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Re: [ARSCLIST] niche markets
haven't been following this thread in detail, but happened to scan this
post - a few random comments
Most Mosaic sets are 5000 copies, a few 7500 and very few 10,000.
There are units connected to the majors which issue very limited
editions: Rhino Handmade for WEA, Hip-O for Universal - editions
as small as 1500 copies. Back in LP days Columbia had their collectors
series, and licensed some jazz material to Biograph.
And the Wendy Carlos catalog is issued by ESD (don't know if she bought
back her catalog, or if it is licensed, nor do I have any idea
what quantities are issued). Rounder has worked with Columbia and RCA
for their Jimmie Rodgers, Carter Family and Bill Monroe cd's, as have
County and others. Marston has a deal with EMI for their very limited
classical vocal and instrumental issues.
Which is to point out that the small markets are not totally ignored by
the majors.
How these contracts are negotiated is not known to me. I do know that
it must take a lot of work getting to the right person in the
majors hierarchy, and a good music biz lawyer. Some years back I made
an inquiry concerning the possibility of releasing the Lee Wiley
Coral sides (they are now available from a Canadian label, and were
bootlegged in the US-so UMG is losing whatever small income they
could have gotten if they had licensed those sides) and got the usual
first response of 10,000 copies, x percent royalty etc.
I think someone seriously interested in licensing material can get
more realistic terms if they do the work.
Thomas.
Tom Fine wrote:
Hi Mike:
You are very correct about niche marketing, but please look into
licensing fees, mastering costs and required minimum units from the
major companies and you'll see why this is rarely a good business
idea. Do you ever wonder why a Mosaic limited edition is, for
instance, 10,000? Because that's what the major label requires them
to pay for in advance. So a product has to have a rather large niche
to work, hence large chunks of catalogs sit out of print. The typical
big megaglomerate wants this kind of licensing deal -- they'll sell
you a digital master or if you have a thoroughly-vetted mastering
place, they'll lease you the tapes to make a master. Then they want to
do the manufacturing, typically through their Special Products unit.
This requires a minimum-units order and payment. I think sometimes
that price is such that you then have X thousand units to sell and you
can keep all the proceeds. Maybe about a $6-7 per CD net cost, so you
can make a 100% profit assuming you can sell out. So if you can scrape
up X thousand customers, it can be profitable. This definitely works
for certain products -- jazz box sets, for example. And now Mosaic is
doing reissues of single Sony/BMG albums, which will probably be
successful too. Classic and Speakers Corner seem able to license LPs
rights and sell enough records to stay in business. I think they might
have fewer minimum units and do their own manufacturing.
The key seems to be having niches that are big enough, and populated
with customers willing to spend premium pricing.
By the way, there are very smart bean-counters in the megaglomerates
who are very aware of back-catalog and reissue decisions are generally
very sane business decisions for their business models. To some of our
chagrins (including mine), that means a good amount of stuff we'd like
to see in print again won't be. Simply put, we're not a mass market
and not even a big enough niche.
-- Tom Fine
----- Original Message ----- From: "Mike Richter" <mrichter@xxxxxxx>
To: <ARSCLIST@xxxxxxxxxxxxxxxx>
Sent: Tuesday, September 26, 2006 10:46 AM
Subject: Re: [ARSCLIST] CD versus Download was "All hail the analogue
revolution..."
Tom Fine wrote:
Hi Steven:
I think you should do some research. The record industry is
completely youth oriented and baby boomers do not buy the bulk of
the products.
May I suggest that the issue is not majority opinion but sufficient
interest. That is, modern marketing is to the world not to the
neighborhood. When one needed to find customers within walking
distance of a shop, percentage interest was paramount. Even today,
the major corporations in any field are concerned about market share.
But when distribution costs are modest and interest is intense among
a few, a business can do very well indeed with a tiny fraction of the
world market. So EMI or Sony/BMG may turn up its corporate nose at
the market for a niche product, but a specialist publisher may thrive
with the same customer base.
My primary interest in music is classical vocal. The industry players
offer nothing at all to me - Andrea Boccelli and Renee Fleming are
darlings of their product lines and neither has a significant place
in my collection. The relatively few recordings I buy come from
labels the majors do not know at all, such as Opera Rara and Andante
(recently and deservedly defunct). The market leader in classical
recordings is a label known to very few of the 'youth', Naxos.
Mike
--
mrichter@xxxxxxx
http://www.mrichter.com/