Analytics In An Artist’s World [Bruno Guez]
Revelator CEO Bruno Guez explores how the latest evolution of data driven niche marketing by companies such as Netflix could be applied in different ways to the music industry, particularly as music streaming occupies an increasingly large segment of the market.
Guest post by Bruno Guez, Founder and CEO of Revelator
Few companies have created the same level of buzz over recent months as Netflix, the company that has completely redefined the way premium television content is distributed, consumed and produced. In their most recent earnings announcement, the company revealed a 3.6m subscriber bump, leading to a 20% stock value increase. Netflix is popularly known as a powerhouse, and yet both Netflix and Wall Street experts alike actually predicted a less than stellar report, so these numbers threw them for a loop. More impressive than the numbers, however, is just how Netflix managed to defy the odds and shatter its own expectations for growth. By channeling and analyzing its massive pool of data, collected from over 83 million users worldwide, Netflix was able to gain invaluable insight into customer behavior, and translate it into actionable targeting and better service. In their case, that came in the form of a push of original content, like Stranger Things and the second season of Narcos.
Essentially, Netflix has been able to channel data to drive game changing and original content by better understanding how to reach niche markets more effectively. The subsequent move from catch-all, mass market television has redefined expectations of what can be achieved in the medium and helped usher in a golden age of television. Yet, the revolution goes far beyond television alone and could have massive implications for the music industry as well.
Big Data Transcending Traditional Industries
The use of big data to target customers and improve service is not a new phenomenon. For years, commercial airlines have been utilizing data to optimize track luggage, personalize offers, and boost loyalty. Additionally, retail behemoth Starbucks has gotten on the big data bandwagon, amassing troves of data on their caffeine riddled customers, which they have used to better tailor their offerings. Not only were they able to increase their profit margins, but also win points for customization in the eyes of their followers. No, big data is certainly not a new fad, and for these and many other companies, the proof of its success is in the proverbial analytics pudding. For too long there has been a misconception that creative industries cannot utilize the same monetizing models as other, more analytical industries, such as retail and travel. However, if there is anything to take away from Netflix’s latest and greatest success, it’s that the digital content industry is ripe for a data disruption. The question is, how can others in the creative arena, specifically music, harness the power of data and leverage technology to up the ante and increase their bottom line, while still generating boundary breaking original material?
Data in a Streaming Era
For the past 10 years or so, we have seen a shift in music distribution formats, from buying and downloading, to the now ever-ubiquitous streaming. The inherent nature of the format gives rise to mass distribution, across all platforms around the world. Believe it or not, each and every song streamed through Spotify, Pandora, Apple Music, has its own digital fingerprint, consisting not only of basic information – record label, title, artist – but more specific metrics, such as location, platform, and listener demographic. As digital content becomes more and more accessible, a huge opportunity is rising in front of industry professionals, from the artists to their managers and record labels, to effectively use those untapped layers of data to their advantage. So now we are left with the conundrum of how to use all this data to better inform our business decisions and take advantage of the insights it affords?
Utilizing Data in a Hyper-Digital Decade
With the rise of digital tools to track and analyze data, artists are able to see layers upon layers of information regarding their song performances. This information becomes particularly invaluable when considering smaller, lesser known artists, which don’t yet have global recognition, nor the funds to invest in an exhaustive marketing campaign. Data enables them to create touring schedules that focus on the markets where they enjoy the greatest popularity, built set lists that will cater to specific audiences and understand where and how their music is being consumed. The result is an increased capacity to focus on originality and creativity. When an artist can quickly and effectively find their audience, they don’t need to waste time in unproductive activities or even worse, dumb down their music in order to drive appeal. Likewise, this data has an added value for managers or record labels, who make decisions on behalf of the artists, in order to improve their careers and income.
This trend is at the heart of some of the world’s most successful acts as well. For instance, while One Direction may have appeared to seamlessly enter the world’s hearts, a tremendous amount of data collection and analysis was ultimately responsible for their popularity. Their “digital first” marketing campaign allowed them to target precisely who their listeners were, and in turn cater to what that group would respond to. The result was a democratization of the music, allowing fans to engage with the band and dictate the members’ actions. With a thorough understanding of their target fan base, One Direction cultivated a following that has enabled longevity and massive success. And the impact could be even larger for rising bands and musicians struggling to drive the revenues necessary to keep their careers and ambitions afloat.
Benefits of Big Data
Through analysis of national and global song performances, artists and their managers can pinpoint precisely where their music is gaining traction, how their music is being received and among which audiences. This is an incredible advantage as their managers or record labels can then in turn use that information to market the artists correctly, which allows them the freedom to be as creative as they please and to focus on their music undividedly. No longer are musicians forced to cater to the masses, but rather can keep their artistic integrity and play to those fans who like them just the way they are.
If Netflix’s recent success has taught us anything, it’s that insight into consumer behavior is invaluable. Whether you’re a small time shop, or an industry behemoth, knowing your audience is absolutely key in understanding how to better serve them. Long gone are the days of feedback surveys, and in their place has arisen a gold mine of untapped behavioral data.
Take the time to invest in your untapped data, as you might be missing an entire market out there for the taking…