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Polyphonic HMI : Mixing Music and Math

Entertainment Management

Situation Analysis Issue Denition Environment Analysis Strategy Options & Choice Action Plan

Situation Analysis

Situation Analysis(External)

So few songs actually become hits - Las Vegas gives you better odds than the Music Industry! You might as well just put a million dollars on red and spin the wheel...
- Ric Wake, Independent Music Producer

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(External)
Music Industry

10%
(only fewer than 300 of the approximately 3,000 singles released each year made it to the Billboard Singles Top 40)
Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(External)
Record Labels

90%
(The lions share of a record companys revenue was generated through its established artists - not new artists. For Warner Music Group established artists accounted for almost 90% of the 1.7 billion in revenues from newly released title in 2003. )
Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(External)
Producers

20 to 30
(There were only 20 to 30 top producers who were responsible for the majority of successes, a large group of a few hundred producers who had a hit once in a while, and thousands of people trying to establish themselves as producer.)
Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(External)
Artists

10,000
(There were about 10,000 artists with a record contract in the U.S. and Europe, but only several hundred with some name recognition and commercial success. Tens of thousands of artists were hoping to secure such a contract.)
Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(Internal)
Polyphonic HMI

Polyphonic HMI was a Subsidiary of Grupo AIA that used A.I and Natural Science to solve business problems. Founded in 2002, It was AIAs rst foray into the entertainment sector Established specically to market Grupo AIAs A.I. tools to the music industry

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(Internal)
Basic Technology

An Extensive analysis of millions of songs. This covered nearly all music released by music labels since the 1950s And the Database was updated weekly with new releases The process considered over 25 characteristics in total
( including Melody, Harmony, Tempo, Pitch, Octave, Beat, Rhythm, Fullness of Sound, Brilliance, and Chord Progression)

Based on its Mathematical characteristics, each song was mapped onto Music Universe Songs with Mathematical similarities are positioned very close to one another

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(Internal)
Music Recommendation System

Polyphonic had initially used the technology to develop a music recommendation system The idea was to develop a device placed in music stores, thereby helping retailers to increase sales Asked what music a consumer liked, matched that to Universe of Music, and used that information to recommend other music. The difcult economic situation caused reluctance among retailers and hardware providers

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(Internal)
Hit Song Science
Existence of clusters was evidence for the view that hit songs share certain mathematical patterns. The extent to which new releases t those clusters should indicate their hit potential. The Clustering technique allowed Polyphonic to provide insights into the coherence of an album and a list of songs with similar mathematical properties. By giving higher weights to songs in the Universe with higher sales levels, HSS could better pinpoint the signicance of a cluster. By focusing on more recent successes among the songs in the Universe, HSS could incorporate the extent to which tastes might change over time.

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Situation Analysis(Internal)
Hit Song Science
Wonder Girls - Tell Me A score of 7.00 or above denotes clear mathematical hit potential. A score of 6.75 to 7.00 is a borderline score. This reects a song whose mathematical hit potential could be strong enough to perform in the market but might require a little extra marketing thought and push. Other scores probably mean your material does not have the optimal mathematical patterns that will assure performance in the market.

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Situation Analysis(Internal)
Hit Song Science
<Hit Song Sciences Success Rates: A Sample>
Artist
Outcast Clay Aiken Santana Feat. Alex Band R.Kelly

Song Title
Hey Ya! This Is The Night Why Dont You & I

HSS Rating > 7.00


Yes Yes Yes Yes No Yes Yes Yes No No

Weeks in the Singles Top 40


29 6 28 22 13 26 15 17 0 0

Highest Chart Position


1 1 6 9 9 12 12 13 -

Hit Song Science can achieve a success rate of 80%


Step In The Name of Love So Gone All The Things She Said If Youre Not The One Drift Away I Wish Youd Stay Beautiful Goodbye Monica t.A.t.U.

Daniel Bedingeld Uncle Kracker Feat. Dobie Gray Brad Paisley Jennifer Hanson

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Issue Denition

Issue Denition

Record Labels
HSS could be helpful in deciding whether to market an album, in selecting which song to release rst, and in testing new artists looking for a record deal

Producers
HSS offered a chance to test songs or album at some stage during the production process and tweak them to maximize their hit potential

Artists
HSS could add value in that it helped them check the hit potential of their songs and thus nd out whether they had a shot at making it in the industry
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Issue Denition

What was the best target market? What was a suitable marketing plan?

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Environment Analysis

Environment Analysis Music Industry Analysis(1)


(in millions)
$40,000 $33,573 $30,000 $25,480 $20,440 $20,000 $15,320 $10,480 $10,000 $4,180 $6,810 $32,915 $32,463 $31,933 $31,437

$30,857

2004

2005

2006(E)

2007(E)

2008(E)

2009(E)

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Environment Analysis Music Industry Analysis(2)


U.S. Digital Music Market(in Millions)
$600 $582

$450

$300

$353

$150

$174

$194

$0

$43

$57 Single Track Downloaded 2005 $22 $16 Album Downloads 2006 15 Mobile Subscriptons

Broadband Lines

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Environment Analysis Music Industry Analysis(3)


Digital Music Device Shipment (in Millions), 2004-2010E
90 78.7 75 59.8 63.3 72.0 85.0

60 44.0 34.3 30

45

15

2004

2005

2006E

2007E

2008E

2009E

2010E 16

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Environment Analysis Music Industry Analysis(4)

Portable Player Music On Mobile Free DRM Digital Music Driver


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Entertainment Management : Polyphonic HMI : Mixing Music and Math

Environment Analysis Value Chain A&R Labels Retailers Consumer

Album

Off-Line

Singles

On-Line

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Environment Analysis SWOT Analysis


Creative Creative S O Needs Needs Customize Customize Contents Contents W T vs. vs.

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Environment Analysis

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Strategy Options & Choice

Strategy Options Strategy Goal

Polyphonic HSS ,

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Strategy Options Segmentation

Record Labels

Producers

Unsigned Artists Online Retailer

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Strategy Options Targeting


Record Labels but () Research Tool , , (B2B) Producers , Major Label Risk, , (B2C) Unsigned Artists , Creative , , , (B2C) Online Retailer but Blue Ocean , , (B2B)
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Strategy Options Targeting

Producers , Major Label Risk, , (B2C) Unsigned Artists , Creative , , , (B2C)

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Strategy Options Positioning

Efciency

Reliability

Practicality

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Strategy Choice
Record Labels Online Retailer

Short Term

B2B
+
Producers Unsigned Artists

Long Term

B2C
,

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Action Plan

Action Plan Short-Term Strategy


Target 1 - Record Labels(1)
HSS Rating
7.21 4.55 3.31 7.29 6.57 7.15 7.32 7.26 7.59 7.12 6.13 6.82 6.29 7.03 6.68

Track
1 2 3 4 5 6 7 8 9 10 11 12 13 14

Song
Dont Know Why Seven Years Cold Cold Heart Feelin The Same Way Come Away With Me Shoot The Moon Turn Me On Lonestar Ive Got To See You Again Painter Song One Flight Down Nightingale The Long Day Is Over The Nearness Of You Global Album Rating

Reliability

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Action Plan Short-Term Strategy


Target 1 - Record Labels(2)
Regions Share of Music Sales, 2002 Major Record Companies Share of Music Sales, 2002

3% 3% 18% 41% 14% 34% 11% 12% 14% 75% 25% 25%

North America Asia Others

Europe Latin America

Universal EMI Warner

Sony BMG Independent 27

Entertainment Management : Polyphonic HMI : Mixing Music and Math

Action Plan Short-Term Strategy


Target 1 - Record Labels(3)

Major Label Music Analysis Service

Product & Price


Product
: Music Analysis Service(HSS + Expertise Analysis)

Price
: + Running Guarantee $ 100,000/year + 1 Album Free Trial 0.1% Running Guarantee

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Action Plan Short-Term Strategy


Target 1 - Record Labels(4)

Promotion
Phase 1
Universal, EMI, Sony BMG, Warner Major Label (B2B) 1 Single Free Trial Service Label HSS Album HSS

HSS Reliability Efciency


Phase 2
A&R Registry Minor Label DM(Direct Mail) : Technology , Label List Billboard , Press Release

Major Label => Independent Label


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Action Plan Short-Term Strategy


Target 2 - Online Retailer(1)

Pandora is an automated music recommendation and Internet radio service created by The Music Genome Project. Users enter a song or artist that they enjoy, and the service responds by playing selections that are musically similar. Users provide feedback on the individual song choices approval or disapproval which Pandora takes into account for future selections.

Music 2.0
Last.fm is a UK-based internet radio and music community website. Using a unique music recommendation system known as "Audioscrobbler", Last.fm builds a detailed prole of each user's musical taste.device.

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Action Plan Short-Term Strategy


Target 2 - Online Retailer(2) Download Songs through iTunes Store(in Millions)
2,000

Share of Total Music Sales in U.S. 6.6% 6.7%

1,500 1,429.7 1,000 820.7 500 555.5 1,249.6 1,061.9 1,502.6

9.8%

13.8% 15.8%

47.5%

230.0 0 2004

2005

2006

2007

2008

2009

2010

Wal-Mart iTunes Target

Best Buy Amazon Others

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Action Plan Short-Term Strategy


Target 2 - Online Retailer(3)

iTunes Store Online Music Recommendation System iTunes ( ) Cluster Searching( )

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Action Plan Short-Term Strategy


Target 2 - Online Retailer(4)

Product & Price


Product
iTunes Store Ranking HSS Rating Score iTunes Store HSS Rating Score Ranking iTunes Player HSS : HSS Cluster Searching iTunes Player

Price
: HSS 10% Fee

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Action Plan Long-Term Strategy


Target 3 - Independent Producers

hitsongscience.com Producer

Product
Hit Song Science+ Rating Score , Title

Price
: 10 , Option Premium Package : 10 $ 400 US/UK Package : 10 $ 300

Promotion
Producer Registry DM 1 month free trial
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Action Plan Long-Term Strategy


Target 4 - Unsigned Artists(1)
The SongSlide Web site is a tool for Independent Artists to sell their music to their Fans. SongSlide lets you pick the price you pay for Independent Music. The more you pay, the more you support the Artist. Step 1 Artists Upload Music Step 2 Fans Find Songs or Albums They Want to Buy Step 3 Fans Pick the Price Step 4 Fans Pay with Credit Card or PayPal and Download Music Step 5 Artists Gets Paid

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Action Plan Long-Term Strategy


Target 4 - Unsigned Artists(2)

Creator HSS

Product & Price


Product
: Label, Producer

Hit Song Science : songslide.com HSS Rating Score

songslide.com HSS rating Score Ranking

Price
: + Running Guarantee : $10/song 10$ Running Guarantee 1%

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Action Plan Long-Term Strategy


Target 4 - Unsigned Artists(3)

Promotion
Phase 1
songslide.com E-Mail
: , Technology, Label List

: songslide HSS Score Ranking Contest

1 Month Free Trial Service Hit Song Contest

HSS Artist
Phase 2
International Talent and Touring Guide DM(Direct Mail) , Press Release


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Executive Summary

Executive Summary Hit Song Science


What is the best target market? What was a suitable marketing plan?

Digital Music Environment


Strategy
Short-Term Strategy : Record Labels and Online Retailers Long-Term Strategy : Independent Producers, Unsigned Artists
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Thank You

Entertainment Management