Music always seems to be one step ahead of video content in the digital space — whether it’s P2P sharing or the new sampling models. While most would say it’s simply a matter of cost of production and file size, I have begun to wonder if there is more to it.
For the last several weeks, this column has examined a variety of distribution methods that brands can choose from when seeking out their audience with video content. This week, I wanted to dive into the question of music distribution — and compare it to online digital video distribution.
While attending SXSW, I got the chance to chat with Ian Rogers, CEO of Topspin. His company combines viral, target, and direct marketing tactics to help artists increase direct-to-fan demand. And its suite of new management tools and widgets are already proving to be effective. I talked with Ian a little bit about his company, how they are thinking about distribution, and how brands might get in on the fun.
Christine Beardsell: Briefly tell me about Topspin and what makes you unique?
Ian Rogers: Topspin is a software company dedicated to building tools to help artists run successful businesses. It’s not news that the music business is undergoing massive change — but we see a better world for both artists and fans in this change. The Internet is bringing more choice to fans more easily. No longer are they only exposed to what big media outlets chooses to feed them. Artists can reach these fans at incredibly low cost via digital marketing and distribution, and for the first time ever the majority of revenue can flow into their pockets.
Topspin sits as an enabling technology platform, helping digital marketers connect artists and fans. This marketing partner can be a label, a marketing services company, or the band themselves. We’re focused not simply on demand fulfillment but on demand creation.
CB: What is your business model? How do you make money?
IR: Topspin makes money when artists make money. Our model is to take a small share of revenue (20 percent or less) of money made with our tools.
CB: You work with some high profile artists — Paul McCartney, David Byrne/Brian Eno, Beastie Boys — are you very selective with who you work with? Or is your platform open to everyone?
IR: To be honest, our decision process is very ad hoc. We are looking for artists who are going to help us learn how our tools work marketing in specific ways, and for projects we think will show a positive return on investment for everyone involved.
Although we are selective, eventually Topspin will be a self-serve product open to all comers. However, we don’t see this being for everyone. The band I had in high school for example should spend a couple years on MySpace before coming to Topspin. We will likely have a threshold making it unattractive for a band, which will produce less than say $5,000 a year in revenue.
Right now we’re concentrating on building our platform and don’t have the resources to handle customer service for tens of thousands of artists. We want to spend our time learning what works for a broad enough number of artists to be meaningful and get the tools right.
CB: How do you help the artists make money? What is your strategy?
IR: Our goal is to capture artist/fan relationships, and enable the artist to serve the fan. We do this a number of ways, through free streams (sampling), free downloads to drive a permission-marketing relationship, paid advertising, and more. We haven’t found a silver bullet yet and I’m pretty sure there isn’t one.
CB: Tell me about the dashboard and distribution strategies you have developed. What makes you unique, and why should an A-list musician who already has a large fan base sign up with you?
IR: Our dashboard allows an artist, manager, or label to keep at least a bit of a pulse on their business. Many of the managers and labels I speak to daily are flying blind. They’re just trying everything and hoping something works. Our dashboard is brand new but it allows at least a modicum of impact assessment of various campaigns.
Topspin’s software makes it easy to manage your assets, manage your fans, and bundle and market your assets to your fans. How you do this is up to you and can take many shapes and sizes, but what the software gives you is a complete view into the entire lifecycle of this content on the Internet. You can place e-mail collection into an ad network, track e-mail capture, direct market to those fans (by geo or other targeting if you’d like), and measure the effectiveness of that path. Then try another path, measure, refine, and start over.
CB: Can you share any success stories of musicians that have signed on?
IR: Thankfully, yes! Many! David Byrne/Brian Eno is a great case study. We were able to increase their mailing list by 20x, deliver the amount of money expected by a record label advance in 50 days, see 20 percent of people who listened to the streaming album purchase, and 30 percent of direct mail customers purchase. And this was before they did an iTunes and CD release!
CB: Is it just music tracks you’re feeding through the dashboards and widgets, or is other media too?
IR: We’re proud to say we pulled off the first better-than-DVD-quality documentary music film release on the Internet for Arcade Fire in December. Fans were treated to a 2.5GB download of an HD version of the film and the DVD was shipped to their home. With our other artists we’ve delivered images, PDFs, screensavers, and interactive album art. We deliver experiences designed by music artists, not just music.
CB: How do brands get into the mix? Just sponsorships? Or are there other opportunities?
IR: Sponsorship is an obvious fit as it’s easy to see where sponsors can reach fans and deliver them something they love, share in data, and remove risk for the artists. But there are other opportunities as bands are just bands and Topspin’s software is designed to support the band’s brand, not Topspin’s brand (there is no fan-facing Topspin brand).
CB: What do you see ahead for record companies? Do they have a future?
IR: Record companies are going through a major shift, but they definitely have a future. While costs of production and distribution have come down considerably, marketing is getting harder and harder as the markets fragment. Artists need marketing and branding partners more in the future than ever, and labels will fill that role. Labels which are affinity-based and have a strong brand of their own will thrive. Labels will be marketing and branding companies and Topspin will be the marketing and branding software which handles many of their workflow issues.
Christine is off today. This column was originally published March 24, 2009 on ClickZ.