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Marketing In The New Music Business Vol. 2

Aug 17, 2007
The RIAA would like you to believe that you are participating in the Recording Industry. Be advised, you are not.

You are in the Touring (Gig) Industry, make no mistake.

Your mission, should you choose to accept it, is to get as many bodies through the doors of your show as possible.

Then, get them on the list. Then, give them things. Then, sell them things. Then get their friends on the list...

Friends? Yup.

What do you do if you want to see a movie? Most people will read a review or ask a friend's advice. Most people want an endorsement of some kind before they can get into it. Even if they've never heard of the movie, chances are they'll go based on the buzz generated by someone else's opinion.

You have your list - your targeted group of consumers. Lets use these people as marketing "hubs". Think of them as the center of a bicycle wheel and their friends as the spokes. It will be a good idea to incentivize your list to get their friends in the fold as well.

Now that we got the lingo down...

The best way to incentivize your hubs will be to either a.) bring them closer or b.) give them things.

Try offering a free t-shirt for each fan that gives you the mailing address of 5 friends. You can then send these 5 each a free CD. From there, the process will continue with these people as well as you continue to incentivize THEM in turn.

So, how long do your keep doing this? Let's stop the giving at 1000 and get into marketing a solid product for purchase - which I'll get into later.

If you're wondering if the cost of 1000 CDs and 200 T-shirts are worth 1000 fans, the answer is YES!

What I do is consider the LIFETIME VALUE of each fan. If you treat them right, their investment in your music won't end with just 1 CD or show, or t-shirt. It will be helpful to think of Lifetime Value in order to draft your long-term marketing plan. And NO, it's not as dry as it sounds - it just makes good sense to do a little thinking, if not planning.

A Little Math
1000 promo CDs, copied and printed at home: $1000
200 T-shirts @ $3.50 per: $700

Total fan investment: $1700 / 1000 fans = $1.7 per fan.

You can call this your Aquisition Cost.

We'll now have to do a bit of estimating in order to figure out each fan's Lifetime Value:

Let's say you play 1 show every 2 months in your town. It's safe to think that if you communicate with your fans effectively, 7-10% may show up at each show.

6 shows per year, 70 fans per show, $5 cover charge: $2100

$2100 / 1000 fans = $2.10 per fan.

That's without merchandise sales, without marketing A SINGLE ITEM to your fans. You've turned a profit - albeit a small one.

Hell, your break even point is only $1.70 - that's only 57 bodies a show. ONLY 5.7% OF YOUR MAILING LIST!!!

Meanwhile you're building goodwill and loyalty which will last alot longer than you realize.

Fan Incentive Idea

Make sure this gets out to as many non-fans as possible. Hopefully before each show, you've hung posters in as many places as you can, advertising the gig. Hold a contest where you give away (free is good!) something cool to the person that takes a photo of themselves doing something crazy in front of your poster. (Pick a few winners) Let them know that they can email the photos to you, or send them via postal mail. Either way, you now have a form of return addresss in which to contact these people again because you'll need to now where to send their prize. More fans, more marketing hubs, more goodwill, more loyalty, more people at your shows, more fans, more LIFETIME VALUE per fan.

Folks, that's not how you build a band, that's how you build an enterprise.

That's how you make a LIFE in the New Music Business!
About the Author
Some have called Aaron a "new music philosopher" for his writings on recording industry practices and the evolution of digital music. A believer in the Free Music Philosophy as well as a proponent of new industry business models, Aaron has been a champion of indie artist's rights in the information age.
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