Bundles are beautiful: they can generate big markups, and encourage consumers to spend a lot more than they otherwise would. It's a time-worn practice, but despite gains in non-CD album formats like digital and vinyl, the music industry is mostly losing its tried-and-true album 'six-pack'.
Which is where companies like Topspin come in - and companies like Spotify don't. But is higher-end, high-priced physical+digital bundling mostly driving tonnage for higher-end bands - ie, the Trent Reznors, Arcade Fires, and Paul McCartneys of the world? And, for that matter, tapping rich fans who can afford the $50, $100, $200, or $300-plus pricetags?
Honestly, I'm not quite sure, because I'm not close enough to this data. But according to managers and executives we've talked to, smaller and developing artists seem to be getting a lift from complicated and pricey bundling packages, but not game-changing financial gains. Because the number of die-hard fans that purchase expensive bundles of colored vinyl and lithographs seem to be limited, at least without major marketing airpower or established superstardom.
Which is why I posed the question on Friday (see last paragraph), and the responses we got from Topspin almost reaffirmed the hunch. "It's not a rich band's game and my email was clear on that fact," Rogers barked at me on email. "Artists like Sonoio do 98 percent of their business direct-to-fan and are successful selling out of high-priced items such as synthesizers (in his case) and t-shirts. It's definitively *not* a rich band's game."
Fair enough, but where's the real data on this? Topspin was pointing to percentages of total artist revenue, without any hard dollar figures. Because wouldn't a few $100 packages naturally command a larger piece of the total revenue pie for a smaller artist (and by extension, a lower percentage for superstars)?
But wait: I realized that Rogers was answering a totally different question. That is, whether direct-to-fan was a rich band's game, which of course it is not. In fact, I don't know anyone who thinks (or asks) that about direct-to-fan broadly (especially given its extreme importance to 'poor bands').
Yet, 'direct-to-fan' was the focus (and title) of a full blog response by Rogers to our article. It's almost as if I asked whether cat breeding was ethical, and Rogers answered, 'Kittens should *not* be tortured!" Huh? Who said that? So I ask Topspin (and the industry) again, with the hopes of seeing some real, dollar data...
/paul
Comments Closed
brooklyn habitat Monday, February 20, 2012
It's just so much crap and bad for the environment. Save a tree, go digital!
Sev Tuesday, February 21, 2012
CDs are also digital.
Maxwellian Monday, February 20, 2012
It's all the classic logical fallacy of the music biz! Trent Reznor was MADE by the major labels, heretofore has FAME, heretofore can SELL against that fame in the form of $200 bundles. It's not the smae for other bands.
::MW
Food For Thought Monday, February 20, 2012
@Paul - the answer is that both you and Ian are correct.
Sorry, there is no greater accurate data to point to than IFPI/RIAA statistics that reveal overall music industry stats (and therefore aren't appropriate to your question about smaller bands). I suppose you can use the Future of Music Coalitions unscientific survey but then that isn't any more accurate than Ian's examples or hundreds of individual examples that your readers can give (none of which can truly answer your question).
The fact is that this is all still too new to provide accurate data that can be applied to all artists (or even most). What can be said is that at the core of revenues for MOST artists should be their music (asking fans to pay for their music). Giving up on that revenue stream unless or until you've proven to yourself that you have a sustainable business elsewhere is foolhardy. Telling artists that they should give away their music as an enticement to sell merch, show tickets, etc. is harmful and irresponsible (as Lefsitz did this weekend while using Van Halen as the example...really?!?! Van Halen, Bob?).
Direct 2 Fan is obviously an important strategy for newer, less established artists.
Bundling is not "just a rich man's game" but everything is relative.
Newer bands should be trying to conceive of things that they can bundle and upsell. They may not get to $100 items right away (although maybe they will) but they'll be working on improving valuable lessons for themselves about what their fans want, creating usable data for themselves about their own growth (eg. when fans begin paying more for certain bundles), and establishing a level of engagement and respect for their fans. All will "pay off" in ways that are almost as valuable as if they're able to actually sell a $100 bundled product.
gaetano Monday, February 20, 2012
Is creating durable goods (physical merchandise) to sell a rich band's game?
Well, that's completely subjective, though yes it involves a degree of overhead.
I've seen "rich" bands spend enormous amounts on goods sold at pricepoints that brought little to no return, I've seen rich bands spend big and net a profit, and vice versa.
Same with "poor" bands.
Bundling is potentially creating and shifting value of product (both physical and virtual) in different ways for different consumers.
As far as the "real" data, the numbers and the bands are most likely incredibly subjective and disparate. Topspin is a service, that serves thousands of artists, that's it. Making the product is one thing, putting it up for sale is another, and the consumer buying it...a whole other thing.
After seeing what happened with the Tunecore data that was put forth a while ago, I have a feeling we know how the topspin numbers would be spun here...
MisterSoftee Monday, February 20, 2012
C'mon Digital Music News wake up and smell the triple-shot espresso that's under your nose. Doesn't matter if its TopSpin or TuneCore they're all selling artists good tools but ultimately a dream -- most are gonna sell a few $300 packages not a ton of them. Try it at home.
coolhandluke Monday, February 20, 2012
well, using Topspin definitely is a rich band's game...
Check the prices... so if you have more than 2k names in your database on there, you're basically looking to have to pay $500 per year to maintain the account. That's before you even pay a % to them on the actual sales of any bundles. That is a hefty amount for any average band...
http://www.topspinmedia.com/signup
JaGe Tuesday, February 21, 2012
I think we have to take a step back and dicuss what we mean by "High Priced" bundles. If you're comparing against a $12 CD or $10 digital download is $20 high priced?
I manage D2C marketing for a large indie label, ran it for a smaller management company and label before this and have run campaigns for indie artists as well. Based on my data, the so-called 'game-changing' amounts of money generated are really one-offs. Nobody should be looking at NIN Ghosts, Paul McCartney or Beastie Boys and saying I'm going to generate 7 figure revenue overnight with this method. That goes for rich artists, labels and everyone else out there. Check out the Trent Reznor/Atticus Ross $300 package on the Null Corp site - still available 3 months after pre-order went live.... big difference from when NIN released Ghosts (and this is coming from a HUGE NIN fan, I want Trent to succeed).
The biggest thing I see happen is when I set up a campaign and we sell out of the product and make a little extra money and the artist comes to me and says "we should have priced it higher, or upped the limited edition number." To me that's a mistake. Make your product, sell out, get the value, get out - do the math in advance and understand it's an investment, you're not always going to be right, but if you are, it should work (or even better manufacture to order).
The value is in the marketing, the data collection, the growth over time, the word of mouth and yes, a little extra revenue. D2C high-priced bundling is for intelligent artists who are building a brand, not for people who want to copy big bands' successes and get rich.
SONOIO is a tough example because Alessandro was in NIN - I know that's not guaranteed success but working with Trent brings some amount of notariety that comes with your project. But I've seen 'not rich' artist sell out of $20-$50 deluxe packs in 24-48 hours when marketed right. It may not be life-changing amounts, but it's a value add.
If you don't want to pay up-front for Topspin use Bandcamp, Pledge Music, set up a paypal store or any other way you're going to do it, there are options.
bobmoz Tuesday, February 21, 2012
Hey Paul...
Let me answer your question directly. No, high-priced bundling is not a rich band's game. Here is how we at Topspin think about it:
It doesn't matter if you have 100,000 fans or 1,000 fans... some percentage of those fans want to buy the coolest, most complete, most elaborate product you can create. If you don't create that product and price it accordingly, those super fans will instead buy low-price, commodity products (iTunes downloads, etc) and you will leave both money AND word-of-mouth markerting opportunity on the table.
The fans who buy (or covet) premium products are also very likely to share your offers around the web -- so getting them excited with unique and premium products is important for lifting sales at all outlets.
I'll look around for some data we can release in a case study here. It isn't always easy, as releasing sales figures for artists isn't our business (all data in Topspin belongs to artists, period). But what we see definitely shows that high-priced bundling is for everyone.
Let's also make sure we're talking about high-priced bundling for the right reason: these products make fans happy, and they earn great margin for the artist.
What these products *are* will of course vary wildly from artist to artist. That Pearl Jam box set you have at the top of the page is for sure a rich band's product. But a hand-written lyric sheet and polaroid picture for $40 would be easy to execute, earn great margin, and be a great product for any developing artist. The high-priced bundled doesn't mean vinyl, books and a decorative box. It means unique, desireable products that impart feelings of access, experience and connectedness to the artist.
Thanks for talking about this in depth, we've got to get the whole community past the old-school thinking of "the format = the product." The web allows artists to make all kinds of unique and limited products. Go artists... make art. ;)
-@bobmoz, Topspin
Jason Spitz Wednesday, February 22, 2012
Paul, you're doing that thing again where you make huge, unfounded assumptions. What constitutes "High Priced Bundling"? Is a $30 bundle "pricey"? What about $50? And what exactly is a "rich band"? U2 and Metallica are rich, certainly. But are Drive-By Truckers "rich"? More importantly, are DBT's *fans* generally wealthy? I'd estimate at least 90% their fans are not millionaires. Maybe even 99%.
So if a few hundred DBT fans buy a $75 deluxe package, and a bunch of others spend $50 on a vinyl & t-shirt bundle (like they did in this case study), does that answer the question "Is high priced bundling a rich band's game"? No. Because the question is vague, stupid, and meaningless. Now here's a question that does mean something: "Will passionate fans spend significant amounts money on a special product from a band they love?" Yes...but that's always been true.
Now, however, the artist can add value to a product, often at little or no extra cost, and then mark up the price & sell it directly to fans at a high margin. That's game-changing. The rules of the game have literally changed, and although there may not be a wealth of public information to make it feel real to you, I'm watching it happen, with my own two eyes, every day. D2F is a growing revenue stream (for those artists who are smart and hardworking enough to do it right). Success is never guaranteed, but the D2F model leaves the door open for hard work and ingenuity to get a fair shot.
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