Hi,

If you’re familiar with music industry conversations over the last year, you’re aware of the dialogue around people trying to figure out & develop direct-to-fan strategies. How streaming just isn’t enough anymore, from a financial perspective as well as nurturing an artist’s audience.

Last week, Goldman Sachs published its “Music in the Air” report that shared some super interesting predictions about where they think the industry is headed. I agree with a lot of them and thought it was worth dedicating a newsletter to.

Let's get into it below.

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This newsletter highlights:

Let's dive in ⬇️

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One reason why the piece is interesting is Goldman Sachs’ enthusiasm about direct-to-fan - it thinks it could grow from tens of millions in industry revenue today to hundreds of millions a year over the next decade.

One of the reasons it’s so bullish is that while streaming can find fans, it’s not really designed to engage, nurture, and monetize those fans with value. Those things are a separate layer of the music business (email list, text list, online community, the store, etc), and on most independent artist teams, nobody truly owns it. The manager is overseeing other parts of the business and making sure the train stays on the tracks while the artist makes music while being creative.

The report essentially put a dollar figure on the idea and its future. In my opinion, that also inherently put a value on the necessary ability to ideate and execute strategies for embracing that direct-to-fan model.

It also highlighted some of the key players. It named EVEN as the clearest example of what it calls the commerce layer: pay-what-you-want releases, vinyl pre-orders, early access windows, etc with sales reporting to Luminate so they count toward Billboard. Essentially, it’s the infrastructure that allows fans to actually pay for and support things from an artist. EVEN did this most notably recently with J. Cole, who used EVEN for the tenth anniversary of 2014 Forest Hills Drive and The Fall Off Tour.

One of my favorite examples of an artist utilizing this approach was a few years ago when Ransom sold his album “Director’s Cut 4” on EVEN in tiers with each tier having a different offer. The highest tier came with a custom intro to the album that he recorded for the fan personally and included that version in the album they received.

It’s one of the more creative examples in recent memory of an artist selling something directly to their fans that was truly a unique experience.

I think for a long time, people questioned or didn’t fully understand whether direct-to-fan was a worthwhile investment of time, energy, and resources. Why not just focus on streaming which is the bread & butter of how the industry makes money?

Now that the industry is embracing direct-to-fan as a viable approach, there’s a next step that begs the question…who actually executes it? If Goldman Sachs (along with so much of the rest of the music industry) predicts that direct-to-fan will become one of the fastest growing sectors of music industry and how most artists engage and monetize their audiences, then whoever helps ideate and execute those strategies becomes critically important. Less bandwidth and resources were needed for an artist to just put their music up on streaming platforms with a few cool activations. Meanwhile, it can take real personnel to ideate and execute strategies to engage your fans.

Whether that’s a dedicated marketing team or the artist themselves, I thought it was worth diving into what the funnel can actually look like with tangible steps at each stage.

This step is essentially offering incentives and value for fans in exchange for them being funneled into an email list, text list, online community, etc.

For example:

Most signups collect the email or phone number and then don’t say anything until the next release or blast. Setting a drip campaign or automated message flow can help keep people engaged while getting to know the artist better.

For example:

Message 1 (immediately): a text or email in the artist's own voice thanking the fan for signing up, letting them know something unique about what to expect, and maybe even a pre-recorded voicenote if possible to make it feel personal.

Message 2 (day 3): sending another message with something related to the song or the artist that the fan might not know. An interesting fact, a photo from a session, etc. This helps establish familiarity and keeps the fan engaged.

Message 3 (day 7): asking a question, for example "What city are you in?" or "What song got you here?" Replies tell you where to tour and what to make, and they tell the email platforms people want your messages to help keep you out of spam.

These messages can be tied to a specific campaign or rollout.

In my opinion, this stage is where the artist gives value but doesn’t ask for anything monetary in return yet. For example, Mike Posner has a newsletter I’ve been subscribed to for years, where he almost never promotes his music.

He talks about his personal life, fitness, mental health, and stories from his career. Whereas most artists use their list for promotional or even spammy purposes, he’s actually giving fans the chance to connect with him on a deeper level without asking for anything 99.9% of the time.

After nurturing your audience and giving, giving, giving, here is where you can introduce the idea of supporting monetarily in exchange for something.

For example:

An artist offering 3 tiers of things fans can pay for:

It can also be helpful to bundle products with the add-on they'd likely buy anyway. For example, vinyl plus a tee shirt plus the download for one price. Fans may have planned on buying the shirt at the show but selling it here eliminates a step.

Worth noting: Goldman's data suggests that close to half of fans pay above the minimum price if you give them the opportunity. Maybe worth setting the floor price where a casual fan is comfortable, then show a suggested amount and a "support the artist" option above it, that way the superfans pick themselves.

In my experience, this is the stage almost every artist team skips, despite it being able to drive lots of potential revenue.

For example, when a fan buys something from your store…you can introduce a post-purchase automation flow similar to what we referenced before.

Here’s an example for those who use Shopify or Klaviyo:

Then there’s segmenting the people who purchased into groups and organizing them with different tags, then segments: vinyl, apparel, bundle buyers, and a top-50 segment sorted by lifetime spend.

It’s also helpful to turn on abandoned checkout messages. Shopify can send an automatic message to anyone who started checkout and didn't finish. It’s so easy for fans to get distracted - those reminder emails can help convert people who intended to buy and just lost sight of it.

Hopefully this doesn’t feel overwhelming or complicated - if anything it should be empowering and exciting. Artists have more power than ever to connect with, engage, and nurture their audiences. It just takes time and intenionality.

As the music business evolves, I believe that artists will continue to become more niche and need to go deeper instead of wider to monetize their audiences and build their businesses. The era of the new global superstar is largely over - we’re going to continue seeing artists that exist in their own pockets and the understanding of who those audiences are will become imperative to their success.

Thanks for reading, until next time.

P.S. If you're an independent artist, manager, or music company trying to get a release off the ground in the next few months, I'd love to help. Tell me what you're working on HERE.

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