Here's how a company went from zero to the world's largest in its field in just 25 years. It's a product you may not be very familiar with: classical music.
In the big music stores like JB HiFi you'll search past vast racks of popular music and in a dusty corner find a small display of classical CDs. But when you add up all the albums sold around the world, it's a very sizable business. And for a long time very neglected, an ideal target for clever marketing.
Except that Klaus Heymann stumbled into it. He went to Hong Kong as a journalist, and then set up a business, importing fine electronic gear from his native Germany. As part of the promotion he staged concerts, and discovered there were no classical music companies in the region, so he started to import and distribute the records.
The eighties saw the growth of CDs. Heymann took advantage by setting up Naxos Records to sell bargain-priced music. He bought most of his early works from behind what was still the Iron Curtain. In cities like Prague and Budapest and Moscow were some of the world's best musicians, orchestras and singers - totally unknown in the west.
His packaging was simple and display cases of the works could be found in every record store that sold classics. Before long music lovers discovered that the performances were superb, the engineering first class, and the prices a third of what the EMIs and Deccas charged.
There were no big names or star prima donnas - though many, like Sumi Jo (below), have since shot to the top. They did not duplicate versions of their works. They did very little promotion but gradually built up a huge catalogue of music.
Classical recordings are small in sales numbers per store - but have world-wide appeal. So Naxos was an early user of internet marketing. In Australia maybe a few dozen people would get excited about a new recording of madrigals by 16th century composer Gesualdo. But if you searched world-wide you would find thousands. This is what the web allows you to do, and Heymann recognised this.
Naxos.com now has a huge inventory of music, from mediaeval chants, to the great composers, to modern glass-breaking experimental compositions. So in the classical field it has grown bigger than giants like Deutsche Grammophon or even EMI, publishing some 40 titles a month.
Their marketing plan has been to determinedly keep on track - but also to look out for other niche interests that will smoothly fit into the huge distribution channel they have created.
So they have brought in other neglected music areas - Japanese classical, Jewish-American, world music, Asian classical, jazz. All that music that the big labels could no longer support because of their old, ungainly marketing structures.
Marketing experts are warning that records are a dying business in the wake of the iTunes revolution. This is no surprise for Heymann. Recent years have brought in streaming web radio, podcasts, and the Naxos Music Library. This is aimed at schools, universities, professional music bodies and conservatories. Through it the students have access to over a million classical musical pieces.
Naxos is a great example of how a company can start off as the ignored, despised cheapie in the bargain basement and through consistent application of its passion and principles, rise to the very top.
While the rest of the music industry frets about the changes around it, Heymann and his team look for the other paths to success that are emerging - because the population, and the market, are still growing. You just have to be where they are.
ray@ebeatty.com
Blog: themarketeer-raybeatty.blogspot.com
