As we know music is one of the few industries built entirely on the strength of fans. It’s products and services aren’t functional and are rarely tangible; instead of fulfilling a material need, they often fulfil an emotional one. Even the act of purchasing a t-shirt derives more from a form of tribalism and loyalty rather than suitability or need. Fans are the reason the music industry exists. Millions are being spent by artists on marketing in order to build an audience that will provide a long term and sustainable income. But are artists chasing the right sort of fans?
Artists relationship with fans changed once they decided to provide rented access to their music. A positive move against piracy maybe but this also ushered in the decline of the physical and digital sale.
The unintended consequence of this is that musicians, in the main, will have to rely on other sources of revenue to sustain their career. It is estimated for instance that in order for an artist to earn minimum wage in a month they would have to generate 230K streams on Spotify. That’s just under a million streams per month if there are four of you in a band.
Artists are therefore far more reliant on building a live audience than ever before to generate a sustainable income. The live music scene is flourishing with fans far happier to shell out large amounts of cash on tickets and merchandise than they are to purchase a CD or download an album.
There is a pile of research from economists that shows the high ratio of revenue aligned to a small percentage of loyal customers in most industries. This ratio is even more concentrated in the music industry where it is estimated just 2% of an artist’s fans provide 20% of the artist’s revenue and drives 80% of sales. To artists, loyal super fans are worth a hell of a lot more than their weight in gold.
One loyal fan of your music is worth thousands of casual listeners. The recent Nielsen study concluded that the music industry could add billions in additional revenue each year by offering fans more of the content and experiences they desperately crave.
So how do you find all those “super fans” from the Nielsen study? One problem is that the most widely used data and insight in the industry is centred around who is streaming an artist’s music or following them on social media. There appears to be very little significant data on who would like to see an artist live.
Streaming services can provide data on which accounts have listened to an artist’s material. The veracity of this data is poor. The logic being applied by some is that there is a correlation between someone listening to an artist’s music in a given location and wanting to see them live. This is simply not true for all sorts of reasons.
Another problem is that the music industry often treats all music listeners as “fans”, but this is misleading. Not all fans are created equal. Passive listeners are unlikely to buy music, merchandise, and tickets, while some super fans will buy VIP meet & greet packages on the other side of the world for the chance to see their favourite artist.
It can therefore be reasonably argued that an artist can create a solid income in the music industry by focusing on this small segment of loyal super fans within the larger mass of music listeners.
The competition to grow awareness of an artist is fierce in a much over crowded market place. Yet many acts fail to get passed this stage of their marketing campaign. It appears fan strategy and, more worryingly, music itself, is becoming increasingly homogenised to suit social media and streaming services and protect the status quo of industry stakeholders.
Artists must be concerned about the level of data and insight available to them from these sources. Social media for instance requires an artist to give away content for free to attract “followers” to its platform. The artist then has to pay to access a small percentage of their “followers” that they themselves have generated. This is not an effective marketing strategy or spend of resources and has a very poor return on investment.
However, as I have mentioned in previous blogs, the music industry can learn a lot from the sports industry which is also built on a fanbase that is deeply tribal and emotional. The sports industry has gone to great efforts over the last few years to build brand awareness, attraction and attachment by using super fans as promotors.
Would the same marketing strategy be possible in the music industry? The simple answer is yes, the elephant in the room is that on current evidence very few artists have a marketing strategy to build and maintain a live audience.
Each artist’s stakeholders are almost certainly spending thousands of pounds on building social media and streaming audiences. Somewhat bizarrely, unless your incredibly popular, these channels provide very little opportunity to build a sustainable income, unlike the live circuit.
Thankfully the technology is now in place to help overcome these problems. There are solutions that will tell an artist where their fans are located, how far the travel for a show, their level of engagement and provide them with the capability to send bespoke messages direct to their fans.
Where appropriate acts will be able to treat their fans as insiders, rewarding them for their engagement and for acting as promotors to friends and family. Artists will build a qualified fan base to support their live shows and sustain and grow their income by offering fans a user experience that matches their level of engagement.
Being in control of this data and insight will help them to protect their fans against the secondary ticket market and from some of the dubious practices of the primary ticket market.
Artists for the first time ever will be able to throw away the one size fits all marketing campaign and create tiered marketing to satisfy each fan from the most “passive” to the most “super” and everything in between.
If you would like to know more about how we are helping artists from around the world to engage and build a live fanbase then please contact our Head of Business Development, Rob Sealy, on 07919 001752.