How to Lead Opportunity in a Downhill Market

Opportunity Knocking

Lessons From a Start-Up in the Music Industry

Leadership starts with first leading one’s self. This is a compelling story in leading one’s self toward a grand vision and doing what it takes to succeed.

While established artists like Jon Bon Jovi curse the new distribution schemes of the music business, others take a reverse look and use the change of the markets as an opportunity to enter the game.

Is this idealistic or simply crazy?

Honestly, what would you say if your friend told you that he was going to found a record label in the middle of a continued decrease of record sales?

Start Me Up

Michael Tolle, of Tucson, Arizona, did just that. He started Mello Music Group in 2008 as a boutique label, doing 2,000-4,000 units per title and has since then moved up to sell 5,000-10,000 of most releases. Sales are generally split 45% physical CDs, 45% digital mp3s and 10% vinyls.

A couple of weeks ago, I had the opportunity to talk to Mike Tolle about how he set up the company, what helped him establish the brand that is now a serious player in the indie hip-hop scene. Every leader, every entrepreneur in a saturated market can take a few lessons from the story he can tell.

Seize the Opportunity

When Tolle, a graduate in literature and linguistics, started to work he missed the music that had marked his life as a student. He had worked as a DJ and had assisted friends who were making music. He, hence, decided to put some money into this area instead of putting it into housing.

“I have always been a kind of believer. It’s not that you have to go out and find a job that you are supposed to do. It’s more to find out if there is a need of what you can do for people.”

However, he has to acknowledge that music production alone does not automatically generate sales. He relied on friends and partners who coached him to understand distribution and get a grip on the marketing and sales activities.

It was “a lot of trial & error” at the beginning, he now concedes. While a huge part of the traditional music industry continued to whine about the customers’ unwillingness to pay for the music, Tolle, however, took the crisis as an opportunity.

“We took a kind of reverse look at that. It’s opportunity. If you’re a major label and you have a giant warehouse and an office, an A&R flying through all these things and then giving things away for free, you sure will go bankrupt. We don’t have this overhead.”

He also loves that hip-hop comes from a position of strength, having established new business models with their own means because the established market did not accept them first. He was also free to use innovative storage and distribution schemes, like the cloud technology of SoundCloud, which is being used  by the major record labels for their digital distribution in the meantime as well.


Pay the Dues

He recognizes the Internet as the big equalizer that allows everybody to get heard “without having to put the big money first”. According to Tolle, it was more important to establish a team that was committed to the art and to the work. All work is done on a contract basis, which allows him to sometimes bring in new people to bring in fresh stuff.

He admits that at the beginning he tried to be big too quick.

To date, the company is completely self-financed. All money that comes from the music goes back to the music. Tolle has continued teaching English full time at his own academy, which allows him that all profits from Mello Music Group can be re-invested. He does not plan to touch any profits before the company will do 1 million dollars in sales – which should be reached sometime in 2012 according to their business plan.

This, of course, also means that he has a working week of 80-100 hours with very little sleep some days.

Working with a globally distributed team does not only mean that you get fresh ideas from all over the world, but that you have to attend to their requests, be them from Berlin or from Los Angeles. Still, he aims to get some rest on Sundays.

Be Grateful to Friends & Family

Enthusiasm and passion have certainly helped Tolle to get through the rough times; but it becomes clear that he would not have made it without the support net of people that have guided him – both implicitly and explicitly. He first mentions two brothers. His much older stepbrother, video director Sam Bayer, winner of three VMA awards and director of Eminem’s recent superbowl commercial for Chrysler, has always been a role model for him.

Tolle’s brother Josh, a painter, has always motivated him in dealing with the cover art of his music. Besides, the close and longtime collaboration with Oddisee, a talented rap producer from DC, has been a source of inspiration for him, too.

Oddisee’s “101” project was Mello Music Group’s first project that started as a free download and was only converted into a sales edition later on – with a return at 100% of their original investment. According to Tolle, Oddisee is also a kind of model for the other artists because

“…he does not live the fantasy of being a rapper, but accepts the business of being a rapper.”

Besides continuing his work as producer, Oddisee has recently taken over responsibilities as East-coast director of Operations for Mello Music Group. Together, the two seem to strive for an attitude where they do not only make music, but also business with a soul.

It seems, even in a doomed marketplace, it is the small bets, smart moves and a soulful passion for what you love doing that eventually pay off and turn you into a game changer.

What sort of dreams are you working toward that challenges you to reach beyond what you are doing? What is holding you back from stretching yourself to be a better leader of your dreams? What small creative steps can you take to make that vision come to reality? I would love to hear your thoughts!

Dr. Bärbel Bohr owns “Bärbel Bohr – Projekte mit System”
Lecturer at HSR Hochschule für Technik / Rapperswil (Switzerland)
She inspires success in leaders & students on communication & culture awareness

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L2L Contributing Author

1 Comment

  1. Michael Tolle on April 11, 2011 at 2:13 am

    Much appreciation for taking time out to speak with us!