ANAHEIM, CA—At the NAMM Show earlier this year, Louis Hernandez, Jr., chairman/CEO of Avid, sat down in an exclusive interview with PSN to review the company's journey since September, 2013—when he laid out a plan to transform the company in a white paper that introduced Avid Everywhere—and to announce the transition into Avid’s next phase that will begin with the unveiling of a set of new technologies at the 2017 NAB Show.
“Q2 2017 marks the official end of the original vision that we laid out in that white paper,” he said. “The idea was to have this global collaborative network that is shared for anyone that wants to create, manage or monetize media—any form of media. Our next phase will just be to get the whole world to use it; that’s going to be our focus.”
Anyone who has followed Avid’s fortunes in recent years will know that it hasn’t all been plain sailing. To correct course, in mid-2016 Hernandez announced a “strategic realignment” that would add almost 250 new employees at an R&D facility in Poland, a hardware design center in Taiwan and support centers in the Philippines and Boca Raton, FL.
“This last year was the year that we eliminated all the duplicate facilities and all the duplicate talent. It was painful for some, but it had been building up,” he said. “And now, Q2 ’17, we’re finished; we can officially declare it over.”
During Avid’s transition, “We changed 100 percent of the management team. The net change in headcount has been 10 percent or so; not that dramatic, but the actual change in people is more like 65 percent,” said Hernandez
Avid Everywhere introduced a new operating system with shared services that can run multiple applications. “Originally, when we built the shared-services model, it had three services; now it has 12,” he said. The original six apps, including Pro Tools and MediaComposer, have expanded to 38. “Users still experience Pro Tools the same way, but the application layer got much thinner. By doing that, you could start launching things much faster.”
The platform has allowed the company to abandon the annual software update model. “When we launched All Access,” he said, “that was the idea that you could release continuously. Because we now have subscriptions taking off, there is no reason to wait for major releases. That’s going to start accelerating after Q2.”
Avid Cloud Collaboration, which enables Pro Tools users to work together remotely, further drives software updates, he continued. “If you’re working on different versions or a different plug-in, there’s an app that pops up; it’s cheaper than if you bought it off the shelf and it’s one click away. It keeps the focus on the story, the artist’s work.”
Avid’s First products—free software with constrained capabilities—have helped grow the user base. “Almost 90 percent of our users are new to Avid, which is incredible. And the number-one reason that people upgrade from First to the professional version is pricing. They have this conception that Avid is only for rich people, the professionals. They’re shocked to hear that you can pay less than a haircut a month and use all these tools,” said Hernandez.
For most musicians working in today’s media industry, cost is certainly an issue. Audio is the one consistent thread through Avid’s constituency, including broadcast, film, sports and games, said Hernandez. Yet musicians, as a group, have not benefitted economically from the tremendous increases in media creation and consumption.
“Music revenue has recovered since ’99, when it started declining,” said Hernandez. “Finally, last year, music revenue was up to $7 billion worldwide, largely due to streaming.”
But the proliferation of choice afforded by the streaming platforms has tightened, not flattened, the yield curve, he said. Without the benefit of filters or curation, listeners tend to gravitate toward a smaller number of artists. “Consumers have had a massive proliferation of choice and accessibility at a very low cost, and the artist has become the big loser out of that whole equation,” he said.
Musicians have no advocacy organizations or economic muscle, he observed, so Avid has been working to introduce features, such as metadata tags, encryption and monitoring of use rates, that could potentially benefit artists financially. A chunk of the company’s R&D has been allocated for the implementation of new features as voted on by the Avid Customer Association, now some 8,600 members strong. “It’s not altruistic,” he said. “If they don’t do well, then we’re not going to do well; they’re not going to buy our product.”
Avid commissioned a study that indicates that using the company’s products can generate increased earnings. “In the case of MediaComposer, on average, it was 44 percent higher income over your career than any other editorial tool,” he reported.
Delineating professional Pro Tools users was trickier, however, said Hernandez. “It was more dramatic, but we didn’t think it was very credible.”
That said, “We uniquely can get a strong income-earning tool into the hands of a lot of folks who may not have the wherewithal to afford it. It’s such a great place to be, if you think about it.”
This article originally appeared in the April, 2017 issue of Pro Sound News as "Hernandez: Avid Entering New Phase."