Ron Suarez and I dissect the business model of his new company, PromoVUZ. PromoVUZ is targeted at independent musical artists who want a low cost, digital means of promoting and selling their content. We discuss the revolution that is sweeping digital music distribution and the role that services provided by companies like PromoVUZ play.
In this podcast (download ipod compatible, 175MB), Ron Suarez and I discuss his new venture, PromoVUZ, which took runner up in the Great Lakes Entrepreneur's Quest. In a sentence, PromoVUZ offers promotion and marketing tools for independent artists. PromoVUZ allows artists to track the audience that is listening to their promotional content and who is purchasing their songs.
PromoVUZ has partnered with Dick Huey of Toolshed, a digital media marketing firm, and Tunecore, a digital distribution firm, in developing and marketing his tools. Both partners also focus on independent artists. PromoVUZ and its partners offer tiered services to their clients with bargain basement entry level pricing. For instance, PromoVUZ will warehouse one song on the Internet for one year for $10. Tunecore and Toolshed have similar business models where they charge the artist for their services, often offering starter packages at very low rates.
Obviously, this business model differs from the traditional record label where the label signs an artist to a contract and then subtracts promotional and marketing fees from CD and other proceeds. As Courtney Love recently noted, the costs record companies charge back to artists are enough that most bands only earn very small wages for the albums they record if they earn anything.
When I asked Ron how he was able to do it for so much less, he pointed out that he had eliminated many middle layers that required significant compensation. It should also be noted that PromoVUZ has high technology leverage. Almost all of their entry tier services are fully automated, not requiring human intervention. PromoVUZ's more premium priced service offerings do require human intervention and are priced accordingly. Nonetheless, because of PromoVUZ's technology leverage, the overall cost still continues to be much less than may be typical of traditional labels.
Ron has an interesting background. Through an IBM program in the 1960's, he was exposed to computer programming while attending high school. Later he earned a doctorate in cognitive psychology at the University of Michigan, completing a post-doc and holding a couple of academic posts at nearby universities. During this period, he spent a lot of time automating the processing of wave form data and figuring out other ways to make lab work more efficient. He also briefly ran a Grateful Dead bootlegging operation (these were tolerated by the band which viewed them as marketing for their concerts).
When I asked Ron where he wanted to be in a year, he mentioned that he wanted to be in a position to sell the business. At that time, he thought he would be profitable from artists' fees alone.
Additional Links
- TuneCore, one of PromoVUZ's partners, was recently profiled in the New York Times.