Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Andre Lecointe-Gayle - Revenue Streams In The Music Industry (Darker Music Talks August '14)

849 views

Published on

Video: http://www.tommydarker.com/music-talks/archive/andre-lecointe-gayle-revenue-streams-in-the-music-industry/

Published in: Education
  • Be the first to comment

Andre Lecointe-Gayle - Revenue Streams In The Music Industry (Darker Music Talks August '14)

  1. 1. HowtoDesignTest andBuildBusinessModels andValuePropositions
  2. 2. “I  just  want  to  sing  and   perform.”  
  3. 3. ?So how does one come up with successful business models?
  4. 4. How does the music industry create, deliver and capture value?  
  5. 5. BUSINESS  MODEL     CANVAS   THE  
  6. 6. Business Model Canvas
  7. 7. to describe, challenge, design, and invent business models more systematically
  8. 8. 74
  9. 9. !innovative business models may unlock new opportunities or enable things that were just not possible with the traditional models
  10. 10. OFFER DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK KEY RESOURCES
  11. 11. building block building block building block building block building block building block building block building block building block building block building block building block
  12. 12. The   Music   Industry   The   Music   Industry  
  13. 13. A  dynamic  market   a  global  industry     characterized  by   many  players  and   fierce  competition  
  14. 14. ! Companies are quick to adopt technologies that support their business model but are slow to adopt technologies that disrupt it. - Clayton M. Christensen,The Innovators Dilemma “
  15. 15. iTunes The “traditional” music industry gave us the choice of buying singles, albums or compilations. The digital service most favoured by the music industry gives us the choice of buying…. singles, albums or compilations. In other words, the music industry has offered consumers a ‘solution’ that is most like the one that went before.
  16. 16. Change in 10 years 2007 2008 2006 2006 2006 2013
  17. 17. If something is going to happen in the end, you may as well do it in the beginning. - Henry Kissinger “ Consumer trends, such as streaming and mobile phones should be seen and acted upon. Too often companies look to the past and say, “Well, that has worked well for us” rather than in to the future and make the changes that may be necessary to their business.
  18. 18. The total number of streams (UK) in 2013 (3.7bn) is more than the total number of singles sold in 60 years.
  19. 19. 26% of all entertainment revenue is now access to content Millions of consumers are showing entertainment industries the way they want to consume their products by signing up with ‘on-demand’ services.
  20. 20. BrandAmp  study,  Millward  Brown,  2007   “Music is something most people love, that no one dislikes and that touches everyone throughout their lives” The  role  of  music  in  peoples’  lives  
  21. 21. Who  is  my  customer?  
  22. 22. What  does  he  or  she  wants?  
  23. 23. What  is  he  or  she  willing  to  pay  for?  
  24. 24. Different  needs  
  25. 25. CUSTOMER SEGMENTS images by JAM
  26. 26. Customer  in  charge  
  27. 27. VALUE PROPOSITIONS images by JAM
  28. 28. Firms  that  record,   produce,  publish,   distribute,  and  market   music.  
  29. 29. Shift  from  ownership   to  access  
  30. 30. ?what is your main target customer trying to get done?
  31. 31. CUSTOMER RELATIONSHIPS images by JAM
  32. 32. GoalsofCustomerRelationshipManagement 1)Identify,attractandwinnewcustomers 2)Retainexistingcustomers 3)Re-invigoraterelationshipswithformercustomers Itdoesn’ttakeageniustorealisethereareclearparallels betweenthevalueofCRMforabrandorbusinessand CRMCRMforabandorartist. Inordertohaveasuccessfulmusiccareer(“business”) youneedtohavefans(“customers”). Andthosefanswon’tcomeunlessyouworkhardforit.
  33. 33. 1.Identify,attractandwinnewfansandsupporters Mostindependentartistsdon’thavemoneytospendon ‘push’advertisingorPRtoreachamassaudience. Yourbestchanceofsuccessliesin‘pull’marketingwhere yousupplyyourfanswithcompellingcontentandthey promoteyoutotheirnetworks. YYourultimateaudienceisnotyour‘Friends;’ it’sthe‘Friendsofyourfriends.’ Ifyoucanburstoutofyournetworkintoeachoftheirs, yourpotentialaudiencewillsuddenlyrocket. Soencourageandincentivisethem toshareyourposts.
  34. 34. 2.Successfullyretainexistingfansandsupporters Onsocialmedia:Sometimesit’simportanttoremindyourself whyyouaregrowingafanbaseonFacebookorTwitter. Manybandsseem tospendalltheirwakinghourscollecting new‘Likes’and‘Followers’butneverinteractwithanyof them. FFacebookusesasystem calledEdgeranktoprioritisethe newsinyourfeed.Ifyoudon’tinteractwithyoufansyou’ll becomeinvisibleveryquickly. Sowhenanew‘Like’or‘Follower’arrives,youhavework todo. Thisisimportant:socialmediaquantityshouldalwaysgo handinhandwithquality. WithoWithoutengagementthose‘Likes’quicklybecome meaningless.
  35. 35. Withmailinglists:Mailinglistsareanotherkeytoolfor retainingfans,butonlyifyouusethem inasmartway. Lazymail-outscontainingasummaryofoldnewsare pointless. Setrulesforyourmail-outs: “IwillonlyevercontactfanswhenIcanrewardthem, oorofferthem somethingexclusive.” “IwillneverjustrepeatnewsI’vepostedonFacebook.” Tip:ThetoolFanReachhasmadeitveryeasyforemerging artiststogrowtheirfanbasethroughnewsletters.
  36. 36. Alwaysbecriticalofthecommunicationyousend. Ifitdoesn’tgenuinelyinterestorexciteyou,whywould anyoneelsecare? Youdon’tbuildrelationshipsbyspammingpeople. Finally,don’tforgetto‘Surprise’&‘Delight’yourfans; it’saprovenbrandtactictoretaininterest. HHowaboutyousurprisethenextthreefansthatcontactyou onTwitterwithafreet-shirtorfreeremix?
  37. 37. Also,youshouldbeabletopersonallynameyourbiggest fans. Whoarethepeoplethatengagewithyouthemoston Facebook? Whoarethepeoplethatcometoallofyourshows? Whobuysyourmusic? BByidentifyingtheseadvocatesyoucanstarttocreate tailoredrewardstoencouragecontinuedsupport. Youcouldofferexclusivepreviewstoaselectgroupof Topfans.
  38. 38. Alwaysbecriticalofthecommunicationyousend. Ifitdoesn’tgenuinelyinterestorexciteyou,whywould anyoneelsecare? Youdon’tbuildrelationshipsbyspammingpeople. Finally,don’tforgetto‘Surprise’&‘Delight’yourfans; it’saprovenbrandtactictoretaininterest. HHowaboutyousurprisethenextthreefansthatcontactyou onTwitterwithafreet-shirtorfreeremix?
  39. 39. 3.Reinvigoraterelationshipswithformerfansandsupporters MakefulluseoftheanalyticsprovidedtoyoubyFacebook andYouTube. Ifyoudon’talreadyknow,taketimetofindout (learnmoreaboutFacebookInsightsandYouTubeAnalytics): Findoutwhich10Facebookpostshad: Thegreatest‘Reach’inthepastthreemonths Themost‘EngagedUsers’ Werethe‘Mosttalkedabout’ Thehighestlevelsof‘Virality’
  40. 40. Whatareyourmostengaging(basedon%ofvideowatched) videosonYouTube? Next,notedownthecommonalitiestoidentifywhatan engagingpostlookslike.E.g., PostedonaMondaymorning Personal,warm friendlystyle Containaquestion Includeagoodqualityphoto Containsavideo Onceyouunderstandtherulesofengagementyoucan repeatthetrick,andhopefullywinbacksomeofthepeople whohaveswitchedoffinresponsetoyourlessengaging posts.
  41. 41. Bonustip:Getorganised. CreateabasicExceldatabase,tocollectandmanageyour relationships.Startwithaseparatetabfor: Artists Blogs Labels PPromoters Publishers Radiostations Thenwheneveryoucomeacrossanewcontact,addtheir keydetails:Name,Company,JobTitle,Email,Phone. These3additionaldetailstakethisfrom beingaflatdatabaseintoanactive, usefulCRMtool: When:Datelastcontacted Why:Reasonforlastcontact What:Outcomeoflastcontact Keepingatrackofwhen,whyandwhatensuresyoucantailoryourresponse andfollowupinthemostappropriateway,onlysharinginformationwhichis relevanttothem.
  42. 42. Don’tbeafraidtofollowup.Ifsomeonereallyhasnointeresttheywilltellyouso. Don’tassumeanon-replyisano;itisoftenjustasigntheyarebusyor disorganized.AsabloggerIwelcomereminders “Haveyouhadachancetocheckoutourtrackyet?” Oftenareminderwillbeenoughtoguaranteeyouareview(ifthemusicisgreat). Alittlethoughtandplanningcanreallyhelpimprovetheeffectivenessofyour ffancommunication,sodon’tbeinarushtopromoteuntilyouareready.
  43. 43. RECURRING   REVENUES Is  every  sales  a  new  effort  or  will  it  result  in   follow-­‐up  revenues  and  purchases?  How   evenly  distributed  are  your  revenues   through  the  year?
  44. 44. CHANNELS images by JAM
  45. 45. Channel 1.Awareness 2.Evaluation-Howdowehelpcustomersevaluate ourvalueproposition 3.Purchase-Howdoweallowcustomerstopurchase specificproductsandservices 4.Delivery-Howdowedeliveravaluepropositionto customers 5.Aftersales-Howdoweprovidepostpurchase customersupport
  46. 46. REVENUE STREAMS images by JAM
  47. 47. 44SONGWRITERANDCOMPOSERREVENUESTREAMS 1.PublisherAdvance Bulkpaymenttosongwriter/composeraspartofapublishingdeal. Paidtosongwriter/composerbypublishingcompany. 2.MechanicalRoyalties Royaltiesgeneratedthroughthelicensedreproductionofrecordingsofyour songssongs— eitherphysicalordigital.Paidtosongwriter/composerbypublisher, label,HarryFox,ordigitalaggregatorlikeCDBabyorTunecore. 3.Commissions Typicallyarequestfrom anensemble,presenter,orchestraorotherentityfora composertocreateanoriginalworkforthem. 4.PublicPerformance(PRO)Royalties Revenuegeneratedwhenyoursongsareplayedonradio,TV,inclubsand rerestaurants.Paidtosongwriter/composer/publisherbyASCAP/BMI/SESAC.
  48. 48. 5.StreamingMechanicalRoyalties Revenuegeneratedwhenyoursongsarestreamedonon-demandservices (Rhapsody,Spotify,Rdio).PaidtopublisherbyHarryFoxorothermechanical licensingagent.Publisherthenpayssongwriter/composer. 6.ComposingOriginalWorksforBroadcast Typicallyacommercialrequesttocomposeanoriginaljingle,soundtrack,score, oorothermusicalworkforafilm,TVorcableshow,oranadagency. Paidtosongwriter/composerbyagencyrequestingthework. 7.SynchLicenses Typicallyinvolveslicensinganexistingworkforuseinamovie,documentary, TV,videogames,internet,oracommercial.Paidtosongwriters/composers eitherviapublisherorrecordlabel,orviaadirectlicensingdealwiththe licensee(moviestudio,adagency,etc)ifyouareself-published. 8.8.SheetMusicSales Revenuegeneratedbythesaleorlicensedreproductionofsongs/compositions assheetmusic.Paidtosongwriter/composerbypublisher,ordirectlyfrom purchasersifyouaresellingitonyourwebsiteoratperformances.
  49. 49. 9.LyricDisplay Revenuegeneratedbythelicenseddisplayofsonglyrics. Onlinelyricsitespaypublishers,whichthenpay songwriter/composer. 10.RingtonesRevenue Generatedfrom licensingyoursongs/compositionsforuseasringtones. PPaidtosongwriter/composerviayourpublisher,yourlabelorHarryFox. 11.ASCAPLUSAwardsProgram AwardedbyASCAPtowritermembersofanygenrewhoseperformancesare primarilyinvenuesoutsideofbroadcastmedia. 12.PublisherSettlement Paymentfrom publisherstowritersforlitigationsettlements.
  50. 50. PERFORMERANDRECORDINGARTISTREVENUE 13.RecordLabelAdvance Paidtoartistaspartofsigningadeal. 14.RecordLabelSupport Moneyfrom labelforrecordingortoursupport. 15.RetailSales RRevenuegeneratedfrom sellingphysicalmusicinretailstoresorviamailorder. Paidtoartist/performerbyyourlabel,orserviceslikeCDBabyorBandcamp thathelpmusicianssellphysicalproduct. 16.DigitalSales Revenuegeneratedfrom sellingmusicdigitally/online.Paidtoartist/performer byyourlabel,ordigitalaggregatorslikeCDBabyorTuneCore,ordirectlyfrom fansviaserviceslikeBandcamp. 117.SalesatShows Revenuegeneratedfrom sellingrecordingsofmusicat shows/liveperformances.Paidtoartist/performerdirectlybyfans.
  51. 51. 18.InteractiveServicePayments Revenuegeneratedwhenyourmusicisstreamedonon-demandservices (Rhapsody,Spotify,Rdio).Paidtoperformerbyyourlabel,ordigitalaggregator likeCDBabyorTuneCore. 19.DigitalPerformanceRoyalties Revenuegeneratedwhenyoursoundrecordingsareplayedoninternetradio, SSiriusXM,Pandora.PaidtoperformersbySoundExchange. 20.AARCRoyalties Collectedfordigitalrecordingofyoursongs,foreignprivatecopyinglevies, andforeignrecordrentalroyalties,distributedtoUSartistsbyAARC. 21.NeighboringRightsRoyalties Collectedfortheforeignperformanceofyourrecordings. 22.Film MusiciansSecondaryMarketsFund PPaidtoperformersonrecordingsusedinfilm,TVandothersecondaryusesby theFilm Musicians’SecondaryMarketsFund.
  52. 52. PERFORMERSESSIONMUSICIANREVENUE 26.SalaryasMemberofOrchestraorEnsemble Incomeearnedasasalariedmemberofanorchestra,bandorensemble. 27.Shows/PerformanceFees Revenuegeneratedfrom playinginalivesetting(fornon-salariedplayers). Paidbyconcertpromoter,presenterorvenuetoperformer. 28.SessionMusician28.SessionMusician/SidemanFeesforStudioWork Paymentstostudiomusicians/freelancers/sidemanforworkinrecordingstudio. paidbylabel,producerorartist,dependingonsituation. 29.SessionMusician/SidemanFeesforLiveWork Paymentstostudiomusicians/freelancers/sidemanforworkinalive setting/ontour.Paidbylabel,producerorartist,dependingonsituation. 30.AFM/SAG-AFTRAPayments PPaymentsfrom theAFM/SAG-AFTRAIntellectualPropertyRightsDistribution Fund,whichdistributesrecordingandperformanceroyaltiestonon-featured artists.
  53. 53. KNOWLEDGEOFCRAFT:TEACHINGANDPRODUCING 31.MusicTeacher Revenuegeneratedfrom teachingyourmusicalcraft. 32.Producer Paymentforproducinganotherartists’workinthestudio orinalivesetting.Paidbylabels,featuredartists,studios, presepresenters,orfoundations,dependingonsituation. 33.HonorariaorSpeakersFees Paymentforconductingalecture,workshopormasterclass.Usuallypaidby school,conservatory,orpresentingorganization.
  54. 54. BRAND-RELATEDREVENUE 40.Acting PaymentsforappearancesinTV,commercials,movies. FAN,CORPORATEANDFOUNDATIONFUNDING 41.FanFunding Moneydirectlyfrom fanstosupportorpre-sellanupcoming rerecordingprojectortour(Kickstarter,PledgeMusic,IndieGogo,Patreon). 42.Sponsorship Corporatesupportforatour,orforyourband/ensemble. 43.Grants Foundationorpublicartsgrantstosupportyourwork/projectfrom foundations, stateorfederalagencies. OTHERSOURCESOFREVENUE 44.44.ArtsAdministrator Moneypaidtoyouspecificallyformanagingtheadministrativeaspectsofa groupthatyouareamemberof.
  55. 55. What  do  customers   want  (tomorrow)?  
  56. 56. Spotify  
  57. 57. Spotify  aggregates  content   from  right  holders,  distributes  it   to  consumers  through  the   technical  platform  and   monetizes  both  through  a  free,   ad  funded  service,  and  a   subscription  service.  
  58. 58. The  business  model  of   Spotify  
  59. 59. The  Business  Model  of  Spotify   OFFER DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK KEY RESOURCES Access  to   music  via   streaming  and   download   services   Pla@orm   development   and   maintenance   Licensing   agreements   SoGware  and   network   engineers   Rightholders   (labels  and   publishers)   Adver:sers   Internet  +     PC   Ad  fees   Subscrip:on   fees  PC   Subscrip:on   fees  PC  +   mobile   Royal:es  to   rightholders   Salaries   Bandwith  costs   Automated   online   rela:onship   Global  music   fans   Adver:sing   Pla@orm  and   brand   Internet  +   mobile   3rd  party  APIs   Communi:es  
  60. 60. OFFER DISTRIBUTION CHANNELS CUSTOMER RELATIONSHIPS CUSTOMER SEGMENTS REVENUE STREAMSCOST STRUCTURE KEY ACTIVITIES PARTNER NETWORK KEY RESOURCES Mass  market   Hits  and   wannabee  hits   Tours  and   concerts   Huge  sales   from  a  few   ar:sts’  albums   Merchandising   Marke:ng  &   promo:on   Detec:ng  &   building  talent   Por@olio  of  star   ar:sts   Copyrighted   content   Distribu:on   channels   Manufacturers   Marke:ng  &   promo:on   Subsidizing   unsuccessful   ar:sts   Royalty   payments   TV   Radio   Retailers   Digital  
  61. 61. www.londonfusion.org.uk Checkoutanewplatform comingsoontohelpperformers createnewrevenuestreams www.performanceroom.com @performanceroom facebook.com/performanceroom
  62. 62. THANK YOU! BusinessModelGeneration.com Twitter: @andrelecointe

×