Not surprisingly, monetizing music remains a mystery for the old industry gatekeepers in this age of technology. While music purchases reached new highs in the digital sector over the last year, album sales are still losing momentum. With a need to reconnect with their audiences, LeadDog marketing recently hosted a panel of startup innovators at Yotel discussing where their businesses stand in facilitating the future of music, while explaining who’s just standing in the way and why.
“We don’t have to wait for the lumbering giants to drive innovation,” said Manick Bhan, financial analyst-turned-entrepreneur and founder of Rukkus, a ticket search engine /music service that sells concert ticket deals to customers based on their unique listening experiences and data. His fellow panelists, entrepreneurial vets Neil Vineberg of ThingLink and Jonathan Block of TheHub.fm, agreed. Big business has ossified, slowing R&D as the industry continues to become fragmented, leaving cracks for market disruption from inventive upstarts. For the panelists, the music industry’s entropic state has more to do with big business’s efforts at thwarting new challengers.
“Everyone in the industry is reliant on everyone else. They don’t necessarily trust each other,” said Bhan. With larger companies buying, then dissolving, smaller startup-hopefuls to maintain order, staying independent represents a commitment to producing change in an industry at its most volatile, and resistant to change.
“[Major labels are] chasing the next release… driven by the diminishing returns of the music industry,” said Vineberg, whose platform turns basic digital images into content-laden multimedia hubs. Having worked in the industry since the dawn of the MP3, Vineberg remarked that this corporate philosophy left companies in a position to observe rather than innovate. Such short-sightedness has left most major labels helpless in generating new traction in the business, leaving powerful, non-proprietary new upstarts like Spotify mostly out of their hands.
As each panelist has been tweaking various traditional revenue models and sources with their startups, they all agreed that today’s product must go beyond the music alone, which has been relegated to being a promotional tool, from a strictly business perspective. Artists are more likely to sell their albums bundled in packages with t-shirts and additional unique items. The panelists are looking to provide an alternative to those sales, while streamlining and re-enchanting the buying experience for users.,
“We must facilitate [a] bond between audiences and musicians,” said Vineberg.
While Rukkus presents ticket offers for concert experiences to would-be fans, Block’s TheHub.fm eliminates the hassles of buying merchandise at concert venues by letting you coordinate transactions and deliveries of items from your smartphone. “It’s got to be easy,” said Block, noting that removing the “clutter” and obscurity from these practices can attract new customers who may have been reluctant to spend money on those items, or even attend a concert.
Intuitiveness drives all of their projects: while Vineberg’s service lets users summon up a customized array of information about a given artist or album from an image, Bhan’s service collects historical data on a band’s past performances to offer the best ticket prices to users.
Vineberg predicted that the industry will continue to consolidate as it struggles to maintain its former successes, and all of the entrepreneurs remained positive about finding new ways to create “greater access” for musicians and users alike, mostly through healthy partnerships. Bhan saw major acquisitions like Tumblr and Hopstop as offering big returns to the Angel and entrepreneurial communities, where he believes innovation will continue to bloom. “[It’s about] taking risk, taking a gamble to make a new future,” he said.
Block agreed, but after a career in indie label management and production, he isn’t interested in selling Hub.fm, but rather in “mak[ing] it cooler,” for customers. Vineberg closed with similar sentiments, delivering advice that spoke to the hazy growing pains most businesses face from the outset – and as the record industry proves – grapple with more as they mature and the industry expands: “Every startup has to fulfill the promise on which they’re launched.”
Image credit : CC by Matteo Albertin