So what's the story? Is SoundScan supplying Handleman with information based, in part, on numbers from regional retailers like Mike Dreese--or not?
SoundScan's Shalett hadn't responded by press time to numerous phone calls, faxes, and E-mail messages requesting that he comment on the discrepancy between Cline's statement and his own.
Make no mistake: soundscan has revolutionized the music industry. It took a ranking system that was based largely on bribes and payola and made it, basically, honest. It leveled the playing field for small, independent record labels by ensuring that their sales are counted, too.
But SoundScan--and, by extension, any information-sharing system--also has its dark side. And Mike Dreese decided that, for him, it had finally overshadowed the light. "We had lost control of our data," he says. "I'm talking about taking a region and its specific tastes and dropping your pants and letting Best Buy and Wal-Mart and people like that come in and just scoop your customer."
Dreese is an exception, partly because he can afford to be. He's big enough and has enough clout to sever his ties with SoundScan and still maintain solid, productive relationships with the labels. Other trendsetting retailers fear that if they were to pull the plug, they'd lose so much label support that they'd disappear. Moreover, they say, they put a tremendous amount into promoting new acts. And they want those efforts--for both their and the artists' sakes--to make a difference.
Mark Cope, perhaps, sums up the status of information sharing via SoundScan the best. "I think it's generally a positive thing," he says, "with an asterisk next to it."
Thea Singer is the articles editor for Inc. Technology.
Company Secrets
Finances, sure. But salaries? Never
Linda M. Navarro
President and CEO
Sonnet Supply Co.
Hawthorne, Calif.
Sonnet Supply is one of three companies that form the Sonnet Group, a $10-million business that sells industrial supplies and cutting tools to the aerospace industry. Linda Navarro has been written up in trade publications for her policy of allowing any customer to review her costs to see exactly what profit she makes.
"I decided to let my customers see exactly what our costs are, because I was tired of hearing that our prices were too high. I tell customers they're welcome to see what I pay for our products, and so far not one customer has called me on it. They say that if I'm that open, I must have nothing to hide, so they don't need to see the numbers.
"It's beyond me why anyone wouldn't make the same offer. It used to make me so angry when a manufacturer would tell me we're making too much money. Everybody has this big illusion that Linda has these fat pockets. It's not so. I'm doing what it takes to take care of my employees and keep the company growing.
"I have 15 employees. I run daily reports that are open to everyone to review. That way, they know what's expected of them. They know where we are in relation to our goals. I treat them like adults. There's no need to hide things. I think if the goals are well-defined, you have a better chance of a hit than a miss.
"What I won't do is discuss my overhead. I don't talk about employees' salaries or what kind of bonuses are issued. Financial results? Fine. But not salaries. Those are personal issues. Revealing that would infringe on people's private lives. But I'm perfectly fine telling anyone who wants to know what a widget costs me and what my profit is. That's my story, and I'm sticking to it."
Company Secrets
Never reveal a customer's strategy
Gary Wheeler
Principal and Managing Director
Perkins & Will, Chicago
Four years ago Gary Wheeler, as president and founder of the $3-million interior-design firm the Wheeler Group (acquired in 1997 by Perkins & Will), acceded to a client's request that he team up with arch rival Shea Architects to design a 12,000-square-foot flagship store in the Mall of America. The decisions he made then formed the basis for his current thinking on when to hold or release information.
"Our profession is very closed. All we have to sell is our ideas, and understandably, people are very tight with them. So when we agreed to do a project with Shea, we all had to sit down and lay out what we were going to share. We decided to give them all the information about the materials and finishes we use, and about architectural details we'd created for things like ceilings and lighting and wall structures. Information like that can be a competitive edge, but we decided to put on the table anything that helped move the project forward on the client's behalf.
"What we chose to keep to ourselves was the business side of things, like our billable hourly rate, labor costs, and budgets. That's a competitive advantage too, but it wasn't one that was important to the success of the project. We were also concerned about antitrust. We were both pretty big players, and it was important that we not appear to be setting fees in such a way that together we could control the market.
"Since we worked on that project, I've become good personal friends with David Shea, president of Shea Architects. When I still lived in Minneapolis, we would get together and talk a lot about our companies. But the thing I wouldn't discuss and still won't discuss--with him or anyone--is which prospective clients I'm currently marketing to. And even after we've got a job and the contract is all signed, I would never, ever discuss what the client itself is doing, what its strategies are. Doing that could hurt our customer's competitive advantage, and it's our job to protect them.
