Social Networking – Fab Four Case Study

When the internet first appeared as a serious business tool about 10 years ago, talk was about industries being transformed.

Here's how the music industry is now being transformed, and the internet-based tools being used. What lessons can be learned by businesses of all types?

The first internet purchase I made, back in the 90s, was flowers for my mother for Mother’s Day (Smothering Sunday). I was working outside a town and buying online was so much easier at lunchtime. But it did mean that the local Interflora shop lost out their commission for taking the order. Indeed “dis-intermediation” has been a major issue in many industries. Middlemen need to be adding value to survive.

Impact of the Internet on the Music Industry

One industry that has perhaps taken longer than I expected to fully transform is the music industry. Now the iPod, mobile phones and other mobile devices can handle masses of files with a sound quality indistinguishable from CDs. The AppleStore, other digital stores and the likes of ReverbNation are the new middlemen, replacing record shops and record labels by letting bands publish their music online directly.

The Impact on Music Retailing

HMV Group are doing a sterling job of keeping HMV stores and Waterstones bookstores open, when virtually every other record, video, game and book store is closing due to digitisation. By coincidence HMV published their full-year results a couple of days ago. They are desperately trying to move into the digital space on the one hand, and into live music through the recent acquisition of Mama Group on the other (HMV Hammersmith Apollo etc). With like-for-like sales down but profits up, the share price rose slightly but has since dropped back, to around a half of the price a year ago. (Please note that link to Stock Exchange website may be playing up - if so try finding HMV once you get there). Capitalisation, the group's value, has dropped in the last year from £488m to around £236m - a drop of some £250million (or quarter of a billion pounds!)

Rich Musicians, Poor Musicians

For professional musicians of all genres, they have always been relatively poor unless they’ve been right at the top. The last few decades have been relatively good for them, but the internet is making it ever more difficult to make money from selling music, due to file sharing and free downloads. Tracks and albums sold via the digital stores are in pence or a few pounds, so huge quantities need to be sold to make any serious money. More and more musicians are complaining of problems making a living.

Musicians are having to focus again on live gigs, and selling merchandise there and online. Fans of Lily Allen will be disappointed to hear that even she is winding down her involvement in the music industry to concentrate on fashion clothing, with just two gigs in July remaining on her schedule, at the Wireless Festival, London on Sunday 4th and Benicassim Festival, Spain on Sunday 18th.

Marketing - Using Social Networking

Marketing for musicians is more important then ever. Using social networking is key, especially amongst the younger generation. How is this being done? What lessons can be learned for other types of business?

The new Fab Four

In honour of my teenage nephew being the youngest member of the youngest band ever to appear at Glastonbury, at founder Michael Eavis’s personal request, I’m going to take a look at how they are trying to break into the music industry using social networking.

“The Theory of Six Degrees” has adopted a multi-pronged approach, in roughly descending order of importance :

1. A web site for the band with a nice short URL www.t6d.co.uk for publicity. The site provides links to all the social networking sites listed below. Merchandise such as event tickets, mp3s, CDs, badges and other super items can be purchased.
2. MySpace This is often the site linked from other websites, such as festival sites, and effectively acts as their principle site because of MySpace’s capabilities. This contains a gig list (including Guilfest where they kick off the Rocksound Rock Cave 1240-1310 on Saturday 17th July), videos, Twitter feeds from band members and the band itself, shortened demo tracks to download free of charge and buy in full, and links to their main merchandise store. They are also carrying banner ads to earn a few bucks (but this is a distraction from their own messages).
3. Facebook This is the principle way to keep in touch with their 2800 fans, many of whom are the traditional teenage girls. Isn’t it magic that they can get feedback about their gigs directly?! For example “saw you at Glastonbury and you were quality and honestly one of the best acts i saw all festival” and “Glastonbury …. one word for the gig... AWESOME!” There are dozens of pictures, and videos, including from their set at Glastonbury last weekend. Announcements can be made on Facebook about gigs, radio and TV interviews and track releases, and there’s links again to their merchandise webshop
4. YouTube Dozens of videos of live gigs and staged demos, plus the BBC News broadcast just before Glastonbury. Yet another way of getting feedback from fans (“Anyway you guys are absolutely amazing. Even my mum thinks you're cute!!!” and the inevitable “Does Scott have a girlfriend?” from a female admirer)
5. ReverbNation a specialist music site where T6D are rated 32nd of the hundreds of London-based bands. Over 6000 fans, and you can hear a selection of their music for free (yes, that’s the problem!, though some are shortened demos) by clicking “Play All”. Enjoy!
6. Twitter A late addition to their set, as it’s perceived as being for older peeps. But why not, to broaden appeal to the parents’ generation? The tweets feeds into their MySpace site.
7. Bebo This is barely used, which reflects Bebo’s problems under AOL’s ownership

This all took time to set up, and now to keep updated. But as most of the facilities are absolutely free, they provide a powerful, low-cost marketing platform for the band’s development.

Lessons for Other Types of Businesses

So what can we learn and adopt in other types of businesses?:

1. A simple but well-designed website can be used to act as the hub of the social networking activities, and include a webshop to sell a variety of electronic and physical products
2. MySpace is aimed principally at musicians, comedians and filmmakers who need gig lists etc. No relevance to other types of business
3. Facebook is really useful to involve fans/customers two-way, at least in the B2C space
4. YouTube is a great way to publish videos, whatever your business
5. Twitter can be used to send out messages, optionally with links to pictures and videos. It’s an easy way of embedding real-time news into your website, by anyone given access rights to the Twitter account(s)
6. ReverbNation: Again mainly relevant to musicians, plus venues
7. Bebo: Can anyone tell me why bother to use it?

Interestingly all these branded web services are based in the US, so there’s all the usual cloud SaaS issues around Data Protection and the like. But let’s not worry about that here.

In any case hope to see you for celebrations on 17th! Discounted Guilfest tickets here. Rock on!!

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