July 10, 2014

Volume 10 - Newsletter 14

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Purple is the New Green

Jeff Hicks, MAI
President

The Dohring Group
RealWired!

"Dearly beloved, we are gathered here today to get through this thing called life," the opening words for the headliner Prince last week at New Orleans' Essence Festival. Seems like a long way for me to travel just to go to a concert, but in my mind, it was not just another concert. You see, I had never seen Prince and he typically plays in the US once a year and a few times internationally. So I was super excited when my wife got me tickets a number of months ago, anticipating a sell-out.

Other bands at the three day concert included some other 1980s vintage artists like Lionel Richie, Nile Rodgers and a super entertaining Charlie "Uncle" Wilson. There were also very fun contemporary artists like Janelle Monae, Liv Warfield and Mary J. Blige. Prince and the Revolution were very big at about the same time as Lionel Richie. Sadly Lionel seemed like a cruise-ship karaoke entertainer (albeit a very good one) resuscitating the past with a montage of hits, while Prince seemed effortlessly relevant and contemporary.

Like our appraisal industry, the music business has experienced structural changes with streaming Pandora, Spotify, Beats Music, YouTube and satellite radio. Product placement in commercials, movies and licensing deals, and to a lesser extent piece-meal song download services like iTunes, is for many artists the limited channels of revenue due to the death of "hard" CD sales and decline in touring popularity for the younger audience.

Prince tightly controls the video and music content on the Internet, greatly limiting its distribution. He rarely does interviews and seems to live up to his iconic and eccentric image as a true creative artist, not just cranking out songs in the hopes of being the next "big thing." New artists seem to toil to stay relevant with a fan base that often has the attention span of a squirrel high on Starbucks caffeine. Fame is fleeting and music consumers want it free and quick, while at the same time offering limited bite-sized loyalty.

The appraisal industry faces similar challenges, not in distribution of its content, but its relevancy. In practical terms I'm talking about the ability of our industry to control the path of its change. I see an absence of younger folks wanting to enter our field and the established appraisers rightly concerned with keeping the bar high. Appraising as a career seems like a long road for those just entering the workforce with unclear rewards for their effort.

So where is our industry going? Technology has greatly impacted our bottom line, for some it has increased our productivity with more cash in our wallet, while others struggle with its implementation. Some have spent money on industry-specific software, infrastructure and consultants with mixed results. Failure typically comes in a one-two combo: 1. Lack of buy-in from appraisers and staff and 2. Lack of proper and ongoing training.

I think we can learn from other industries going through changes. Take the legal field; their billable hour is stagnant or dropping while rising for a very small percentage. Graduating lawyers today struggle to find a job due to over-supply in many cities. Even veteran attorneys are scrambling to differentiate their work with specialty training coupled with extensive marketing and sales. Those last two items make appraisers cringe, marketing and sales? Sometimes appraisers hold themselves to be the third party purveyors of the market value truth and ignore Business 101 which demands us to think about appraising as a business and not a trade.

Prince is constantly working on new material. A real musician is always in creative mode. Like his music or not, you have to admire his trend-setting attitude and effort. I suggest we work harder on establishing new and maintaining existing relationships, while paying attention to the evolving business model of appraising. I for one don't want to end up in a cheesy bar in Tokyo drinking sake singing Lionel Ritchie karaoke. Think purple.

If you would like to join a discussion about this topic or Appraisal Best Practices, go to our blog or contact Jeff Hicks.

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