STRATEGIES EXECUTED
1. Updates product lines to stay ahead of the competition.
2. Modernizes products with technology enhancements, including an online store and the development of CDs and DVDs to products for convenience and comprehension.
3. Acquires companies when the merger is a good fit with the company’s vision and mission.
As the Internet evolved in 1990s, it became a natural enemy for a business such as Hal Leonard Corp., which had specialized in developing and selling sheet music and instrument lessons for decades.
After all, if budding musicians could illegally download the sheet music and lessons for free on line, why would they pay for the same information from Hal Leonard?
However, the Waukesha-based company was not content to fade away like a muted concerto into the archives.
Hal Leonard launched SheetMusicDirect.com in 1997, and as the music industry tightened its enforcement of protecting copyrighted material, the Internet changed from a threat to a spectacular marketing tool for the firm.
The company has used the Internet to expand its offerings, according to Keith Mardak, chairman and chief executive officer.
Mardak has instructed school bands, orchestras and guitar players through the same Hal Leonard method books and instrument programs for more than 40 years.
SheetMusicDirect.com created an Internet database consisting of download-friendly versions of the company’s 60,000-plus song catalog.
"The songs we control were available illegally on the Internet," Mardak said.
"Downloading something like that is stealing. It takes away from sales and deprives song publishers and songwriters of income. In addition, the transcriptions are often inaccurate. The legal downloading of sheet music has not expanded the market, but has provided an alternative, or a useful tool for the musician who does not have sheet music and needs it late at night or in an emergency situation."
Mardak said SheetMusicDirect.com had three competitors when it was first launched, and now only one remains.
As CDs and DVDs became widespread, Mardak added the audio/visual accompaniment to the Hal Leonard’s Essential Elements complete comprehensive band instrument program, which was created for school bands and orchestras.
The same technology of convenience and strategy was applied to the Hal Leonard Guitar Method program.
Mardak’s company partners with music catalog companies and record production companies to keep the business ahead of and away from the competition.
"The bulk of our growth has been internal, along with external acquisitions," Mardak said. "When we look at the market, we look at what exists from our competitors, and if we think the product area is viable, we would then launch a competitive product. And if a company is available, we find out if it is a good fit with ours. We expand the market and the business in general by introducing products that have never been created before."
The key to success in the musical instrument method business is getting there first and thinking of enhancements the competition has not yet introduced, Mardak said.
An enhancement can be as simple as adding audio, digital and visual technology to a product, or as complex as rewriting a method or launching a new product line, he said.
In 1992, Hal Leonard put itself ahead by adding color and more detailed graphic demonstrations to its Essential Elements program.
"We knew the competition would react, so we decided to react first, and we re-launched Essential Elements in 2000, called it Essential Elements 2000 and included a CD," Mardak said. "Now for 2004, we anticipated our competition would add CDs. At a Chicago convention with all of our competition present, we launched Essential Elements 2000 Plus. The 2000 Plus has a CD and a DVD that shows things like a student assembling an instrument, posture and proper seating."
As well known as Hal Leonard may be in the music business, the talent behind the production of methods and sheet music is very technical and editorial.
Employees at Hal Leonard are not packing boxes of books and signing for packages of sheet music. The employees are musicians transcribing lyrics and melodies from audio to written form, testing methods and creating tools for the future.
"We define the song in its printed format, so once documented, it exists forever," Mardak said. "Most singer/songwriters are not capable of doing what we do."
According to Mardak, hiring the right people for the right job has never been a problem. Mardak hires musicians, whose abilities are apparent in the interviews.
"Hal Leonard is unique in that we sell music. The people that are employed here love music, and most are musicians," Mardak said. "When we have an opening, candidates come in from all over the country to interview, and we end up with the cr?me de la cr?me of musicians that can become involved on the editorial side."
Many musicians are interested in the line of work Hal Leonard offers because requires talent to derive notes and lyrics from, for example, a Norah Jones album or the soundtrack to Stephen Schwartz and Winnie Holzman’s Broadway musical, "Wicked," two of Hal Leonard’s clients.
Mardak said employees prefer having job security while continuing to play and work with music.
"At Hal Leonard, musicians have a real day job with real benefits and real insurance," Mardak said. "The jobs here are very inspiring, gratifying and satisfying to people who want to work with music."
As the company continues to expand and acquire competitors, Mardak intends to keep Hal Leonard as an independent company and continue developing quality instructional tools and sheet music.
Hal Leonard announced this month it will become the exclusive distributor for the prestigious Boosey & Hawkes classical and educational music catalog. The new contract will result in additional warehousing, distribution and editorial jobs being created at Hal Leonard’s Waukesha headquarters and its facility in Winona, Minn.
"The way I think about it, there are 2 million new guitars sold per year, and further taking into consideration all of the used ones, there are a lot of people that are learning to play the guitar every year," Mardak said. "People want to play and they need a book to learn from."
May 28, 2004 Small Business Times, Milwaukee, WI
