Understanding Leverage as a Music Business Model

by Matt @ Kurb on April 26, 2009

Okay here we go, time to get down to it.

I could charge you US$500 for 3 months promotion with me and my team.

Or I could ask you, in exchange for 3 months promotion with me and my team, to sign up for a dozen or more product trials that would cost perhaps $1-2 each but just as often be completely free. You’d be under no obligation to purchase the product – sure – they might send you a few annoying emails, and it’ll probably take a few minutes of your time to enter your details to sign up.

But in the end it wouldn’t cost you more than US$20.

But guess what? I’d be making more than US$500.

And that . . . is leverage.

NEED ONLINE ARTIST MANAGEMENT, ONLINE PROMOTION, MUSIC MARKETING

CONTACT ME, MATT @ KURB

kurbpromo@gmail.com

+64 27 684 8250

I been talking a lot here recently – and for a while actually – about “leverage” but it was only in the last couple of months I decided to be more proactive and walk the talk.

If leverage was such a great model and selling stuff was old news, why was I still trying to get money out of musicians for promotion?

What, just because my services are in high demand and I can? That’s not very forward thinking, is it?

It worked out a little bit like this: as a result of refining my brand – that is of me being a music business guy, here to focus on how developing music and entertainment acts and brands can make money online, i naturally started to focus more on exactly how to make that happen.

The music industry isn’t just turning on it’s head, from what I can see, it’s pretty much well almost flipped, we’re only just starting to feel the fall out of whats been happening now that a recession is accelerating the extinction of the dinosaur record labels as the industries principal business unit. But the fact that so many established acts are now taking flight from the labels and trying new business models doesn’t have a lot of bearing on how the bottom up process of a new act breaking through occurs other than the fact that the big labels are running out of money, ideas, and time.

SO . . . diminishing capital and lack of innovative business strategy to support breaking acts is where we remain. Not good.

Love it or hate it, the value of a recorded piece of music is in rapid decline due to what is quite obvious economic and technological parameters and nothing in the history of our technological development suggests that we can reverse this change, if even stall it.

But the crucial economic observation to understand is : the value of music has not dropped, in fact, in terms of it’s cultural value I would risk saying it’s actually increased. I think music plays a bigger part in consumers everyday lives than ever before.

They just don’t want to buy it.

Which underlines that only the value of recordings that have dropped, and this has changed the whole game because up until very recently, the production, manufacture and sale of recordings was the basis of the industry.

The problem is, that so very few in the industry are addressing the problem in this way – asking: the recordings have lost their value, but people still love music and they love musicians . . . so where can we generate revenue?

And you should know all the tired answers: Gigging and shows. T shirts and merch. New forms of digital products. Licensing and publishing.

But none of this will work if no one knows who you are. These income streams are almost always predicated on the act – who’s label has already put thousands of marketing dollars and and hours of experienced promotion personnel behind them – having broken through on some level to widespread recognition.

But when I talk about understanding a leverage based or trust based music business model, it comes down to creating value for a core fanbase – an audience, or “tribe” as is the popular term in new media as of lately – that trusts and has an emotional investment in the artist.

Then, rather than trying to get your fledgling fanbase to buy something directly from you that you have to convince them has value when that doesn’t fit with modern perception, it’s about leveraging that trust to motivate your fans to engage in dynamic propositions that lead directly to revenue for the artist from a 3rd party without the fans actually having to spend anything at all.

There’s a few things I want to put straight here before we keep talking about the nature of leverage as a music business model

– If you’re not allowing access to your content, because you’re always trying to charge for it, it’s going to be harder for any potential fans to engage with it and promote it through viral word of mouth. In fact you will be irrelevant, because if you don’t give your stuff away free, I’ll just go to the guy who does.

– when I talk abou t”engaging in a proposition” I’m talking about a real proposition. not 99c or $1.29 for a song, thats a rip off. That’s unoriginal. You gotta cut right across that.

– this is not a music business model designed to turn the industry on it’s head. that’s not what I’m here to do. It’s designed to give you a cutting edge in the new music business while I’ll get fairly wealthy which, as far as I’m aware, is our respective motivations for being here.

SO. The idea of leverage, is that you take something that you have – which is the trust and value you’ve created for a specific audience or tribe – which you’ve acheved of course by allowing people access to regular, quality content that is strongly branded and engages people.

Then, rather than making money DIRECTLY from it by trying to sell something that has little perceived value, you LEVERAGE it – the audience trust + your perceived brand image – to provide a service to someone who will pay for it.

Who will pay for it? Who will pay for trust? People with lots of money will pay for trust. Businesses and commercial interests with their entrenched capital are so desperate to get attention and create trust and be given the opportunity for positive and quality exposure that they will gladly pay for the opportunity to interact with your fanbase.

I know dozens of services throughout many different industries that will pay you to have your fans sign up for a free service or a free or extremely highly discounted trial of a particular product, and a whole range of different products and services.

So all you have to do, is once you’ve established a rapport with a growing fanbase through the promotion strategies we use – which you wont be paying for either, of course – then, you begin to present them with the proposition.

You write your regular email to your fans discussing and involving them in all those essential discussions that are most relevant to your brand, and you use your blog and your social networks also alongside your email list to advance your latest proposition.

Which of course is your latest leveraged proposition, that is DON’T BUY OUR NEW CONTENT PRODUCT!!

[a content product is likely a downloadable package including a few songs with remixes, a live version, a video or two, maybe some interactive elements . . . y’know, just a sweet content package for the fans]

GET our latest content product – featuring the new single and video for “Leverage is a sweet ass music biz model” –  ABSOLUTELY FREE – when you sign up for your $1 trial of invigorating goki berry herbal tea*!!!”

*this is a mad up example. there are hundreds of products out there but health products tend to be on the higher paying scale

For that $1 trial you could end up netting $US25. Per sign up.  So if you can get just 100 fans to sign up thats $2500 to put towards getting a serious campaign and getting some seriously professional standard content happening.

And as I said, rather than just talking about it, and telling you what I think is best, I’m walking the talk and thats what I’m doing right now . . .

I could charge you US$500 for 3 months promotion with me and my team.

Or I could ask you, in exchange for 3 months promotion with me and my team, to sign up for a dozen or more product trials that would cost perhaps $1-2 each but just as often be completely free. You’d be under no obligation to purchase the product – sure – they might send you a few annoying emails, and it’ll probably take a few minutes of your time to enter your details to sign up.

But in the end it wouldn’t cost you more than US$20.

But guess what? I’d be making more than US$500.

And that . . . is leverage.

I’m excited about the future of leverage as a business model for me and the musicians I’m working with.

Whether it’s something you commit to long term, or simply a short term strategy to establish the funding you need to take your music to the next level, this is a blueprint for artists to begin developing serious online marketing and promotions that creates significant short to mid term income.

And always remember – the work you do building authentic interactions and intelligently branded platforms with which to interact with fans . . . is never going to be wasted.

NEED ONLINE ARTIST MANAGEMENT, ONLINE PROMOTION, MUSIC MARKETING

CONTACT ME, MATT @ KURB

kurbpromo@gmail.com

+64 27 684 8250

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