Blog: Ron Suarez

A Purely Digital Play Business in the Land of Manufacturing

Can a purely digital play succeed in Michigan? Will the various players from investors to needed staff who "get it" be available to us in Michigan? Can we avoid having to move to the east or west coast? These are the questions I continue to ask myself.

The Great Lakes Entrepreneurs Quest (GLEQ) business plan competition came to a conclusion on June 12, 2007. My new company promoVUZ took second place in the emerging company category along with a $5,000 cash prize. We provide digital promotion, stats and sales tools for emerging artists in the independent music market.

Even if we had not won any cash the overall experience was well worth the hard work that our team put into writing the plan, because we actually came up with a totally new revenue model. The final part of the competiton included delivering a 3 minute elevator pitch, which in our case is what moved us up into 2nd place. The written plan was seriously questioned by a couple of the judges. People had told me that I should avoid trying to describe certain concepts like doing business in the long tail. However, one judge, who understood our plan used those very words in his feedback, even though we did not include them in our plan.

The fact that the majority of Amazon book sales are from books that are not in the top 200,000 is evidence of the business opportunities in longtailed distributions.

Perhaps the most significant misunderstanding was about why a giant like iTunes or Amazon wouldn't eat us alive. While acquisition by Amazon could certainly be an exit strategy for us, we are positioned quite a distance away from them in terms of the customers we are targeting.

We started off two years ago doing work for Toolshed, a company that does promotion for 30 independent labels. The bands in this market may seem like members of the long tail compared to "hit makers" who get played on broadcast radio. However, we are moving much further down the tail and we are targeting emerging artists. From their perspective, "long tail" artists with a significant loyal fan base seem like "hitmakers," even though they may not be getting radio play. While the average Joe has not heard about many of these "long tail" bands, each one of them has countless emerging artists who want to be like them.

Thus, even inside the long tail, there are minor "hitmakers" at the heads of mini-long tails within the tail. And, I am sure that this "tails with the long tail" phenomenon is not unique to the music industry where I am building my business. We are marking out new territory that the likely competition would not consider - at least not in the near future.

According to authors of  the book Blue Ocean Strategy, by W. Chan Kim and Renée Mauborgne, "Companies have long . . .  battled over market share . . . in overcrowded industries, competing head-on results in nothing but a bloody "red ocean" of rivals fighting over a shrinking profit pool. (they argue that) . . . tomorrow's leading companies will succeed not by battling competitors, but by creating "blue oceans" of uncontested market space ripe for growth."

Now, of course, how does one describe those totally new markets in the Blue Ocean to a business plan judge. Hmmm?