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.
Filed Under: business models, free, free cds, music
Comments on “What About Free CDs?”
Funny
Mike,
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
Re: 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.
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.
Re: Funny
It is funny at first glance, but like Mike already said the circumstances are different. Opposite really. In this instance they are leveraging a scarce good (physical media + shipping) to promote a scarce good (concerts and full CDs) and infinite goods (iTunes albums).
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.
I kinda agree with not bob here, in that your comment seems to go agaisnt the other comments you’ve had in the past.
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.
@michael-the only problem with using an electronic distribution is that a fair number of people will use fake emails to get access to something. sure it costs less to distribute, but the database of fan info you build will be significantly less valuable as a marketing tool. people that give snail mail addresses to receive something wont think twice about using their real address.
Re: Re:
Indeed that can be the case, as it can be with the snail mail as well. People can give incorrect info, ask for the CD to be sent to a PO box to mask their address, or even just give a ficticous address as a joke (which costs the band real money) and that database is just info is just as useless as if they lied on the webform.
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.
Re: Re:
That doesn’t really make any sense. They said they’ve had a single person request up to 50 CDs. What would be the difference between sending 50 CDs to a legitimate address, or allowing an iso download for 50 fake email addresses? Free is still free, and the downloads would seriously cut production costs (assuming the bandwidth fees don’t outweigh the CD production and postage costs) and would allow the music to be spread even more easily. Again, it’s just a 2-song sampler CD, a promotional tool for the full album (and possibly other things). There shouldn’t be any reason to limit the distribution, no matter what method they use.
Re: Re: Re:
The database in and of itself has value. They have a better understanding of who really likes them. They could use that information to promote themselves by possibly doing various things for their hardcore fans and what not.
Wouldn’t it be cheaper if its only a 2 song CD, to produce a mini CD?
Re: Re:
Not necessarily. Sometimes when buying in bulk, buying the most commonly made version of something is cheaper than buying something that while may be smaller, is somewhat more of a niche market and therefore sometimes more costly.
Think of growth
I think that this looks like a great business model for the aspiring musician. I don’t view the business model as being limited to small scale. Instead, I view it as a launching platform for bigger and more widespread business models to accommodate more fans. If you’re a lesser-known artist, how do you get to become a popular artist? This business method is the answer, at least for your early releases.
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.
Snail Mail Address vs Email Address
You can ask requests to be sent in by email,
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?
Scale
The problem with scale isn’t really a major one.
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.
Tangibility
I would say that the advantage of using CDs instead of a download link or something is that it puts something in the peoples’ hands. Instead of just sending a friend a link to download a song that may have some promo information on a website, having something tangible makes the artist stand out… and it is likely that having a CD with information printed on it will be left out on someone’s dresser or desk or something, reminding the person of the artist. Additionally, I have a few friends who send me links to download songs all of the time and I don’t always do it – but if they hand me a CD there is a better chance that I’ll listen to it.
The Real Cost?
Let’s break down what this costs: (I have used some figures from my favorite online media shop, an exhaustive search might find better ones)
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.
Nice idea but...
What happens when more bands try to be hip and cool like this? I think a bit part of the success factor here is the gimmick. I guess what I’m saying is if all bands started giving away their music then the little guys would probably not have so much success.
Just a hunch.
Re: Nice idea but...
This must be a joke…?
Re: Nice idea but...
The only problem with your theory is that this is NOT new. The local music stores consistently have promo CDs at the counter with a couple tracks from an upcoming album. I’ve seen them for bands of varying sizes, from small bands I have never heard of to bands that have received some substantial radio play. The CDs are usually “free with any purchase,” but most stores will give you one anyway if you really want it. More abstractly, this is just and extension of the “free sample” idea used frequently with physical goods.
Pretty smart guys, I can see them thinking it should be ok to scale up to internet distribution when cd printing starts to become a burden.
Cost vs benefit
You say that this is expensive and risky, but where, exactly, have you EVER seen success without risk? I doubt that it is really much more expensive than advertising, and it automatically cuts through to the target audience.
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.
Re: Cost vs benefit
I agree with hegemon13 on this one. Sending a physical CD is saying to potential customers that they are willing to go out of their way to make a fan. Compared to this idea, just slapping the MP3s on the website seems kinda half-assed.
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.
Mobile devices?
Why are mobile devices never considered for distribution in cases like this? Most of my sons friends view/swap media on their phones. With Bluetooth so common it is a simple process.
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 http://www.???? for more” to the end.
Personal Thank You Notes Make a True Fan
‘Joe writes a thank you in each and every one.’
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.
The Ubuntu strategy...
… it’s the Ubuntu strategy, which has been doing this on a major scale for at least 5 years.
Nothing new here, just a variant of an old strategy.
Is it possible that even though it is expensive, it ends up being worth it in the end? I mean, most marketing tools are expensive, right? Maybe even scaled up it could be worth it…guess we would have to see the figures (changes in attendance vs cost of production)
the value is the data
AnonCoward @ 7:30 has it almost right when he says the data alone has value: as the manager alludes, it is the data on the fans that has the most value in this deal, and in artist development and fanbase management in general. This is why enterprising hippie bands started their own ticketing operations years ago (you thought it was because they were hippies and wanted to stick it to ‘the man’?). It’s why artists start fan clubs, set up elaborate websites, put resources into selling their own merch via the web, and pretty much everything else they do, at least if they have a half-way savvy manager. And once the artist grows to a point where they start to outsource some of those functions, the contracts with those service providers almost invariably state that customer data belongs to the artist and may only be used by the service provider either in connection with its activities in promoting that artist, or with the artist’s express written permission.
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.
i fail to see the downside here
What makes this is the personal note. I thought that was so cool, even as just a potential collectible, that I looked into the guy’s music–which I didn’t much care for and, thus, didn’t want to waste his time and money by requesting the CD.
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.
Perhaps instead of sending a cd, print out a label or as many as were requested. Alternatively, you could send a cardboard sleeve for the cd to go in like samplers or singles usually do. Send the label/sleeve and a card that has a link to the .iso file to be downloaded. Your customer burns the cd themselves and you don’t have to pay to have them made. All you pay are some printing costs and lighter postage.
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.
HI
P.O.BOXKF346
KOFORIDUA
GHANA
00233
THANK U
HI
P.O.BOXKF346
KOFORIDUA
GHANA
00233
THANK U
any
Mawko educational complex
p.o.box 417
Ghana
w/a
00233
tema.
thanks
M.G janaka sampath,
NO12/13,
New town,
Kothmale,
20560,
sri lanka.
153/6 kovillawatta magalle
Galle