People in the music business get straight to the point.
Can you blame them? It’s a hard business and tougher now than ever according to Tom Silverman, founder of Tommy Boy Records and the New Music Seminar. Tom would know. He discovered Queen Latifah, Naughty by Nature and House of Pain among others.
We sat down last week to talk about the New Music Seminar, the industry’s largest conference, in NYC this September and his wife’s, Donna D’Cruz, new video show, Rasa Living, on Open Sky and YouTube, that begins in May. We talked about social media and the music business. What makes both work is fans.
The classic marketing rule is that fans result in a 80/20 split: 20% of the fans account for 80% of the revenue. The 80/20 rule in the music business has historically been 80/1.3. That is, 1.3% of the releases sell 80% of the units so fans relationships are really crucial. At the New Music Seminar, a focal point is the Fan Relationship Pyramid.
Here are 5 lessons in fan relationships from a music business leader and why they matter to your business.
- FANS GENERATE RENEWABLE REVENUES: An artist with just 1,000 fans can make a decent living because fans follow the artist for tour dates, buy merchandise and lead to product licensing. And they keep doing it. Music labels rarely take a risk on an artist these days because the margins are too thin.
- FANS GET BEHIND YOU THE MORE YOU ARE IN FRONT OF THEM: It used to be a band toured only if they had a DVD to promote because the latter made the real money. Now, you’re more likely to make real money through a sponsorship or product endorsement. But this doesn’t happen unless you’re top-of-mind, authentic and consistent with your fans. If you drop off the map for any length of time, you’re likely to lose much of your audience. When businesses use social media, the key is to be constantly showing up for fans by putting out relevant content. If you think because you have a Facebook page, fans will find you, think again.
- NEW TECHNOLOGIES ARE MEANINGLESS WITHOUT FANS. It’s easier and less expensive than ever for an artist to get their music out to the public. With technology and $50, any act can sell their music on iTunes through TuneCore. There are over 600,000 artists on TuneCore and the average artist makes $175/year.
- FISH WHERE THE FANS ARE: Where does someone in the music business go to try to find the up-and-comers or see how popular an existing artist really is? It’s not DVD’s, iTunes or spending time in clubs. It’s YouTube, now the largest catalogue of music in the world. On YouTube, you measure fan vitality through views, reviews, rating, shares, pass-along and YouTube Analytics. As tough as it is to make it in the music business, people at least know where to look. Do you know where your fans are?
- HAVE A FAN RELATIONSHIP STRATEGY …which brings us back to the lesson at the top of the page. Because if you don’t know where you want to go, you’re probably going to end up someplace you don’t want to be. On the other hand, if an artist has a relationships with 1,000 fans and rewards best fans by giving them access to content and deals other people can’t get, they will have figured out a road-map for getting fans to help with the heavy lifting.
I’ve known Tom over 30 years since school together at Colby College. He’s been a great source of inspiration in both business and life. When we got together, I brought my son, Sean, because he is pursuing a career in the music business. The best advice I could give Sean or you is to follow the advice in the video below. If you do, you’ll be pointed in the right direction.
Do you have a relationship with your fans?