Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Niche Marketing Study: Determine a Potential Target Market for
Lokananta Studio
Steven Bunjamin
Lokananta studio is the first recording studio in Indonesia, besides it has a
superior recording quality it also has a remarkable historical value for
Indonesian music history, even Indonesia national anthem ”Indonesia Raya”
was first recorded in this studio. However, this studio is going bankrupt and
starts to be left behind by the government. This study is aiming to determine a
potential target market for this historical studio by analyzing a niche market that
concerns about recording quality of music.
Keywords: Niche Marketing, Music Industry, Two Sided Market
1. Introduction - History of Lokananta Studio
Lokananta is the first recording studio in Indonesia that belongs to the government, it was
established in 1956 by R. Maladi. At first, the purpose of Lokananta studio is to
accommodate RRI (Radio Republik Indonesia) that was spread to many cities in
Indonesia with many traditional music from different region. Lokananta studio was built to
archived the record of all the traditional music that exist in Indonesia.
Lokananta is the only recording studio that belongs to the government in the patronage of
“Departemen Penerangan Republik Indonesia”, it was the cultural centre of Indonesian
traditional music. Lokananta has a big contribution in Indonesia’s music industry, a big
name of Indonesian famous singer such as Waljinah, Gesang, Bob Tutupoly, mostly come
from this studio, moreover the original version of Indonesian national anthem, “Indonesia
Raya” is recorded in this studio. It also keeps many important records that have a
historical value to this country, for example is the speech from President Soekarno when
he attend the grand opening of Institut Teknologi Bandung (ITB) in 1959 is still archived in
Lokananta, and even ITB doesn’t have it.
2. Current Condition
From 2000, Lokananta is in the patronage of PERUM PNRI since “Departemen
Penerangan Republik Indonesia” or DEPEN is liquidated by the government. Because of
the liquidation of DEPEN, many of Lokananta employees gone to the other national
department, so the remaining employee is only the veteran employee from the previous
time. Lokananta is starting to be forgotten by the government, they don’t even receive a
portion of the country’s budget, so right now the loyal employee is trying to survive in many
ways to keep this historical studio alive.
They reproduce the old songs that was recorded in a form of vinyl to CD and sell it to
public, they also open a futsal field in the unused land that was located at the back of the
studio.
*Steven Bunjamin, School of Business and Management, Institut Teknologi Bandung, Indonesia. Email:
stevenbunjamin@gmail.com
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Lokananta studio still have over 40.000 pieces of vinyl that consist of traditional songs and
speech record, the employee are now trying to make it into a digital archived by remastering the vinyl record. Although the archived was a “treasure” for Indonesia music
history, it doesn’t stored well in Lokananta. The storage room doesn’t even have an Air
Conditioner to keep the vinyl away from being mildew. In order to maintain the
temperature at the storage room, Lokananta’s employee have to open the window in the
storage room in the morning and close it again at night. They use a coffee powder and
camphor to avoid over humidity in the storage room.
The current condition of Lokananta studio is very alarming, although it is a history for
Indonesia music industry, the government doesn’t give much attention to it. Recently, a
group of people who are concerns about the existence of Lokananta is trying to make a
movement called #savelokananta, it is a campaign via social media in order to increase
public awareness about the history of Lokananta, they also try to manage a crowd-funding
event for Lokananta but the result is less satisfactory. Couples of musician is also starting
to aware about Lokananta condition, a big name like Glenn Fredly, White Shoes & the
Couples Company, Shaggy Dog, etc are trying to help the studio by making a live
recording album in the studio, they also realize that the acoustic sound of Lokananta
studio is no match in Indonesia, it can produce a high quality sound with their “oldfashioned” tools and equipment.
3. Objective & Methodology
The objective of this research is to find a potential niche market for Lokananta studio by
conducting a depth interview to the CEO of Lokananta studio management to know about
the firms current condition, capabilities, and competitive advantage, also an interview to
School of Audio Engineering Jakarta as a leading music institute in Indonesia to know the
market condition and behavior. The author will also search for some opinions from a
music community in Bandung regarding to the quality of the studio.
4. A Potential Niche Market
In order to find the best market for Lokananta to play in, the strategic assessment process
is the first step to be done. It starts with the firm capabilities, competencies, and
competitive advantage. The best product to serve the market needs to be defined from the
strategic assessment process. The market for a records label like Lokananta is divided
into two sides, the first one is the creativity network which consist of the musicians,
producer, etc and the second one is the distribution network which consist of the listener,
retail store, channel, etc.
In terms of niche marketing, a marketing strategy that will be devised must consider a
firms capabilities, competencies, and competitive advantage (Thilmany, 2008).
 Capabilities
Lokananta studio is capable of recording a music work with live recording or multi-track
method, it is also capable to record a live performance of a big band since it have a huge
studio size (25x15x7m). The recording quality is no match for any other studio that exist
in Indonesia since it has a superior acoustic quality that was built by the expert back in
1956.
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
It is also capable to produce a music work in vinyl form, since it was Indonesia’s biggest
vinyl factory back in 1956. Currently, Lokananta also produce music in a form of Compact
Disc (CD), even a legendary song that was recorded back in 1956 are now available in
CD.
 Competencies
Lokananta’s main competency is the sound engineer that has designed the studio
perfectly for live recording, the wall are surround by an absorption panel and sound
diffusor that can distribute the sound equally to all side of the room. Every corner of the
room is also equipped by a bass trap to control the bass level of the sounds produced in
the room. For a live recording, a professional sound engineer is also present to help the
band set their instrument in an optimal position, each speaker and monitor will be divided
by a sound diffusor if needed to distribute the sound.
 Competitive Advantage
Lokananta studio has a very strong competitive advantage in terms of recording quality
especially in live recording. The acoustic quality is no match for others recording studio in
Indonesia., Indonesian market concerns about the sound quality is a big opportunity for
this studio. Historical value that the studio has can also become another added value for
creating a sustainable competitive advantage.
Another strong competitive advantage is the size of the studio, it has a huge size (25 x 15
x 7 m2 )
 Resources
Lokananta still maintain its studio in a good condition, but because it was abandoned by
the government, they don’t receive any operating money from the government. Besides
that, there are some tools and equipment like mixer, band set, computer, etc needs to be
changed in order to evoke the studio optimal quality.
Lokananta is capable in doing both live recording and multi-track recording method to
serve the market for the creativity network, but a single product needs to be defined to
make a differentiation strategy.
4.1 Multi-Track vs. Live Recording
The idea of multi-track recording technique is to record a different audio channel
separately and then mixed it in one tape after all the recording material is recorded. After
done with recording all the materials, the process continue into mixing process where all
the material that has been recorded separately will be combined and adjusted into one
track.
Live recording is capturing all of the sounds from a single live performance, without
overdubbing. Many musicians will feel that live recording is more “honest” due to the lack
of overdubbing, also the sounds will be more “blended” compared to MTR technique.
Playing in the same room can also make the musicians to communicate (nonverbally)
easier with the other band player, it can also add a great feel, groove and energy to the
music.
Besides it advantages, live recording technique also has several weakness, for example if
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
the player make any single mistake, the recording must be started all over again, it doesn’t
tolerate any single mistake. So in order to getting a flawless performance, the recording
time will increase significantly compared to MTR technique. The other technical factor is
that the acoustic quality of the studio must be good enough to produce the best sound
from the instrument.
4.2 Indonesian Music Trends
To further deal with the creativity network, the music trend in Indonesia needs to be
analyzed because the musicians are the main target market. The segmentation that the
author used is based on their genre.
4.2.1 Jazz Music Penetration
In 2005, Peter F Gontha started Java Jazz Festival in Jakarta; it is the biggest jazz festival
in the world. It brings a lot of positive feedback from Indonesian market as well as from the
international market, later on in the next year the news spread all over the world that
causing many people from all around the world are gather in Jakarta to see Java Jazz
Festival. This festival is bringing a big change to Indonesia’s music industry; a market for
jazz music is widely open. About three or four years later, jazz music is starting to reign in
the industry especially in the middle-up demographic segment. Later on, jazz music are
starting to penetrated into the middle segment, its start when many musicians are
acculturated their music with jazz, it was the beginning of pop-jazz, fusion, and funk-jazz
genre, the genre are showing a significant growth in the industry until the mid 2011. At that
time, jazz musicians are starting to show up in the television as a public spectacle.
4.2.2 Indie Music Shows Up!
Indie comes from the word “Independent” means free, not depends on something, just like
the philosophy of the music. The songs that are categorized in Indie music are the one
that is not following the music “pattern” that are favored in the market. This kind of music
has their own listener, a specific niche market. Musicians who claimed himself as an Indie
musicians usually record and sell their music on their own and not involving a major record
label to reach a big market.
In the 90’s the word “Indie music” is starting to come up, replacing the word “underground
music”. Underground music is referring to a music that are “running away” from a
mainstream music trends. PAS Band is the one who starts to release their album on their
own (Indie way), then many metal band such as Pupen, Koil, Burgerkill, etc release their
album with the “indie” method. It was the beginning of the Indie era where the youngster
are starting to make their own music, many musicians and bands are come up from a big
city in Indonesia with a various music genre.
Pure Saturday is the first un-metal band who make their indie album, it was released in
1995 and then followed by many names who are interested in making indie album. The
booming period was start when Mocca, a swing pop band from Bandung are successfully
sold 100.000 copies of their indie album. It was bringing a huge impact on the
development of indie music in Indonesia. Right after that, a big names like Shaggy Dog,
Superman is Dead, Rocket Rockers, and Superglad is starting to get an attention from the
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
music lovers. Even some of those names are getting a contract from a major record label
and bringing a big debate in indie idealism. Major record label is not always bringing a
positive effect on a musician, however the most important thing for a musician is a
freedom to express their feeling into a music.
Indie music is still getting a nice position in Indonesian market, a couples of names like
The S.I.G.I.T, The Upstairs, The Brandals, The Milo, Bangku Taman, Efek Rumah Kaca,
Teenage Dead Star, Seek Six Sick, The Adams, White Shoes And The Couple Company,
Goodnight Electric, etc. are starting to winning the competition in the market, even eight
indie albums is able to enter the top 20 best album at Rolling Stone magazine in 2008. It
proves that indie music quality in Indonesia is great and it can compete with the
“mainstream” music that are exist in Indonesia.
4.3 Types of Audio Format
Types of audio format is also needs to be determine in order to make a clear
differentiation strategy. There are some options available regarding to the development of
the music industry in Indonesia.
CD (Compact Disc) format is the most common format that exists in music industry
nowadays, almost all of the music listeners have their own CD player, it is the most
potential format from market size point of view. Besides that, piracy is another
consideration when choosing an audio format, CD is the easiest format to be ripped off, in
other words this format is having a high piracy probability that can be threaten the firms
and musicians income.
Vinyl record, commonly known as "a record", is an analog sound storage medium in the
form of a flat polyvinyl chloride (previously shellac) disc with an inscribed, modulated spiral
groove. A groove carved into it mirrors the original sound's waveform. This means that no
information is lost. The output of a record player is analog. It can be fed directly to your
amplifier without any conversion. This means that the waveforms from a vinyl recording
can be much more accurate, and that can be heard in the richness of the sound. But there
is a downside; any specks of dust or damage to the disc can be heard as noise or static.
During quiet spots in songs this noise may be heard over the music. Digital recordings
don't degrade over time, and if the digital recording contains silence, then there will be no
noise.
Market size for vinyl format is relatively small compared to CD, but it is a premium market.
A firm can set a higher margin for a vinyl product because the market behavior in this
segment is different; they are looking for a better sound quality that can only be gotten in
vinyl record. These days, not so many people have a gramophone (vinyl player), so, in
order to market a vinyl product a firm needs to do a deep market research. Nielsen
SoundScan release an interesting data about vinyl sales in America, this data shows that
starting from 2008, vinyl sales is continue to grow with a significant increase each year, a
new generation of vinyl player is also starting to produce by some firms in the industry, this
can cause a great comeback for vinyl in the market. Moreover, vinyl has a very low piracy
probability since the content is hard to be ripped off, moreover to make a vinyl record
required a specific tools or machine that can make a “carved groove” into the vinyl.
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
4.4 Potential Niche Characteristic
Based on its capabilities, competencies, competitive advantage, and current available
resources, Lokananta should offer its most unique service that is the live recording studio.
The most potential market for the creativity network is the indie musicians since they
usually have a good music skills to perform in a live records and mostly they haven’t take
any contract with any records label.
Indie music is also growing rapidly in Indonesia for the last two years; it can compete with
the other “mainstream” music that exist on the market. The way or method that indie
musicians used for promoting their album is also supported with the technology
development where they can record their music in their house or even in a small room with
a laptop. They can also market it online via blog or online community.
The most important characteristic for this niche is their indie (independent) idealism; they
will not follow any other party that will try to affect their musical ideology. This is why they
often refuse a contract with the records label. Their music is unique and sometimes can’t
be categorized into any kind of genre that is why they called it indie. The common
misconception is that indie is not a genre it is more to be an idealism of the musicians to
play and share music.
People who are listening to indie music usually come from the middle-up segment in terms
of their income. Indie music are only available through some online community or blog and
usually middle-low segment doesn’t have the access to this forum or community since
they are not familiar with the internet and only knows the music that was played on TV or a
radio. Other way to spread indie music is through a word-of-mouth that only effective
within the inner circles of the middle-up segment.
For the distribution network, the most potential media format is vinyl since it records a
better sound, it has a very low piracy probability and it will target a specific niche market.
The characteristic in this market is that the people are aiming for a better sound quality or
experience, they willing to spend some extra money to buy the product. It will make an
opportunity for Lokananta to increase its margin and play in the premium market.
The fact that vinyl is going to come back at the market is supported by some audio
companies that are starting to produce a vinyl player in this digital era, a company like
audio technica, stanton, and crosley are producing their new models of vinyl player this
year.
Many vinyl community are also starting to shows up in Indonesia, most of them are
created in 2013. A website called gilavynil.com, Facebook community such as Bandung
Vinyl Club, or even an online fashion forum like darahkubiru.com are starting to create a
thread called vinyl, vintage audio thread. This phenomenon is showing a great market
potential for vinyl. Moreover, the market exist in this segment are so obsessed with quality
and willing to pay a premium price.
The future of music is selling an experience, not just the music. Nowadays, in the open
source era people can just stream for the music they want to hear through the Internet
they don’t even have to download it. The market will not going to pay for music unless they
are given a different experience. Vinyl isn't just music. It's an experience. And one that's
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
worth paying for. (Mario Aguilar, gizmodo.com)
Indie musicians and vinyl media format is a very exclusive market to enter, specifically in
Indonesia with a wide variety of distribution channel the firm must choose the right one to
grab the market attention. The market is obviously a middle-up segment in terms of their
income and most of them are educated. A modern bookstore such as aksara and periplus
can be a good choice to market the vinyl since the middle-up segment will visit this kind of
place; moreover a modern bookstore are selling imported books and charging a premium
price for their customer due to their branding strategy. This will make the marketing
communication goes easier since the distribution channel has narrowing the market itself.
5. Conclusions
This study has shown that Indonesia has a great recording studio that has an important
historical value in Indonesia’s music industry. Current condition of this studio is tragic,
where thousands of work, speech, and national anthem is stored in an old room with a
less feasible facilities to keep the records fine. The author also assess the development of
Indonesia’s music industry, conduct an interview with some expert to find a solution for
Lokananta and come up with an interesting findings.
5.1 Recommendations
After determine the most potential niche market for Lokananta studio and did the strategic
assessment process (Capabilities, Competencies, Competitive Advantage). This study
also ends up with a simple implementation plan for Lokananta studio to come back to the
industry.
1. Crowdsourcing
Crowdsourcing is the best way for a niche firms who has a limited financial capabilities to
gather its resources since it doesn’t need a lot of money. Several findings about the
market condition in Indonesia is the most important point to be stressed in the
crowdsourcing concept then the firms competitive advantage is next.
The fact that many local communities are trying to save Lokananta is another good point;
the studio can ask the communities to help them in the crowdsourcing phase.
Communities will help the studio to expand its network to the market and investor.
2. Building the Trust
At this phase Lokananta can start to build an online campaign about their strength and
competitive advantage. They can also make a campaign about vinyl. They can show some
facts that make vinyl is better than any other media format in terms of sound quality, this
campaign can also be collaborated by some vinyl lovers and community in the internet.
To attract the creativity networks, Lokananta should show its strength in terms of live
recording studio and the recording quality. They can also ask for the review and testimony
for other musicians who have done a record in the studio. Live recording method can also
be a challenge for some musicians to prove their musical skills; this specific behaviour can
Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
become a good material to generate a marketing strategy.
3. Market Penetration
After gaining some trust from the creativity and distribution network, the firms can starts to
enter the market through some distribution channel. A vinyl store and premium bookstore
in Jakarta can be a good channel to starts with; because those distribution channels are
already have their own market, which is a middle-up and educated person. Another great
fact is a small size distribution channel such as a local bookstore and vinyl store usually
doesn’t ask for a lot amount of money for entering their network.
The first market penetration can also be seen as a market-testing phase, before decided
to go with this market it is a must for a niche firms to test the market first. Asking for some
reviews, comments, and suggestions from the market is the best way to understand the
market completely. Thankfully in the social media era gathering a valuable information and
feedback from the market is no longer needs a big amount of money.
4. Listening Phase
Listening is the key to success in the niche market, since the market has their specific
needs to be fulfilled. Finding their unmet needs or sweet spots will help the firm in winning
the competition. Always give an incentives for peoples who would like to share his
comments and reviews for the products, evaluate the firm current service and product
quality in order to serve the market better in the future is the other important factor to
survive.
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Thilmany, Dawn, Ph.D. (2008). What are Niche Markets? What Advantages do They
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Toften, Kjell., Hammervoll, Trond. (2009). Niche Firms and Marketing Strategy, European
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