Solution

5 - The solution: building and maintaining an ecosystem.

The solution is, like the research topic of this thesis, two-fold. This section of the thesis is thus split up into two main parts. The first part is about building a strong ecosystem, the second part is about maintaining that ecosystem, which is where most marketing opportunities lie. The definition of this ecosystem will be discussed in part one, along with the rules and theories of a healthy ecosystem.

Initially I tried organising the information for the solution in the same 4 Ps model used in the problem definition. While a good tool for exploring and analysing a problem, I found it to be impractical to apply here. In the problem section, a lot of the trends were already overflowing, from place, to price, to product and promotion, but in the solution these are so linked and merged that that way of organizing information was impossible. Instead, I organized it in a step by step way, so that the steps 2AM must take are listed more or less chronologically (even though the solution is actually cyclical). However, I do refer back to the concepts of the marketing mix (4 Ps) throughout this section.

5.1 - Part 1: building a strong ecosystem - introduction.

Doorbraak! by Niels Aalberts
Doorbraak! by Niels Aalberts

The solution is based on a model revealed in a conversation I had with Niels Aalberts (@EHPO), a successful music manager in The Netherlands, who is behind the success of the popular hip-hop artist Kyteman. In his first 1.5 years, Kyteman sold over 60,000 CDs, 15,000 DVDs, reached 150,000 people with live performances, 5 million Dutch TV viewers and sold out every venue they performed in. The only money spent on marketing for this was €53.10 (Aalberts, 2011). The concept of the ecosystem puts all of the theory into place. It was not the first time I had heard about the concept of the 'ecosystem' in relation to the music industry. Tech blogs, such as TechCrunch, use the word all the time, but are usually referring to the developer or business-to-business side. I realized as a concept, the ecosystem can also be applied to business-to-consumer. The concept of the ecosystem is not set in stone and it's just a label I've used to define the process. Why I've used this label, instead of another, will become clear further on, especially through the case-studies. My conversation with Niels Aalberts, which revealed the model for categorizing the information in the solution section, basically came down to the following:

  1. First, a band, group, artist, label, has to differentiate themselves. This means, their music has to be very good, but it also needs an element which defines it and which makes it different from all the other music in the niche or sub-genre.
  2. Second, as an artist or label, you need to give fans a message that spreads. Niels Aalbers mentioned that people love telling stories. With the phenomenon of word of mouse, stories spread faster and more easily than ever. This does not mean that you have to tell stories in your songs, but that you have to be a story, as an artist or a label, be remarkable and be worth mentioning. A good example of this is the immensely popular pop artist Lady Gaga, whose songs are (arguably) about nothing, but the identity of Lady Gaga is a great 'story' (one only needs to look at the pictureon this page to understand that).
  3. Third, when this story starts spreading, that's when you start building your ecosystem. This has to be done with patience according to Niels Aalbers, specifically noting that business models should be kept out of the door for as long as possible.
  4. Fourth, once the ecosystem is in place, one should start listening very closely to this ecosystem to see what it wants. This is a paradigm-shift in marketing communications, because it has traditionally been about finding a consumer for your product, but this is about finding a product (business opportunity) for your consumers.

Moreover, it's important not to try to force 'complicated messages' into your ecosystem. An example of a band with a lot of teenage fans was mentioned in the conversation with Niels Aalberts. This band was trying to sell physical copies of albums to their fans, but the message of paying 12 euros for a plastic disc with 10 tracks, that they have to put into a CD-player they never use is a very complicated one for teenagers. Instead, Niels Aalberts suggested that they sell their album via SMS, because that's the language these teenagers speak and it's a message they understand. Sure, you will only make 2 euros per sale, instead of 12, but when nobody buys your plastic-disc-12-euro album, that point no longer makes economic sense.

With a strong ecosystem, one also doesn't need to worry about gatekeepers that one traditionally would need, such as the people who decide what to play on MTV. Now gatekeepers are more likely to follow the trends instead of determining them. Besides that, the ecosystem should be like the cool party happening down the street; it just makes you want to go up to join in and if it's fun enough, you will call your friends to abandon whatever party they are attending and to come to this one. Soon enough, the party will be attracting people from all over the area, perhaps stopping by a shop to buy some drinks for their friends and making sure the party stays fun; the fun of the party depends on its own existence and therefore the party protects its continued existence.

Now imagine that party without geographical limitations. That's the power of an ecosystem in a digital world. This section shows how to build up that power.

5.1.1 - Part 1, step 1: getting discovered.

The very first step of building your ecosystem is by generating attention and getting discovered. In terms of the marketing mix, this is mostly about promotion. Actually, the first step is making very good music that differentiates itself from other music, but since that's not necessarily my area of expertise, nor the topic of my studies, I will leave that one up to the producers.

Theoretical Framework

It's important to remember Gerd Leonhard's concept of Music Like Water and further discussed in the problem conclusion, Leonhard claims that music should be seen as a service instead of a product. In an interview I've conducted with Gerd Leonhard for this thesis, he noted the following about getting discovered:

"The strategy, in general, is for smaller artists to publish as much as they can in as many different places and with the right target group and to basically generate attention. Because the biggest problem for the artists is [...] not the fact that they don't get paid. The biggest problem is that nobody pays any attention to them. Right, so the payment [...] comes after you get the attention. So basically anything that gets your attention on the web, that's what you should be doing." (Leonhard, thesis interview, 2009)

Seth Godin, a marketing guru and popular author, seems to agree with this. In his book Purple Cow he advocates doing the remarkable, whether that's for products, services or ideas. Marketing has been very much about pushing a product to the people and music has been no different. However this is changing and the pull approach offered in Purple Cow might be a solution for the music industry. Create something that's remarkable enough and let word of mouth (word of mouse) do the work.

Seth Godin:

"This is the greatest moment in the history of music if your dream is to distribute as much music as possible to as many people as possible, or if your goal is to make it as easy as possible to become heard as a musician." (Godin, 2009)

Gerd Leonhard:

"Whatever your content is, that's your marketing. If your content is good, then people run across you when you publish it a lot and they'll tell others and sooner or later you have a following. And when you have a following, that's when you start monetizing." (Leonhard, thesis interview, 2009)

Word of Mouse

Word of mouse is a promotion-reality created by the developments in the marketing mix's place. Two great recent examples of this word of mouse at work are Die Antwoord and The Ugly Dance (both discussed next).

Case-study: Die Antwoord

Die Antwoord
Die Antwoord

South African rap act Die Antwoord is a perfect example of a group that absolutely mastered this first step of getting discovered. On February 4, 2010 I noted on my blog:

"In one day, they have doubled their Facebook fans from 5.000 to 10.000 and it seems like they're still picking up steam, with blogs like Boing Boing, Dlisted and Mad Decent writing about them. Why is that? It is very simple. Die Antwoord is unique. They offer something fresh, in a remarkable way? In thm digital age, where we can share all the music we want, being remarkable is THE most important characteristic for a band, group, musician, producer, etc. You have to be worth talking about."

To put it in the words of Seth Godin, Die Antwoord is a purple cow. To put it in the words of Niels Aalberts; Die Antwoord is a good story, although Aalberts specifically noted that one does not need to be as extreme as Die Antwood in order for this to work.

I continued:

"So what did they do? Not much. They created a unique concept (or maybe this is just an extension of their personalities), uploaded their songs to YouTube, do a lot of performing and try to get people to spread the word. That's probably why they give away music at live shows: "First 100 zeflings thru the door get a free hand-drawn full-length $O$ album (16 tracks) burned by die fokken rap-rave meesters NINJA en YO-LANDI."

The question for 2AM is, where can 2AM, and their main act, Star Tattooed, get discovered?

Case-study: The Ugly Dance

The Ugly Dance
The Ugly Dance.

Perhaps the funniest way I found in which one band is getting their music discovered, is The Ugly Dance. The idea of The Ugly Dance is very simple. You go to the site, upload your picture, your face is placed on an animated body and you can choose all kinds of maniacal ways of dancing.

It's a project by Swedish band Fulkultur and is definitely getting their music heard (discovered) by a lot of people. This type of thing spreads—and not just because it has a big 'share on Facebook' button.

This function is only available for those who support our band...
The Ugly Dance donate screen.

I got in touch with the band and, in half a year, TheUglyDance.com had had over 7 million unique visitors. This excludes the visitors they got to the Swedish version prior to and after the launch of the international version.

← When I wanted to create a second dancer (to send to a friend), I got this message.

Quite a reasonable thing to ask, but we'll delve into the selling proposals and products later. There are even a bunch of tribute videos and remixes out there (yes, every one of those words links to a unique video, have fun). This is an example of the ecosystem at work; you lead, they follow. Not for you, but for themselves, because they're having fun.

Empirical Research

The empirical research conducted for this thesis supports the concept of a story worth telling. It tests the validity of the expert opinions and adds further depth. When people were presented with the statement, "if a friend recommends music to me and supplies a link I always have a listen," 78% of the respondents agreed.

graph
Figure 13: If a Friend Recommends Music To Me and Supplies a Link I Always Have a Listen

In the section about the problem definition, the empirical research pertaining to the problem was already discussed. Some research looked into the group of 20 to 24 year olds, as it's a target demographic for 2AM.

When asked how they discover new music, over 90% mentioned the internet and about 45% said they discover music at friends' places. As can be seen in the chart below, radio also plays an important role, but television seems quite unimportant.

This is the same for pirates, except with them radio and TV play an even smaller role and the internet and friends a slightly bigger role.

graph
Figure 14: Ways In Which 20 To 24 Year Olds Discover New Music

The same goes for the social networkers (see below), however there are some differences between them:

graph
Figure 15: Where Do Social Networkers Discover Music
  • Twitter users are more likely to discover new music through 'old media' (print, radio, TV).
  • MySpace users discover music outside of their homes (at friends, record store, bars/restaurants/clubs), while Twitter users clearly prefer a less outgoing way of getting to know new music. Facebook users hover in between.
  • The internet is a medium listed by almost all the daily social network users, no matter what their network of preference is.
graph: ways internet users discover new music online
Figure 16: Ways Internet Users Discover Music Online. (Of people who discover music online, these are ways they discover it.)

Respondents that claimed they were discovering new music via the internet were then asked how they do that exactly. They could check between one and three answers. People gave rather varied answers (see above) and it appears there is not one general way in which people discover music online, perhaps that's why people like Gerd Leonhard say that artists should publish as much as possible, in as many different places as possible. Getting music via friends, like in social networks or via email, seems the most popular way to discover new music, followed by YouTube and blogs.

The most important outtake is that people have different desires and different ways of discovery. The internet is here to stay, but trends on the web will come and go (this includes specific social networks; since I started research on this topic, MySpace went from 'in decline' but still a major player, to a dying network). The most important thing for getting discovered is thus being everywhere (easy to come across) and being easy to share. This is, again, about convenience, which was found to be one of the key desires for consumers in the problem definition.

5.1.2 - Part 1, step 2: retention.

While getting the attention, one also needs to work on retention. There are a lot of ways artists can retain the attention they get and the easiest is via social networks. This is about communication and connecting with fans.

Someone Else's Party

In our conversation, Niels Aalberts named a particular concept which I feel would be particularly useful here. The concept is called "Someone Else's Party" and basically means that a following should be fun to join. The reason why I feel this is useful is based on my experience in running a political campaign for a new party, but also my experience of being a blogger, promoting my own recorded DJ sets, and having been a part of many online communities. When starting the political party, which really depended on grassroots activism, it was very important to get the ecosystem fired up as soon as possible, so that 'fans' would be able to attract, entertain and retain each other. If you only go for one-way communication, the party will always be depending on your presence. If you're not there, nobody's having fun. We've all been at a house party where everyone was kind of standing around, waiting for the host to come talk to them. The more successful parties have a host (and/or a few friends of the host) who introduce people to each other and encourage them to interact or even bring their own friends.

Derek Sivers, founder of the indie music store CD Baby, posted a great example of Someone Else's Party on his blog:

  • "Shine a spotlight on the first fan that loves you. Help them be a starter. Show what they're doing, and how happy they are.
  • Help your second fan join together with the first, instead of also dancing alone.
  • Make sure they do almost exactly the same thing, so it's easy for others to also see how to join.
  • Give a few early adopters the courage to jump in together with the first. Make sure they stick together as a group.
  • Now it's not about you, it's about them. Publicize the group, not yourself. Make it fun to join.
  • Make sure all late-adopters can see what fun the early adopters are having." (Sivers, 2009)

This quote makes it almost sound like having to build your sub-culture, like Insane Clown Posse or the Grateful Dead did for instance, but that's not necessary. Even the Ugly Dance is a movement and Sivers' comments apply almost literally. As Niels Aalberts indicated when talking about having to differentiate yourself, it's not necessarily about extremities. These models should be applied with practical intensity, which means finding the right balance.

What the above quote also shows, is that one-way communication (2AM to fan) is old-fashioned and becoming increasingly ineffective. The same goes for two-way communication (2AM to fan, fan to 2AM). The internet has sped this up and has made the demand for communication evolve. Communication can and should be much more dynamic than one-way or two-way (and the changes in the marketing mix's place have made this possible!).

Yes, 2AM should communicate to fans and fans to 2AM, but fans should also communicate with each other, with their friends who are not fans, with the media, with strangers that they want to inform about their passion.

Millennials: Non-Linear Thinkers

P2P Network

It's about non-linear communication, which actually looks quite similar to the communication processes in P2P-filesharing networks (see image). BOX1824, a Brazilian research company specialized in consumer trends and behavioural sciences (from which the concept of 'the selfish consumer' originates), says the following about communication with people that grew up with the internet (millennials):

"It's not always easy to understand what millennials are saying. That's because they've developed a non-linear way of thinking, that exactly reflects the language of the internet where an infinity of subjects can be followed at the same time. For these millennials, it is natural to start out with something and end up [...] somewhere else." (BOX1824, 2010)

This non-linear communication is the key to the ecosystem and probably quite scary for most record labels' marketing teams, since it's impossible to control—remember the loss of control trend from the problem definition? Attempts to control the communication can often backfire, because it's insulting to the fanbase—the ecosystem. The main role for the artist, the label and the marketing communications team, is influencing the conversation—giving people a story worth talking about.

This is where full circle is reached, because not only does this lead to retention, but it also causes the retainees and influencers within the network to let the ecosystem grow. Ergo, to retain; create a network and connect new followers to the network (examples of what such networks look like can be seen in case-studies to follow).

Empirical Research

The most important part of the empirical research which specifically pertains to this, is indicated by how willing people are to listen to friends' recommendations. It's this social side which is probably more effective than a traditional marketing message, because it's relatively cheap and could be assessed as more genuine. This is why the non-linear peer-to-peer communication should be enabled as soon as possible. This sounds like advice to put a forum on the label site, but it could be as simple as offering fans a chance to hang out with you (online in a chat, or offline in a bar); you are the unifying factor, but they also get to meet new people.

Case-study: mau5ville

Deadmau5, a popular dance music producer, found a great way to apply aforementioned concepts of retention through being the unifying factor. In November 2010, deadmau5 set up his own server for this sandbox-game in which players can craft their own world. His fans love it, and deadmau5 regularly pops in to hang out with them in 'mau5ville.' In a way, both deadmau5 and his fans emerge themselves in fan art. There are tons of videos of mau5ville online, so you can take a tour. One user even used the game's tools to make a cover of a song by deadmau5, which deadmau5 then shared with over 2 million of his fans. Other artists sometimes prefer to go the way of a takedown notice when a fan puts his energy into making fan art -- but deadmau5 prefers to promote it. This connects to Derek Sivers' advice of publicizing your fans and shining a spotlight on them. You can see both videos below:

In January 2011, deadmau5 bought about 20 Minecraft accounts (15 euro a piece) and posted the gift codes on his Facebook page. He understands that having fun with your fanbase and spending a little money on it can be much more important than telling them to buy your music or spamming them with marketing messages (later on, there is another deadmau5 case-study where you can see what his feelings on that are). However, most importantly, for retention? One way he retains fans is by connecting them in a co-created world called mau5ville and being the unifying factor by regularly hanging out with them there.

5.1.3 - Part 1, step 3: the ecosystem defined.

So what exactly is the ecosystem that one has to build up? At the core of the ecosystem lies the fanbase, sometimes labelled a tribe or a movement:

"Senator Bill Bradley defines a movement as having three elements:

  1. A narrative that tells a story about who we are and the future we're trying to build.
  2. A connection between and among the leader and the tribe.
  3. Something to do [...] the fewer limits the better." (Godin, 2008)

The ecosystem is nothing more than a movement with the dynamics of peer-to-peer communication.

So what does this ecosystem mean in terms of the 4Ps, covered in the problem definition section?

  • Place: Few ecosystems unite in one place. Even though one might only be distributing news via Facebook and music via iTunes, the ecosystem can and will hear the news and the music in many other places (it is, of course, recommendable to publish in as many different places as resources allow). If you have a story worth talking about, the ecosystem WILL talk about it, whether that means reblogging your news on their own Tumblr-blog, or combining your music and their favourite art into a YouTube-video. This is a great thing, as the empirical research before has already established that people discover music in many different places on the internet and this word of mouse makes sure it spreads, because it is (or should be) a story worth telling.
  • Product: What you do and who you are, should be a story worth talking about. The product is a combination of many elements: record label image, artist image, design, physical or digital, premium or very low-priced, etc. (note: I originally used the word 'brand' instead of 'image', but chose the latter to make it more readable, however I want to stress that there are strong similarities between the image of an artist and 'branding'). The medium on which your music is published, is a product (since you buy a CD), but this medium is also a channel to deliver your content. The price and promotion of a product also add a certain value or image to the product. Again, this stresses how much the marketing mix is merged and overlapping in the modern music business. Personally, as a communication manager, I'm very excited about the role of the product now, because never before has communication been so essential to the development of a product. This is because now, instead of finding a market for your product, you find a product for your ecosystem. This is why this communication advice has such a business angle. Read more about this in the second part of this section which is about maintaining the ecosystem.
  • Promotion: A lot has already been said about how promotion has changed and the case-studies throughout this thesis (more to come) do a great job of showing that. For the ecosystem, promotion means two things. The first is keeping your ecosystem informed or updated, because a connected fan is a fan that will purchase (as seen in the earlier correlation between people's willingness to buy music and them knowing which labels their favourite artists are signed to (see table 2)). The second function of promotion is making your ecosystem grow.

    The number of ways in which this promotion can be done is considerable, since the web allows for all kinds of exchanges and interactions, but in the end it comes down to the same thing as with branding the product: it has to be a story worth talking about. The best parties are not the parties with a hundred thousand euro marketing budget that nobody talks about? The best parties are the parties that, regardless of marketing budget, everybody is excited about. The budget is not important until you get the message (story) right.

  • Price: The price can and will be anything. While researching the problem, it was already established that people have different expectations and desires when it comes to the price of music. For some part of the ecosystem 0 will definitely be the only price for consumption, but that does not mean that part doesn't add value to your ecosystem.

    "The following automatically translates to the click, which translates to the money." (Leonhard, thesis interview, 2009)

    In the empirical analysis in the problem section, I showed that there were two groups within pirates: those that buy music more frequently than the average respondent and those that buy less frequently.

    For the second group, zero—'feels like free'—is the right price, but they can help spread your music (via social networks or even filesharing networks), which means more potential ecosystem members, which means more people that belong to the first group. Those are the ones that are willing to spend. In old marketing, one would only define this first group as the target group, but in new marketing they are just one target group.

More About The Ecosystem

In his thesis about the new music industry, music technology student Alexander Mooij introduces interesting concepts by Kevin Kelly, a former editor of Wired magazine.

One of these is the theory of 1,000 True Fans.

1000 true fans on long tail graph
1000 true fans and the long tail.

In a blog post titled 1,000 True Fans, Kelly argues that all an artist really needs to make a decent living is one thousand true fans. He goes on that the long tail that artists have to deal with is very steep and perhaps impossible to climb. The long tail represents the model that a small percentage of products/artists/brands get the majority of attention, which translates to income when monetized.

To put it in a marketing perspective, one could look at the AIDA-model: without Attention, you cannot create Interest, Desire or the Action which is the end goal of marketing—like a purchase of a product or subscription to a service. The long tail theory was popularized by Chris Anderson, mentioned in the problem section regarding how the internet has changed price.

Since 2AM doesn't see itself as producing music for any specific niche, the goal for 2AM is to move up the long tail as far as possible. This can be done by acquiring a thousand true fans.

"A True Fan is defined as someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can't wait till you issue your next work. They are true fans." (Kelly, 2008)

This is not so much a definition, as it is a bunch of examples. To define a true fan, at least in marketing terms, means someone with a certain brand loyalty towards an artist.

"One thousand is a feasible number. You could count to 1,000. If you added one fan a day, it would take only three years. True Fanship is doable. Pleasing a True Fan is pleasurable, and invigorating. It rewards the artist to remain true, to focus on the unique aspects of their work, the qualities that True Fans appreciate." (Kelly, 2008)

What follows logically is that the music is used to create awareness and connection—getting discovered. Social networks can be used to retain and to further connect with fans and to connect fans to each other. Not every fan in the ecosystem has to be a True Fan, but the goal is to make sure your ecosystem contains them.

This sums up what the ecosystem is and how it basically works, but how does one maintain the ecosystem? When do we actually get to the part of selling the product?

5.2 - Part 2: maintaining the ecosystem.

Once one gets the ecosystem going, the real fun starts. Most people probably get a mild shiver when they hear the word maintenance but if you look at some of the examples and case-studies in this part you will see that with the right attitude this is the most fun and rewarding part.

Due to the fact that dealing with the ecosystem is not a linear process, some of the concepts handled in the previous part will be mentioned again, through overlap (just like how the marketing mix is heavily overlapping). Maintaining the ecosystem is about connecting with fans and listening to them. This is where the business opportunities lie, but these opportunities are solely created through communication (which includes listening).

5.2.1 - Part 2, step 1: building a connection.

In order to maintain the ecosystem an artist or record label must cultivate or build a strong connection with the ecosystem. Instead of connection, one could use the phrase 'rapport,' which is defined as a relationship of mutual trust or emotional affinity. There are many books that go into how to build rapport—from How to Win Friends and Influence People to Dr. Robert Cialdini's Influence to books about sales or even seduction. There are probably as many methods as personalities, so one 'simply' has to figure out what suits them best.

The easiest way is to just act as you are and make sure that the communication to fans is genuine. Keep this in mind when figuring out what the story worth talking about could be! Technically, this would fall under the promotion part of the marketing mix, but I think the word 'promotion' has some negative connotations. It is about a genuine conversation between artist and ecosystem; not just about sending out your marketing message. The first time I came across 'connecting with fans' as a phrase, was in a speech by tech journalist and new media consultant Mike Masnick about the band Nine Inch Nails. Masnick was talking about was CwF+RtB=$$$ (Connecting With Fans + Reason To Buy = income). Although I believe the basic formula leaves out many of the subtleties of communication and communities, the speech did make a good point about connecting with fans.

Case-study: Trent Reznor and Nine Inch Nails

For the album launch of Year Zero in 2007, NIN member Trent Reznor left hints throughout merchandise and websites as part of put together an internet scavenger hunt or an 'alternative reality game', which energized and connected fans. Then he took USB-sticks, put some unreleased NIN music on them and dropped them at bathrooms at NIN gigs, only to be found by fans who would be thrilled when they discovered what they had found. Fans shared this music, but got take-down notices from organisations representing NIN, so it backfired a little and NIN ended up leaving their label.

Now Trent Reznor could take things a step further. This meant that they gave away their album Ghost I-IV for free (under a Creative Commons license), yet still made $1.6 million within the first week of the release (have a look at the source for more information about the RtB). Two months later, they released another album titled The Slip, which was again downloadable for free, this time also in lossless quality.

Besides the album releases, they aggregate NIN photos from people on Flickr on the NIN website, which means you can see other people's pictures from concerts you went to (or missed), and the same for videos. The website also let people download raw sound files and encouraged them to create remixes, had hidden tickets throughout the site, and had coordinates that people could go to and they'dfind free tickets to a NIN show hidden somewhere. Trent Reznor also uploaded 450 gigabytes of raw concert footage and encouraged fans to do "something cool" with it. The opportunities of building a strong connection with fans are only limited by the creativity of those wanting to build this connection.

The more exact how constantly changes. In the past, artists would have to reach out by responding to fanmail, appearing in magazines and on TV and other types of traditional publicity. A few years ago, it was all about MySpace and live chats. Now, it's more about Facebook, Twitter, live videochat via Ustream, or even interaction with fans within online multiplayer games, as in the mau5ville case-study.

Empirical Evidence

Primary research also showed that this connection increases the chance of people spending money on an artist in some way.

56.1% of respondents agreed to "if I have exchanged a few words with an artist, whether in person or via the internet, I'm more likely to buy their music" while 20.4% disagreed.

For pirates this percentage was slightly higher and for the social networkers it varied by network. When the social network users were asked about whether they would be more likely to buy music after talking to an artist, over 60% of Twitter users agreed.

graph: more likely to buy music after talking to an artist
Figure 17: More Likely to Buy Music After Talking to an Artist

Facebook users were remarkably insensitive, with over 60% indicating that it would not matter to them. MySpace users were not as enthusiastic as Twitter users either, but were more positive.

This might indicate that although Twitter users buy more physical music copies, they might also desire more of a connection with artists than people that prefer other social networks. It's unsure why Facebook users claim to be less sensitive. Personally, I believe this shows the limits of a survey, because it all depends on how good consumers are in predicting the behaviour that marketeers try to influence.

5.2.2 - Part 2, step 2: nurturing the connection.

Once the connection has been built, it needs nurturing. This means staying genuine and consistent. If you have been chatting with fans daily and suddenly disappear for 2 months without notice, that's a rapport-breaker and thus terrible for the ecosystem.

The demise of the album as a format, and the fact that most of 2AM's projects are not exactly album-projects, is a good thing. Instead of making a lot of songs, then releasing them over one or two years and then having to go into the studio, one can just publish the songs when they're done. This helps a lot with controlling your own consistency and frequency of communication. Now one can claim this nurturing still falls under promotion, but in my eyes, this is where we've reached the limits of the marketing mix model. It is much more about community management and consistent sincerity.

A good illustration of why it is important to stay consistent is an incident which took place on aforementioned deadmau5' Facebook fanpage. Deadmau5 uses his Facebook page to stay connected with his ecosystem and has a lot of fun with them and frequently updates it with a very personal touch. Fans love him for this, as can be witnessed in the comments below every status update.

When he released his new album, deadmau5' marketing team decided to throw in some marketing messages:
on Facebook...poll...which new tune do you want to hear live?...[3 choices, then]...deadmau5's new album 4x4=12 is now available to buy...
Apparently deadmau5 didn't like the fact that his management was disturbing the trust and rapport he had built up with the ecosystem, because those status updates were followed by deadmau5's:
on Facebook...deadmau5...who thinks polls suck 1. me 2. not me...this is why mgmt needs to give me a heads up before posting stuff on my wall...1067 people like this
Then he checked the backend of his Facebook page? This case serves as a great example of how to nurture the connection, even when something disturbs this connection. This is the best thing he could do to earn back the trust of the ecosystem, because you really don't want to get on the bad side of the ecosystem. The ecosystem can reject you, the ecosystem can move on, the ecosystem doesn't need YOU specifically in order to survive.
on Facebook...deadmau5...i just popped on this page's settings and there were like 12 admins...and 9 of em i have NO idea who they are. so I just removed everyone but me n rukes (so he can upload pics n stuff). hahaha...1409 people like this
The best thing is, deadmau5 wasn't thinking about marketing or self-preservation or strategy in the process of making his choices. It's just him, genuinely. The status update he posted 1 minute later shows just that:
TAKE THAT MARKETING! in yo FACE...2518 people like this

5.2.3 - Part 2, step 3: listening to the ecosystem.

When I mentioned Mike Masnick's Connecting with Fans and giving a Reason to Buy model (CwF+RtB=$$$) in my conversation with Niels Aalberts, he indicated that the formula was incomplete. He said it's much more important to listen to the ecosystem and keep the business models out of it for as long as possible. About this, aforementioned Gerd Leonhard told me this:

"The first step is to get them to use—to click. And then the second step is to snag them further to basically get them hooked. [...] The following automatically translates to the click, which translates to the money." (Leonhard, thesis interview, 2009)

It seems to be a common rule in the so-called web 2.0—the social web which emerged in the last decade. Fred Wilson, a famous blogger and tech start-up venture capitalist (who recently invested in Soundcloud) recommends the same idea to young companies that need to build communities:

"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base." (Wilson, 2006)

What does listening to the ecosystem mean? Basically, it's a matter of connecting with your fans through passive and active observing and acting on the observations. The most profound result of this is that the business models originate from the ecosystem, by giving the people what they want. As said before: it's about communicating to find out what product to develop for the ecosystem, instead of finding a market for your product. It is important to remember the fact that the music itself is no longer the product.

The model looks like this:

music ecosystem concept
The ecosytem model.

Even though product development and business models do not seem like a part of communication management, they are. The concepts developed are the product of a communication process and the products themselves serve to further strengthen the connection between artist and ecosystem, because you're showing that you're listening to it (and giving the 'selfish consumers' what they want!). The following case-study about Shpongle serves well to illustrate that point.

Case-study: Twisted Music, Shpongle and the ecosystem

This case-study is about Shpongle, a much respected group of musicians, in a very specific niche: psychedelic chill-out, but attracting many fans of other genres too and is generally categorized as 'electronica.'

A while before they released their latest album 'Ineffable Mysteries From Shpongleland', it leaked onto filesharing networks and fans of Shpongle started discussing the new album on the internet forum of Shpongle's record label, Twisted Music. Obviously, Simon Posford, the main person behind Shpongle and owner of the Twisted Music label, was very unhappy about this and lashed out:

"So some fucker has released the album on the internet already... Thanks a lot, whoever it was... Maybe twisted will still recoup, maybe not... All I know is that we are teetering on bankruptcy, and are seeking deals elsewhere... The 12 loyal fans on this forum are not enough to sustain a record label... How much do you think Twisted has in the bank account? Have a guess? More than $10,000? More than $20,000? Well it is actually less than $1,000... Raj and I haven't even been paid our advance for this album... All the artists on twisted are seeking deals with other labels now? We can't pay a label manager, and we can't pay the artists?. always putting our hope in 'just ONE more release'... "We'll be ok if the DVD sells"... "Surely the Shpongle CD will sell, right?"

[...]

"This sucks, for Twisted, for myself and Raj who have spent 3 years working on the album?. Just as i started looking around and posting on this forum again, I remembered why I shouldn't bother?. I'm outta here? Soon to be followed by Younger Brother [another project by Simon Posford] and probably Twisted?

"Enjoy."

He got understandably emotional, but misdirected his anger towards perhaps the most dedicated fans: those who really cannot wait until the release and decided to preview it. After all, Shpongle hadn't released an album in four years and their following is quite fanatical about their music. Later in the same forum topic, he adds some more thoughts which are also relevant to this case study:

"It's all very well to speculate, but I can tell you as a fact, we made more money before file sharing? we could survive? now not so... and I think you will find it the same all over the music business? the argument that "file sharing is promotion" is probably valid... in fact, I agree?in a way it serves a similar purpose to radio... but the argument that 'file sharing is promotion and therefore you will sell more CDs' is clearly absolute bollocks, otherwise the music industry would be booming right now!"

[...]

"Also I'm sorry that "And if it weren't for the internet, I would have given up on music entirely"... for me, the internet makes me want to give up music ;-) But I guess i'm from a different generation... I started making some of the trance that probably fills your 100Gigs hard drive before i'd even heard of the internet? and I didn't need the internet to find a deep love of music? the rush of buying a new vinyl, of collecting every release/picture disc by my favourite artists... discovering new music I liked, all underground, no radio-plugged mix CDs or whatever? ALL without the internet!"

Later on in the topic, which currently carries over 600 replies, fans started to suggest ideas to Simon. They encouraged each other to buy more merchandise, replace old t-shirts or hoodies, buy an extra album to give to a friend and they came up with ideas to help out Simon Posford, Shpongle, and Twisted Music.

And it seems Simon has also learned from the fact that you indeed will not sell more CDs even when filesharing is good promotion, as he noted. Being a fan myself, I was very delighted to receive a newsletter, one year after the leak, which featured some interesting new business models and experiments. It does a few things very well and I'll highlight this bit by bit. The opening paragraph is as follows:

"Dear Twisted fans,

The new Prometheus album has been doing very well on Beatport with 4 of his tracks reaching the Top10 of the electronica charts. If you haven't got your copy yet then Benji and Twisted would be happy if you could get onto Beatport and purchase at least the electronica tracks. We'd love to see him get to Number 1!

Ott is beginning his 6 date tour of the USA starting tonight! You can see and buy tickets to all his tour dates at the bottom of this newsletter. You can also join his Facebook Fan Page here.

We've also got two new tracks of Younger Brother and Shpongle available as a free download, keep reading to find out how to get hold of them."

What a dramatic change of tone, compared to the rants on the forum. This is how you connect with fans! First of all, it acknowledges fan support in terms of chart positions and makes a polite request (as opposed to lashing out or guilt-tripping fans, like on the forum). Also, it tries to unite the fans and give them a purpose; a mission. People love accomplishments, individually or in groups, if only for the little dopamine rewards our brains release.

They then give the fans more information and ways to connect with one of the label's artists and finally reward fans with free music. That's a great way to open a newsletter.

shpongle email widget
Shpongle's email-for-a-track widget.

As for the free tracks, the newsletter featured two images with links to the place to download the song. Once on the page, the page showed a download button, which when clicked, becomes a box in which people must enter their email address. So actually, they can see which email addresses support which artists, but also, when people choose to use one of the share buttons, they help Twisted Music get more email addresses than just the ones they already had for the newsletter.

younger brother page screenshot
Younger Brother's page screenshot.

Younger Brother's page was a little more complex (see screenshot ←). It included more information, but basically boiled down to the same thing.

The newsletter then continues with another exciting way of dealing with the reality created by the internet—crowd-funding:

"Many of you have already pledged on the Younger Brother album Vaccine. We're working with pledge to raise money and to set up the best possible foundation to promote and release the record next year. We're calling on the loyal and faithful to help. In exchange we're offering loads of interesting things from studio time with the band to limited artwork and access to rehearsals."

Again, a great way to involve fans and offer them something exciting. It basically offers them a reason to do it for themselves, instead of telling them to please buy a CD because the label needs it (see forum post). Some of the items on the list for people that pledge: signed CD (£15), new album and entire back catalogue (£25), coming to one of their rehearsals (£40), studio workshop (£300), being in one of their videos (£150), a unique personal remix of your favourite track of the album (£600), and much more. This ties back in with Hornik's comments where he advocates offering as much as possible and letting the consumer choose for themselves. Perhaps nobody is going to pay for a remix, but it doesn't matter because it doesn't cost anything to offer it.

The newsletter closes with more standard stuff, such as tour dates and the like.

Recap

The strategy here is simple, yet complex. First of all, the label releases some very unique, high-quality music, which has given them a fanatical and evangelical following (Seth Godin would call this a tribe). Secondly, this following, together with the label, has turned into an ecosystem; when things were not going well, the ecosystem started figuring out ways in which it could survive as a whole. Thirdly, Simon Posford started paying close attention to his tribe and started catering directly to their needs. When reduced to a communication and business strategy, it becomes the formula of CwF (Connecting with Fans) and giving fans a RtB (Reason to Buy).

Giving away free songs is a good example of connecting with fans by rewarding them. The clearest reasons to buy in this mailing are the mission to get one of the label's artists to number 1, as well as all the rewards for pledging money for the new album.

It is important to note that this should not be done to generate profit, but should genuinely be done to please the fans and to give them what they want. It should come about as a result of listening to the ecosystem, instead of pushing a product down their throat, because that's what you (or your industry) believes is the best product format. I thoroughly believe that if you betray your fans' trust, you will lose them and your (potential) income.

Better Than Free

In the problem section I discussed the new reality of competing with free (the 'other CwF'). Kevin Kelly, who theorized the 1,000 true fans model, argues that the best way to compete with free is to offer something better than free:

"When copies are super abundant, they become worthless. When copies are super abundant, stuff which can't be copied becomes scarce and valuable. When copies are free, you need to sell things which cannot be copied." (Kelly, 2008)

Kevin Kelly: 8 Generatives Better Than Free

  1. Immediacy. Letting your true fans (ecosystem) be first in line to preview a new track or album. For instance, one could release a limited edition deluxe premium set one week beforethe digital album launch (Kelly uses the example of a hardcover book, which is usually released before softcovers and demand a higher price).
  2. Personalization. Costs a lot of time and energy, but can be charged for appropriately. One example is the 600 British pounds personalized remix from the Twisted Music case-study, but it can be as simple as a fixed number of autographed copies of whatever you're selling.
  3. Interpretation. The content is free, but the way to use it is not. This is very much true for the music business, where the MP3 player business thrives on music being available freely. It is difficult to see how this can be leveraged by 2AM, except by making sure they're included in licenses, for streaming services on mobile devices for instance or by offering some online VIP backstage area for fans, but one should avoid the risk of alienating other parts of the ecosystem.
  4. Authenticity. People are willing to pay for something authentic, for instance by buying signed CDs from an artist's website or getting it at a live show.
  5. Accessibility. People will pay to be able to easily access content, like music. This means making sure your music is in the catalogues of all the major online radio services as well as digital music stores. This means letting people subscribe to email updates, Facebook updates, Twitter updates, the RSS feed of your blog or podcast… As long as what they are looking for is easily accessible and they don't have to work to get to it. The less clicks, the better.
  6. Embodiment. In earlier research, conducted for the paper "Best practices of the online promotion of new musical content", one of the successful trends uncovered was titled "the package IS the product" (Grasmayer, 2009). When EMI wouldn't let Sparklehorse and Danger Mouse publish their music, they leaked it and sold a photography book to go with the music instead. Rapper Mos Def even released his album as a t-shirt. This is what is meant by embodiment.
  7. Patronage. This refers to fans paying because it feels good, because they want to pay. This can be leveraged by pay-what-you-want models or a simple donation button on your website (although an exchange is always more valuable to a fan, than charity). Micro-payment models like the one tech startup Flattr is developing will become common and it's interesting to look it up. Just a heads up. For the sake of this thesis, it's not necessary to go into further detail.
  8. Findability. Similar to accessibility; make sure people can find you and can stumble upon you. Be discoverable!

The point is, all of these business models should come from listening to the ecosystem. Even though listening to the ecosystem is listed last in the solutions section, it is not the final step. Building and maintaining the ecosystem is a cyclical process in which each step should be repeated and employed simultaneously. Obviously, you cannot listen to an ecosystem when you don't have one, but when you do, it is important to keep building and keep maintaining.

This concludes how to maintain the ecosystem. The next section recaps the solutions to conclude and answers the research question of this thesis.