Entrepreneurial Small Business 4th Edition by Jerome Katz ,Richard Green

Exercise 16

THE STORY BEHIND SIGNS AND SIGNIFIERS
What happens when the distribution channel itself is falling apart Up until the threshold of the new millennium, there were six major record labels that were the source of all hits: BMG, EMI, Polygram, Sony, Universal, and Warner. If one of them didn't pick up your band, you lived in poverty and obscurity. By 2011, the industry was in disarray. More music was being sold by more companies than ever before, because digital distribution of MP3s made obsolete a lot of the manufacturing requirements and expenditures of the big record labels.
So with the old giants in trouble and hundreds of small distributors being super-specialized by genre, like
Reggaeinc.com for reggae, how does a new talent get recognized by the public
That was the problem facing JD McPherson, who was an art teacher in the outskirts of Tulsa, Oklahoma, who had a long-time fascination with old rock-and-roll, rockabilly, and R B. He dreamed of developing a record using the old styles and technologies of music combined with the best aspects of postmodern music like the Clash and the Pixies. He put together a couple of songs and connected with producer Jimmy Sutton via My Space. Sutton liked what he heard and the two exchanged music and ideas for months via the Internet.
After about six months, Sutton finished his new Chicago home and all-analog studio-complete with old-fashioned microphones and a studio-grade tape recorder, and McPherson arrived with his ideas for an album. Bringing in Alex Hall, who handled the engineering and drums, the three banged out the album called Signs and Signifiers in a week in 2010, produced on Jimmy's own Hi-Style Records label. JD figured to get the MP3s out to the public and to take gigs to build his fan base-the usual distribution model for part-time musicians.
JD's general goal of growing his music changed gears when he was laid off from his teaching job. That motivated him to do whatever it took to make a success of his music. And that probably meant getting picked up by a record label, even a mid-sized one, to get a broader distribution through the multiple channels every record label cultivates full time. The key to the strategy was to make enough noise and visibility to get some label attention.
To accomplish this, JD and Jimmy approached building distribution like the record itself, involving the old and the new. Sutton made a limited run of actual records to send to key decision makers to grab attention. Meanwhile JD and Jimmy made a YouTube video ( www.youtube.com/watch v=aZGn4LncY0g) of the track of the album, "North Side Girl," and pushed it to their friends and followers. The video went a bit viral, getting 350,000 views within a few months, dovetailing with the attention the records received from key music gatekeepers including those at National Public Radio, who named JD an "artist you should know" in 2011 ( www.npr.org/2011/12/07/143267601/5-must-heardiscoveries- of-2011-from-kexp ), and continued to like him ( www.npr.org/2012/05/18/153000478/jd-mcphersonwhen- a-punk-goes-vintage ). The question was, would this be enough to get the attention of a record label, and enough ahead of other musicians to get a distribution contract
What are the financial trade-offs of the two approaches What is the benefit of each approach