The 4 Reasons Fans Buy Your Products

I was on a recent panel in Memphis, TN, for The Recording Academy called “Grammy GPS: A Roadmap for Today’s Music Business.” The topic of my panel was Direct-to-Fan (DTF) commerce. In preparation, I pored over data (anecdotal and empirical) from the last 3+ years of working with Artists, Labels and Managers, including recent data from our online DTF product Reverb Store that launched in January of this year.

The first thing that dawned on me was how much DTF commerce is already taking place, offline, in the form of the ubiquitous merch table at virtually every concert on the planet. The Artist Revenue Survey we conducted in 2008 revealed that more than 50% of our Artists total revenue came from playing live shows and selling merch and music at those shows.

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Email 101 for Artists

Email is an essential part of the fan relationship equation for artists, labels, and managers. While it is difficult to say the exact value of collecting any individual email address for musicians, marketers from other industries peg the generic value of getting an email at about $1 each.   But it’s all about what you do with it once you are given the great responsibility of owning it.  We have seen Artists generate as much as $10 per email address on their list, when used properly.

Email has some interesting attributes going for it, like:

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ReverbNation Survey: Artists and Health Care

Its a hot topic for those of us who are citizens of the United States.  Congress, the President, talk show hosts, movie stars, and even my very own barber have strong opinions about health care reform.  So we at ReverbNation thought it the appropriate time to ask some of our Artists about their helth care situations and opinions.  The following represents some of the data collected from a survey taken by a small, random sample of Artists who are US citizens (n=259).

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Making MySpace Work For YOU

Every Band has a MySpace page, but very few have a MySpace STRATEGY.

A recent post by Bruce Houghton at Hypebot reminded me of a conversation I had with a Band last year on this subject:

Band: “Should we take down our MySpace page and make people go to our own website?”

Me: “Absolutely not! Are you crazy?”

Band: “Why? We get some fans there, but most aren’t real anyway.”

Me: “True, but…”

Problem:

Most Artists think of MySpace as a ‘home base’ for their online activity.  The problem is that a MySpace page is akin to a rental unit within a huge apartment complex.  Sure, living in this rental complex means that ‘friends’ drop by all the time, which is fun when they bring chips and beer and are really into your music, but less fun when they bring con artists and viagra salesmen (although, admittedly it depends on your goals).  Its a very noisy place, MySpace, and attracting the wrong crowd some of the time is par for the course.

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From Exposure to Conversion "How to Create a Real Fan" - Part 2

Thanks for the comments I received on the Fan Funnel model we employ at ReverbNation.  I’m still looking for more feedback, so please speak up if you have any.

Now, to continue the train of thought begun in the first post…

The Fan Funnel, in any incarnation, is incomplete.  It is a ‘stock’ measurement in that it tells you how many fans you have in each section of the funnel at any given time.  But it fails to measure some important things like the trajectory the Artist has (rate at which fans are entering the Funnel or moving down the funnel), and how deeply engaged those fans are with the content, to name a few.  As a result of this deficiency, we developed a proprietary metric for every Artist that uses ReverbNation called a Band Equity(TM) Score.  Artists use this in conjunction with the Fan Funnel.

Band Equity(TM) takes into account four factors that add up to the current value of the Artists’ portfolio of fan relationships (normalized as a ‘score’), as well as the trajectory of that value:

(1)  Breadth
How many people does your content touch, overall?  How many listen or even view it in a given time period?  Having your content on many web pages, touching many people is a great way to understand the total conversion ‘potential’, and might be summed up as ‘awareness’.  All else equal, an Artist whose content touches more people has a higher potential  for converting fans and developing relationships than an Artist whose content touches fewer.

(2) Influence
How frequently do those people seek out a second instance of the content (like play a second song or video or view the blog after they play a song)?  What is the ‘open rate’ on your emails to fans (what is the probability they will actually open and read it instead of just deleting it when it comes in)?  How long do they play a song or video before they turn it off and do something else?  All else equal, an Artist that garners more engagement per interaction has stronger and deeper relationships with their fans.

(3) Recency
When was the last time you engaged your fans?  All else equal, an Artist that had their fans engaged yesterday has more Band Equity(TM) than an Artist that last engaged them six months ago.  Recency causes your Band Equity (TM) to deteriorate over time if the # of fan interactions and level of engagement drop off.   Think of this as the main ‘trajectory’ element.

(4) Access
Of your total ‘FANS’ and ‘LISTENERS’, how many of them can you contact without the assistance of a social network?  If the only way you have to communicate with your ‘FANS’ is via a MySpace Bulletin, then you do not have the Band Equity(TM) that another Artist, all things equal, has if they can send a custom email or other custom message promoting their show or new release (full disclosure:  ReverbNation provides a free email service for Artists, Labels, Managers, and Venues).  This element cannot be underestimated by Artists.  Social networks are a great place to RENT fan relationships, but the most savvy and successful Artists find ways to OWN their fan relationships, so they can access them when they want, and how they need.

From these four elements we construct a Band Equity(TM) Score for each Artist (and we also build our Charts from those scores, because we believe that it measures the right things).  It is updated once per day.  The goal is to raise their awareness of these important factors in their success, and to give them visibility into which promotional/marketing efforts deliver the desired result - stronger, deeper, and more fan relationships.

 
Let’s face it, record labels, talent buyers, gig promoters, and brands (people who pay the Artist) do not believe in MySpace friend counts anymore.  The numbers can be easily spoofed and a few bad apples have spoiled it for everyone else.  Artists, likewise, should not measure themselves by a metric like this alone, as the correlation between MySpace friend totals and commercial success is dubious, at best.  That is not to say that establishing friend relationships at MySpace is not a valuable endeavor (it can definitely add to awareness, and MySpace is probably still the best place to go to harvest fan relationships).  But, as a single metric for understanding the ‘financial potential’ of your band (notice I did not say the ‘artistic value’), it falls short.  We provide tools for the Artists to actually incorporate the activity happening at MySpace, Facebook,  blogs, homepages, etc, into the Band Equity (TM) Score, so they can have a global view of their success.  Its a big music world out there on the web, and Artists need a way to consolidate and understand how those fan relationships are changing across the board.



 

From Exposure to Conversion - 'How to Create a Real Fan' - Part One

Steve Lawson recently posted an entry on understanding and measuring the path that fans take from simply listening to a song, all the way to ‘conversion’ into a fan.
 
That got me thinking about the Fan Funnel metaphor we use at ReverbNation.  I am looking for feedback from Music Think Tank readers on the steps below and the process we use to enable artists to essentially operate a “Fan Funnel”.  Our goal is to provide a framework for understanding the process, and to provide tools for the Artists to experiment with marketing and promotion efforts so they can see what ‘works’ for them.  Here is a crash course in what the FAN FUNNEL  is:

 
Step 1 - Exposure
People must be exposed to the content.  Once exposed, there is some probability that they will either move down the funnel, or pass the exposure along to friends who may move down the funnel. People who check out the content are called ‘LISTENERS’.  Certainly the quality of the content matters here.  Good songs and good videos will have a higher probability of moving folks down the funnel, but for ALL artists, increasing the number of exposures will have a positive impact on their raw conversion numbers.  As a result, we began to provide tools for increasing exposure for the artist (widgets that make it easy to post the music and let fans spread it, street team functions so that the Artist can encourage existing loyal fans to spread it for them, applications for social networks, etc).
 
Step 2 - Starting A Relationship With The Fan
Once a person is exposed to the content, it is imperative that the Artist offer up some way for them to identify themselves to the Artist as a ‘FAN’ of the music.  This could be going straight to a ‘conversion’ by letting them join the street team or providing them with a purchase option, but most often it simply manifests with a person joining the mailing list or just identifying themselves as a ‘FAN’ of the Artist.  We ensure that potential ‘FANS’ can do this with every exposure tool we offer.  Its critical that Artists OWN this ‘FAN’ relationship for themselves, and not RENT them from the various social networks on which the relationship was created – more on the importance of this later.
 
Step 3 - Converting FANS Into STREET TEAMERS
Once you OWN the relationship with the ‘FAN’, you have a ‘pipeline’ of folks that you can talk to, on your own terms, and in any way you wish.  This is critical to success by our observations, as this allows the Artist the most flexibility in the messaging they convey to their ‘FANS’.  The next logical step, beyond asking them to buy a product (ticket, song, t-shirt), is to ask them if they want to exchange loyalty or behavior for something of value to them (something you can give away that actually deepens the relationship with them, like a backstage pass).  This is the act of building a ‘STREET TEAM’.  Artists that have ‘STREET TEAMS’, all else equal, find much more success than those that do not.  In addition, these Artists have the ability to execute marketing and promotional programs for less money than those that do not possess a ‘STREET TEAM’, as they work for non-monetary items like being put on a guest list, etc.
 
Step 4 - Getting Fans To Promote You
Now that you have some ‘STREET TEAMERS’, the next step is to give them tasks to do that promote your music or add more ‘FANS’.  This can take many forms, but usually involves prompting them with the right tools and clear instructions on where to post your content on the web in order to help you (something you need to OWN the relationships to do properly).  Many Artists have an untapped base of extremely loyal fans who have never been engaged to actively help them grow their popularity.  This is a wasted marketing asset.  The most successful Artists that we have observed tap into their fans at least once per month to help them spread content, recruit new fans, or promote a specific product (we provide tools to help them do this).  You are probably thinking that this can only help established Artists, but we have seen the power of this tool for even the newest Artists, and it is POWERFUL.  Remember, Artists with smaller followings often have a familiar relationship with their fans (read: friends and family) where established Artists only have an affinity relationship.  It is often the case that these close relationships can be the seed crystal that these Artists need to grow from obscurity to local recognition in their area.
 
That is the ‘FAN FUNNEL’ in a nutshell, and it is the framework with which we encourage Artists to view their business.  We provide ‘FAN FUNNEL’ stats directly to every Artist that uses our site in hopes that they will use it as the framework for understanding how to approach the challenges they face at growing their popularity.  It is based on the empirical evidence we have around the things that make a ‘successful’ Artist.  Soon we will be able to incorporate the actual sales data that come back from digital retailers like iTunes, closing the loop on how the activities of the ‘FAN FUNNEL’ impact real business objectives like selling music.
 
But the ‘FAN FUNNEL’, even as it grows in scope, is deficient in some respects.  It does not take into account the relative value of your content above other Artists (comparing you to standards in your genre), nor does it factor in a few other things of critical importance to understanding how you are doing, overall, at growing your fan base in both breadth and depth (especially depth).  For this, we developed an overall metric of the Artists’ ability to develop and nurture fan relationships called ‘BAND EQUITY’.  I will post a follow-up entry on how we look at this concept, but I’d love your feedback on the FAN FUNNEL in the meantime.