What About Free CDs?
from the not-sure-that-scales... dept
Don Bartlett, a manager for some musicians, has written in to point out a letter that he wrote to Bob Lefsetz outlining the successful strategy he's had in promoting one of his acts and asked for the thoughts of folks around here:We decided to put an offer up on Joe's website and MySpace. We told any fan that if they knew anyone who might be interested in Joe's music that they could send us an email and we send them as many copies of a two-song sampler CD as they wanted. Free. We even cover the postage. To keep costs down, we invested in a cd publishing system that burns and prints them robotically. Each CD has two songs, contact info, MySpace, and a reminder that the full cd was at iTunes. If someone lived near a place where a show was scheduled, we printed that show info on there as well. People requested as few as 2 and as many as 50. We sent all of them. Requests continued to pour in, and the more we sent out the faster the new requests came in. We're at the point now where we get about 15 a day. Joe writes a thank you in each and every one. And almost instantly, sales took off. Attendance jumped noticeably and MySpace/website action began a steady upward arc. More importantly, we built an incredible database of his most hardcore fans. And after receiving a mailbox full of cds for free, they are willing to do anything to help forward the cause. And it is the ultimate in target marketing.... you have people who already like your music passing it on to their friends, whose tastes they presumably know.The idea is definitely a bit different, but obviously can and does work on a small scale. The problem is that it wouldn't scale to a really large number very easily. It's also somewhat costly. Even if they've decreased the production costs, there are still costs in terms of resources, time and postage for every free CD they send out. It's good that it's allowed them to more closely connect with fans (and turn them into true fan promoters), but it seems risky to spend so much on promotions. So, while it can work on a small scale, and help a musician stand out as being especially fan friendly, it seems like it could be pretty costly if you tried to scale it up.
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Filed Under: business models, free, free cds, music
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Funny
I think I agree with you but you have to admit it is a bit funny to hear you say this idea might only be good for a certain type of group. Especially after all the blather we here in the comments about how certain business models would only work for a small-time (no, big-name) group but not a big-name (no, small-time) group.
NB
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Re: Funny
I don't see how that's really relevant. That's in the context of actually using infinite goods to make scarce goods more valuable.
This is a scenario where it's using scarce goods to try to sell... anything.
So, I think it's perfectly reasonable to point out how it can work under these conditions, but is unlikely to scale.
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Re: Funny
Normally Mike is saying they should do this kind of thing with infinite goods (the iTunes albums) to promote the scarce goods.
It is more risky. Scarce goods are noticeably more expensive than infinite. So they are investing more into promotion, and they can't really stop without disappointing fans so they're kind of locked in.
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As for the operation, I see a way they could lower distro costs even more. Instead of doing a snail mail free promotion, setup a webpage form for the request that after the data is entered, gives the fan a diorect link to an .iso of the CD that they would have previously mailed off.
Encourage the fans to burn them themselves and share with their friends. Saves time, money (in the physical media and in the postage) but, and its a big but, maintain the snail mail option for fans that either don't have computer access or the technical know how to burn their own images.
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Re:
If you're promoting to fans, the fans will have a vested interest in providing good information because they know it'll help them *and* help the band they love, and if they don't provide accurate info, then your no worse off than having no information at all.
You still reach out to your hardcore fan, in a way that they are likely comfortable with, and give them what they want and the free reign to share, and they'll tend to give you good info. Just my 2 cents.
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Think of growth
Prior, you would have to attract a major label, then sign your soul away with a contract, and finally the label might not promote you at all even if you think that you have some pretty good music, so you still end up as an unknown artist.
This is the alternative, where you start up a hardcore cult following, get others interested in your music, and build popularity for shows.
After that you have the marketing aspect down, your next release can be iTunes only, or perhaps mailed in a limited edition (first 200 requests get it mailed, and then after that you'll have to get it on iTunes; alternately give older hardcore fans priority). How much you need to do to maintain that hardcore fan base is dependent on how good your music is, along with how much effort you're willing to put into it, which is exactly the way it should be.
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Snail Mail Address vs Email Address
and have a unique activation code sent by snail mail
to a download link? There should be some way to get the same information without the cost of producing/mailing an entire CD?
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Scale
As the musician is still small, the best way of building a following would be through these CD's, as you're a lot more likely to load up a CD and take notice of the extras put on it, than you are to go to a website and insert a code for example.
However, as things start to scale, and the costs of producing CDs becomes prohibitive, that is when you start moving to the Code on a Website model, or some other form of cheaper marketing. Sure you wont get as high a percentage of people actually putting the code in, but as the scale of applications increases you'll still get the volume of people and therefore the exposure.
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Tangibility
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The Real Cost?
Paper Sleeve for CD: .03
Blank CD: .20
Postage (first class): .79
Mailer envelope: .18
TOTAL: 1.20
SO there's your marginal cost, $1.20 per Disc. Some economy might be gained by mailing multiple discs in one batch, and of course this does not account for the labor actually stuffing the envelopes, but the article's example was 15 a day, and if they have a burning and labeling robot, that's probably less than an hour a day even with a personal note in each one. Very doable for a musician just starting out. The start-up costs are a little high (that robot probably cost a couple grand), but I would think that at the point when you have so many fans that you can't afford to do this anymore, you will have enough concert and regular CD sales that you can either discontinue this promotion, or pay someone to stuff your envelopes for you.
Another thing that I did not see mentioned, is that since you are already engaged in mailing CD's all over the country anyway, you could also set up a web shop to sell your full album, and fulfill the orders yourself, using the same robot. $10-$15 dollars seems appropriate, and the marginal cost is the same as above... that's better than iTunes, and better than any deal you would get out of a recording contract. Again, to scale up, you get your CD professionally pressed, and mail those.... and when it gets too much, there are plenty of people who specialize in fulfilling orders.
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Nice idea but...
Just a hunch.
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Re: Nice idea but...
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Re: Nice idea but...
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Cost vs benefit
As far as using electronic distribution, I doubt it would work nearly as well. What works about the CD is that the recipient sees it as a gift, an object of value. They are more likely to play it because, psychologically, it has more value than an electronic file. It is also acts as a physical connection with the band, especially if it contains a thank-you letter. It makes the fans feel special, like insiders.
If their sales, attendance, and Web site traffic have all increased significantly, then I think it is pretty clear that the investment was worth it.
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Re: Cost vs benefit
Scaling may look like a problem but that depends on how many concert tickets and full CDs they sell. But, they can always "upgrade" to digital downloads for their samples if the CDs get too expensive.
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Mobile devices?
If Don and Joe made wma, mp4 and other common formats available for download any Web capable phone can download it. Once on the phone it will get viewed and shared with others.
Just tag a short "Go to www.???? for more" to the end.
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Personal Thank You Notes Make a True Fan
It would be easier to distribute the tracks as a free download but with the note he throws into the shipment it is another, more personal, way to connect with fans. Sure, he could have a blanket letter on the download site after the the goods are dl'd but that just isn't the same.
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The Ubuntu strategy...
Nothing new here, just a variant of an old strategy.
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the value is the data
Unless and until an artist achieves a certain level of success (i.e., has grown a sufficiently large fanbase), there's almost no money at all to be made in any of these things, at least not once the costs of doing them are accounted for. Adding a buck or two in costs per registered fan by sending out a CD that fan will truly appreciate, along with promo for local shows and some other info on how the fan can connect with the artist, is in the scheme of things not at all silly.
In fact, some of those fans, being likely among the most ardent core of the artist, will be very ripe for recruiting for street teams and perhaps other promotional functions as well. I strongly suspect it will probably yield more on that score than web-based recruiting efforts do.
Too many in the music business were unbelievably late to the game when it comes to the inherent value of customer data, when it is incredibly valuable if used, maintained, and manipulated well. Knowing somebody's email address is one thing; knowing who they actually are, where they live, corresponding with them IRL and sending them something tangible, this is the truly smart stuff. Next level is compiling data on their purchasing habits -- tickets, merch, music -- and, to keep with the theme of this blog when it comes to music, downloading free music as well. Everything a person does with respect to that artist, if it can be connected to the rest of the data, enhances the value of the database to that artist. Ticketmaster, Live Nation, both figured this out ages ago. TM was first, but LN has been putting resources into this for quite some time, and was behind the scenes one of the huge sticking points in its often tense business relationship with TM, one of the several reasons it finally had enough and is not renewing its contract. Smaller players also built themselves into pretty large operations -- Musictoday (now owned by LiveNation) comes to mind, as well as some lesser known entities.
All-in-all, if you are an artist and you're going to invest the insane amount of time and energy (and money) required to build an even remotely successful career, spending a couple bucks per fan here and there is without dispute completely worth every penny.
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i fail to see the downside here
But Jets Overhead, an awesome Canadian band, just sent me a link to two new songs. I have to say, I get a little fannish with the contact.
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You could also distribute the MP3 files with full or custom coverart, lyrics, and other id3 info embedded - including the URL to the site in the comment section of the tag. This would further lower your distro costs and hopefully the music would spread faster.
Good luck and great idea.
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