Last night I checked out VLAB at Stanford’s Graduate School of Business for one of the most engaging and interesting evenings I’ve spent in a while. The topic was new business models at play in the music industry and across the web, and the panel was fantastic! It consisted of Jordan Kurland, Jessica Kahn, Dorrian Porter, Larry Marcus, Jeff Yasuda and MC [flippin'] Hammer. I didn’t realize it until we were under way but I couldn’t have asked for a more interesting mix of business and thought leaders in the music space.
The whole thing kicked off with Blip.fm CEO and Founder Jeff Yasuda describing his saga. Trials and tribulations don’t begin to describe what a small startup faces when they get into the big kid’s game of licensing mainstream music, and that’s the path they chose instead of chasing down the long tail of indie. Even without that raging mess, just building a following online is hard enough. Long story short, he shared five lessons [paraphrased for your viewing pleasure]:
1. Less is more.
Many features means many confused users
2. Experiment, measure, tweak and REPEAT
Always do new things but be able to measure their impact thoroughly
3. Long tail is a LONG road
There’s nothing wrong with sticking to the old favorites
4. NEVER run out of money [BONUS: be cheap]
Keep your burn rates so staggeringly low.
5. Math and margins are key
Figure out the basic arithmetic, otherwise you’re lost
After Jeff’s reality check, Hammer simplified the whole issue of the music/web intersection when he said the true value for a content creator is the direct connection to the consumer. Others added that for someone with a brand name like his, free distribution, whether through iPhone apps, mp3 downloads or promotional giveaways, reinforces value in the consumer’s eyes.
Tapulous Director of Engineering, Jessica Kahn, offered input to a similar effect. Through their wildly popular and free iPhone game, Tap Tap Revenge, they’re able to produce buzz around new and established artists and directly gauge conversions through the iTunes Store. Jordan Kurland, Artist Manager for Death Cab for Cutie and She and Him [among others] scored a victory by offering Death cab’s singles for free on MySpace back in 2005.
Hammer called out Drake Mosier from the crowd, who was instrumental in Radiohead’s groundbreaking release of In Rainbows last year. Mosier confirmed that the majority of consumers are honorable, and if you ask them to pay what they want, they’re best offer is worlds better than losing them to a file sharing network. [Apparently Radiohead made out like bandits.]
For brand name creators, all signs seemed to point to one process. Offer content for free to reinforce value. Gather as much data as possible on usage, and how usage is linked to the greater web. Use this data to intelligently serve premium content to the super fan. Make your content serving methods a learning engine that works for you.
When asked by moderator Paul Bonanos about the value of 250k+ people following his every act for free on Twitter, Hammer said “We may be talking about what I’m having for breakfast, but you can bet you’re buying lunch!”
