The Structure of Electrical Power Generation and Distribution in Texas

Energy deregulation in Texas has been set in place for more than 10 years already and has given the people of this state as well as others the power to select their electric company or retail provider. Although the Texas consumer gained certain unique benefits with the deregulation of Texas electric companies particularly on retail distribution, some people are still confused about how the process of energy deregulation actually works particularly on the roles of electric companies and other players in Texas’ energy market.

To better understand how energy deregulation actually works, the consumer should have a firm understanding of what roles each player in the energy market has. In its most basic sense, energy deregulation applies only to the retail providers, with the manufacturing and transmission component remaining intact and unaffected. Each of the major elements in the market: generation, transmission, and retail – each of which is a distinct electric company in itself – plays a major role in ensuring that the Texas consumer receives electrical energy in an efficient and reliable manner.

A Historical Perspective

During the old days of energy grid monopolies and before energy deregulation was ever put in place, a single electric company provided all the components of the utility from generation, to transmission and distribution and finally to retail. When energy deregulation was institutionalized, it revolutionized the energy market in states like Texas and California where the system was implemented and created better competition among existing and emerging electric companies.

Energy deregulation also paved the way for renewable and considerably cheap electricity sources to enter the energy market, resulting in more choices for consumers particularly the option to choose environmental friendly sources of electrical energy.

The Current Structure in Texas

The following describes the currently deregulated structure of electrical power generation and distribution in Texas and among Texas electric companies:

* Power Generation

These electric companies are responsible for the generation of electrical energy through various means including the use of fossil fuels, coal, biomass, hydroelectric, natural gas, nuclear, solar, and wind energy. Power generation is not affected by energy deregulation as these power plants produce and sold to the distribution and retail electric providers. These Texas electric companies, particularly the leading wind energy generators in the country, provide a considerable portion of energy capacity not only for Texas but for other parts of the United States as well.

* Transmission and Distribution

Texas electric companies responsible for transmission and distribution are called Transmission / Distribution Service Providers or TDSP. These companies remained the same after energy deregulation was implemented as they continue to have control and maintenance of electrical transmission infrastructures. TDSPs continue to be responsible whenever electrical lines are down, and will provide the repair and maintenance needed should this eventuality take place. Electricity they own can also be sold to the retail providers aside from charging them monthly maintenance service fees.

* Retail Distribution

Texas electric companies that were directly affected by energy deregulation are the Retail Electricity Providers or REP’s. These are the entities that sell electrical service to consumers, whose accounts can be monitored through the monthly electrical bills sent to them by the REPs. These companies turns a particular service on or off and is responsible for directly communicating with end consumers. Energy deregulation spawned the emergence of various Retail Electricity Providers which compete for consumer attention through discounts, rate plans, incentives, renewable energy options and quality of customer service.

The Right Mix For Seamless Distribution in Indian Retail

In retail business, distribution plays a key role, as it decides the where, how, whom and when for products to reach their ultimate destination. Manufacturers and retailers need a number of distribution models, channels and intermediaries at varying degrees of importance and priority, depending on the consumer, product or region. Retailers have to zero down on a right mix of distribution model and network that can enact the balancing act to the fullest, profiting everyone involved in the entire chain. There are no textbook solutions or standard procedure to facilitate a flawless distribution in the retail sector; however, the parties involved can give serious thought to essential general parameters that can help them move ahead in the right direction.

Retailers have to plan more than one distribution model for different segments or regions. The supply chain network may vary according to the requirements of either the product or the consumer. A distribution structure that is perfect for home furnishing may turn out to be a failure when it is used for food and beverage category. Likewise, what works in Maharashtra might not have the same effect when it is implemented in Himachal Pradesh. Retail market in India is as varied in nature as the demographics of the country; each market has to be dealt locally to gain a competitive advantage.

Identification of the right consumer is of paramount importance in distribution. Not every company needs distribution networks that have a pan-India presence. Some products or services may have consumers throughout the country, while certain products may sell only in select regions. Woolens would have no buyers in southern cities like Chennai, that don’t have the privilege of experiencing a cold winter. You have to decide on a supply chain network keeping in mind your consumer base.

Indian Retail companies should also be ready to work with multiple networks, given the very disjointed and fragmented nature of distribution channels in India. Companies sometimes use hundreds of distributors and stockists to ensure that their products reach millions of consumers in every nook and corner of the country. Of course, the number of channel partners or distributors is commensurate of your target consumers and segments. It is also important to invest on training or coaching the people involved in your retail network, as they can give you very high returns in the long run.

Targeting a consumer segment that fits the bill for your business, identifying the areas and regions where you can get your target consumers and then picking the right mix of distribution model(s) would keep you ahead of your competitors in the business.

How to Distribute Your Digital Music

In the age of digital music distribution, with its endless channels and intricacies, it can be a daunting task for independent artists to try to navigate through all the requirements of each digital music distributor in order to get music tracks uploaded and ‘stocked’ in digital stores such as iTunes. Luckily, a few enterprising services have sprung up on the net to act as the aggregator and a one-stop-digital distributor-shop, thereby greatly simplifying a very complicated process. Today we will review several such services, one of which in depth, called The Bizmo.

Music Promotion

Our focus here at Audiofanzine has always been gear- reviewing, updating, testing and breaking. But gear at the end is at the service of music creation. Once music is produced, mixed and mastered, we will want to release the music for everyone to hear. Artists eventually face the marketing and distribution cross roads, and more and more, in the age of DIY and independent artists, artists will try to upload their music directly on iTunes, Amazon MP3, and other leading digital music stores while at the same time doing a bit of viral marketing and general promotion. It forces an artist to wear many hats these days, and to dedicate more time than ever before to the business of promoting music. Once a single is ‘done’, the work has just begun, and between tweeting, performing, publishing and selling (and perhaps a day job), an artist is stretched thin to say the least.

Every artist knows that in order to promote music you should upload tracks to your various social network profiles, do an email campaign, book gigs, woo bloggers and magazine editors to review your music, schmooze, network, beg, cajole and talk to anyone online and off who will give you 2 minutes of their time. But today, we’d like to take this a step further and introduce you to a service we recently discovered here called The Bizmo, which, in addition to the to-do-list above, can be a very useful service to help both your small time viral campaign and your big time music distribution endeavors, with minimal headache considering the mammoth task at hand.

The Microstore Widget
The Bizmo microstore widget can be a great addition to your viral/online marketing efforts by embedding it in your personal webpage, My Space/Face Book profiles, or email blasts. It is a good tool to keep in touch with fans of your music and gives your selling efforts that personal intimate touch of a ‘mom and pop shop’.

Newcomers to the Bizmo website will be glad to find a simple, uncluttered homepage, with clear and concise instructions as to what the Bizmo does and how you can join. Registration is simple and easy and thereafter you find yourself in the microstore widget space where you can easily upload and sell:

  • Music Dual download
  • Videos Dual download
  • Tickets to your gigs
  • Merchandise (e.g. t-shirts)
  • E-books, Sheet music or similar pdf formatted products
  • Ring tones Dual download

All the digital products are so called dual downloads. That means they are delivered both to your customers mobile phone and to their PC as well. Each time someone buys a digital product via the widget they get three things:

  1. An option to download the product to their PC straight out of the microstore
  2. An email with the download link in it.
  3. An SMS message (If they supplied a phone number) containing a link that downloads the content directly to their phone.

OK great. So once you have stocked the widget with all your products you can upload the widget directly to your Facebook, My Space, Ning, and Sky Rock profiles if you have them – or to any other website you manage by copying and pasting the html code. The process is relatively straightforward and simple from the My Store page on The Bizmo. On My Space it worked like a charm and within minutes our Audiofanzine microstore was embedded on the homepage of my personal profile for everyone to see. On Facebook, the situation is less ideal as the widget finds itself embedded not on your profile homepage but under the ‘Shop’ tab. Apparently, though this is because The Bizmo has a hard time catching up with Facebook’s ever changing code…Hmm, so does everybody else.

The good thing about the microstore is that it is free to set up and use. Second, we find the design attractive, clean and clear. Once you edit your store it is automatically updated everywhere almost in real time. We very happily encountered no bugs along the way.

Money Matters
If you are not sure what to charge for your products on the microstore, The Bizmo has created a small guideline for you to reduce thinking time. The amount you earn from each sale depends mainly on 4 factors:

  1. The price you set: You decide the retail price from the above price brackets; your profit is generally a percentage of that price.
  2. The type of product you sell: External costs vary between products, e.g. shipping for T-Shirts
  3. The payment method the customer chooses, e.g. charges for mobile phone payments are much higher than on credit cards
  4. The currency the product is sold in. The Bizmo operates with several currencies and the bank exchange rates vary.

The average return is more or less 70% of the retail price. The money is deposited into your Pay Pal account which you can withdraw whenever you’d like. If you have a Bizmo Silver account you get 100% of the retail price.

We should mention that The Bizmo was not the first to come up with this type of widget, and Nimbit, a veteran in the fields of direct-to-fan sales and marketing solutions for independent artists, was first and is the market leader. But today we find that at least when it comes to the microstore widget, The Bizmo offers more products for sale on the widget for free! While Nimbit does pay out 80% of retail price, their free service only includes music selling. If you want to sell tickets, t-shirts, DVDs, merchandise etc. on Nimbit you will have to upgrade to the Nimbit Retail account at $9.95/month or $99 for the whole year.

Super Distribution
While The Bizmo microstore is a nice freebie to have, The Bizmo’s music distribution system is “Super”, as they call it. Super or not, we will soon find out, one thing is clear: if you want to graduate to the big times you will need at some point to grapple with global distribution systems such as iTunes, Amazon MP3, Napster, Spotify etc.

Getting a track to go live on iTunes or Napster for example can be a tricky business. Every retailer has its own requirements. iTunes, for example requires a completely different format called Apple Lossless. Each has its own idiosyncrasies regarding artwork formats, quality and content. Moreover, today big distributors actually do not accept submissions from independent artists and require artists to actually go through an aggregator! This is because operationally it is extremely more burdensome to deal with a torrent of individuals uploading music rather than a few big aggregators and labels. Furthermore, when settling royalty payouts it becomes an accounting nightmare for music distributors if they need to settle millions of individual accounts.

In addition, for each track you will need to supply:

  1. An ISRC (“International Standard Recording Code”) for tracking and accounting purposes.
  2. A Universal Product Code (UPC) or barcode exclusively associated with your release. Getting these codes by yourself is also a bit of a headache, and can cost up to $50 per code.

Being that there are dozens of major retailers that your tracks should be on, not to mention hundreds of other retailers that you might want to distribute your songs on, an independent DIY distribution project for your music can take months and you might lose your sanity along the way. And as we mentioned before, in most cases big distributors will not accept submissions from individuals. Hence, there is almost no choice today for the independent artist/label: you MUST use an aggregator to distribute your music.

Hence, here The Bizmo launched a service whereby it acts as the ‘super label’ and you give it the non-exclusive rights to submit your music to digital retailers on your behalf to iTunes, Amazon and over 130 retailers for $34.95 US per year regardless of how many tracks or albums. The Bizmo’s cut? 15% from revenues you receive from selling your music. In this regard, facing the competition, The Bizmo has rightfully earned the title “super distribution” as it distributes your music to the widest range of stores. Yet, as the old adage goes- “it’s not the quantity but the quality that counts”, and an iTunes distribution can be a lot more valuable than distribution in 50 lesser known stores. Still, it’s impressive.

So how does it work? Unfortunately, if you’ve already uploaded your songs to the microstore widget you will have to upload them again on the Super Distribution system, as the latter is a whole different ballgame so to speak with much stricter guidelines and standards. Next, the SD (Super Distribution) system will quickly generate for you all the UPC and ISRC codes for your tracks in case you don’t have them. For each track/album you will need to enter a host of metadata on the SD Content Management System including detailed release info, tracks, artists, territories for release, retailers to submit to etc. While this seems cumbersome, it is unfortunately a necessary evil as this is the information that will be sent to the retailers and how your song will be displayed. Any changes later will be very difficult to implement as apparently big retailers such as iTunes not well-oiled machines for content updates. Hence, take your time to enter all the information correctly!

Finally we come to the file upload area. Your cover image must be a perfect square and not smaller than 1400 X 1400 pixels. Music file requirements are as such:

  1. Supported format is WAV (PCM).
  2. Bitrate not lower than 1.4Mbps.
  3. Sampling rate not lower than 44.1KHz.
  4. Bits per sample not lower than 16.
  5. A minimum of 2 channels (stereo).
  6. Should originate from a high quality source.

If you are not sure what some of these things mean, there are handy Wikipedia links embedded to give you a quick tutorial.

While the whole process seems a bit long and heavy, it does give you a sense of power and control over your music and its metadata. Uploading a 36MB WAV file took us 23 minutes with high speed internet with no bugs or upload failure messages.

After we’ve submitted our tracks we wait for them to go live. The day after we checked their status and saw that they have already been submitted to four major stores including iTunes. There is no alert system, neither by the distributors nor by Bizmo to inform you that your track is live. It is up to you to check the stores regularly – it could take up to 6-8 weeks to see your tracks live. And then of course, there is always the chance that your track might be rejected by a store for various reasons unrelated to the aggregator. It’s not a perfect science.

We should mention some of The Bizmo’s competition, as “super distribution” is a brand new service having been just recently launched in September 2009 and so far it looks poised to give market leaders something to watch out for. While we did not go through the whole process of trying to distribute music with the other aggregators, on the face of it here is a brief synopsis of their major offerings:

TuneCore: Has a complicated pricing model. For single tracks you pay a flat price of $9.99 per year to put up one single in all 14 stores. For albums, you pay $0.99 per track, $0.99 per store per album, and $19.98 per album per year storage and maintenance. Tunecore pays 100% royalties with no cut.

CD Baby: Charges $35 per album (in all 24 stores) and $20 per UPC number (!). For downloads from their site they take a 25% cut of retail price (minimum 29 cents). From other outlets like iTunes and others, they pay 91% royalties.

Reverbnation: Charges $34.95 per release per year (in 10 stores). One can have up to 50 tracks in one release. Pays out 100% of royalties, but must have a balance of at least $5 to withdraw funds.

Nibmit: Charges $9.95 per month or $99 per year (in 6 stores) for an unclear number of songs. Pays out 100% of royalties.