Internet business success story

Matthew Covey

Can a small firm operate a successful business selling music CDs from the Czech Republic? How can e-commerce work successfully now that the Internet bubble has burst? Can a business be tied to a cultural mission? Tamizdat, a Prague-based non-profit firm selling alternative music from Eastern and Central Europe over the Internet is out to prove that all these things are possible. The following report was prepared by Katya Zapletnyuk.

When two Americans Matthew Covey and his partner Heather Mount first came to Trencin in Slovakia, in 1993 their goals were purely academic. But very soon the two teachers at a small local university discovered that Central Europe has a very interesting and diverse alternative music scene.

So, in 1995 Covey and Mount started Tamizdat - initially to do concert promotions in Boston, New York and Washington DC.

As the work kicked off the partners realized that there were many other problems. One was that journalists refused to review bands whose CDs were not commercially available. To eliminate this problem Covey and Mount decided to start a CD sales project in order to set up a system that at least came close to normal distribution.

The market came as a surprise. They set up a website, and before they even began to promote it, they were bombarded with orders. A typical example was a man from Mexico City who ordered a copy of an old Plastic People album, a copy of a Croatian digital hard core album and a Hungarian folk musician.

When Covey and Mount finally decided to go all out for putting their CD sale project into practice in 1999, it was before the internet bubble had burst, and there were many opportunities to raise money. But they decided not to admit any venture capital investment and launched the first web site with $40. This meant that unlike many other internet businesses they never got their fingers burned.

After one year of running the company part-time as a hobby in New York and later in Amsterdam, the couple relocated to Prague in 2000, to be closer to the bands they were working with.

As setting up a small business in the Czech Republic is a notoriously difficult feat especially for a company balancing between the commercial and non-commercial, Tamizdat remained registered as a non-profit organization in New York and is functioning under a simple trade license in Prague.

When Tamizdat started its organizers would use their old contacts to look for bands. Now bands are coming themselves. Covey says that he doesn't necessarily like all the music, but some of it is important for other reasons. For example, the first ever Serbian punk band is on their books. The company has systematically avoided commercial pop music.

Like every normal business Tamizdat is trying to figure out how to make more money for itself and musicians whose music it is promoting. One possible way paradoxically is trying to get the music used in consumer commercials. For 30 seconds of his or her music used in a toothpaste TV commercial a musician can get more money than from years on the road. But at the same time the company is trying to avoid taking on management-type responsibilities because really the purpose is to help artists and labels figure out how to do things for themselves. So paradoxical as it may sound, their long-term aim is to render themselves superfluous.

Authors: Katya Zapletnyuk , Ian Willoughby
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