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  • 1. Larry Lowe 1 May 2007 MUIN 350 Professor Howard Management Proposal
  • 2. Lowe Key Entertainment – Management Proposal EXECUTIVE SUMMARY Lowe Key Entertainment creates, distributes, and promotes R&B and Soul music. Our vision is to be the leading entertainment company for the best in R&B and Soul music. Our creative environment sets our business apart from others by keeping a balance between business and creativity. Lowe Key Entertainment knows the importance of maintaining and understanding our niche market (African Americans between the ages of 18-30). Our target market is divided into two segments (faithful fans and observing customers). To reach our target segments, we will create and maintain a sense of culture surrounding each project through alignment of our values with the values of our customers. Our goal is to sell 500,000 units of each release. By cross-marketing our products, all products will benefit from the marketing strategies implemented for each product. This will help Lowe Key Entertainment in maintaining a reasonable share of the market for R&B and Soul music. Selling 500,000 units of all four products, Lowe Key Entertainment will have gross revenue of $20,000,000. The range for the cost of producing and promoting such products is $12 to 13 million for all four. Most of the production and miscellaneous expenses are recoupable from units sold for each product. To reach our goals, Lowe Key Entertainment must close the gaps that are between the company and goals. We must assemble a team of talent, gain the leverage needed within the industry, and measure our success to close these gaps. Closing these gaps will help Lowe Key Entertainment become creatively and professionally successful.
  • 3. STRATIGIC CORE Core Principles Mission Lowe Key Entertainment is an entertainment company that provides its customers with quality, ground-breaking soul and rhythm & blues music. We creatively and strategically develop artists by providing creative and economical input and direction. Lowe Key Entertainment strives to create a balance that tailors to the artist’s and the customer’s needs. This balance is achieved by promoting creativity among artists and providing the finances and marketing strategies that reaps a profit without comprising the integrity of the company and art form. Vision The vision of Lowe Key Entertainment is to be the leading company amongst artists for career guidance. Lowe Key Entertainment will grow to include different audio and visual mediums of entertainment to become the leading entertainment entity among its customers. Value/Principle 1Cultural diversity Our company recognizes the advantages a diverse staff can bring to benefit our company. Our goal is to capitalize on our diversity to create a unique culture that differentiates our company from competitors and reflects the cultural backgrounds of our customers. 2Teamwork Teamwork draws upon the many unique talents each employee brings to the company. By working together, our company is able to bring the best products and services effectively and efficiently. 3Moral responsibility 3
  • 4. Lowe Key Entertainment strives to be the leading moral example within the music industry. Considering the effect a decision will have on the company and its customers is the key to maintaining our ethical standards. 4Creative environment Lowe Key Entertainment is a company that balances both the creative and business aspects of the music industry. The company provides financial resources for the artist and creative input. Employees are divided according to expertise. 5Respect for others Our company wants to create an understanding between both the business and the creative aspects of the music industry. Lowe Key Entertainment will take all employee ideas into consideration and expect employees to do the same. Disciplinary action will be taken if anyone of our employees disrespects are takes illegal action causing a threat to other employees, customers, and/or the company. Objectives/Aims Near-Term 1.Hire the right personnel needed to push the company forward for economical success. 2.Have at least 5 talented artists that could be developed in a short period of time (less than 3 years). 3.Obtain the finances necessary to release one of these artists within a year of development. Mid-Term 1.Have the first artist sell more than 500,000 copies of the associated product within a year of release. 2.Have enough profit left over from the first product release to support another artist's release. Long-Term 1.Gain and maintain more than a 10% share of R&B/Soul music distributed within the music industry in 15 years.
  • 5. 2.Have five artists as cash cows selling more than 1 million copies of their product each year within 10 years. Gaps GAP 1: Lowe Key Entertainment does not have the talent roster to run a record label. There are no current artists. GAP 2: Lowe Key Entertainment lacks financial resources and leverage within the music industry because of its independency. Lowe Key Entertainment must increase exposure to gain leverage within the music industry and to maintain its independency. GAP 3: There is also no formulated formula for success. Customers Our customers are largely young African Americans between the ages of 18-30. This demographic is career focused and/or just beginning to form a family. Therefore, it is important for our music to reflect the values of family and work (i.e. parentally advised). Our Customers are divided into two segments. The first segment is those customers that are devoted fans. They intentionally and persistently purchase the releases of our artists. It is important for this segment to have the product available upon release (i.e. digital downloads). The second segment has to be convinced to purchase the product. To reach this segment, we must promote the album through free on-line listening parties and alignment with other products. Music is normally purchased at a discount from rack jobbers like Wal-Mart and Target. Therefore, music is a secondary purchase. It is often purchased with other, mostly non-related, products. 5
  • 6. Marketing Strategy Lowe Key Entertainment strives to reach its market with the best in musical products within the R&B/Urban genre. One way Lowe Key Entertainment will reach this goal is by having a diverse line up of artist that can provide our customers with at least four new products available for purchase within the market. Developing a new musical act at least every two years and gaining a 10% share of R&B/Urban genre will help provide our customers with more than four new quality products for purchase each year. Lowe Key Entertainment is creating a niche for itself within the music industry which gives the company room to grow. It is important to separate our products from others by creating a loyal fan base. Our market is for people who share a love of R&B and soul music. To reach this audience, it is important to use to Internet as a new promotion medium using the right formats, keep in touch with social trends, and to keep in touch with the markets changing needs. It is also important to keep our products accessible for our market. Being aware of the changes within the music industry and maintaining independence are the keys to keeping our products accessible. Our products should also reflect quality for a reasonable price. The mobility of music has made a single song more marketable; therefore, it would be lucrative to integrate the products into other industries besides the music industry. The marketing strategy is to associate our products with economically stable products such as a model cell phone, a popular TV show, or with a movie and/or video game. The best way to reach our market is to allow our product to be accessible on the Internet and to rely on the Internet as a primary source for promotion and revenue. The Internet is known for increasing exposure and has become a very important part of everyday life. It is not only used for entertainment but also for business and work. By recognizing the importance of the Internet, the potential market can expand.
  • 7. Controls A roster of devoted fans should be maintained for each artist. It is important to keep in touch with the changing behaviors and interests amongst our roster of fans. The success of the musical products should be monitored through chart positions. The chart positions will be compared with Lowe Key Entertainment’s past records and with the records of competitors. The number of units shipped, digital downloads, and promotion materials necessary for distribution should also correlate with the number of units sold. All products are expected to break-even. Financial records should be maintained, monitored, and compared to industry records and standards (i.e. Billboard, RIAA, and Pollstar) for consistency and accessibility for investors. By examining the balance sheet, owner’s equity should be assessed also. Contingency Plans Plan 1: Expand financial and artistic resources. a. Develop business plan and hire personnel to help manage the business. i. Write management proposal, marketing plan, and financial plan. ii. Talk to industry contacts about the possibility of working for Lowe Key Entertainment. b. Shop business plan to business investors. i. Talk to industry contacts about investors. ii. Attend parties and conferences for networking. c. Look for five sonically different artists with a local following. i. Attend local shows. ii. Go to publishers’ unsigned artists showcases. iii. Attend college gigs. d. Hire writers and producers that fit each artist’s style. i. Look for up and coming writers and producers at local colleges. ii. Talk to publishers about prospective writers 7
  • 8. and producers. e. Record demos. i. Book studio time. ii. Arrange for producers, writers, and musicians to attend studio sessions. Plan 2: Expand following for artists. a. Create marketing plan for artists. i. Take survey of demographics at local shows. ii. Determine action plan and metrics to reach target market. b. Make websites for artists. i. Determine a server. ii. Obtain legal rights to URL’s. iii. Hire web designer(s). iv. Form fan clubs. v. Hire someone to manage and update the websites. c. Create tour schedule for artist. i. Contact managers and/or booking agents with similar artists. d. Obtain a publicist. i. Get references from industry insiders. Plan 3: Penetrate the market with products. a. Release singles to radio and digital stores. i. Determine a release date for each single to radio. ii. Have singles available for digital downloads on the date of release to radio. iii. Make videos for singles. b. Work with publishers to exploit singles. i. Suggest TV shows, products (commercials), movies, and other entertainment mediums for exploitation. c. Create a tour centered on those artists. i. Release groups of CDS and other musical products strategically around the same time. ii. Implement marketing strategy. iii. Set up meeting with managers and/or booking agencies. d. Proportionately focus on digital and brick & mortar retail. i. Look at industry data to determine what the
  • 9. appropriate route is. ii. Contact retailers about in-store promotion. Financial Metrics Lowe Key Entertainment is going to release four albums by four different artists over a two year period. The cost per unit released, which includes promotion and production, is expected to be in a range of $5.94 - $6.49. Record sales are expected to be above 500,000 in units within a year’s time for each album. Some of the expected budget is recoupable. This includes tour support, production costs, vocal training, cosmetics and living expenses. The range for these recoupable funds is $250,750 – 401,250 per album released. The revenue from all four of these CDs is expected to be at a total of approximately $20,000,000 within two years assuming wholesale is at $10. For One Artist/Album Radio Promotion (3 month range/single) Independent $ 6,000 Low-end Commercial 30,000 – 100,000 (116 Howard) Total $ 36,000 – 106,000 Music video $ 50,000 – 100,000(156 Passman) Distribution (rack jobbers, digital downloading, special retail, etc.) Co-op $ 1.50 per record (142 Howard) Marketing/Promotion $ 3.50 per record (143 Howard) Internet per song (1* charge) $ 0.99 per album/store(1* charge)$ 0.99 per album (per year) $ 9 .98 (blackboard: tunecore) (maintenance and storage) Total $ 2,500,030 *$3.50 per record should also cover these costs: promo copies, manufacturing of singles, the hiring of independent publicists and promo people, postcards/fliers, web site design and keep up, magazine ads, and sales personnel(s). Possible Tour Support $ 100,000 (Brabec) Miscellaneous: Cosmetics Booklet Design $ 10,000 – 15,000 (93 Brabec) Photos (2-3 hours) $ 425 (Tarrice 9
  • 10. Love) Stylist $ 1,800 (NY Image Consultant) Make up $ 485 – 855 (BDG) Hair $ 35 – 120 (NY Image Consultant) Total $ 12,745 – 18,200 Production costs $ 100,000 – 250,000 (88-89 Brabec) Vocal training $ 750 – 1,250 ( Living Expenses Artist $50,000 (Per artist) Entrepreneur $120,000 (Two years) Total $ 170,000 *Artist’s living expenses are recoupable. Operating Expenses $ 0 – 2,000 *Includes rent, utilities, office supplies, etc. Total $ 2,969,525 – 3,247,480 Total (4 albums) $ 11,878,099 – 12,989,920