Topspin Media is a music company co-founded by Peter Gotcher (who also co-founded DigiDesign, the company behind ProTools) and Shamal Ranasinghe. The company is in the process of fine-tuning its proprietary software platform that allows artists and their teams to build fanbases and careers more efficiently and effectively than ever before. Though currently working with artists on an invitation-only basis, the company is set to officially release its software platform sometime in the coming months. Anticipation of the software’s official debut has been building, but the company still has not set any specific release date.
There is always quite a bit of hype surrounding new music ventures, with a lot of chatter about “new models”, “emerging trends”, and bold predictions about the music industry that never seem to quite pan out. Topspin has been getting a lot of hype lately, but most people don’t really know what the company actually does. In a nutshell, the company’s software allows an artist to harvest, organize, analyze, and capitalize upon marketing information. The company has so far mostly used their platform for high-profile direct-to-fan releases with artists like Nine Inch Nails, David Byrne and Brian Eno, and Paul McCartney. They have also worked with lesser-known artists like Joe Purdy and Spinnerette.
But before we get too in depth about what Topspin does, we should back up a bit and take a look at the traditional record industry approach to marketing to see what makes the company different. Conversation about the decline of the traditional record industry is often framed in the context of new and old media formats – the increasingly anachronistic CD sinking into oblivion as digital music files like the mp3 become the basic unit of the 21st century music experience.
Traditional Marketing and Distribution
Apple is one company that has led the way toward a new model based on digital downloads replacing physical distribution networks and the CD (and of course, cutting out the brick-and-mortar record store). By seamlessly integrating their iTunes music store with their iTunes music management software, Macintosh computers, iPod music players, and iPhone smart phones, the company has established itself as the leader of the digital music market.
And while Apple has been immensely successful with this approach, it has not played out as well for the larger music industry. To begin with, the volume of digital music sales has not nearly matched the decline in physical album sales. Record labels not only sell fewer copies of their releases, but also have to deal with the sizeable cut that Apple takes off the top of their digital music sales.
Recording artists have likewise struggled with this decline in sales volume. If they are signed to a label, they have deal with recording contracts designed for an era when gold and platinum records were somewhat commonplace. When artists choose to forego labels entirely, they often flounder in a crowded marketplace because they lack the marketing and promotional support to make a big splash.
The current problem for artists, then, has very little to do with the format or distribution of music and much more to do with marketing. In the old days, record labels had complete control on the marketing and distribution of music. That allowed them to sell a low-margin product at high volumes, which provided a bloated budget for “carpet-bomb” marketing. That approach entails spending massive amounts on things like advertising campaigns, which seek to reach as many people as possible in the hopes of reaching a few possible customers. This strategy worked for a long time, but as album sales plummeted, marketing budgets have been slashed, creating a vacuum that other players in the music industry are now striving to fill.
A New Approach
This is where Topspin comes in, approaching the problems the struggling music industry from the perspective of marketing. The company is based on a software platform that puts a number of tools at the instant disposal of a band and its management team. These include customizable music players that fans can easily embed in their own personal pages. The players not only allow purchase directly from the embedded widget, but also collect a wealth of information, including what songs are being listened to, where they are being listening to, how much of a track is being listened to, and more.
That’s just the beginning. A major feature of Topspin’s software involves intelligent, customizable electronic mailing list that allows bands to easily collect and capitalize upon a wealth of information about their fans. This is an example of permission marketing, wherein the consumer voluntarily agrees to be marketed to. It not only satisfies the fans’ desire for information and messages directly from the band, but also allows the band to collect valuable information from the people most likely to buy their music, merchandise, and concert tickets.
Topspin’s platform is intended to use that information in brand new ways. For example, it is easy to see a map laying out where people are joining the mailing list, steaming songs, or purchasing music. It is easy to see where people are buying music and how much they are spending. If an artist has a show coming up in Kansas City, for example, the software allows the artist to send an e-mail only to fans located within a hundred miles of that city. You can even plot customers, listeners, and mailing list subscribers on a map to see where fans are, how much they are listening, the money fans are spending, and more.
There are many other benefits to that kind of flexibility. Among them is the ability to contact fans only when there is information relevant to them. While fans love to hear from their favorite bands, they will tend to unsubscribe from the mailing list if they are receiving 3 messages a day full of information irrelevant to them. It is important to send messages enough to keep fans connected, but not so many that people become alienated and annoyed. The ability to customize messages is a huge help in achieving that goal.
The idea is to connect artists to their fans in the most direct way possible, building a personal connection that strengthens over time. Brian Klein, manager of Joe Purdy, was recently quoted on Topspin’s online blog speaking about the company. He was able to release Joe’s new album “2 hours after Joe finished his cover art and approved the mastered audio. His fans knew that from the email that we sent to them and they felt special! They knew that they had it immediately and felt empowered. AWESOME! Word of mouth, instant back end info on who is buying and where, direct email thank you to the fan, viral player that spreads our store across the web, super distribution, more fans. I love it!”
Sealing the Deal
Of course, it is well and good to talk about great marketing and building a connection with fans, but for an artist to make any money, people still need to buy music. The Topspin approach here is to allow as many people as people hear the music, target those most likely to make a purchase, and offer those people a range of purchase options.
For example, Topspin released an album from Paul McCartney’s Fireman project. Fans had the choice to stream the album for free, buy the album on mp3 for $8.99, a CD for $12.99, $29.99 for the album on vinyl, and $79.99 for a package containing 24-bit 96khz tracks on one DVD and multi-track sessions for selected songs on another. Even more, one could choose to substitute high-quality FLAC or Apple Lossless files for mp3s at the $8.99 price.
On a basic level, giving people choices involves the fan in the process, allowing them to customize their purchase based on their own needs. By enriching the purchasing experience, the artist is strengthening that ever-important bond with their fans and increasing the likelihood of future purchases.
But there is more going on here. Remember that the old recorded music business model relies on selling large numbers of low-margin products. Selling high-priced packages directly to fans allows the band to increase both the profit margin and actual amount of the purchases. In fact, Topspin’s current average revenue-per-sale is an impressive $22.
Also remember that legal music sales are always in competition with free illegal downloads. Though there will always be a group of people that almost always pay for their music (and another that refuses to pay for any music), there is a large group of people on the fence that purchase only some of their music. The challenge is always to give those people enough incentive to shell out their hard-earned cash instead of simply downloading it for free.
There have been a number of direct-to-fan album releases that have done a great job of doing just that. For example, the website for David Byrne and Brian Eno’s album Everything That Happens Will Happen Today offers fans a choice between mp3s and higher quality FLAC files. The deluxe edition, meanwhile, features bonus songs, a short film, a hardbound book, a special screensaver, and more. All of that enhances the music experience far beyond what an illegal download can offer.
There is also a more abstract incentive to fans to purchase music that comes with direct-to-fan releases. By cutting out record labels and retailers, fans know their purchase money is going directly into the band’s coffers, rather than into the hands of retailers, distributors, and labels. The major record labels often have a rather negative image among the public at large, so many people feel much better about purchasing music directly from the band they love.
But remember, Topspin is a flexible software platform designed to help give artists control of their own destinies. And while direct-to-fan album releases have been a major part of Topspin’s focus so far, it is certainly not the only use for the company’s technology. On the company’s website, for example, there is a post that highlights a band called BASECAMP that used Topspin to get word out about one of their first gigs at a 400-capacity rock club.
That’s good, considering that concert tickets and merchandise have started to seem more important to a band than record sales, a reversal from the past. Topspin is absolutely not a record label, but a marketing tool that helps artists and their teams manage their relationship with their customers (the fans).
Questions about the future
But after a few years in development, Topspin’s software and services are not yet available to the “public” (to be more specific, Topspin only works with artists, not the public at large). Currently, the company is working with a select number of artists in an effort to perfect their software. The Topspin website says it will be launching within months, but there has yet to be a specific timetable for release. Meanwhile, the company is spending a lot of money to continue developing its software. That money will not last forever, and in this economic climate it may be difficult for the company to convince investors to support the company as it struggles to get off the ground.
So while Topspin is doing some wonderful things and in many ways deserves the hype it has been receiving, it is important to remember that hype is rarely a reliable predictor of long-term success. Only time will tell how things will turn out. In the meantime, the entire music industry will be keeping its eyes on this innovative new company.
By Mark Schafer