2012Monetizing Music

Hany Nada

- Disrupting The Music Eco-System

“You've lost control of the means of distribution, promotion, and manufacturing. You've lost [inventory] control… what you sell has become as free as oxygen”

-Michael Wolff, NYT

We’re doing it wrong

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• Music is not a product it’s a Service• You don’t have customers, you have

Fans and Patrons• Business model is antiquated, its not a

one size fits all business, analyze and segment

• Lawyers don’t innovate, entrepreneursinnovate

Fan Engagement = $200B industry

Product vs. ServiceCustomer vs. Fan

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• It all started with sheet music• Creation, distribution, promotion and

monetization were controlled under a licensing and access model facilities by strongly defined structure and a Self-reinforcing system

• “One size fits all” packaging of music• $$$ to lure broke artists/bands ensures

sustainability of old model• Do you know your fans ?

Customer

Patron Fan

Stuck in old mind-set

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Stone Roses Heaton Park performance, 70K fans Video

• Problem with entire ecosystem• Needs dramatic disruption• New ways to engage with fans• Segmented offers/services• Give away the product, sell the

service• “Crossing the chasm” moment

A Monetization Eco-System

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Minnows

Segmentation + Tools = Data you can act on to maximize your revenue potential

DolphinsWhales

Give Whales special Access Reward Dolphins to keep them engaged and loyal

Monetize Minnows by allowing them to extend fan base

NFL’s Fan–based $40B franchise

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Suites$125k-$500k

Club Section 20k-80k License

+ $400/game

Reserved Section$2-$12k License

+$100-$200/game

“Bleacher seats”$2k License + $85/game

TV Rights

TV rights for “Minnows” worth $6B/year

Packers – ARPF:$390 / NFL ARPF:$50

* CBA states that players get ~50% of revenue

49ers Stadium:$675mm and counting…

Free to play games

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• Heavily data driven

• $50mm-$1B gaming franchises

• 2-10% of gamers actually pay

• 50% of revenue are 5% of payers

• ARPPU of $0.10-$40.00

• Whales spend $10k/month

• Value fan base, game longevity matters

Virtual Monetization

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• Poison made $50k last month

• Creative monetization strategies based on human behavior• “Front of the line”• Bragging rights• Super fan status• Channel control

• ARPF = $0.16• ARPPF= $2.38

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Kickstarter breakdownWhales- 48% of raise

949 Fans/4% of baseRange of contribution $300-$10,000Signed album+ book+ surprise gift“Veblen” Goods

Dolphins- 49% of raise13k Fans/ % of baseOffers: $25-$125Prerelease CDs+ booklets“positional goods”

Minnows- 3% of raise11k Fans/45% of baseOffers: $1-$5single track + album downloadsFacilitates Dolphins and Whales

$540k

$550k

$37k

949 Fans4%

13k Fans51%

11k Fans45%

Free To Play Music

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• Become very active in social marketing• Give your [product] to sources that are

willing to share the data!• Segment and target fans with specific

offers – Fan Relationship Management• Create specific and scalable offers for

your Whales, Dolphins and Minnows• Learn economics- there is a science to

this

What’s Your ARPF ?

Thank YouHany Nada / hnada@ggvc.com