The Music Data Problem

John Loken’s blog post a couple weeks back got me thinking about a post I’ve been meaning to do for months, but have been too swamped to actually spit out. The post, titled “More Metrics Please,” is, as the title suggests, a plea for metrics on par with the TV business.

Some of this data has been collected in the past, but for various reasons (the biggest of which being the market and channel control by the majors) almost all data points beyond Soundscan and Billboard charts seem to have been ignored. Now, however, there is a perfect storm for music data: more artists than ever before, more listeners than ever before with easier access through more channels than ever before, and more technology for data collection than ever before.

Put simply: music data is both more important and more available than ever before.

This shouldn’t come as a surprise, and John is not alone in asking for more data. Companies are springing up left and right to help answer her prayers. Companies like Next Big Sound, BandMetrics, and Music Metric are busy collecting third party data from around the web in single dashboards. Companies like Bandize and Artist Data are helping bands organize their own data. Companies like HypeMachine and Elbo.ws are aggregating marketing/A&R data in the form of blog and Twitter charts. Companies like Songkick and Gigulate help fans track basic concert data and music news, respectively, creating interesting data sets that are sure to surface soon.

The issue isn’t in the data collection or availability, it’s in the connecting, processing, and understanding. Like all data, the points themselves are completely irrelevant without context – a MySpace play doesn’t inherently mean anything, nor does a friend on Facebook. Data can only be understood with relevant ratios.

Connecting the data might be the biggest obstacle at the moment, but I’m hopeful that will change. It’s primarily an issue of a few major players (namely, the retail channel) not having open APIs, or sharing any of the data with the artists – when a fan buys an album on iTunes, that fan data belongs to iTunes and iTunes doesn’t want to part with it.

The other obstacle in connecting the data is the breadth to which music discovery, engagement, and purchasing have spread. You used to get your discovery metrics solely from radio numbers, your engagement metrics from concert tickets, and your purchasing metrics from Soundscan. Now discovery can span blogs, P2P, internet radio, and beyond, engagement can be a play on a blog, a MySpace page, an iPod, or anywhere else, and while record purchases are still largely covered by Soundscan, records are an increasingly small portion of the overall business picture for an artist.

Pulling all that data together is not easy, but I think it can be done as long as those collecting the data are ensuring it’s clean and are willing to make it accessible. Purchases should be easiest, as long as retail channels come around. Last.fm and Twones are handling engagement fairly well (though neither has all the necessary channels covered, by any stretch). Discovery is incredibly tough without having the engagement piece nailed – if you don’t have a view of all a fan’s engagement data, how do you know the first time/place they interacted with an artist?

Progress is coming, but only as a stream of one-dimensional data points. More radical change is needed in order to get to the ratios that are truly relevant and key to making informed business decisions. We need to be able to close the loop on fan data – how fans move down the funnel from discovery to engagement to purchasing. Knowing that you had a spike in MySpace plays around the same time you had a spike in iTunes sales shouldn’t be surprising, and is thus practically worthless (if you didn’t see a spike in sales, it would indicate a strong PR effort but not a high enough quality product for fans to take out their wallets, so the data isn’t totally worthless). Knowing that the majority of the folks who purchased your deluxe edition CD through Amazon first heard your song on Pitchfork and downloaded your EP through P2P is highly valuable.

The technology to make this happen is not expensive, nor particularly difficult to implement, with APIs and OpenID or OAuth. Thanks to the web's ever-expanding processing power, we have far easier access to more data than ever before – it’s no longer reserved for the major corporations who can pay hundreds of thousands of dollars to market research firms to run surveys. We just need to have the right technology implemented properly in order to make the data connection easier.

If we can connect all the data collection points properly, the processing isn’t horribly difficult – it’s merely implementing techniques that economists and social scientists have used for ages to slice and dice large data sets. Everyone should be able to be armchair statisticians (as Google Analytics has enabled web hosts to be), the winners will be the ones who have the deepest understanding how to find the most relevant data and take the most appropriate actions as a result.

The understanding is the place where I fear the music business will have the most catching up to do. From my personal experience, data analysis seems to be a new concept to many industry veterans. Many are excited by the prospect of data being available, but few seem to know what to do with it – it serves as little more than eye-candy, another blurry trend chart at a corporate meeting (to be fair, it's not yet easily available in relevant and easy-to-read format without some tech savvy and excel skills). Layer on top of that the fact that people in the music business seem to be among the world’s biggest optimists, and you’ve got a recipe for disaster when it comes to biased or outright incorrect interpretation of data.

The winner of the data wars among the music startups will be the one who can provide the deepest insights, not just the most data. They will preemptively answer both questions of “What does this mean?” and “What should I do?”

The biggest winner will also have the tools to power the “What should I do?” actions. This means marketing, ecommerce, and access to relevant channels. These tools need to empower the artist, but also add value. In the end, I believe success may be measured as some variation of the following equation (would love to hear your feedback on improvements to the equation), and the winners among the startups will be the ones who can prove to consistently impact the quotient the most:

(Engagement + (Investment x Demand Generation Execution))^Quality = $$$

Note that quality is hyperefficient and falls almost entirely on the artist. Even the best data analysis in the world can’t make up for a product that doesn’t appeal. But it can tell you why your product isn’t selling as well as your competitors, and what you can do to make incremental improvements from a business perspective. And that makes data incredibly valuable, and a worthwhile pursuit -- it will undoubtedly unlock a plethora of new business models for music, and allow artists to figure out their own optimal model.

What happened to my radio?: The new profitable tastemakers

In my last post, I alluded to some of my views on licensing songs and the ties (or, more accurately, lack thereof) to Lifetime Value (LTV) of fans, and thus careers for the musicians. Now I would like to clarify my thoughts on ties between bands and brands and give a sense of how I believe the most mutually beneficial relationships can be built.

I believe that bands and brands have very strong natural ties, and that bands should really be thought of as brands in their own right. The key demographic for up and coming bands is generally the teenagers and young adults, which today is Generation Y. Known as the first generation to grow up with a true comfort with technology, having known no life without computers, we are distrustful of advertising and seek deeper relationships with the organizations to whom we give our time and money.

Music is a well-known key to human emotion. It also influences relationships - people who like the same music are almost instantaneous friends, thanks to a connection felt at a more primal level. Friends are also known to enjoy similar products and brands - they make similar connections influenced by shared experiences and compatible ideologies.

The key, then, is finding where these connections (between consumer and brand, and between that consumer and band) have potential overlap, and leveraging that connection to benefit both parties.

Your car commercial has a catchy tune in it, don't you think some folks might catch onto that (don't you want them to?) and want a download of that song? They would, and they would appreciate you for being the one to recommend it to them. You're building customer loyalty among people who aren't even necessarily your customers yet.

Afternoons had a song in a Lincoln commercial that premiered during The Grammys. I would love to have that mp3 by going to LincolnMusic.com, would be thankful to Lincoln for introducing me to it, and while I'm not in the market for a car right now, I'd have a slightly more favorable opinion of Lincoln. Lincoln, in turn, would have my email address (which they could use to introduce me to more music and further build my trust and respect, NOT to spam my inbox with nonstop car ads), my potential to spread the word to more friends (and thus fans of Lincoln), and a potential lifetime fan of their brand (bringing them perhaps as many as five to twenty purchases).

Traditionally, radio has made a living off being intermediaries -- brokering these relationships through their professional tastemaking and controlling the distribution channel (the AM and FM frequencies of our car and personal stereos). Thanks to the Internet and digital music, the distribution channels are no longer restricted -- brands and bands have access to each other and to the fans through a single channel with no need for intermediaries. (In fact, the Gen-Y fans would prefer not to have intermediaries.)

Many brands, of course, will be slow to understand these benefits. Corporations aren't often used to the concepts of direct ROI from marketing spends -- the people working the income sheets and the people spending the marketing money are on different floors and probably have never met. The onus (and thus, business), then, is on consultancies like Brands + Music to show the finance departments why they should be hired to project manage the marketing department's relationships regarding music. In the future, however, it would in no way surprise me to see brands whose target audience is largely Gen-Y starting music departments to help identify and build relationships with bands with similar demographic fanbases.

While brands may be somewhat sluggish to realize the potential of deeper relationships with artists and mutual fans, successful artists (remember, an artist is a brand, too) can coin themselves as tastemakers and built their own brands. You already see it happening, both with an increased number of vanity imprints (artists starting their own labels to help bring legitimacy to their friends and other bands they like) and with artists like Kanye West, whose blog mentions send page views through the roof for anyone fortunate enough to be on the receiving end of a link. In both cases, the artists leverage their existing fans' trust of their brand to become tastemakers and drive benefits for other b(r)ands, and in turn themselves.

The hope, of course, is to be able to automate some of the identification process for all parties involved -- many of the biggest changes to come about in the Internet era have come as a result of taking manual effort out of business processes. The technology will soon exist to have your brand grow many times in size by being the modern equivalent of the cool DJ in town, an opportunity you may not immediately think relevant. Of course, technology is just a tool, and the brands and artists who employ the tools make their own fates and fortunes with their usage -- technology will never be a substitute for genuinely identifying with the brand you sell and using your own passion to connect with the fans of your brand and desire to add value to their lives.



As a side-note, I'm sure questions will arise as to the potential of "regular" individuals to become tastemakers. To some extent, there is, but it will have to be through a channel they define for themselves (generally through blogs), rather than through sites like SUURGE. Musicane's (and many others) original business model presupposed fans would appreciate being rewarded for their music recommendations to friends. What they failed to realize was how pithy rewards from not having a substantially large sphere of influence is actually a demotivator (people would rather recommend out of passion than see a couple pennies). Where Amie Street separates themselves is by becoming a tastemaker in their own right by aggregating fan inputs (their biggest sales driver is moderated weekly emails with personal recommendations) -- their users buy based on their view of Amie St as a tastemaker, and getting small discounts is a nice side benefit that makes them feel good for being a part of the community.