Entertainment Business Finance - Full Sail University: The Course In Review

I must admit that going into this course I was a bit of a skeptic. What in the world was this “university of artists” going to teach me about finance that I didn’t already know? I am a degreed accountant with fourteen years of experience in corporate financial reporting and business intelligence. What did they possibly know that I had not already learned? The answer is: “plenty.”

As an example, my most recent former boss taught me that my home was my greatest asset and my cheapest liability. From an accounting standpoint, that is true. He has a Master of Accountancy and is a CPA. He told me to pay down all of my other debts first, because they are at a higher interest rate than my mortgage. “Your mortgage is the cheapest debt you will ever own,” he said.

That made perfect sense to me at the time, because I don’t like to pay for the use of someone else’s money. But this course taught me to rethink my strategy, and ask a couple of simple questions:

1.     Would you rather have your credit card company or your mortgage bank upset with you? Let’s hope that neither is the case, but assume you had to choose. Your credit card company cannot make you homeless; your mortgagor can. And your credit card company does not generate gains for you. Your home usually does. So whom do you want to keep happy?

2.     Why is any asset other than my noggin considered to be my greatest asset? Getting back to the example of my incredibly smart former boss, why does he not consider his knowledge to be his greatest asset? It is, after all, his smarts that made him what he is – not his home, his stocks, or bonds, or mutual funds. It is his financial intelligence that will carry him through, even if all of those other assets are gone (Kiyosaki, 2012).

This was a fantastic course in so many ways. But my greatest take-away is this: teach your children about financial intelligence, because they are not likely to get that education in public schools or universities (ironic, huh?).

Kiyosaki, Robert (2012). Rich Dad, Poor Dad. Scottsdale, AZ. Plata Publishing.

Where There’s A Will, There’s A Way: Real Careers In the Entertainment Business

So you’ve discovered your life’s calling, life’s task, career epiphany, or what ever you want to call it, and it’s in the entertainment business. Whether in film, music, classical arts, or artist management, you’ve found it, and you are excited and ready to get started! But there’s that little voice of a parent, boyfriend, girlfriend, or spouse that keeps repeating in your head: “Grow up. Get a real job.”

There are valid reasons that the non-artistic persons in your life might say things like this to you. While it’s primarily because they lack your creativity and don’t understand your passion for entertainment, these more analytical types know that you probably have a greater chance of being simultaneously bitten by a shark and struck by lightning than becoming the next Jennifer Lopez.

I recently discovered for myself that I had narrowed the scope of my career and business far too much. Setting out to be a self-sufficient composer, musician, and sound engineer was a good start, but it placed far to many limitations on my income potential. In an informal interview with a personal friend, mentor, and entrepreneur, John Jacobs, I asked him what the secret to his success and longevity was (he has over eleven years as a self employed individual). He said: “Don’t think of yourself as a composer or musician, think of yourself as someone in the music business who is willing to do anything within your sector to make money.”

That sentiment was reinforced when I came across the article "The Top Ten Reasons Not To Become A Recording Engineer," in which author Justin Colletti points out many of the pitfalls in this specific entertainment business pursuit. I was not surprised by the first one, “It can be hard to find paying work,” but the second one, “It can be hard to find non-paying work,” was an eye-opener!

So I went about revamping my company’s business model and without knowing it, I had already followed Colletti’s next piece of advice. In his article "6 Areas In The Music Business With Potential For Growth," he points to broader scale enterprises like record labels. That is exactly what I have done with my own company, expanding it from a composition factory to a full-blown label. It has opened the door to income streams that I didn’t have when it was just “me, myself, and I.” Are there more headaches? Of course.  Is it worth it? Absolutely.

Now I spend a portion of my time working with personalities of a questionable nature, babysitting young artists, and recording music that grates my nerves. But I’m still in the industry I love, I still have time for my own music, and it sure beats trading hours for money as a corporate pawn!

Doing What You Love - No Excuses (inspired by Gary Vaynerchuck)

"Crowd Accelerated Innovation" (Chris Anderson, 2010) is an amazing new-age concept that leaders in the Entertainment Industry should make note of. In summary, it is the idea that the Internet is the driving force for today’s wheel of innovation.

There are three dials that spin the wheel faster: Crowd, Light (Visibility), and Desire. The Internet is the tool that ratchets up all three. Obviously an artist’s Crowd and Visibility are expanded via the Internet, often exponentially if the performance is superior or unique. But it is also noted that Desire is increased by the fact that a person can now create his or her own celebrity status with little or no help from anyone else. With nothing but an acoustic guitar, a web came, and mediocre talent, Jess Greenberg has made herself into a YouTube sensation. With eleven million views on just one video, she could have filled Anaheim Stadium approximately 122 times!

Jess is doing what she loves, so it is almost impossible to argue with her success. Gary Vaynerchuck said it this way: “There is no reason in 2008 to do shit you hate.” Six years later, that is even truer. The world is an open market place, and it is waiting for your passionate product. “You can lose just as much money being happy as hell,” Gary continues. If you are of the creative mindset, that statement should seriously resonate with you. Whether you are making money or losing it, you will be happy if you have found your life’s calling, and you are pursing it.

I spent the first half of my career as an accountant and business intelligence project manager, and I hated every second of it. Just like Gary, I had that “ah ha” moment, thank goodness. I decided that the second half of my career would be spent doing, studying, living and breathing my passion. I've never been more fulfilled or satisfied.

Discussing "The Twenty-Two Immutable Laws of Branding"

Yahoo! is at it again! In this blog post, the Ries’ point out that “[Yahoo’s] new logo lacks the weight and uniqueness of the old. Change for change sake isn’t smart marketing.” So why did CEO Marissa Mayer make the change? According to the Ries’ article, it sounds like ego. She’s bought seventeen companies, changed the company’s logo, and cleaned up the homepage.   Whoopie-dee-doo.

Here is what else she has done: Yahoo CEO Falls Asleep, Late To Meeting. With a single stroke, she has annihilated the reputation of the company, leaving advertising executives at the meeting astonished.  Robert Greene's fifth law of power reminds us that so much depends on reputation, and we should guard it with our lives.

As much as I might sound like a dissatisfied customer, I am not. My Yahoo! email account is still my primary personal email address, so I am thankful that the company has not gone under. However, I don’t use Yahoo! for anything else.  I don’t know anyone who does.

During her two-year tenure as CEO, here is an example of what has happened. For those who have never studied the difference between GAAP and Non-GAAP income from operations, don’t concern yourself: whether income from operations is down 84% or 33% (Q1, 2013 to Q1, 2014), that is not a good sign.

So what of the twenty-two immutable laws of branding? Numbers nineteen and twenty can be combined into one law for Marissa Mayer of Yahoo!: Brands are built over decades and should be only changed with careful consideration.

Brand Identity Foundations

After reading the related materials for this discussion post, I realized that after two years in business, my company has virtually no brand. It’s no wonder that my website, business cards, and mailers are essentially useless at driving new business my way. In "Brand Identity Defined," Derrick Day writes “a brand is the result of an unbroken series of consistent gestures, encompassing both what it does and how it does it.” I don’t have a consistent logo or slogan, and therefore I see why it is difficult for potential customers to identify emotionally with what I do.

At the same time, Al and Laura Ries warn in their blog post to “… take your time and find the right slogan to use. And then use it virtually forever.” So while I’m excited to find a new and consistent logo, slogan, and positioning statement, I feel the need to take pause and get it right. The same blog also described the new logo for Yahoo! and how it does nothing to further the brand’s identity or define what the company does.

The official name of my Florida Company is “Mogedo’s Digital Recording Studio, LLC” – far too long in this day and age of internet marketing and difficult to brand. While there is some funny history to the name and who Mogedo is, you wouldn’t know it unless you were a family member or friend of mine. I think that story needs to be told and tied in with the new logo, slogan, and positioning statement.

I am preliminarily considering the slogan: “Your Music, Your Passion, Your Life” which is exactly what Mogedo represents and why the company was started. However, I need to research the slogan and make sure that it (or something too similar to it) is not being used.

Today’s music publishing world is filled with shysters.  I recently read an article that essentially said that no musician in today’s age should pay for studio time. If they are, the company with which they have signed does not believe in their music, is not engaged in producing the best possible product, and is ripping them off. Therefore, my “Internal Culture and Values” section includes my company’s leading ethical principles:

1.     The Music Comes First. This is a description of how I intend to continue to place the utmost focus on my clients’ song writing. A bad song can be well recorded, but it is still a bad song.

2.     Focus on Quality Excellence. The reverse is also true. If a client comes to the studio with an incredibly well composed song and all of the talent to perform it, then they deserve all of my ability to create a masterful recording. A good song can be poorly recorded, and it becomes a bad song.

3.     Legal Integrity. Entertainment business law is a tricky space. There is room for manipulation of artists who know nothing about the music business. Both parties have a need to protect themselves, so I keep my contracts simple, and I always recommend that they have their attorney review it before we begin any work.

Nothing could be worse than taking what should be one of the most creative and enjoyable experiences of an artist’s life and confusing it with misunderstanding or the perception of legal manipulation!

The Brand Gap

The LEAP Index  (Leveraging Emotional Attachment for Profit), is a proprietary tool constructed by New Media Metrics to measure how much customers “love” certain brands. In the most recent 2013 LEAP study (see image below), Disney Cruise Lines jumped 31% in emotional attachment with its customers. With a 49% increase in the price of its parent company’s stock during the same year, The Walt Disney Company (DIS) is reaping the rewards of diversification, as their other lines of business lag behind.

Who is Disney Cruise Lines?

A cruise ship subsidiary of The Walt Disney Company.

What do they do?

Provide family cruise vacations that offer something for everyone!

Why does it matter?

Traditional cruise vacations are not typically tailored toward an entire family’s enjoyment.  On other cruise lines, you will find a focus on the paying adults, and the attention toward the kids is typically, at best, a day-care type environment with perhaps some games and activities that will keep the young ones out of the adults’ hair.

By contrast, Disney cruise vacations ensure that the entire family is engaged in a magical experience, encouraging family time rather than separation. In December of 2013, The New York Daily News rated Disney Cruise Lines as the number one cruise line for families and among the top cruise lines for the money!

Finally, all four of Disney’s ships ranked 91% or better in the most recent Safety and Sanitation Inspection conducted by the CDC, so customers are ensured of a clean, safe ride!

Disney Cruise Lines has impacted the industry since its introduction in 1999. While they could have simply relied on the Disney name to make a splash, they actually built their ships with the family in mind. Newly built ships in other competing fleets have adopted many of Disney’s build strategies in order to remain competitive.  Things like: larger staterooms, most of which include a balcony, bathtubs in almost all rooms for young children, and of course something that no competitor can touch – multiple visits from Disney characters throughout the duration of the cruise.

Most parents are so “emotionally attached” to the Disney brand that it will be very difficult for any competitor to attack their cruise line market share. Add to that the constant advances in “family-oriented technology” that they bring to their ships, and you’ve got a brand that will last for generations.