This contribution is by Bas Grasmayer (@Spartz), head of information strategy at Zvooq, the leading music-streaming platform in Russia & CIS.

Recently music industry analyst Mark Mulligan presented his plea for a serious adoption of a new music format. He claims that most new business model ideas in the music business are retail innovations, but not format innovations. In short, he argues that the new music format should be Dynamic, Interactive, Social and Curated (DISC). For the full vision, check out his speech at midem 2012, or read his full 15-page ‘manifesto for the next generation of music products’.

In my thesis about marketing music through non-linear communication, I wrote a case-study about a record label called Twisted Music and their remarkable adoption of an excellent business mentality for the digital age.

Like the last time, I was pleasantly surprised when I, along with countless other fans who subscribed to their newsletter (many through download-vs-email tools), got an invitation to a product development survey. I wasn’t excited because I was invited to fill in yet another survey, but because it shows they’ve taken their biz saviness to the next level, exactly according to Mulligan’s DISC-formula:

Through the survey they poll whether people are interested in the features, if they’re prepared to pay about $3.50 per month, what type of phone they own and whether they have a credit card or PayPal.

It’s a terrific example of smart product development and bringing out the inner-‘selfish consumer’ in fans. That means: giving them something so great, that they will spend money on it for themselves; as opposed to selling what you want them to buy (and treating your creativity like a charity by getting fans to buy your music merely “to support their favourite band” - a much weaker sales proposition). I’m not saying people won’t buy music to support the bands they like, but it’s much more powerful to develop and sell something that even the most selfish person in the world would buy. It’s a stronger offer and the fans that would buy your music anyway will love you for offering such a cool product or service (note: giving people a great reason to buy is also way of connecting with fans).

So what is great about this App model:

• Connection: by creating this kind of walled garden, you create a great opportunity for yourself as an artist or label to connect to your most hardcore fans. Not only that; you connect fans with each other. Which is one of the most important steps in building a movement which can become an ecosystem to sustain your business and creativity.
  
  
• Lock-in & steady monthly revenue: by providing fans features like these through a subscription-model, you’ll be guaranteed a certain amount of monthly income which depends more on the overall quality of features & releases than the (hard-to-predict) hype around any one particular release as would be the case in a sales-model. If your features and content live up to users’ expectations, the mental effort to unsubscribe will be higher than to stay subscribed… Besides that, unsubscribing means waiving your access to all of the content, so that creates a kind of lock-in effect, similar to a lot of digital subscriptions. It’s a little like canceling your subscription to a print magazine and losing access to all previously received magazine editions immediately.
  
  
• The package is the product: in my thesis I argued that music itself is not a product and I recently wrote a detailed post underlining that (similar to Jeff Macdougall’s rant on Hypebot a year ago). People pay for the content indirectly, by making a direct payment for its package: a CD, MP3, subscription service, ticket to a live experience etc. This kind of app with these features is an amazing package for most fans, especially for the hardcore ones. Due to them being the most hardcore ones, I’m also skeptical that this app would lead to (*incoming buzzword alert*) ‘sales cannibalization’. If executed properly, the increased connection would actually lead to more sales of physical as well as digital.

Remember! One size does not fit all!

Different hats for different people. This specific model will not work for all labels or artists. What makes this work for Twisted Music is that they’re trend-setters within a specific niche of related genres. The fanbases of the different artists on their label often have a huge overlap, sometimes as much as 90%, I reckon. They have spent many years competing for attention, with success, and they’ve turned that attention into connection; artist-to-fan-to-artist, but also fan-to-fan. So if you, as a label or artist, want to start applying these amazing business models, follow these steps: be remarkable, be easy to discover, turn your fanbase into a party, connect, listen closely for opportunities.