Growing your music business
This is a guest post from Andy Hill, CEO of I Like Music
My experiences over the past thirty years in the music industry have taught me a thing or two about running an organisation in this tempestuous sector. Changes in the industry are being felt in all corners but there are, and always will be, certain business principles that will continue to stand true. The two that have helped my business, I Like Music, survive and even thrive are simple in name but less in nature; international expansion and effective financing.
Like Music is a simple business model. It provides fully licensed music for use in the media, retail, hospitality and, increasingly of late, leisure markets. We have access to a vast record collection compiled through purchases of the BBC’s library in the 90s and procurement of Phil Swern’s (the consummate collector and radio producer) vast vinyl and CD collection. This collection covers every conceivable genre and is unique in that it is the only library to include Every Top 40 Hit single since the charts began in 1952.
I Like Music began in essence in the late 80s while I was working at IBM and visiting their R&D departments, whose budget was a staggering $7.2billion per annum to invent the future. During this period the first ever system for moving digital music files onto a PC was established, laying the ground work for the digital music industry that we have today. Through this advancement, we created the first digital music licensing model, providing music for use in commercial purposes.
Such a close involvement in the birth of digital music sharing gave me a real insight into how the music landscape was changing and what a behemoth it would become. It is this knowledge that has set I Like Music in good stead and allowed the company to thrive and take advantage of the opportunities such a burgeoning industry has afforded it. Any business must have this know-how to succeed. Without it, the competition from those who do have it will simply be too great.
But once this knowledge is established, and a business is on the up, where should you go? How should you expand a business that is succeeding in its current market? For the music industry, the natural expansion is overseas. Music is appreciated and enjoyed by everyone, so for I Like Music, which sells all types of music, markets are mostly geographical. But before doing this, prior research was essential. I Like Music aimed for the North American market with its huge leisure, retail and media industries.
Specifically, we identified target companies that would make for perfect partners in developing our products. Once compiled, we turned to Santander, whose SME Support programme, Breakthrough, organised a trade mission to New York to help fast growth businesses expand overseas. This was the opportune moment for I Like Music as we were almost ready to launch our Virtual Jukebox product – an app-based system for music selection in pubs and bars. Following the trade mission, I Like Music is now in the process of signing a deal with a Chicago based investment company and distributor with expertise in the market. Without such knowledge, we would have found it really difficult to make any in-roads.
This new deal has opened up a potentially lucrative revenue stream for I Like Music, one which has the potential to be replicated across the globe. Yet such growth requires capital, something that is hard to come by in the current market. In my experience, banks are shying away from lending to SMEs, viewed as too high-risk. There is always the angel investor or venture capital markets, but the issue for I Like Music here was the dilution of ownership of the company – something I was simply not prepared to give up.
Again, Santander’s Breakthrough programme offered an alternative solution through their Growth Capital fund, providing us with £700k to expand. This injection is being used to hire staff to help support international growth. Alongside the Virtual Jukebox product in the US, I Like Music is expanding its original licensed music product to businesses in Australia, Singapore and, in the future, South Africa. Our sales team, therefore, needs to be well trained and knowledgeable about those areas. The additional funding will give us the opportunity to hire, train and also organise the company in such a way that each region will be serviced as effectively as possible.
Through these business experiences I have learnt a lot about delivering success in a volatile market. In the current global economy, focusing only on the UK is limiting for a flourishing business. When considering international growth business owners should make sure that any goals or business objectives have the ability to be scaled up to ensure the potential for overseas growth. Also ensure that with these goals comes a clear understanding of specific markets. Without this, any potential expansion will be a far more risky affair and be liable to fail. On top of this, guarantee that you have access to the funds you need for such growth to prevent stalling.
Santander’s Growth Capital was right for our business size, but make sure that any scheme you apply for is relevant to the business and its aims. Keeping these learnings in mind will hopefully provide some food for thought for other burgeoning entrepreneurs in the digital music sector. The industry is changing at a rapid pace, so the opportunities for well crafted, innovative business models are coming equally fast and we all need to be prepared to take advantage.
Andy Hill, Chief Executive Officer, I Like Music