Hi, my name is Ian Kwon and I’m the co-founder of fanatic.fm, a newly-launched music sponsorship platform. fanatic.fm was recently selected as a finalist at the Rethink Music Business model competition, where your long-time manager Paul McGuinness spoke as a panelist. (http://rethink-music.com/)
#1. The death of recorded music business
Historically, music business has always been centered on “physical products” that you sell. This model never changed over the last 50 years, and it was all about extracting money from the fans through LPs, cassettes, and CDs.
As you know, this business model is now dead, and the reason is simple: although fans still love music, they simply do NOT want to pay for the recorded music. They are no longer the revenue source that sustains the recorded music industry.
This was the big reason why we started thinking of new, sustainable business models. We felt it’s about time we address this issue head on – by completely changing the business model.
Instead of relying on fans (who do not want to pay), can’t we find other sources of revenue? fanatic.fm believes that brands can be the next source of revenue for the music industry going forward.
#2. Brand sponsorship is the future of music industry
Brands are increasing interaction with consumers through social media – creating facebook pages, youtube channels, twitter accounts, etc. Social media is empowering consumers to become the new distributors, and the demand for “entertainment” from brands is on the rise, especially among the internet savvy age groups.
As a result, there is tremendous opportunity in the growing market being created in the intersection of branded contents and music sponsorship.
What fanatic.fm brings to pioneer this market is the concept of “sponsorship”. Let me explain. I’ve been a long time fan of the Premier League football team Manchester United, and I still clearly remember all the corporate sponsors that had their logo on the players jerseys over the last 10 years. (It was Sharp, Vodafone, AIG and Aon, if I’m not mistaken) If I was a simple consumer of the entertainment ManU provides, these sponsors would have absolutely no meaning to me. However, becoming a fan is different. There is an emotional bond that forms with your favorite football team, your band, your singer, guitarist, and so on.
For example, let’s say that you publish your latest album through GM’s sponsorship. If this happens, GM is no longer just an advertiser. They are directly responsible for the free music your fans will enjoy, and they will be appreciated by these fans in a completely different level. It’s a new way for GM to maximize its branding/advertising impact.
#3. No corporate sell-out. Music that changes the world.
You may immediately think of ‘corporate sell out’ when you hear the word ‘brand sponsorship’. We truly understand this and want to suggest two solutions.
First, fanatic.fm offers musicians complete control over choosing their sponsors. If you don’t want to get sponsored by let’s say some mortgage company that invited you, you have the freedom to decline the suggestion. A Sponsorship is made only when both (sponsors and musicians) reach mutual agreement. It’s like a friendship request on facebook.
Second, 5% of the sponsorship revenue is always donated to charities you select, such as Make Poverty History or Live8, which you are already involved with. By doing this, your sponsors, fans, and your music unite to change the world. Simply listening to your music on fanatic.fm (along with the sponsors’ unintrusive contents), fans contribute to the virtuous cycle with you. And through such contribution, fans feel a connection towards your sponsors, rather than see the image of corporate sell out.
#4. Take 70%.
The relationship between you, fans, and music sites should be different. In older models, musicians were merely ‘content providers’ for certain music sites. You (and your label) accepted this because those sites generate ‘traffic’. Your live concert on YouTube was an example of this unfortunate relationship. (I heard from Mr. Paul McGuinness in Rethink Music conference that you got paid something in the neighborhood of $2,000 from the live concert on YouTube)
Today, however, thanks to social media and the direct relationship between you and your fans, you don’t need to be a part of the music sites. You already have twitter followers and facebook friends who are completely up to date on what you are up to.
What you can now do, rather than trying to reach into your fans’ pockets, is encourage them to listen to the sponsored plays of your new album.
And the best part is, you take 70% of the total sponsorship revenue directly.
#5. What can you do right now?
So, if you think what I’ve told you makes any sense, you can upload sneak peaks of your upcoming albums (Pre-album) on our platform. Sponsors will react very quickly to your pioneering movement. Fans, of course, will love it.
Thank you for your time reading this long article. I truly appreciate it, and please do not hesitate to contact me should you have any questions. My email is firstname.lastname@example.org.
Co-founder / fanatic.fm