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Direct-to-Fan Holds Much Promise, Many Problems

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By  Kyle Bylin (@sidewinderfm), founder and editor of sidewinder.fm, a music and tech think tank.

The notion of artists selling music directly to their fans holds a powerful allure. Why pay to distribute your music to iTunes and Amazon if you can set up your own online storefront? You keep a higher percentage of the sales revenue and obtain invaluable information about your audience.

This information — such as email addresses and buying behavior — empowers you to contact your fans the next time that you have new music or merch for sale.

Furthermore, going directly to fans allows you to set the price of your music and sell high-end bundles. Rather than limit your release to a $9.99 digital download, you can create unique tiers that align with the different spending levels of your fan base. By doing this, you stand a higher chance of making more money because causal fans can buy the baseline offer and avid followers can snap up the exclusive fair.

At the apex of the direct-to-fan craze, these beliefs emerged like prophecies. A middle class of musicians would blossom and supplant the traditional model.

As great as those conference panels and guest posts were, it appears as though much of the initial hype around direct-to-fan has been displaced by reality. To better understand the promise of direct-to-fan and how it has changed, sidewinder.fm asked several music and tech experts: How would you describe the initial promise of direct-to-fan? Have any parts of this hyperbole been displaced by reality?

The Promise Of Direct-To-Fan Is Engaging Fans

Benji Rogers is the founder and CEO of the crowdfunding company PledgeMusic.

I made my own CDs and sold them on the road direct-to-fan in 2000. Shortly after that, I got them up on CD Baby, and when iTunes launched, I got them there as well. I had my own website and was an early user of Bandzoogle, which to me is still one of the best and most powerful direct-to-fan tools out there. Through my website, I communicated directly with the hardcore fans, updating them with pictures, songs and videos from the road or the studio.

With the embers of MySpace still glowing and the sparks of Facebook emerging, I had an amazing home where fans could be a part of what I was doing musically. All of this was, if I'm honest, building the case for why a record label should sign me — it was out of necessity and not really out of choice. I couldn't get the mega deal I had always wanted, but I wasn't about to let that stop me.

As the tools got better and some of the more established artists started to use this method, a shift in thinking began to creep in — a sense that this could become the new way of doing business for the industry as a whole. There was a sense that all you needed was a website and an email list and you could become the next Radiohead. For most artists like me, this was simply not true.

To add to this, everyone started to do it. The social web was awash with what to me became a more homogenized consumer experience that dealt in fan acquisition, direct-to-consumer targeting and strategies to monetize and capture, often at the expense of any kind of fan engagement. As the labels and larger artists got involved in these ways of direct selling to fans, the experience part of the equation began to suffer.

In today's industry, every band has a website through which they offer a bunch of products. Are these considered direct-to-fan or simply consumer experiences under a friendlier name? To me, direct-to-fan is more of a process in which fans can participate.

To me, the promise of direct-to-fan was one of engaging fans in a journey that led to a destination. Artists and labels leave fans on the table every day by simply offering them more ways to consume, rather than more reasons to buy, which is what the journey of direct-to-fan should really be about: process and not product, reasons and not simply ways.

Fans want and deserve more than a bunch of items for sale on a website, email blasts and social networks posts about pre-orders. While all those things are good, they won't be a game changer for most.

Bands With Good Work Ethic Can Find Real Profits

Jason Spitz is an independent online marketing consultant at The Spitz Agency.

Similar to the platitudes that accompanied the arrival of the “long tail" theory, direct-to-fan initially promised a paradigm shift in favor of smaller, more independent bands. Who needs a label when you can be your own manufacturer, distributor, and store? The ideal of cutting out all the middlemen is appealing — and believe me, it can work — but it requires a realistic set of expectations, and just like any other “hot new theory," the buzz around direct-to-fan was all about lofty promises.

I believe one of the reasons Topspin became an early leader in direct-to-fan was because it aimed for higher-tier established acts first, and worked hand-in-hand with David Byrne and Metric to prove the viability of its model with real case studies. Most other platforms just courted the “mass market" of direct-to-fan users with shiny apps and nifty features, and a breathless industry press (and optimistic artists) happily got their hopes up. But the tidal wave of change did not materialize. But that is due to the realities of the music business — not direct-to-fan's business model.

The fact is, being a successful band — like any entrepreneurial endeavor — takes hard work and time to scale up from zero, and often fails. If an artist runs a direct-to-fan campaign, and they fail to “make it" and eventually break up, does that mean the business model is flawed? Nope. Direct-to-fan does not promise easy, instant success for everyone who uses it. But the shine of a hyperbolic music/tech press can set unrealistic expectations that deflate quickly.

Meanwhile, artists — and their audiences — are adapting slowly. Fans must be taught to buy directly from the artist; they must trust that the artist will provide a good customer experience. And the artist has to follow through. There's a huge gap between doing direct-to-fan, and doing it well. Fortunately, e-commerce has a well-established set of best practices to follow. Bands with good work ethic, a decent-sized audience, and a basic grasp of business fundamentals can find real profit in direct-to-fan.

Direct-To-Fan Is Great In Theory, Harder In Practice 

Virginie Berger is the founder and GM of the creative and development agency DBTH.

Today, many more artists get to broadcast since the access to broadcasting has become widely open (a Mac, a guitar, and a Facebook page) and since labels face more and more difficulties (too many potential artists to manage and less and less money to do it). It has never been so easy to make music and broadcast it. And above all, via any contact platform, I am in tune with my public.

One of the greatest advances in music marketing and promotion is the ability to go directly to the fans and engage with them in information exchange and commerce. This is direct-to-fan. By developing direct online relationships with your fans, you can make and keep more money, and begin to amass a wealth of data.

But, no matter if you are able to broadcast your music the way you like; if nobody cares and knows you, you might as well send it by mail to your friends and the result will be exactly the same. More and more online direct-to-fan tools exist to ensure the promotion of artists. Pretty cool. But how can you master these tools?

“Do-it-yourself" and “direct-to-fan" are great concepts... if the majority is okay with not making a living out of it. Again here, without a very consistent fanbase, a serious work team and a strong marketing and media broadcasting basis, things won't get very far. You won't even earn enough money to remunerate your web designer. First, you have to work hard, really hard. “Direct-to-fan" doesn't boil down to directly selling content to fans, it is about providing them with an incentive to buy; whether via your website, a record store or on tour. To sum up, the upstream work is essential here in terms of visibility and bonding with your audience.

According to Cory Doctorow, only 3% of musicians signed by majors before Napster earned more than $600 per year from their record sales. So it wasn't that much better then for a whole category of artists. What now? What the Internet has also created is a whole middle class of artists. As Jack Tatum of Wild Nothing states in Pitchfork: “From a certain point of view, the Internet is the best thing that has ever happened to music. From another, it is also the worst."

Hence the fundamental point of direct-to-fan: establish strong bonds with the public / consumer. What for? To earn a living... But, the truth is that almost everything almost every artist tries to earn money fails.

Middle Class Artists Face Direct-To-Fan Challenges 

Darren Hemmings is the founder of the digital marketing agency Motive Unknown.

I think the initial promise — or certainly the implication via PR etc. — was that direct-to-consumer (D2C) could be a significant move against the prime retailers, potentially allowing artists to cut out the middleman and get closer to fans. I think the reality is that the logistics and percentages involved mean that this only really works for unsigned DIY artists, or the likes of Paul McCartney.

For everyone else, D2C can work but its more the icing on the cake than a significant income stream. I think one area that rarely got quite the coverage it needed when analyzing the merits of D2C was the logistics: how the product is shipped, who handles that, the costs involved etc.

If you're an unsigned DIY artist, you can handle this all yourself because the scale will be relatively small. If you're Paul McCartney or another huge artist, you can also manage it because you have sufficient assured sales to bring on a fulfillment partner. If you're an indie band with a relatively modest budget and general sales expectation for your release however, you fall between the two and that's where problems creep in.


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This story appears courtesy of HypeBot.
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