Q: What’s your best tip for other entrepreneurs?

A: It’s not about starting a business. It’s about solving problems. That’s what being an entrepreneur is. Find a problem that there’s a better way to solve. Get a vision of how it could work better, and stick with it.

Ron Shaich, Chairman of Panera Bread, in the "Wall Street Journal"

This is why all those online music startups failed, you know the ones that were going to revolutionize distribution, they didn’t know who their customer was!  It wasn’t the music listener, but the major labels and publishers.  And their problem wasn’t easy access or availability, it was revenue replacement.  Unless you can convince rights holders they’re going to make a ton of money with your online idea, it’s a nonstarter, they just won’t license it.  Doesn’t matter that you’re arguing about an inevitable future, how much easier it will be for consumers, it comes down to cold hard cash.  The labels lost it and they need it. Can you solve that problem?

Kind of like Ticketmaster.  If you can find a way to sell tickets to consumers more cheaply, great.  But your site better not work worse than Ticketmaster’s, then you’re going in the wrong direction.  This doomed Live Nation’s ticketing efforts.  The system didn’t work upon launch.  And no matter what improvements were made, public perception was that LN’s system didn’t work.  And once again, we’ve got an issue of rights.  Buildings and promoters are less worried about end consumer experience than cold cash.  They’re not sacrificing profits in order to make the consumer happy.  Without profits, they’re not in business.  And they’re greedy, just like the acts.  That’s what the Ticketmaster fees are all about, they’re hidden profit centers for the acts and promoters and venues.  They don’t have a problem with Ticketmaster, you do!

And now we know why Amazon’s music efforts are a nonstarter.  The public did not have a problem with iTunes.  And sure, Amazon may blow out music at a loss, but how do you get it into iTunes and on your iPod?  People buy from iTunes as insurance, of a hassle-free experience.  Come on, everyone hates tech trouble.  Who do you call?  Who do you e-mail?  Actually, at this point it’s clear you’re on your own.  You’ve got to do online research.  Unless you’re an Apple customer.  Then you can go to the Genius Bar.  That’s a problem Apple solved.  You buy their products and you’ve got someone who’ll help you.  Ever try to get help at Amazon?

And Sirius XM has solved the problem of endless radio commercials.  But it hasn’t solved the problem that their stations sound just like the dreaded terrestrial ones, just without ads.  That’s half a solution.  Which is why subscriptions have stalled.  Twenty million people will pay to get rid of commercials.  But in order to get everyone to pay, you’ve got to be offering a service that’s different from what’s available for free.

And speaking of free, Pandora’s successful because it solves the filter problem.  What do I listen to?  There’s a plethora of music online, where do I start?  By plugging in the name of your favorite act in Pandora.  Build a better mousetrap than Pandora, give better recommendations and you can kill the site.  Only one venture in every category succeeds online.  Barnes & Noble has no traction selling books online and Borders is barely in business, everyone just goes to Amazon.  Amazon sells books very well. They were there first and got it right, like Apple did in music.

In order for the aforementioned Live Nation to be successful, it’s got to solve the problems of acts.  Which is they want to make more money without giving the appearance of screwing their fans.  Sure, LN overpaid for years, but now they’re in trouble if they want to pay less.  Because the acts are not loyal to LN, they’re loyal to money.  In order to triumph, LN’s got to not only pay more for gigs, but prove to acts that they can upsell ticket buyers on additional merchandise.  We keep hearing about this, but it’s yet to happen.  So, right now, unless an act wants to play in the sheds, it’s open season in the concert business.  If you’re willing to pay, you can promote the act.  Because there’s just nothing special to LN.  Used to be they paid more, but with that debt…

And the problem acts have is exposure and getting paid.  Which is why the major labels are faltering.  Because the majors can only expose mainstream/Top Forty fare and they don’t want to pay more, they want to pay less for more rights.  That’s not an enticing deal.  Certainly not if you’re not making Top Forty music.  Unless the majors find a way to sell music in categories other than Top Forty, unless they provide more services for their 360 deals, they’re screwed.

And indie retail will continue to die, because most people don’t have a problem with online music.  Sorry, it’s the truth.

And new venues will always have an uphill climb, because people don’t go for the building, but the show.  The problem is getting tickets to see the desirable acts.  StubHub fixed this problem, as did the scalpers, that’s why they’re triumphing.  The acts have platinum packages, there’s talk of airplane pricing, which no one likes when flying, I don’t know why they’d like it in concert tickets, the only solution is for the act to truly control the ticket by going paperless.  But that eliminates shenanigans…  But if you’re in it for the long haul, it’s the only way to go.  Then again, if you’re a flash in the pan, your problem is how can you make as much money as possible as quickly as possible.  Don’t worry about screwing your fans, they won’t care about you two years from now anyway.

And if you’re making music…  The consumer’s problem is not that he can’t find enough beat-driven Top Forty music.  It’s that he can’t find anything new and innovative that he will pledge allegiance to.  Unless you can make this, you’re on a long hard slog.