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case study

Singer-songwriter Steve Bell with Guitar

The challenge

Steve Bell hung up the phone and shook his head. Another Christian bookstore had gone bust. This meant that another shipment of compact discs, DVDs and songbooks would have to be written off as bad debts; the fourth time in the last two years. Combined with a recent concert cancellation, the Juno-winning singer-songwriter was left wondering if it was time to either hang up the guitar or to find a new way to play it.

The background

Mr. Bell grew up on the Canadian prairies as the middle child of a pastor's family. After finishing high school he played in a variety of musical ventures, including the folk trio Elias, Schritt and Bell.

In the latter half of the 1980s, he began to explore the connection between his Christian faith and his music. This culminated in the 1989 release of his first solo project Comfort My People. After being turned down by several established labels, Bell released the album on the independent Winnipeg-based record label, Signpost Music.

The next 15 years featured a steady flow of developments including over a dozen albums, two Juno awards, and concerts in regions as diverse as Poland, Guatemala, Bangladesh and Israel. Part of Mr. Bell's success was also attributable to the synergistic working relationship he had with his partner, recording engineer Dave Zeglinski, who managed the business end of things.

Things were looking up for the musician that Billboard Magazine called "a Canadian musical treasure." In fact, things were looking up so much that in the early 2000's, Signpost Music signed a half dozen other artists, including Carolyn Arends and Bob Bennett.

A masterstroke had been a symphonic endeavour featuring Mr. Bell performing with the Winnipeg Symphony Orchestra, followed by the release of the 2007 album The Symphony Sessions. The project was so well received he had repeated the concert experience across Canada with symphonies in Edmonton, Calgary, Saskatoon, Kitchener, Thunder Bay, Hamilton and Ottawa (and even a U.S. date with the Nashville Symphony).

Life, as they say, was good.

The problem

Five years ago, Mr. Bell and Mr. Zeglinski begun to notice change in the industry. It wasn't incremental, but quantum; not single-dimensional but multi-faceted.

First, the music industry began migrating to the Internet. The digitization of music had dire consequences on Mr. Bell. It meant that people were less inclined to pay $20 for an album, particularly when they could buy a used copy for a fraction of the price or download some – or all – of the albums online.

In addition, many specialty faith-based bookstores were either shutting down or going broke as big boxes like Wal-Mart and Best Buy increasingly dominated the music industry. This shift was critical to Mr. Bell as each independent's closing meant one less distribution point for albums and concert tickets. In a world increasingly moving toward iTunes, and the Big-Box model, old distribution formulas were being shaken to their core.

Complicating matters was the fact that recording a digital product had become so easy; meaning, essentially anyone could get into the 'music ministry' business. Adding insult to injury, many of these new entrants were willing to cut their album and ticket prices in order to "get the gig" and "sell the album."

Mr. Bell was fond of an Old Testament-inspired maxim that said "You can't see the new Jerusalem if you can't leave the old Egypt." But what exactly, he and Mr. Zeglinski wondered, did the "new Jerusalem" look like? And while he knew he almost certainly had to let go of some parts of his old business model, what parts were essential to keep?

The solution

In early 2010, Mr. Bell and Mr. Zeglinski went through a no-holds-barred re-assessment of their accomplishments over the past two decades, as well as an in-depth analysis of the current marketplace. Taking leads from the entrepreneurial innovations of fellow Canadian Loreena McKennitt, the pair came to several conclusions about how they would proceed.

First, they sensed they were called to keep making music, but in a different way. This 'different way' meant making some tough choices; one of which included releasing all of the artists they'd brought into Signpost only a few years earlier in order to focus exclusively on Mr. Bell's music.

A second key change was moving toward articulating a new business model; more specifically, a new funding model that included the launch of IncarNATION Ministries. The organization was created to allow Mr. Bell's supporters to become modern-day 'patrons of the arts.' This marked an important shift for Mr. Bell, as it reminded him that his raison d'être centred on addressing people's primal need for God-inspired beauty. A third key change involved seeking grants available to registered Canadian arts groups, which included Signpost Music. While IncarNATION – founded by David Jennings of Vancouver – had already been in action since 2004, recently it became evident that fundraising efforts needed to be stepped-up, adding sponsorships and seeking additional investors.

While Mr. Bell continues to meet some speedbumps along the way – including a physical disability with his arm that mean an entire summer off guitar-playing, Signpost Music continues to 'point its special way forward.' Mr. Bell and Mr. Zeglinski are currently exploring a variety of new projects, including a new album scheduled for release in early 2011 and some novel e-book ideas that would centre on reintroducing some of Mr. Bell's earlier works alongside selected scriptural readings and devotional meditations.

Special to The Globe and Mail

Reg Litz is a professor in the Asper School of Business of the University of Manitoba.

This is one of a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Your Business website.

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