Fanning the flames of innovation: New Fan Management Tools & Companies

Posted by | March 9, 2010 | 3,527 views

This is the first interview in a series focussed on fan management. On one end of the spectrum there are companies offering basic CRM services and at the other end there are increasing numbers of companies claiming to be a full-service digital label. Through the series of CEO interviews, I hope to provide some insights into the new ways that artists and managers are leveraging the internet to build new kinds of relationships with their fans and managing the data that is now accessible through more advanced fan management services.

This first interview is with with Noah Dinkin, Co-Founder FanBridge.com

- What is the FanBridge story?

First, I want to say that we really believe we are just in the beginning of the full story of FanBridge. There are so many things we want to do, we can’t move fast enough (and we move really really fast). But okay…the story of FanBridge begins a few years ago when my Co-Founder Spencer Richardson and I were graduating from college. We met about halfway through our senior year, and quickly realized we both had entrepreneural genes in our DNA. As we were heading towards graduation, we already had day jobs, but we decided it would be fun to get together and work on a project in our spare time.

We talked a lot about what we wanted to do, and looked at a bunch of different ideas. One area that was very interesting to us was the music industry, because it was going through a huge amount of chaos…and with chaos breeds opportunity. Technology was breaking down barriers to entry, and more people were creating music than ever before. At the same time, more music was being consumed than ever before. It was really the middle where established companies, procedures, and ways of doing business were crumbling. We looked at what was going on, and both of us agreed that the most important piece of the music business is the relationship between the artist and the fan. Artists that had long and sustainable careers more often than not had been the ones that had built the relationships with their fans, rather than trying to win the ‘hit song lottery.’ To us, this relationship is the hub of the wheel, and everything else spokes out from there. As we researched, there really was nobody enabling a direct relationship between the artist and the fan, and infact, a lot of people were getting in the way, preventing that relationship from happening (on several levels).

I knew from my experience as an artist manager that a fan email list was incredibly valuable, yet artists were often horrible at collecting the list, managing it, and communicating with their fans via email. They practically would beg for someone else to do this for them. And remember, this was back in the day when the first words out of any artist’s mouth were, “I have a million/billion/trillion friends on MySpace, what do I need their email addresses for?” We knew email was a very valuable channel for communication and commerce, so we decided to build an email list manager for bands. We talked with musicians to learn what they would really want from something like this (such as key features like geo-targeting by zip code and radius), and then each put in a few hundred dollars and built v1 of FanBridge. We didn’t have Google size aspirations for this, it was a hobby on the side and we had no idea where it would go.

Fast forward a few years and we are here today with a platform that makes it really easy for artists to get more fans, manage their fans, and then communicate with their fans. Artists can communicate via email, mobile, and social networks, and we collect a massive amount of data around all of that to make the platform more intelligent and help the artists make those fan relationships more valuable. We obviously are doing this full time now (alongside a rockstar team of people), and work with a huge number of artists ranging from tiny developing musicians to international superstars. We are growing in every key metric and having a great time doing it.

- What is unique about FanBridge compared to its competitors? What do you think your competitors are doing well?

There are a bunch of things that make FanBridge unique compared to other companies in the same space. The first is we are very intouch with what musicians are actually looking for, and we satisfy a core need. There are a bunch of companies out there that I would put more into the category of “cool things, but you don’t really need this” rather than something that is core to a musician’s career. We’re not a bunch of technology guys who started a company because we thought it would be cool to work with musicians. We constantly talk with our clients and conduct surveys to learn what they like, don’t like, and what would they like us to build. This client focus allows us to have a very strong value proposition, high utilization rates, and a truly easy to use platform.

Another differentiator is our awesome client service. We use Zappos as our example of super premium, over the top client service, and strive to be like that every day. Everyone who signs up with us gets a personal account manager, whom they can email at any time. We have a phone number you can call, we don’t hide it (it’s on every page of the site). If you have a problem, question, or want advice, we are happy to help. We try to be very proactive in helping out, and not just reacting to inbound questions. Search Twitter for FanBridge. Clients rave about our service, unsolicited. I think there are very very few companies in this space whose clients will shout from the mountaintops how great the company is, and we are proud to be one of them. This personal touch also means we have tremendous client loyalty, and happy clients are the absolute best marketing we can have. We don’t just say this like most companies do, we live it every day. We spend $15 a month on paid marketing, and that is spent buying misspellings of the word FanBridge on Google Adwords. That’s it. The majority of our new clients are referred by existing clients, and we are growing at a pretty healthy pace against other companies that are spending thousands, if not tens of thousands of dollars a month on marketing.

In terms of what our competitors are doing well, it really depends which one you are talking about. Some are great at getting press, others are great at widgets, and others are great at acquiring huge numbers of signups. We wish them all the best because there is still a lot of education that needs to go on in the industry around the fan relationship management area, and we all are fighting that battle together everyday. The more that musicians understand the importance of their fan relationships, the more we all win.

- What surprised you most about starting this business and what continues to surprise you?

I think one of the initial surprises for both Spencer and I was the sheer number of people our platform touches. In addition to a huge number of musicians (large and small), we have well over 50 million fans under management, which is an insane number when you think about it. There are very few other services on the internet with more than that number of people in one place, and that number is growing large amounts every day.

I am still often surprised at how well we are doing against other companies that have millions, if not tens of millions of dollars more than us. Pretty much everyone gets more press than us, spends more on marketing than us, yet we continue to grow in a big way each month. This isn’t something I think about every day, but every now and then the thought comes across my mind and it makes me smile.

One other thing that was surprising was how long it took many other people in this world to catch on to the importance of the artist-fan relaitonship. Years ago, we went around trying to partner with people saying “hey! this fan list stuff is really important, we should partner” and a lot of people didn’t really care because they were focused on whatever their company did. Sure we were a lot smaller back then, but I think it was a combination of both our size and the fact that they didn’t really see much value in what we were doing. I’d say in the last 12-18 months, a bunch of companies have woken up to this piece of the puzzle, and are now scrambling for some sort of solution (which puts us in a great position).

- What are new features you intend to offer?

You will see a lot of iteration from us around existing features. We are always trying to get more feedback to make our existing features more effective and easier to use. In terms of new features, I won’t go into anything specific right now, but our tagline (Powering Valuable Fan Relationships) should provide some insight. We are all about making fan relationships more valuable…which is a combination of value from data, revenue, and other sources.

- How do you measure the value of a fan, an email address or of a mobile number?

First, the industry is still in the very early stages of general awareness of the concept of Fan Lifetime Value (FLV). This pretty much didn’t exist in music until very recently, and it still is just starting to gain a little bit of traction. Once more people start to understand the concept of FLV, we think many new types of marketing will come into place.

In terms of the value of a fan, value can come in a few different ways. The most obvious is dollars…basically how much did this fan spend on me. Another type of value is viral value…does this fan tell all their friends about your music, or is this a trusted person for music recommendations. Both provide value to an artist, and neither is easy to measure (as things stand today).

You will start to see more from us in this area this year, because understanding the value of each of your fans is the key that unlocks a lot of doors.

- What role does a manager play these days? What about a publisher, label or a distributor?

Here is how I see these roles:

Manager: Managers create the plan to grow an artist’s career. I believe managers are in the best position of all these players, because they sit directly in front of an artist. The whole world can change, but as long as you are right in front of an artist, you will always have a role. Because of this position, they also participate in all the income streams of an artist, and are in the best position to do creative deals to further the common goal of building an artist’s career (and income). That said, I think we will see some creativity in the way managers are compensated, as it isn’t easy to make a living making 20% of the income of developing artists. The other side of this is managers with access to a pool of capital will be in a great position as they will be first on the scene to invest in opportunities (around their artists) quicker than anyone else.

Publisher: Publishers are also in a relatively good position, largely because of the legal protections around their IP (copyright) ownership. It is already happening, and I think we will see more publishers play a more active role in developing talent (through investment of both time and dollars).

Label: Large labels are becoming banks, and their problem is the one income stream they have traditionally participated in (sales of recorded music) is steadily decreasing. They’ve tried to compensate with 360 deals, but the issue is they don’t have competencies in all the other areas of an artist’s career. I think labels need to move more to the model that financing has gone, with many little labels (angel investors), fewer mid size labels (VCs), and a few large labels (late stage VCs/private equity).

Labels have proven they can’t predict what artist is going to be a hit, so I think the solution is to setup essentially a farm-team/feeder system where a ton of little bets are spread out over a large number of artists, and then as those artists show strong key metrics, they move up the ladder. Once an artist reaches a major label, the label is just throwing a ton of gas (dollars) on the fire to make it a massive success. The financial reward will be less (because they had to pay more to get the artist), but this tiered system also means the risk will be far less than it is now. It is really about coordinating the risk/reward ratio.

The problem here is a few things. First, major labels believe they can identify a diamond in the rough and build something from the very bottom up. Not only has history proven this to be untrue, it is also a really expensive (read: unprofitable) game to play. Second, nobody has figured out what the key metrics to look at are yet. It will take a lot of data mining and research, but I do believe the data is there to find the correlation that will tell you what are the right early indicators of success. I don’t believe it is sales, plays, pageviews, or any of the other things that people have been looking at. I will posit that the # of engaged fans (and at which levels of engagement) is the best metric I can think of, which is another reason why I believe FanBridge is in a really good place given that we have this data.

Distributors: I think distributors are in a very tough place. They are becoming a commodity, and unless they can turn into a highly automated, efficient, and scalable solution, there really isnt a good future ahead.

- What advice can you offer other music entrepreneurs?

I am by no means the expert in this area, but if I were to pick a few things, they would be:

- Talk to your core users, whether they are musicians or fans. Find out what they NEED, not just what would be nice to have. This is an industry with plenty of areas that need fixing, and spending some time with musicians (or fans) will open your eyes to many opportunities.

- Try to avoid needing big content deals for your business to succeed. There are many accounts (from all sides) of the issues/difficulties in dealing with large content holders (major labels, publishers, etc). While they are doing deals with startups and things are changing, you will likely be facing an uphill battle from the start, and things may not move at the speed which you had hoped.

- Understand the music industry. This industry has many intracacies that most ‘outsiders’ don’t understand, and you will be at a great advantage if you can understand who does what, what their motivations are, and why irrational things are the way they are.

- What role does a social network play in music today and in the future?

It really depends which social network we are talking about, but today they are great because they are large destination websites with huge numbers of people who can all find out about your music. Whether they find your music because you were featured, their friend shared a song with them, or they were browsing the charts, they give you an opportunity to be reached by a huge number of people. Our view now is that social networks are great for finding fans, and then you should use a sign-up form or link to get the fans to sign-up for your direct fan list. Essentially the social network is a feeder to a list that you own and control.

In the future, it is really hard to say, because social networks are changing. With Facebook Connect, Facebook is getting woven into the fabric of the internet outside of facebook.com proper. This brings social features to sites that were never ‘social’ to begin with. Similarly, email is a ‘social network’ that has more penetration than any other, has been around longer than any other, and continues to evolve with technology. Many are quick to dismiss email as a thing of the past, but we would disagree. I don’t think ‘social networks’ in the future are going to be what we think they are today.

- What new models might appear?

I don’t think anyone knows the answer to this question. Everyone continues to debate a la carte vs subscription vs cloud vs ISP licensing vs free vs bundled vs ad supported vs 12 other ideas, and I don’t even think I’m set on which one I think will win (if one even ‘wins’). One thing regarding business models I do believe is that there is a tremendous amount of data around music, and only very recently are people starting to release this data and use it in interesting ways. I think we will see a lot more of this in the future, and this could drive some new business models that we haven’t even thought of yet today.

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Posted by on Mar 9 2010. Filed under Business Models, Digital, featured, Gadget & Services, Marketing. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

1 Comment for “Fanning the flames of innovation: New Fan Management Tools & Companies”

  1. joseph Nicoletti consulting

    Yes! it is ALL “True”.. if you are in this Creative business we all “need” every Positive connection there is!..music is the international Spirtit that “connects” us all!.why exclude any force that helps get your songs/talent/message out ?..Joseph nicoletti musicbiz@cox.net

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