How To Launch a Music Startup: Willingness to Pay - hypebot

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TJ

Asking how to launch a music startup is like asking how to commit suicide. Don't do it.

Webmaster

Thanks for continuing the series, Brenden! (Though I have to say that after the last two installments, it sounds like you are holding back on this one; or are maybe just busy.) I'd be curious what Chris Anderson (re: his freemiums and cross-subsidies) has to say on the subject. Maybe you could comment on which artist services you have seen successfully use "free" as a way of developing a revenue base later or in parallel.

Another sub-topic is that sometimes the services are rolled out before the potential customer base realizes they need it. With any "disruptive technology" (to use a phrase from The Innovator's Dilemma), adoption is not always immediate. However, sometimes by the time customers do adopt it, it is too late for veterans of the particular industry to throw their hat into the ring.

And finally, this brings up the emerging shift in the Internet from Web to Single-Function app. Which can allow for a low price and thus a low barrier to entry. So thoughtfulness about a focused scope of the service can help lead to a price that potential customers can digest.

Thanks again! Really great contribution to the field!

Dmitri Vietze
www.DubMC.com (world music trade industry blog)
www.rockpaperscissors.biz (global music publicity firm)
www.FlipSwitchPR.com (take a guess)

Suzanne Lainson

If you can show a direct connection between paying for a service and a return on investment greater than one, you can probably make your case. But there are some challenges:

1. Most services don't run controlled tests. So if a musician is using multiple services/tactics, it may be hard to establish what service/tactic was responsible for the profit. You can really only prove cost effectiveness by isolating the service/tactic and run two identical tests with the artist/band, one using the service/tactic and the other not.

2. Since not every artist/band succeeds no matter what they do, it's hard to claim that using your service is going to make a difference. Even if two different artists/bands use a service in exactly the same way, they may each not achieve the same results.

3. Most artists/bands have limited financial resources. So usually they have to decide where to spend their money. Some services are more important than others even if they are both fairly priced. Artists/musicians and their managers have or should have a priority list of what they need to do when. Some services just have to wait until the artist/band has the money or is at a stage in their careers when it is most beneficial or when they can use it most effectively.

Caroline Bottomley

I'm really enjoying this series. I look after a site called RadarMusicVideos - we enable artists and labels to find and commission music video directors online and also help promote music videos. Our commissioner clients range from majors (Mercury, Island) to small independent labels and unsigned artists. Pricing has been our trickiest issue and isn't necessarily sorted yet!

We've decided, as our commissioner market on the whole have severely limited budgets, we'll charge them on a one-off, per brief basis. We also have an annual option which costs less, but even majors prefer to use the one-off per brief option.

Previous pricing models included retrospective charging based on % of budget (a short-term, introductory strategy for obvious reasons), followed by a recurring subscription model. We abandoned the recurring subs model pretty quickly - labels/artists are incredibly wary. On the other hand, directors are more than happy to pay a small recurring sub every month to keep in touch with new briefs.

Brenden Mulligan

I wouldn't state it that bluntly. But there are certain expectations to set.

Sayvee

Ya, the word saturated is a little less than an understatement.

First off, the whole freemium thing is such a great idea and has obviously worked for a ton of companies (including Artistdata, Bandcamp) because artists in general are needing to get really creative about ways to create income.

We've found, since launching, that the word "need" is very relative as well - it all depends on what level of artist you're targeting. Since launching our website builder we run into piles of artists that want to bake us cakes for creating something so simple and necessary for them to function yet others don't feel like having a website is a need (& would rather just stick to Myspace, Fbook, and selling tunes on iTunes etc.)

The mailing list manager comment I totally agree with in that I can't imagine this ever becoming obsolete. We will always have a need to communicate with people which is why we built this piece right into our system. However, over the past couple of years I've seen tons of artists transition out of the mailing list idea for Facebook Fans...

Nico
co-creator
http://sayvee.com
http://facebook.com/sayvee
http://twitter.com/sayvee

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