Modern Auto Recycling - A New Model For Record Labels
Why modern auto recycling is a great model for the record labels of the future….
I have experience in both industries. This post is food for thought.

The auto recycling industry…
Consider that every single car on the road will ultimately be recycled. The automotive recycling industry generates over $30,000,000,000 (billion) in revenue annually. The auto recycling industry is one of the most complex, competitive, data intensive and demanding industries on earth.

The music industry is going to become one of the most complex, competitive, data intensive and demanding industries on earth…

• The auto recycling and the music industry are almost numerically identical.
• There are as many record labels as there are auto recyclers (modern junk yards).
• There are several dominant auto recycling groups, but the "indie" recyclers also thrive.
• There are as many automobiles wrecked each year as there are artists performing or recording each year.
• There are as many songs per artist as there are salable parts per wrecked car.
• There are as many automotive manufactures as there are major genres of music.

The complexity of auto recycling…
Auto recyclers acquire whole wrecked cars for their constituent parts at highly competitive auctions. The cars come from insurance companies that have inherited the cars from consumers after a car is appraised as unfixable (after an accident for example).

When an auto recycler buys a vehicle at auction, the recycler has to rapidly process a complex matrix of information, as every car has numerous parts, and each and every part has numerous questions that have to be answered before a bid price can be tendered:

• Is the part damaged or not?
• Will this part fit on other similar cars?
• How old or used is this part?
• Is this same part already in stock and how many do we have?
• How many miles are on the same parts we currently have?
• How many of the same part do my competitors stock?
• What are my competitor's prices on the same part?
• How often do calls come in for this same part?
• How many days did it take to sell the last one of this same part?
• How many times have I lost a sale trying to sell this same part?
• What is the average selling price of this same part?
• How expensive is it to handle this same part?
• How long does it take to recover my investment in this same part?
• How much is capital costing me right now?

Using sophisticated and fully-automated salvage buying programs, the answers to these questions are numerically tallied and scored against every other vehicle that the recycler could possibly buy at the auction, as an investment in one vehicle usually means forgoing an investment in an alternative vehicle that carries a different matrix of answers to the questions above.

A typical large auto recycler has to make this type of inventory investment analysis decision hundreds of thousands of times per year. Large auto recyclers carry tens of millions of dollars worth of inventory and the inventory investment decisions are absolutely critical to the success of a recycler.

Auto recycling is a data driven business. The acquisition of cars for their parts is driven by data. No amount of promotion or marketing by the entity disposing of the car will change the data driven decision that the recycler must make to be profitable.

The music industry will become a data driven business.
The current music industry is a business driven by marketing and promotion. Going forward, any company that puts "record label" on their business card will have to be a business that is skilled at rapidly acquiring, managing, analyzing, presenting and intelligently acting upon…data.

Every time you interact with music, data events occur:

• You listen to a song and a computer ups the play-count by one.
• You buy a song and a computer ups the buy-count by one.
• You share a song and a computer ups the share-count by one.
• You stream a song and a computer ups the stream-count by one.
• You comment on a song and a computer ups the comment-count by one.
• You rate a song and a computer records your rating.
• You listen to a song, but you don't buy it. (this is called a lost sale)
• You skip a song repeatedly because you are tired of it.
• You repeatedly hit the next or seek button because you can't find more of what you like.
• You negatively commented on a song.
• Etc, etc., etc…

What the record labels of the future will have to do to thrive…
There are millions of artists in the world creating millions of new songs per year, which are being vetted and adopted by billions of music fans. Labels are going to have to do what auto recyclers do now:

Using sophisticated and fully automated song acquisition programs, labels will have to summarize and score every song / artist against every other alternative in the marketplace, as an investment in one wrecked vehicle artist usually means forgoing an investment in an alternative wrecked vehicle artist that carries a different matrix of costs and upside possibilities…