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The measure of intelligence is the ability to change Albert Einstein Journalist Matthew Blakemore Tech Entrepreneur Business Development Spotlight Bil Bryant CEO PowerFX Systems AB The importance for an entrepreneur to be flexible and willing to embrace new business direction to ensure success has been touched upon at many entrepreneur forums and tech conventions that I have attended The topic is often greeted with a firm nod of the head from the audience an agreement in principle but what percentage of that audience realistically would be willing to change the shape of their business entirely at the first sign of problems Would you be able to In truth change can be extremely difficult especially when forced upon us by outside influencers but one could argue it is how we react in these situations that really determines the true stature of entrepreneur we are Being passionate and driven in business are two fantastic attributes for any entrepreneur to have It s important to stress however without some level of realism they can leave anyone blind to the reality of a serious business situation until its too late

In this article we re going to focus on the impact of illegal downloads on businesses operating in the music industry We will explore the background story and discover both the successes and failures of companies that did or did not adapt to the changing consumer behavior Today s spotlight is on Bil Bryant CEO of PowerFX who successfully adapted his business in 2009 to cope with the changing online environment He will be telling us his story and offering valuable advice to fellow entrepreneurs Pre internet music piracy existed purely in the form of copying CD s or tape cassettes With the growth of the World Wide Web and the development of a digital transfer infrastructure the late nineties saw the release of Napster a P2P service for fast file transfer which resulted in widespread use of the web for sharing and copying music Music sales history in the USA shows a steady increase of about 10 across the industry between 1993 and 1999 This is followed sharply by a 16 decrease in sales between years 2000 and 2003 to coincide with the release of Napster and other free download services How did the record labels react It s fair to say the labels did not want to change and approached this new technology not as an opportunity but rather as an aggressor wanting to wipe it out and maintain the business model that had been successful for many years previous They banded together to shut down Napster in 2001 and issued threats of legal action to those involved in copyright infringement This reaction however just spurred on the illegal download revolution and led to the emergence of new more advanced services including FastTrack Audiogalaxy Imesh Gnutella E Mule E Donkey LimeWire and Kazaa It was not until April 2003 when Apple backed by record labels EMI Universal Warner Sony Music Entertainment and BMG released the iTunes Music Store a form of legal music downloading that the industry began to recover CNET News reported in early 2004 that the iTunes store had already sold 50 million songs By 2010 it had sold over 10 billion songs and become the biggest music vendor in the World It has been the acceptance of change and the willingness to adapt their business strategy that saved the major record labels and arguably the whole music industry Though outside influencers can at first appear entirely destructive we can learn from these events that embracing change and utilizing it to your advantage is far more effective than trying to restrict it especially in online situations

Despite the success of iTunes and legal downloading the record labels continued their war on piracy well into 2009 when the Recording Industry Association America RIAA eventually stopped hunting down and suing downloaders The illegal download community had responded to threats by creating more advanced difficult to track services such as BitTorrent and Peer Guardian meaning policing the internet had become an unending battle Furthermore in the same year it emerged that labels may have been hounding some of their biggest customers with a poll conducted in the UK by Ipsos Mori suggesting that those who admitted illegally downloading music spent an average of 44 more on music every year than those who claim they did not In late 2009 the Telegraph reported that seven million UK users downloaded music illegally costing the British music industry 200 million a year this demonstrates the retreat of the RIAA did not signal the end of this practice Even today according to Ofcom piracy continues at an alarming rate just between November 2012 and January 2013 in the UK alone 280 million music tracks were digitally pirated with 18 of internet users over 12 admitting to illegal downloads The major record labels are now trying to work with Governments and Internet Service Providers ISP directly to reduce the level of piracy So what of the other businesses who have been affected by the swift change in online consumer behavior HMV and Virgin Megastores later Zaavi two huge names in the record store business that both became victims of the turmoil caused by the new habits of music consumers Stores that fed off the chart return machine found themselves in serious trouble as not only was illegal downloading an issue but also there was the added problem of supermarkets such as Asda Tesco and Sainsbury s becoming competitors selling CD s at cheaper prices Graham Jones an expert in this field points out in his book Last Shop Standing Whatever Happened to Record Shops that the record stores that survived were the independent ones who adapted to the new consumer environment by diversifying into specialist fields to cater for the non mainstream music buyer It is again the businesses that have changed who have stayed successful and those that failed to do so who have failed Finally one other business affected by piracy was PowerFX Systems AB http powerfx com Based in Stockholm the company were and still remain producers and digital distributors of the most extensive advanced online sound library in existence with over 100 000 high quality loops samples and sound effects to their name CEO Bil Bryant tells us that the business running since 1995 has had tremendous success in their field being the preferred sound and loop producer for some of the globes biggest artists including Rihanna Usher Brandy and Timbaland Perhaps most impressively for those of you au fait with Apples ILife suite PowerFX produced the loops and sound effects for their music creation program Garageband

For all this success in a relatively short period of time one could be forgiven for continuing blindly down the same road knowing you were on to a winner CEO Bil Bryant however is an entrepreneur that never lets the business stand still he is always adapting the company to new market trends and to optimize its future performance In 2009 he became aware that illegal downloading of the extensive PowerFX library was costing the business thousands in lost revenue every year he ensured preventive measures were taken to stop the file sharing as much as possible and also embarked on a new business plan with the aim to protect the PowerFX library and guarantee the companies successful longevity PowerFX new direction came in the form of their very own online digital audio workstation DAW called Soundation Studio http www soundation com Bil realized that by combining the extensive PowerFX sound library with an online DAW they could offer a unique package that could encourage consumers to pay a monthly fee to use the sounds in a studio environment For a user illegally downloading loops or sound effects from PowerFX they would need to purchase a DAW to use them effectively if they did indeed do this and they proceeded to release the loops or sound effects in a track they could be prosecuted if discovered In Soundation Studio Bil and his team had created an inexpensive legal solution for the consumer For those wanting to create tracks entirely for free Bil also gives users the opportunity to use a restricted small selection of the PowerFX library in the Soundation Studio at no cost Bil states after successfully launching Soundation Studio with very limited fanfare we have built an impressive regular user base of 700 000 registered users Our next challenge is to build the Soundation community further and to engage them with regular competitions and events Recently remixing competitions of new tracks from established artists have been popular with the prizes being recognition and to feature on the new release as the official remix Having now built the Worlds most advanced online DAW we are looking to spread the word as far and wide as possible When asked about future developments Bil like all good entrepreneurs was keeping his cards close to his chest we have some exciting new projects underway not least of these of course our work with G and creating the Worlds first multi user music creation tool There is already a demo of this live on the Soundation website and I recommend you experience it for yourself PowerFX continues to build its extensive sound library and has just created what we would argue is the world most advanced Vocaloid with Swedish Japanese pop star Yohio We are in really exciting times with technology moving so fast it is key we work hard to remain on top it s a real buzz to be considered a revolutionary company PowerFX Systems AB are currently embarking on a new investment round to enable them to push forward with new projects and increase the size of their team Bil said we are looking to work with investors who are excited by what we have achieved so far and what we can achieve together in the future On advice for fellow entrepreneurs Bil was very clear a true entrepreneur especially in this industry never rests on their laurels as well as having the traditional attributes of passion and drive an entrepreneur must be blessed with the ability to listen to their market sector and quickly identify new consumer behaviors One must always be on top of all competitor developments and be prepared to like any successful Olympian work harder and longer than them Being an entrepreneur is never easy its not a quick route to success it takes time to establish yourself and it takes hard work to maintain your position Unlike an Olympian you don t get a Gold medal for staying on top instead you have the satisfaction of knowing you are doing something that no one else has ever achieved surely that is reward enough in itself To conclude whatever sector your are in or plan on going into never forget that nothing in business stands still Consumer behaviors will always change and it is those that can adapt to that as we have seen that will maintain their success Bils words have certainly inspired me and I hope the rest of the entrepreneurial community reading this also benefit from his insight