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In an industry where profit margins are low, and often tensions are high, the term CD broker generates a lot of hostility. Perhaps that's why I was chewed out by a few people when approaching them about this column. However, I intend to look at how replicators and brokers can help each other, and to try to explain the difference between "project managers" and true "brokers."
In a time when the number of large orders may be fewer and more far between for content providers, working with project managers may be the only way for them to get quality work done on smaller orders that many larger, well-known replicators will not handle. And for the replicator who doesn't want to lose a steady customer, working with a project manager may be the way to keep a client who occasionally may be submitting a smaller order. That's only one of the many scenarios I heard proving that working with a project manager may not be such a bad thing, and may open up opportunities for replicators. Of course, sometimes the project manager may be competing for the same job as a replicator on one day, and may be working with him the next. That can cause some strain. However, many of Denon Digital's experiences with project managers have been positive, according to president/COO Brian Wilson. While Denon doesn't work with a lot of brokers, Wilson says, the companies he has worked with have added value to a job and did not just broker on price. If you go online and Google disc replicators, "a zillion will come up," says Wilson. Most of them do not do any manufacturing even though they claim to, and it is often difficult to tell the difference at first. "Their websites create the illusion that they are manufacturing themselves when in fact they are not. These are just not stand-up people, and not a company you want to work with." "We all have our stories about a company that did business with us, then didn't pay, then filed bankruptcy for their little LLC and opened another company," says one replicator who preferred to be quoted without attribution. "Not a pleasant experience." The biggest gripe replicators have with brokers is pricing, and rightly so. "Brokers generally mark up the replicator pricing between 25-50%," one replicator says. "That is where all the profit is. Most replicators are operating at break-even or are only slightly profitable. The brokers insist on depressing prices as they want their margin, and unlike replicators, they have no overhead as they do not have to buy equipment." Tom O'Reilly, regional sales manager for Dublin, Ohio-based replicator Inoveris, offers a perspective from both ends of the spectrum since, in the past, he was also in the broker's seat. From the replicator's perspective, in an ideal world, there would be no brokers. "Customers would all deal directly with a replication service provider, and margins would probably be much better than they are today," O'Reilly says. "But in fairness to brokers, they have just taken advantage of the fact that replicators are generally poor marketers. Brokers have found customers, formed relationships with them, and have made a nice business for themselves managing those customers' projects." A more positive name for brokers is used R. Harvey Bravman, when referring to his own Boston-based brokerage outfit, Advanced Digital Replication which he calls "a logistics company." Bravman explains, "Almost no projects exist where replicating a disc is the only part of the project. Most projects require two to nine vendors to complete a job. Most replicators outsource at that point. Remember, they don't make custom cardboard packaging." In addition to simply pulling vendors together, O'Reilly says, "good brokers can also offer valuable insight and suggestions. They can be helpful to replicators as well because it can be easier to work with one broker rather than several small customers to get one project done." This is a particularly important asset in this Just-In-Time world. A company I have been familiar with for a long time, New York-based Digital Force, has offered project management services to Chamber of Music Society at Lincoln Center and the National Symphony at Kennedy Center as well as educational institutions. And the list goes on. Digital Force founder Jerry Bunke says, "We find that education is a big part of what we do." Denon's Wilson agrees, and as a result often sends rookie clients to a few trusted sources. Good project managers organize everything. They tell customers what they need to do before the actual replication is under way. They help them buy graphics and anything else their job might require. Why am I writing about project management despite replicator reaction to my questions? One reason is that I often interview up-and-coming music artists, many of whom try and pull together replication and or duplication of their discs on their own. One artist, Mica Lee Williams, recently told me about her horrible experience with a well-known company. She said that while the prices were high because of their name, the customer service was low. She was given misinformation, and the project, as a result, was delayed. That's where a project manager can help. Replicators are not always innocent. They can be sneaky as well, like in real estate … trying to sell directly to the broker's client. The truth is, says O'Reilly, there are good and bad brokers, good and bad replicators." Don't cut your nose off to spite your face, as they say. When looking for companies to partner with, be open-minded, and do your research. It's the only way to get jobs done efficiently and for a good price. Mistakes cost money. Unhappy clients cost business. My favorite comment came from Bunke who says, "Why is there never enough time to do the job right, but plenty of time to do it over." Could a replicator/broker relationship grow your business? Ultimately save you time and money? Think about it!
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