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Saturday, September 18, 2021

What can be done to reduce risk and foster growth? Dualtone Records: Growth

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The music industry, book publishing and, to a lesser extent, movie industry, worked in a similar way for years. You can sign a lot (or author) and make many movies. Hoping that only a few break even and that some of them make it big enough to pay the rest.

This is one of three reasons that Sony Music Group, Universal Music Group and Warner Music Group account for almost 70 percent each of the industry’s revenues. It matters. Reach matters. It is important to have deep pockets.

Being a small company is not easy. It’s not impossible.

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This year marks the 20th anniversary of Dualtone Records, the Nashville-based label that boasts over 12 million albums sold, over 5 billion streams, and 15 Grammy nominations and 4 wins.

Just releasedAmerikinda – 20 years of Dualtone,A compilation album with Dualtone alumni and artists like The Lumineers and Shovels & Rope and Langhorne Slim.Gregory Alan IsakovCovering each other’s music.

In an industry that tends to see ventures last for years and not decades, how has Dualtone managed to survive?

According to Dualtone founder Scott Robinson (whom I spoke with on the label’s 15th anniversary), one of the keys is to minimize risk. Spending should be evaluated not only in terms of gross and efficiency, but also in the context of cost. Adapt constantly to changing technology and consumer tastes, but don’t over-adapt.

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Find artists who have been road-tested.

Paul Roper (Dualtone President) says, “We are not the best at listening to a song on TikTok. We take a big risk on something that isn’t proven.” We don’t pursue viral moments or single-song moments. This is not the area where we have the greatest value. Our forte is working with established artists who have percolating fan base…and helping them to turn up the heat.”

Dualtone also minimizes risks. Dualtone partners with artists to minimize risk. (For example, here’s what Tom Petty thought about his first record contract.)

Robinson states that every deal with an artist is different to a certain degree. This is because each artist is unique. They choose their path. They need. They have goals. Every artist is different and requires a unique approach. A small shop is able to offer a customized approach that major labels cannot.

Oddly, the label’s decision to invest more in vinyl helped reduce risk and increase revenues. In 2018, Dualtone acquired Magnolia Record Club, an artist-curated subscription service. That, along with the Dualtone online store, accounts for a sizable chunk of earnings.

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It makes it easier to forecast (physical) sales. Roper states that a pre-order strategy can recoup a large percentage of the initial investment. We have doubled our marketing efforts online because of this. We can instantly see which strategies work and adjust them in real-time.

This sounds wonderful. What happens if a tornado strikes your office in March 2020? Dualtone isn’t the only company that doesn’t know this risk.

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Your people and your culture are your back-up plan in such cases.

Roper states, “We have always attempted to make the company about everyone and not just one individual.” When you are faced with a pandemic, that shines through. You may also lose your building. These things have changed the way we work together, but not the spirit of the company.

This created an opportunity to reduce future risks by increasing operational efficiency.

Travel is easier with less. There is less overhead. Robinson states that there is less office space. Robinson says there is a lot of tempo space in the downtown area. We believe it is a hybrid model and that this is the best way forward. Many of our employees commute. Others have circumstances that make it more practical to work on a flexible schedule. It is important to find great employees and believe they will get the job done. They don’t matter what location they are working in.

Robinson and Roper disagree on the best approach to minimizing risk and building a long-term, profitable business.

Robinson states, “Business can be competitive but everyone has a place if they treat others well.” Every business should have ethics as its primary goal. You will succeed if you are ethical and treat others well. It’s possible to navigate your way through.

Build a sense of loyalty. Robinson states, “One thing I am most proud about is that the model has worked.” Robinson says that the majority of our artists have experienced substantial growth and 80 to 90 percent receive royalty checks. This has always been our goal: Artists make money.

The best way to reduce risk is by working with people who are committed. You can minimize risk by working with people that want your success.

Vice versa.

You’re all part of it, then.

Inc.com columnsists’ opinions are not the views of Inc.com.

Publiated at Thu 26 August 2021, 14:29.27 +0000

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