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Impulse Records

Executive Summary

Impulse Records is an unusual business model for a record label. The company is founded by Jevgenijs Locmers where the business operates to promote several Riga (Latvia) local based bands.

Products and Services Impulse Records is a Riga based record label for a select group of Riga based bands. Impulse Records has adopted the business philosophy that for long term sustainable growth it will be more successful for the label to sign up just a few bands and promote them equally than to sign up a bunch and hope one is a commercial success, enough to float the rest of the bands. This approach is quite appealing to a few bands. It provides the bands with the intimate and specialized focus of the label. The bands recognize that fact that this label will be working hard to promote just a few bands and that they will not be lost in the shuffle.

The Business Model In order for this record label to succeed, a lot of sweat equity will be required will little to no revenue stream for the first year. For Impulse Records it helps that these realistic expectations have been established up front, and will not be an unwelcome future surprise. Additionally, the investors (friends and family) are aware of these parameters and have given their blessing. It will take a lot of work to pull this off, but with reasonable expectation up front and the right management to execute on the business model, it will happen.

• Objectives
• To become the premier local music label, based on CD\Digital Music sales, within three years.
• Sign at least five groups within the first three years.
• Reach profitability within three years.
• Mission

Impulse Records exists as a locally based record label whose mission is to promote local music groups, increasing live appearances and record sales. Impulse Records has been established to promote its bands and at the same time make a fair profit.

• Keys to Success
• Choose promising bands to promote.
• Do not sign up too many bands; otherwise the effectiveness of promotion will be diluted.
• Work hard and have fun.
• Company Summary

Impulse Records is a start-up organization that has been founded as Riga (Latvia) based SIA. The founder is Jevgenijs Locmers. The company was founded in June 2009

• Company Ownership

The company has been founded and is primarily owned by Jevgenijs Locmers. Mr. Locmers has invested 10,000£ in the business and will seek additional investment money from friends and family.

• Start-up Summary

Impulse Records will purchase the following equipment needed for the start up phase of the business:

• Personal Computer
• Audio Hardware
• Audio Monitors
• Mixing desk

Impulse Records will initially be located in Jevgenijs' home. For years two and three a small space will be used primarily for inventory management and sales operations.

Impulse Records will be operating on no revenue for the first year with low overhead. Impulse Records will rely on the owner's investment and money from friends and family. It will be too difficult to secure bank debt due to the long period of time before revenue.

Jevgenijs will not take a salary for the first two years. This becomes less important since he will not be securing unfamiliar investors or bank debt which typically wants the principal to draw a salary. For the first year Jevgenijs will be making investments of sweat equity.

• Products and Services

Impulse Records is a new, Riga (Latvia) based record label. Impulse Rec. choose different approach of Bands, CDs and Digital Music promotion and will concentrate on several local bands instead of competing with large labels, by working with only a few bands at once, Impulse Records will be more specialized with good level of attention to services for the bands. This will be the competitive edge, the difference that no other record label can offer.

Impulse Rec. will begin with the production of a compilation CD which features many different local artists. If a Band decides to put additional single on a CD this will bee free of charge, in fact Bands are encouraged as it gives a visibility outlet for the band. That will be an opportunity for bands that are trying to gain visibility on the local market as Bands are interested in having as many people become familiar with the product, since as popular the band is becoming as it becomes more likely to secure live gigs and possibly produce a CD and receive revenue from CD sales. Within the first year Impulse Rec. aiming to produce two compilation CDs, these will be free of charge for the bands and there will be free distribution of the CDs. Enough expectation and anticipation for the up and coming bands will allow Impulse Records to soon begin to charge for releases.

At the same time that the CDs provide visibility for the respective bands, it provides visibility for Impulse Records. They need to be known as a hard working/promoting record label. This is important because the stronger the label appears, the more attractive the label becomes in terms of being an exclusive promoter for a band.

While the compilations CDs are released, Impulse Records will be working with a variety of parties for networking purposes. The first is local radio stations. Being able to get air play for the CD depends on relationships with the key decision makers at the various stations. Impulse Records will also be working with various record stores, developing relationships with them so that as some of the bands on the CDs become known and there is consumer interest, Impulse Records can begin to sell the CDs. Lastly, Impulse Records will be working with the different clubs to get the bands live gigs. Playing live to local crowds will be one of the most productive activities in terms of developing fanfare.

As the bands begin to sign on, the next tasks are to assist in the production of a studio CD for the band. The CD is cut key activities will be aimed at record sales and live show production. These are key activities as these are the sources of revenue for Impulse Records, CD sales which occur at record stores as well as at the live shows.

• Market Analysis Summary

Impulse Records will target two primary market segments, record stores and consumers at live shows. These will be the sources of income so they will be the main targets. Initially, Impulse Records focus will be to develop visibility within the community, enough to be able to sign up bands which are the key to revenue generation. The need to sign up bands will drive the marketing activities that Impulse Records will undertake in order to generate revenue in the future.

• Market Segmentation

Impulse Records has identified three target market segments which will be the main targeted customers.

• Record retailers- This segment sells CDs to the end consumers. This is the retail channel that typically moves the greatest quantity of CDs. The ability of the record stores to move decent quantity takes time, it does not occur initially. The bands must develop a name for themselves, through the compilation CD release as well as through live performances in order for the record stores to be willing to sell their material. This customer segment will be used to sell the compilation CD and band CDs eventually, although not initially.
• Digital Music Sales – This segment sells digital music (mp3) on internet and World Wide Web basis. It is the easiest and most practical way to sell music in our days, in order for this segment to take place WEB page/portal has to be created and maintained on daily basis.
• Consumers at live concerts- This segment attends live music performances, typically at the local level. While at the show, enjoying the music, they often purchase a CD of the band that they are currently viewing. This is, more often than not, an impulse purchase. They hear the music, they are impressed and they decide they would like more material from the band. Additionally, the patrons will also purchase the compilation CD as a means of hearing new music.
• Target Market Segment Strategy

Impulse Records has chosen these three distinct market segments because they are the main source of revenue. Impulse Records will remain focused on their important marketing activities aimed at developing visibility for the record label, however, ultimately it comes down to CD and digital music sales for business viability and the record stores and consumers at live performances being the source of this revenue. This is a fairly intimate industry; most of the industry participants within a region know each other. Keeping this in mind, networking will be the most efficient and effective activity. The only way to get into record stores is by showing potential record sales. The way you begin to do this is to have good contacts within the stores to get the right people to listen to you.

Another source of revenue will be the buy out of a band from their Impulse Rec. contract in favor of a larger, national label. These events will not be marketed for; they will tend to occur on their own.

• Service Business Analysis

In general, the record industry, at least when based on overall sales, is a highly concentrated national industry. There are several huge international corporations that control the bulk of record sales. For bands looking to break through into national stardom and significant record sales, this is the distribution/promotion channel that they must concentrate on.

There are also the "Indie" labels which are broader than regional companies, but do not have the same breadth as a national player. The Indie labels can be quite large; they just tend to do business in less commercial ways. Many Indie labels can support national acts who are professional musicians.

The last segment of the market are local record labels who typically support musicians who are not professional in the sense that they typically have day jobs that occupy their time in addition to the musical interests. There are very few labels that will only concentrate on a specific city such as Impulse Records in Riga; it is often too difficult to concentrate on such a small audience. It is certainly a viable business model; you just need to be strategically focused to pull it off.

• Competition and Buying Patterns
• National record labels- These distributors care about one thing, CD sales. The more CDs they sell, the more money they make. Bands do not get much individual attention. They are carefully trained to develop mass appeal. These companies' mantra is widespread acceptance, not niche fringes.
• Indie labels- These companies are also quite concerned about CD sales, however they tend to choose bands with less commercial appeal and exploit whatever niche that band exists in. This competitor also faces the pitfalls of not being able to offer specialized attention as their "reach" is also quite broad. They are basically a smaller, better behaved version of the large record labels. They are only concerned ultimately with CD sales, and achieve these goals with less commercial means.
• Regional labels- This is almost a catch all gathering of labels, with so many different types participating in the space. Some labels are similar to Impulse Records where CD sales are key, but are looked at more holistically so that a band's health and popularity is concentrated on, recognizing that if this is addressed, CD sales will fall into place. There are also many different types of labels that represent a large number of bands within an area, not having the same reach as the larger companies, and not caring much about the bands themselves, just like the larger labels.
• Web Plan Summary

Impulse Records’ website will be an excellent source of information dissemination and CD/digital music sales.

• The different bands will be listed with information about their music, bios, etc.
• Music samples of the bands will also be available. The samples will be available as streaming media as well as downloads in a compressed format.
• Touring dates will also be posted on the site encouraging people to attend the live shows.
• CDs/digital music will be sold over the website. Sales info is captured under sales forecasts. The e-commerce module to the website will be outsourced and the costs are captured within direct costs of goods sold for online sales.
• Website Marketing Strategy

The site will be linked to the various Riga entertainment guides such as Sound Division, The Depo, Salamandra etc. Impulse Records will also submit the site to several different search engines. Lastly, the URL address will be prominent on all printed material and correspondence.

• Development Requirements

The site will be developed by a computer science student.

• Financial Plan

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