By Sramana Mitra (Founder, One Million By One Million)
Cookie Marenco knows the music industry inside out. She started her career at the age of fourteen as a piano teacher. In 1982, she bootstrapped her recording studio with a partner and received Grammy nominations and two Gold Records. In 1987, she joined Windham Hill Records as a producer. Here she learned how a record label operates, legal issues of music, relationship development, the intricacies/ problems of music distribution and branding. In 1997, Cookie became the chief engineer for Liquid Audio, one of the first online music download companies. Part of her job was bringing indie labels to the company.
Cookie launched Blue Coast Records in 2007. When the recording business was gasping for oxygen, a record label looked to be an odd venture to start. But after working as an independent recording engineer, music producer and commercial recording studio owner for 30 years that was the best thing Cookie could think of doing.
Blue Coast Records is a cutting-edge music company pioneering super-resolution audio creation and innovative distribution methods. Blue Coast Records was the first to release DSD (Direct Stream Digital, Sony’s newest digital format) audio which was delivered to end-users through the internet.
Since 2007, Cookie created several revenue streams and launched many branded products. All her activities revolve around the strong belief: “quality adds value”. At times, she has gone against the trends, but it’s her commitment towards quality that has made her successful.
Prior to launching Blue Coast Records, Cookie worked with Jean Claude Reynaud for a few years to develop a recording technique for surround sound. They called it Extended Sound Environment (E.S.E). Jean is an engineer. Cookie met Jean on a trip to France. They thoroughly tested the gear and formats available to achieve the highest level of acoustic recording. When the rest of the world was turning to home digital recording and low-end mp3, Cookie and Jean returned to analog tape and DSD for their recordings.
They tested the market thoroughly to find out whether consumers would accept a label that delivers high quality audio recording and acoustic music. High-end sound equipment manufacturers were the first to latch onto the recordings. To sell their expensive gear, they needed music that was recorded faithfully to the real sound so that it would show off what their products could do. Several manufacturers approached them to create co-branded products. Their first sales were to audiophile manufacturers. However, Jean had to return to France, his home country, to take over his family business before the official launch of Blue Coast Records.
Cookie was bootstrapping back then. To retain control over the product, she turned down many investors. It was a tough decision. She also had to continue with the studio operations to support Blue Coast Records.
Finance was not the only challenge. Within two months of the launch, Walmart declared to retail all discs at $10 and news media reported CD to be a dead medium. But Cookie decided to stick to quality and continued to sell the discs for $40. That was the best decision she made. She also decided not to sell iTunes and mp3.
The demand for her products increased with time. To maintain quality, file sizes became large; existing high-resolution music companies refused her request for digital distribution because of the large file size. Cookie found another gap here; and she started Downloads NOW! It is the platform they use to sell their recordings. With Downloads NOW! she has the flexibility of distributing files of any size.
Distributing DSD files was not a challenge any more; within six months manufacturers responded to customers’ request and started building converters so that DSD files could be played on home sound systems. As word spread of new hardware, software support and more recorded music became available.
Content providers started coming to them to release their DSD audio. However, to protect the Blue Coast Records brand, they decided to create a separate outlet for the recordings done by third parties. This new outlet allowed any label to take advantage of Downloads NOW!
There are more than 150 titles available at Downloads NOW! 19,000 users download DSD audio in a year. The company is experiencing annual growth of 84%. They are negotiating with Symphony Orchestras, a nationally known major label, to release their content with Downloads NOW! In 2012 Blue Coast Records has already achieved 50% of the revenue required to cover the total operational costs and is very close to the tipping point.
However, growth and mass acceptance are the main challenges Cookie is facing now. According to her estimate, it will take 5 years to reach a level when 1% to 5% of acoustic music buyers will be using DSD which is likely to generate sales of $10 to $15 million. For this, a new ecosystem of consumer and professional devices is also required.
Cookie’s entrepreneurial journey is challenging, but also gratifying.
Women 2.0 readers: What do you think of startups disrupting the music industry? Let us know in the comments!
About the guest blogger: Sramana Mitra is Founder of One Million By One Million, an educational business development and incubation program that aims to help one million entrepreneurs globally to reach $1 million in revenue and beyond. She is a Silicon Valley entrepreneur and strategy consultant. As an entrepreneur CEO, she ran three companies: DAIS, Intarka, and Uuma. Sramana has a master’s degree in electrical engineering and computer science from MIT. Follow her on Twitter at @sramana.