Why Isn’t Music Merchandise More Like Sports Merchandise?
By Andy Young the CEO & Founder of Tunipop (@Tunipop), a platform to sell to fans while they listen to music. Young is also the inventor of a patent pending for in-stream contextual commerce in digital media.
The contrast couldn't be starker. Sports merchandise retailer, Fanatics Inc., recently closed a new $170 million investment on a $3.1 billion valuation. Meanwhile, no merchandise is being sold against the billions of songs and music videos that are streamed every month in an industry that is desperate to find new sources of sustainable revenue. Fanatics exists because the sports merchandise marketplace is accessible, rational, targeted and efficient. All things that music merchandise lacks.
This isn't just about black t-shirts either. Merchandise, in the context of music, is the typical physical merchandise and apparel, but it also includes fan experience products, pledge campaigns and digital bundles. Merchandise gives the fan a reason to go deeper in the relationship with the artist. Unfortunately, this is not really an effective option in today's digital music eco-system without a lot of effort on the part of both the fan and the artist.
As a developer, standardized data about artists, albums, tracks, tickets and concert listings is relatively easy to access from multiple sources. However, fans can't buy a t-shirt on Pandora or any other music service, nor can they see all the products in one place from the band line-up at festivals like Lollapalooza. How is it that a company like Fanatics can have a $3.1 billion valuation, while the music industry still can't figure out how to sell a single t-shirt on a music streaming service?
Merchandise needs to be more accessible, so let's make it easy to sell products where the fans are streaming and discovering music. With all the talk about direct-to-fan recently, the fan is still required to take action outside of the listening experience to become eligible for a direct-to-fan offering from an artist. They have to "like" a Facebook page, visit a website or sign up for emails. A fan should expect to have easy access to merchandise anytime, anywhere, and on any platform where they are enjoying that artist's music.
A rational merchandise marketplace means separating the information about the actual product from the user application. The promise of the yet-to-be launched music service from Beats called Daisy, is that it will include a direct-to-fan platform, which is great, but it will still be a walled garden. There needs to be an open platform where merchandise data can be contributed in a standardized way by all artists and suppliers, and then consumed in a predictable way by all retailers and application developers, while keeping control of product selection, pricing, etc. in the hands of the artist.
A targeted music merchandise solution means delivering the right offer, to the right fan, at the right time. It is well documented that relevancy and timeliness matter in contextual advertising effectiveness. Shouldn't the same apply in music? Data that segments the casual fan from the super fan needs to be combined with merchandise to be truly effective. For example, a super fan with every song, from every album on their playlist is probably more open to high-end merchandise opportunities like a limited edition leather jacket or VIP experience, than a casual fan.
Lastly, to be efficient, the financial interests of the entire supply chain from the artist, to supplier, to music service, to fan need to be aligned. Today, the music merchandise business is almost entirely controlled by a small number of large suppliers. The main concern of these suppliers is recouping their up-front licensing advance, and keeping their roster of artists out of the hands of competing suppliers. They are similar to the big record labels and have a vested interest in maintaining the status quo. They are not incented to try new things.
An open music merchandise platform will give the market scalability, and drive the creation of compelling new services. Fans, on the other hand, will come to expect a predictable and trusted source of official merchandise whenever and wherever they listen to music. Combined, these will go a long way towards making music merchandise much more like sports merchandise. Perhaps Dave Kusek and Gerd Loenhard in their book "The Future of Music" had it wrong; since music is everywhere and no longer generating the revenue it once did, maybe it is the merchandise that needs to flow like water in order to make money in the music business.
