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As the music industry continues to evolve and search for a sustainable and profitable business model, the direct-to-fan (D2F) approach is making great advances, from artists just starting their career up to superstars with massive fan bases.

Artists marketing and selling directly to their audience is not necessarily a new or revolutionary concept — one can find examples of artists offering their products to customers directly in every generation of music. For established artists, it is used as a way to inexpensively leverage all the awareness they have amassed. For evolving artists, it is often a necessity. Without a label and distributor, the usual options for new artists have been selling music at live shows, selling through fan clubs or sympathetic indie record stores — or sometimes just selling out of the trunk of a car (which is how N.W.A. got started). But today, advances in technology have opened up exciting new avenues for direct-to-fan sales.
Successes in the D2F Market

Direct-to-fan sales and marketing have seen a significant spike in recent years thanks to a number of factors. First, technology has given artists at all levels the opportunity to sell and market to their fans in a clear, inexpensive, engaging fashion online. Second, many emerging artists see less value in signing to a label and instead choose to steer clear of entangling contractual obligations. Finally, established artists are choosing not to renew their label contracts at a record pace, realizing that the brand they have developed can be leveraged without a label. All of these situations benefit greatly from direct-to-fan initiatives.

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The list of interesting applications of direct-to-fan marketing and sales seems to grow daily. As with anything innovative, a few core examples will always stand out. Most notable is Radiohead’s 2007 offering of “In Rainbows” — interesting both because of the name-your-own-price model and the absence of any middlemen upon initial release. What was revolutionary about this was that the band enabled both the transaction and digital download directly from their site at a price of the fan’s choosing; the experiment brought the band a significant amount of publicity and awareness.

Many critics of Radiohead’s approach felt it would not scale downwards, but that was proven wrong when the band Metric launched a successful D2F offering surrounding their April 2009 release “Fantasies.” A combination of free content (in exchange for email addresses), streaming media widgets, and intelligent social networking strategy resulted in more gross revenue in a few weeks than in four years for their prior release. The band was in full control of their retail presence, and was able to offer heightened packages (at heightened profit margins) to dedicated fans. So as not to exclude fans that preferred a traditional retail experience, the release was also made available at iTunes.

Josh Freese, a studio drummer extraordinaire but not a household name, used the direct-to-fan approach to launch a campaign that completely re-wrote the rules of music marketing. His sales page included everything from a $7 digital download to massive packages in the thousands of dollars that included a level of personal interaction never before offered as a retail music item (e.g. foot rubs, drum lessons, and Josh’s 1993 Volvo).

The unique packages generated massive amounts of press, which certainly helped, but the bigger point is that a $20,000 rock fantasy week that included mini-golf with Maynard James Keenan is not the type of offering that the traditional music industry is built around. Selling this type of experience directly to a hardcore fan created an opportunity where each side saw massive benefit.
Why Now?

The biggest hurdle most artists have faced in setting up a direct-to-fan marketplace has been distribution, followed closely by dealing with financial transactions and customer service issues. For many years retailers have been willing to help facilitate the process, a good example being Amazon.com’s Advantage Program, where any artist can pay a $30 yearly fee as well as 55% of each product sold. Although this does enable artists with no distribution to sell via a massive online retailer and not be concerned with transactions and customer service, it comes at a major profit hit. Essentially, instead of a label, distributor, and a retailer, Amazon is the sole middleman existing between artist and consumer. Forty-five percent of a sale price is higher than most signed artists get, but far lower than the margin from selling directly.

Fortunately for artists at all levels, technology has allowed direct-to-fan to become much more viable. Digital distribution has significantly leveled the playing field for all artists, and transaction processing has become widespread and easy for most bands to implement. Enterprising companies have created products that offer services typically reserved for those artists signed to a label and distributor.

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Companies such as Topspin and Snocap have made it very easy to sell products and collect revenue. Websites such as Reverb Nation and Nimbit offer tools that enable artists to build, interact with, and sell to their fan base. Aggregation services such as TuneCore allow artists to get their music onto digital retailers such as iTunes (not quite true D2F, but cutting out at least one middleman).

Topspin has taken direct-to-fan much further than simple transaction processing. It has developed widgets and technology that gives artist and fans levels of control never available at the DIY (do-it-yourself) level. Artists with little tech ability are able to upload content, create sales offers, and then distribute them in embeddable widgets. In addition to a software platform, they have developed a full methodology and set of best practices for optimizing the D2F process. (Full disclosure: I am a certified marketing partner of Topspin.)

Reverb Nation also gives artists a sizable toolkit to market and sell to their fans, including a catalog of widgets that fill many purposes, including streaming audio and tour routing. The site also provides a back end for managing fan interaction, organizing street teams, and social networking.

Topspin CEO Ian C. Rogers feels that direct-to-fan is helping define the new direction of the music business.

“The greatest thing about the future of music is that artists have choice of who their partners are,” he said. “It’s not about ‘getting signed’ — it’s about choosing the right team and running a smart business. At the end of the day there are only two important things in the music business: the artist and the fan. The rest of us are here to provide value and efficiency to them. It’s not up to them to provide value to us; it’s up to us to provide value to them.”

Through the use of technology and a forward-thinking digital strategy, artists at all levels finally have the tools necessary to build and maintain an environment that lets them dictate the terms of their business.

Jason Feinberg is the president and founder of On Target Media Group, a music industry online marketing and promotion company. He is responsible for business development, formulation and management of online marketing campaigns, and media relations with over 1,000 websites and media outlets. The company has served clients including Warner Bros. Records, Universal Music Enterprises, EMI, Concord Music Group, Roadrunner Records, and others with an artist roster that includes The Rentals, Flipper, Thin Lizzy, Sammy Hagar, Primus, Poncho Sanchez, Ringo Starr, Chick Corea, and many more.

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Inspired by Mike Masnick’s recent NARM talk, I thought I’d provide yet another example of a band that has used the direct-to-fan (D2F) channel to connect with their fans (CwF), give them a reason to buy (RtB) and have not only made money, but earned thousands of fans in a matter of days.

Fanfarlo is a band from London that a decent following in Europe and the UK. They’ve toured Europe a few times, and even made it to the US and made a bit of buzz at SXSW this year. They really wanted to expand their fan base in the US, so they looked to Topspin for some guidance. I won’t be too much of a Topspin shill, but I will provide some anecdotes that I learned while working on their latest campaign.

marketing basics are still relevant in the D2F channel

First let me break down the 4 P’s of marketing (remember those?) and how they related to Fanfarlo’s latest D2F campaign:

Product: Their latest LP, “Reservoir”, which had been released previously and bought by a few hundred people. They didn’t was to piss off their previous paying customers by offering the same album for only $1, so they included 4 bonus tracks to give their previous customers something to come back for, and everyone was happy.

Price: $1. That’s right. 15 tracks (11 album tracks + 4 bonus tracks) for just one stinking dollar. But wait…

Place: Only on Fanfarlo.com. This allows them to control the messaging and method by which people purchase the album. It’s a seamless and controlled experience, which is one great aspect of the Topspin platform. (Hint hint.)

Promotion: Remember that $1 price point? Well it’s only $1 until July 4th. This creates a feeling of immediacy. If you don’t get it now for $1, you might miss out. We also made it easy for fans to share the deal with their friends on twitter and facebook, which can work extraordinarily well because friends serve as great filters and recommendation engines. Another key aspect of this campaign’s promotion was an email sent out by Iceland rockers Sigur Ros. They encouraged their fans to check out the Fanfarlo deal, which did lead to a significant sales bump.

what can i take away from this as a musician?

The first thing you must remember is the product must be good. None of this would’ve been possible if the music sucked. Also, remember to give your music away, in some way/shape/form, for FREE. As you’ll see on Fanfarlo’s website, there is a streaming player there for you to stream all of the tracks, in their entirety, for free. (And in decent quality I might add.) A $1 price point is hard to beat, but may not work for every act. The objective here is just to raise awareness and build up some fans. The great thing about Fanfarlo is that they knew they had to be in it for the long haul. They knew that building rabid fan base is of utmost importance right now. Those fans will then be willing to purchase any offers or packages in the future. It’s critical for new bands to remember this: focus on fans now, and the money will come later. Don’t expect to record a 10-12 track LP, sell it for 10 bucks and get rich in a few months. If nobody knows you, who’s going to spend $10 on your album? NOBODY.

What was also crucial to the success of this campaign was the Sigur Ros endorsement. All unknown bands should try their hardest to get some sort of endorsement from a band that is more popular than them. Remember, this is a business, and “who you know” can often play a key role in the success of any business. You don’t necessarily have to shoot for the starts and go for a Sigur Ros type endorsement, but you have to be talking to and networking with other, more popular bands. Send them your record and see if they can say something nice about you to their fans.

CwF + RtB = $$$

This is Mike Masnick’s golden equation. Connect with Fans + (give them a) Reason to Buy, and you’ll make $$$. Let’s break this down.

So how did Fanfarlo connect with their fans? The promo on their website was written by them, in a very casual manner. You can tell it’s not marketing speak and it’s direct from the band. Fans fell a real connection with this type of language and are more apt, in my opinion, to buy the album. It was also a controlled experience all on the Fanfarlo website, so the messaging was controlled and the fans were always connected to the band. When you sell via iTunes or Amazon, that connection is lost and is very difficult to get back.

What’s the reason to buy? It’s only $1 until July 4th. After that, this deal will be gone. As they say on their website, after July 4th, you can buy the CD, vinyl and a “beautiful new special edition at normal prices.” Basically, if you don’t act now, you might miss out on this crazy $1 deal. And if you like it, maybe after July 4th you’ll buy the CD, vinyl, or even the special edition package.

To sum it up, Fanfarlo is yet another example of an unknown band that harnessed the power of the direct-to-fan channel and have been very successful with their latest campaign. They’ve got thousands of fans in the U.S., where they had effectively zero fans only a few weeks ago. Services like Topspin, Bandcamp, nimbit and others enable any band to experience the same success. The future certainly looks bright for independent musicians.

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Aaris A. Schroeder
lounge.sonicbids

There are several ways to market a product. When you first look at it from a musician or artist standpoint, many people tend to think – spend money and make flyers for an event. Yet this is not the way to keep your overhead low nor is it the only way to get the word out about your gig. What is called “The Four P’s of Marketing” must be taken into action to be successful at selling your product.

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