Thesis

Design by RVE (@ryanve)

Midem 2012 Visionary Monday Speech

I've had the great pleasure to be invited to midem's Visionary Monday to speak about my thesis. For an extremely condensed version of my thesis, call it a quick run through if you will, watch the above video. I look forward to speaking more about this topic and related topics in the future. If you're doing an event, don't hesitate to contact me.

Welcome

Hi!

Before you hop right in, there are just a few things I'd like to say first. This thesis is the result of about two years of dedication to this topic. What initially started out as research into 'the future of music distribution' slowly became more focused until I realized it's actually about non-linear music marketing. Some numbers in the thesis are already dated, but I tried to make it in such a way that it becomes clear what the trends are; so that the numbers don't really matter. This explains why MySpace still plays a role in this thesis—two years ago it was still doing (more or less) fine.

A thesis about non-linear communication should probably not be read in a linear way. I had the help of the great designer Ryan Van Etten to turn this thought into reality. He did a great job adapting the paper version into the site you see before you now. You'll find that everything is very linked, so whenever you want to see a reference to earlier research, click the link and the site will take you there.

One of the motivations for writing this thesis is because over the years I've grown quite tired about the endless 'piracy' debate and the toll this is having on our culture and even civil liberties. I never believed piracy to be the problem and as this thesis shows it's actually more of a symtpom than the cause. I wanted to show that piracy doesn't have to be the problem, and it doesn't, as long as you follow the rules of non-linearity.

This thesis investigates this non-linearity and all its symptoms: peer-to-peer filesharing, social networks, crowdsourcing, word of mouse, the economy of abundance and new business models.

I hope this thesis helps you reach your goals.

Bas Grasmayer
Blog // Facebook // LinkedIn // Twitter

Acknowledgements

Thanks go out to 2AM for welcoming me and always having time to answer questions about their vision on the music business and their position in it. It has helped to give direction to this thesis. A personal thank you to Miro Gechev and Darah Oreshkova. Thanks to you, the process of assembling this thesis was not just interesting, but also fun.

I would like to extend my gratitude to Dr. Donald Ropes, my academic supervisor. His criticism and guidance helped me to be more critical of my thesis myself. I'm glad the school appointed me the supervisor I requested.

Further gratitude is extended to the jury of the CBRD Award 2011 for selecting my thesis as the most innovative of the year at Inholland University of Applied Sciences' School of Communication, Media and Music in Amsterdam/Diemen, Haarlem, The Hague and Rotterdam.

Many thanks to Ryan Van Etten for developing this website!

Thanks also go out to Gerd Leonhard and Niels Aalberts, two experts whom I interviewed for this thesis. Their experience and vision helped give shape to my research and to the way I've organised the information contained in this thesis.

Thank you to all the artists who gave away their music in order to increase the potential population of my survey. Alexandra & Alec, ESP, Keekz, Kit Ashton, Lyall Anderson, P.Y.T, Piedra de Sol, RuN RiOT; thanks!

A special thanks to official.fm, in particular Jeremie and Olivier, who approached me shortly after handing in my thesis to offer me a chance to put into practice the ideas presented in this thesis.

My friends, acquaintances and helpful strangers who supported me through various social media also deserve my gratitude. Your support and help was very useful. I will return the favour someday, or pay it forward.

In conclusion, a very special thank you to my family and girlfriend for their support and patience during the writing of this thesis.

Thank you.

Abstract

The purpose of this study was to develop an effective approach for 2AM to market music to their fans using the web. 2AM is a small independent record label, publisher and music production house based in Sofia, Bulgaria. Their main product at the start of this study was Star Tattooed, a vocal house music project. 2AM's management wanted a better understanding of how the internet was changing the music business and how 2AM should deal with this from a marketing communication perspective. The study was commissioned by 2AM.

The research carried out for this study was both qualitative and quantitative. Qualitative desk research, interviews and participation in discussion groups was used to provide a theoretical framework for the quantitative research. The quantitative data was gathered through an online survey which delivered 362 valid cases.

The research revealed that convenience is one of the most important factors for music consumption. Due to the fact that the music industry has lost control over the distribution of their content, this desire for convenience has resulted in piracy. Meanwhile, consumers are replacing traditional media with new media with the percentage of respondents who have never bought a physical CD increasing per generation. People have different expectations as to what price is reasonable for different products. An important trend being that people enjoy consumption that feels like free, which has made that which is easily copied cheaper and that which can't be copied more expensive. Although consumers like 'free', even consumers that frequently pirate music often regularly spend money on music.

As a solution to these challenges, the author recommends that 2AM starts integrating the concept of the ecosystem into their communication strategy. The ecosystem is an active fanbase which is interconnected through non-linear communication. This means producing a story worth telling to turn the internet's non-linear communication and loss of control over distribution into an opportunity to get discovered. The second step is retaining the attention by connecting with listeners and connecting them to each other like the host of a party would with guests. Turning the ecosystem into a fun party helps energize the fanbase and amplifies the aforementioned story worth telling. Marketing opportunities come from listening to the ecosystem and releasing the products they want, as opposed to the classic approach of pushing the product that you want them to buy. Internet-enabled concepts such as pre-ordering and digital releases allow 2AM to offer the ecosystem abundant choice to play into all the different expectations regarding price and product characteristics. This most likely will involve a mix of (feels like) free and publishing products or services that are better than free.

Introduction

This thesis answers the question "how can 2AM effectively market their music to fans by using the web?"

The problem-owner, 2AM, is an independent record label, music publisher and production house, founded in 2005.Its main 'products' are the productions of Miro Gechev (also the label founder) as Star Tattooed and Miro Gee. The main niche of these products is vocal house music which always takes into consideration the trends in other popular genres. The goal is definitely to hit the charts around Europe and the rest of the world, instead of focusing on a particular scene or geographic zone.

2AM, as a business, is quite connected to the traditional music industry, having also had their music released via Universal, Warner and EMI. The distinct advantage 2AM has over these labels, is that they're independent, small and can adapt fast to new trends. However, that which impacts the entire music industry, such as digitization, also impacts 2AM.

The thesis is split up in two parts, one part researching the problem and one part researching and defining the solution.

This means that the traditional 'Context' section one would expect in the beginning of a paper like this has been scrapped. Instead, the research into the problem should provide the necessary context. However, there is a little context which should be provided prior to the problem research.

For the last decade, news media outletshave regularly reported about the way the music industry is being impacted by the digital age. There are big issues and the main problem, from a communication management point of view, is that the failure of the music industry to adapt to the digital age has led to a disconnection with their consumers (particularly 'digital natives').

Before the leading research question can be answered, the following questions need to be answered:

How and why has the internet changed the music business for record labels such as 2AM and why is this a communication problem?

This is to provide the relevant context. A big part of solving the problem lies in understanding the problem.

The solution is presented through a concept called the ecosystem. The following question is answered:

How do you build and maintain an ecosystem?

By answering these questions, this thesis should provide an in-depth understanding of the communication problem of the music industry (and 2AM) in the digital age, as well as a clear guide how to solve this communication problem by using the opportunities created by the digitization.

Methodology

This section explains how the research for this thesis was conducted.

For the contextual framework, I've tried to identify marketing and music business experts, connected with them on Twitter, followed blogs about the topic, followed trends in music fanatically and tried to make myself an expert in the topic. I've visited multiple events about the music business in the digital age and have spoken to a lot of experienced experts in person, both online and offline. I've tried to look into trends more than the status quo, since the status quo kept transforming over the course of putting this thesis together. The trends remained more constant and require significant upheaval in order to be turned around or replaced. This will become clear over the course of reading this thesis.

For the primary research, I've conducted somewhat of a dragnet survey. It looks into both the problem as well as the solution and I tried to get as much data as possible, to study the correlations. This survey was conducted over the summer of 2009 and resulted in 362 valid cases. It was conducted online, because what is needed, is people who already use the web, because of the likelihood of the possibility to apply previous theory to them.

The link to the survey was spread through social networks (both online and offline) of the parties involved, but also via blogs, and forums of online music communities, like filesharing websites and the sites of online radio stations.

As an incentive for people to take the survey, respondents received nine free MP3's after answering the questions. This was done to gain a bigger survey population, so as to increase the value of the survey data. The free music also created word of mouth.

Data Analysis

The data was analysed in SPSS. Through the research in the contextual framework, assumptions were formulated. Some were assumed truths, which people talk about on blogs, in books or industry reports, but others are based on my own assumptions which stem from connecting the theory. To guarantee a certain level of validity to the findings, I've tried to make sure most data in this thesis comes from cross-relations, so that there's always a certain context (instead of taking the survey averages and assuming they apply to all consumers). The quantitative research has been used to support both the problem definition as well as the proposed solution.

2AM

Prior to starting the research, I've thoroughly discussed the research topic and the goals of the research with 2AM. The main purpose of these discussions was to identify how 2AM functions and what is important to them, but 2AM also gave statistical insight into their fanbase. Even during the process of composing this thesis I've kept in close touch with 2AM to make sure that the final product would be of practical use to them.