at the same time.

The difference is that such a broadcast can be saved as a file and downloaded later. So viewing the “live” show in virtual time becomes relatively meaningless. A person sitting in front of a computer screen viewing a “live” show at 9 pm versus 5 minutes after 9 results in little difference in terms of the experience. In the physical realm this is different. Attending a concert is an experience because so many experience the same thing in different ways at the same time. At atmosphere or ambience is created.

The digital realm is not a group experience, at least not a group that experiences something at the same time. Ironically, a much larger group—or community—can experience something far beyond the collectiveness of a live concert performed in one place at one time.

Summary
There is an "energy" generated by live musicians and a live human voice that still defies digital replication. And the real test is in live performance. Audiences are unlikely to want to watch a digitized avatar born out of artificial intelligence, singing and dancing or performing Shakespeare-except for the novelty.

For the ICC with the right connections and a lot of luck, Content Management strategies become moot. But in return for corporate support the ICC gives up profits and control.

The rewards for many Content creators far exceed the punishments of doing business with an Enterprise. Again, the enterprise has fleets of trucks, radio stations and retail outlets at their command.

The exception is when an ICC takes on the attributes of an enterprise and becomes a Personal Enterprise. The ICC also takes on the risks and hardships associated with doing business in the Digital Age.

Complaints from independents and SME's (Small and Medium Enterprise) who haven't nearly the resources to implement ideas, products and services as their bigger enterprise counterparts are legitimate. But many of these complaints bear little sympathy in a world that has no problem pumping out CD after CD, book after book, and movie after movie. Those who have "made it" are where the story begins and ends by many standards. In a hardliner approach, it's as though the industry collectively says, "They made it...what's your excuse?" In the Digital Age--you're on your own...sorta.



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