We came across this panel video yesterday thanks to Ryan Leslie (more on him in a minute). The panel was made up of Ryan and a few other important figures from the music world discussing technology and its impact on the music industry. It’s worth pointing out that there isn’t a definitive solution for resurrecting the music business but we’re starting to see trends that indicate where the money can come from. Our feeling is a mix of many elements discussed in the panel but primarily the use of streaming services and D2C marketing and artist-fan interaction that Ryan Leslie is pioneering (again, we’ll come to that in a minute). There’s so much to discuss on the topic of music and technology but we’ll try to keep it short and revisit the topic on a frequent basis.
We’ve already briefly discussed Spotify (Spotify Hits 15m Subscribers
) and it was encouraging to hear members of the panel validate its value both monetarily and its effectiveness at allowing artists to be discovered with a low cost of entry for the consumer. One other value that wasn’t discussed, and this goes for streaming as a whole, is utilizing streaming data to shape radio playlists. We hold our hands up here that we’re still a little unsure of exactly how playlists work, although we have first hand experience of getting a song to number 34 in the Top 40 charts, albeit with the help of a radio promotions company (we were, however, still the only independent release on the chart). Just think about this though, instead of record companies lobbying program directors at radio stations and spending a shit ton (read:A LOT) of money to keep their songs spinning, what if that money, and most likely a lot less, was spent marketing the songs to consumers so that fans then went and listened to the songs on streaming services? Radio stations would then act as curators, looking at the data to see which songs are popular and then putting playlists together that reflect that. Radio is still the most important discovery tool for consumers which means music lovers only discover what the program directors and record labels want them to. What if consumers were the new taste makers? Radio would be able to see which artists and songs were picking up steam online and then broadcast that out to a wider audience.
Now on to direct to consumer marketing (D2C)… Ryan Leslie is a musician & entrepreneur who really pioneered the use of YouTube and Myspace to build a social following and promote his artist Cassie back in the mid 2000’s. We’ve been following him since we first heard the record he produced for New Edition called “Hot 2nite” and he really was ahead of the curve using the internet to market himself and his music. Do a quick google on Ryan and you’ll see the guy is SMART, he graduated from Harvard at 19 and on top of that is an incredible musician. As an artist he recognized that he wasn’t able to access any information about who his fans are. Digital retailers are currently unwilling to share this kind of data which is hugely valuable information for someone selling music, merchandise or concert tickets. Knowing who your fans are and how to reach them is really important if you want to let them know when you have new music dropping, if you’re playing in their city, if you have a new video you want them to watch or merchandise to sell. Ryan built his own platform Disruptive Multimedia to effectively run his business from an app on his phone. Fans join his Renegades club, providing him with their contact info and location. He is then able to reach out to fans whenever he has something to tell them and also allows them to reach out to him whenever they want by giving them his phone number and email address. Paolo is a member of the Renegades and can attest to this artist-fan relationship. For a first hand description of this platform check out the video below.
Labels and artists are beginning to see the benefits of being able to directly communicate with their consumers and the financial rewards this can bring. Want to see the new video before anyone else does or hear the new record? Most fans will pay a premium for that! Especially if they are listening to the music essentially for free on streaming services. If fans are engaged with their favorite artists, they’re more likely to spend more per year than the $10 it costs to buy an album.
Where does this tie in with streaming? It’s all about brand management. Think about the brands/companies you always go back to, it’s more than likely that they’ve made you feel grateful for being a customer, which is crazy- you’re the one giving them business! You were probably given a good discount and treated nicely when you had to deal with them or given exclusive offers for being part of a loyalty club. It should be the same with music, an artist is a brand selling products. Use the music to market the brand, don’t see it as the only product you sell. Streaming services will place your music on a global platform, making you easily discover-able. Once you have a fan, use your D2C marketing to engage them, offer them exclusive merchandise, first viewings or listens to new material or VIP experiences at your next show. This is all putting aside the fact that as streaming services grow, so will the generated revenue and the music may end up being your primary source of income. You’ll also be making more from bigger attendances at shows (fans will know exactly when and where you’re playing), more t-shirts sold and music videos will have some relevance again. Fans put a premium on being the first to hear new music, why not offer them the chance to pay for it by sending them a text to tell them they’re entitled to download the new album before it hits the streaming services? If they want to hear it that badly, they’ll pay for it! You could make a great amount of money with only 1,000 fans as you will own your relationship with them and they will reward you for that.
Wrapping up, the future of music lies firmly in technology’s hands. Once music distributors and artists figure out the right ways to utilize it we’ll have this industry prospering again. Streaming services are the best way for consumers to hear the music, that’s pretty clear. Using a D2C approach is the missing piece that will engage fans and generate new paths of income for artists if they’re smart in how they market. We hold a lot of value in Ryan Leslie’s Disruptive Multimedia and really hope it becomes more widely adopted. The music industry is not dead, it’s just in a transition and we’ll be with it the whole way.