Jan 17, 2013 - Business, management, People    No Comments

Death of the CD?

Dido_Brown

Dido Brown is not only a musical genius, he is also a business master mind.

We first met in Japan when he was touring with his group Bonafide Crew and I was fortunate enough to be able to spend some time with them on the road while travelling from Kanto all the way to Nagoya over the span of a week.

Dido is short for “Bandido” and I am sure it is pretty evident that this is not his real name but the artist persona that he has created for himself. The name itself hails from times growing up in some of the roughest neighbour hoods  of Southern California and having to both survive and provide for himself from a very young age.

Choices are few when life is rough and if you listen to some of Dido’s music you can hear the reality and the pain of the things he had to go through to make it out of a reality that is too harsh for most people to ever endure.

Life catches up with you though and it did with Dido as well putting him behind bars for years to pay his dues to the society that has failed him.

And then he became really smart….

Making music was something that he had done for years but simply being good is not enough to create a prosperous business. This holds true for all business in the way that “simply having a good product does not guarantee success”

Know your market

The United States, California in particular is a car culture and people tend to spend more time in their cars than anywhere else in the world. The whole infrastructure is built around it and so when you go shopping for a coffee, clothes, food or anything else, you go in your car.

The result being that Southern California, if not the whole United States, is littered with huge shopping malls with parking lots that reach as far as the eyes can see

Know your customer

When it comes to music you might argue that pretty much anyone is a customer which is true but at the same time you have demographics for the type and style of music you create. Dido’s customers are the average working class people of Southern California. These people can relate to his music since it is delivered in context in a way that it is not for people like me who live in Japan.

The birth of the “Parking Lot Hustle”

Out of the system Dido set his mind to organizing street teams which would sell the music that he and his team produced in the legendary San Diego music studio known as “The Bat Cave”.

Dido has told me many times that he sees himself more as a social worker than a business man and this is clear in the way that he organizes his teams. Usually he rents an apartment and furnishes it for up to 10 people to live together. His teams eat, sleep and work together and all support and push each other to do more and better. This in itself is a safety net for young troubled males who without constant supervision often fall off the wagon and into a life of crime.

To reach economies of scale it is necessary to sell quite a high number of CDs but it turns out that if you can do it the rewards are there for the taking. First you record a CD, print the artwork, get the cases and the inlay and finalize the product. Your order your volumes and make sure you get as low a price as possible per item.

Normally, in the parking lot hand-to-hand a CD will sell for 10 dollars on average. Now with good levels of sales you can get the same CD wholesale for 1 dollar. So believe it or not but the profit rate for the business that Dido has set up is a whopping 900%. How many business do you know that can put up those kind of numbers??

But I have never heard of Dido Brown you say?

Without signing up with one of the big record labels an artist is never going to get the international exposure needed for most people to ever hear about them. What they do not tell you though is that the marketing cost for doing this kind of promotion comes straight out of the artist’s pay check.

So Dido is happy to stay “independent out the trunk” as one of my favourite songs of his is called and last I heard he still keeps pushing his business forward on the parking lots of SOCAL.

I have the good fortune of having the opportunity to go out to California for a conference next month and am hoping that I get the chance to see my friend Dido again. I want to speak with him about the death of the CD as a delivery system over the next 5 years and how he will have to adjust to survive.

But chance are he is already way ahead of me in this area as well. After all yo do not sell 2 million CDs  from the trunk of your car at a 900% profit rate without having both some serious drive and skill.

You do the math!

 

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