Wednesday, July 18, 2012

MakeMusic Take-Over Speculations

http://www.makemusic.com/Pressroom/Default.aspx?pid=555

http://www.sec.gov/Archives/edgar/data/920707/000092189512001507/ex99113da807845mak_071512.htm

http://www.facebook.com/pages/EEi-Band/363753580351771

To me, the recent news of the bid to take over MakeMusic is big news and I have some somewhat random thoughts on it.

I have a lot of experience with SmartMusic and don't really want to find a replacement for my teaching practice.

Especially when the perceived competition mentioned in the LaunchEquities Partners' SEC filing (Essential Elements Interactive) is still in beta.

It is not too surprising that this move is happening now:

  • The price of MakeMusic stock is down. 
  • The management has run through some people at the "C" level as well.  
  • The economy is down and that really has had an effect on school band programs.
The price of the stock has been down and that will give more upside possibility to LEP's side of the deal.  Nothing really wrong with that, it is still a "buy low/sell high" market.  I think there is lots of value in MakeMusic.  MakeMusic has one of the most popular notation products (Finale.)  I also believe that SmartMusic is in the lead is far as interactive practice/learning tools go. [No, I don't believe that I own any MMUS stock.  I am a mutual fund investor, so that my not be totally true and I haven't checked.]  

I don't really know why MakeMusic is going through upper level management so rapidly.  I have had the experience of working for 7 different principals in 8 years at the school I am currently at.  After that decade of somewhat similar experience, I am not so sure that those top positions (principal, CEO, COO) are as important as the people doing the actual work.  Maybe they were climbers moving on to greener pastures.

What do you really need?  Make sure you have sales people in place.  Supply lots of training for the end users.  Keep your products in the minds of users and possible users.  Do your product development.  When things start going well in the economy, the company will be ready to ride the wave.

When you look at MMUS's reports there doesn't appear to be many places to cut to help stop the losses.  They do look heavy on product development.  But this is the software business.  Stop developing and everyone will catch-up.  So there is a balancing act to be done here.  Keep developing, but probably not  at the major release a year pace.  I do think that Finale waiting to 2013 to update was the right thing to do.  Both Finale and SmartMusic are mature products.  I would focus on reliability across platforms for these computer-based projects.  

I WOULD be putting the pedal to the metal in iOS development.  Those darn iPads are going to be changing schools in a big way.  Paperless schools and Finale Song Book will go together nicely.  SmartMusic on all those iPads would be a major step forward too.

Yes, the economy has been down the last couple of years.  You wouldn't think that is a factor.  But I  have seen a number of families pull the family instrument away from the older brother or sister and give it to the a younger sibling to "try" band.  Beginning band numbers have been down.  School-owned instruments have made band possible for a number of kids.  Students are the real customer of SmartMusic.  Our registration is up this year by about 20 percent.  Things may be turning around for our families.  I think they will be for SmartMusic soon.

LEP is concerned that there is new competition from Hal Leonard.  That may be, but won't their product favor Hal Leonard Publishing's catalog?  I would prefer SmartMusic's cross-publisher catalog and the ability to add other works not in their catalog with Finale.  

As a teacher I also know that I am going to be the first line of tech support.  That makes the maturity of the SmartMusic product appealing to me.  Learning how to trouble shoot the new product is not something I want to do.  Most of the time, the mature product has the bugs worked out and I do know how to teach kids how to use it.

HL Interactive appears to be more web-based than SmartMusic.  (No, I haven't had the chance to try it.  Just going by their Facebook page.)  Yes, SmartMusic does use the internet to get material and send projects back and forth, but most of the work is done on the local machine.  I would be very concerned if either of these products depend too much more on the quality of the home web connection.  Schools with primarily rural families or kids behind the digital divide will have problems.  

There have been competitors before (In the Chair and iPass) that have just missed the mark for teachers and students.  Either in their ability to organize work or reliability.

I am really hoping that something positive happens with MakeMusic.  If they MMUS board doesn't hang on, I hope LEP is patient enough with the company.  SmartMusic has changed the way I teach for the better and I really don't want to go backwards.  If SmartMusic is going away, this may be the day I wished I had about 20 million dollars.

2 comments:

ericdano said...

Never heard of HL Interactive. Got a link for it?

Roger Whaley said...

Thanks for reading...

I miss named it HL Interactive. Their official title (and what I was trying to write) is Essential Elements Interactive.

The link is: http://www.halleonard.com/eeinteractive/

Not surprising that you haven't heard of it, it is still in development. Looks like they will be developing this like SmartMusic by getting the instrumental subjects developed before the vocal music side.