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May 2013

Brokerage Design -

Digitize Brokerage's Message & Style

By By Jeremy Conaway

May 2013

By Jeremy Conaway

One of the real joys of being engaged with the real estate industry, at this particular moment in its history, is the opportunity to understand the course of the industry's current migration while, at the same time, being able to identify the behaviors and adaptations that will allow certain of its present brokers and practitioners to utilize the energies generated by the current transitions to move their businesses and careers to the next levels. Frequently this effort involves discovering other industries that have previously encountered, or are currently encountering, similar challenges and then studying how their stars and best players topped their challenge.

Dr. Steven Rothstein is one of those interesting people that life allows you to meet from time to time. Steven's life is all about music composition. He holds a Ph.D. in music composition from UCLA, an academic and teaching relationship he continues to this day even as his career expands into the world of video music composition, recording and production. During a recent series of interviews and interactions (including my first visit to a vegetarian restaurant) in New York City, Steven introduced me to the digital recording world and helped me understand the mechanics of both its transition and its new reality.

The parallels of many, if not most, industries today are noteworthy. The process begins when either or both global investors and digital technology vendors discover industries and professions that have (1) traditionally relied heavily upon analog or manual (A.K.A. human) processes, like medicine, music and real estate, and (2) where experts deem an excessive amount of revenues and opportunities generated by those industries accrue to the sole benefit of the industry's practitioners rather than being shared on an equitable basis with that industry's owners or investors.

The invasive procedures utilized by these players are quite predictable. Automation through technology is generally the first step. Research into the traditional internal practices of such an industry frequently discloses significant levels of inefficiency and waste. Which is to say that, in all too many cases, revenues that might well drive appropriate returns on investment are actually being expended to no one's benefit because organized practitioners refuse to modify traditional practices.

In the case of the music recording industry, this process traces its origins to the period of 2002 - 2005. Since that time this industry has been radically transformed by the introduction of composing software such as Sibelius, which claims to be "the leading music composition and notation software." Such transformation also leans heavily upon the existence of previous resources; in the music industry's case MP3 based technologies and the overall enhancement of the Internet itself. Sibelius software allows composers to both input their composition and perfectly play back the specific notes using the sound of selected instruments without human performance. This has had, and continues to have, a profound impact upon that industry's products and profits.

While the availability of digital composition technologies have had a major impact upon the levels of creativity and innovation that are being seen in the music industry, an even greater impact has been experienced with respect to long standing music recording studios. In fact, over the past year several long-standing and even famous recording studios have announced that they are shutting down, leaving literally thousands of musicians, directors and associated professionals out of work with little or no hope for the future of their performing professions.

A secondary impact of this process has been what contemporary economists refer to as vertical disintegration. In plain English this means that the introduction of enhanced technologies into the music recording industry has paved the way for a shift of power into the hands of third party investors. Many experts argue that this shift has been to the disadvantage of both the industry and the consumer.

At the same time other experts argue that these same technologies also contribute to the democratization of the industries and professions that they touch. In the case of music, the Sibelius software is widely available and is very affordable, thus allowing composers like Steven Rothstein to expand their capabilities, competencies and potential for professional and economic success. Perhaps poetically this opportunity is not available for those practitioners who argue that they have some manner of constitutional right to engage in traditional practices.

The relevance of these factors to the real estate industry is absolute. There is more than adequate evidence to establish the fact that both the global investor and the technology have discovered the real estate industry and are moving quickly to create a power base. There is also evidence to support the fact that a significant segment of current practitioners, especially those from the boomer generation, are refusing to transition to processes, technologies and procedures that might effect a more equitable distribution of revenues. These factors would suggest to some that the die has been cast.

But, wait! The music recording industry is prepared to offer yet another superb example of what talented, creative and innovative individuals can do to meet the challenges of the investor/technology impact.

Enter the Piano Guys. First of all, find their youtube.com channel at http://www.youtube.com/user/ThePianoGuys. Spend a few moments validating the effectiveness of their music and their solution (it is, after all, remarkable).

Here is a group of five musicians that have been together less than three years, had little or no personal or investor funding, have completely avoided traditional entanglements, yet have used the very processes that threatened to frustrate and even defeat their professional dreams in a manner that has rocketed them to the heights of success and, seemingly, financial security.

When all is said and done, what the Piano Guys have done is ridiculously simple. They merely identified what made them vulnerable (in this case digital composition) and turned it to their benefit by (1) adding a video component and (2) surrounding the entire package with an amazing level of creativity, high definition, innovation and, perhaps most important of all, joy.

The lessons presented by the Piano Guy's story have an absolute reference to the real estate industry. There is no reason for today's brokerages and/or agents to be defeated by global investors, technology vendors or even Big Data. Individual and team creativity and innovation have always outperformed third party packaging and power. That is one of the things that make capitalism great.

Learn how and why you are vulnerable. Discover what makes you or your business special. Take that unique quality to the next level. Play it out on a mountaintop, a beach or on the rim of a canyon. Find your rhythm, capture your pace and play out your destiny. This is the greatest time to be in the real estate market in the past thirty years. You can do this.