In the past, the music business was about moving units. Today, it’s about making fans. And that’s a way better deal for musicians and fans.

Today, music exists in a post-scarcity, attention economy. What does that mean? Access to music is free or nearly so, and all musicians are competing to get the attention of the listener.

A 2011 study by the IFPI suggests Americans spend roughly $25 on music a year per person. In other words, they will pay $25 worth of attention to music. Part of that might be downloads or streaming, they might buy a show ticket and merch, they might back a crowdfunding campaign. This is their budget to patronize the music they love. You are competing with other bands for a percentage of this attention.

In reality, people are not “average”. True music fans spend hundreds of dollars on music. The average is weighed down by the boring but large chunk of the population who don’t buy any music. We’re not talking about so-called “pirates” — study after study has shown people who download music freely spend more money on music, not less. We’re talking about people who aren’t interested in music, or who simply don’t have disposable income. Fortunately music is becoming more popular every day as access increases, sadly the income disparity is worsening. That pirates take the blame when shrinking disposable income is clearly the culprit is classic smoke and mirrors by the corporate elite… but that’s a rant for another time.

You, as an individual musician, need to figure out how to grow and monetize your fan base. Copyright exploitation continues to generate big profits for the corporations who have acquired the majority of music copyrights. This is true for some musicians as well, but a career based on patronage has never been more possible and is certainly more rewarding in many ways. You will likely engage in both exploitation and patronage on your way to the top, but centering your strategy around gaining fan support vs. signing your rights over for exploitation is an easy choice in the beginning. Remember, you can always “sell out” later if the deal makes sense. It depends on the current value of your music and the future valuation based on market conditions and other factors, so it’s best to grow that value as much as you can before making a deal. More on that in Part 7.

The best way to build value around your music (and attract a business team so you can focus on the music) is to grow and monetize your fan base. We’re going to go over the foundation of building fans and value in the modern music business: fan relationship management and the fan lifecycle.

Fan Relationship Management

It’s useful to think of your fan base as a series of concentric circles:

Inner Circle – These people are your friends and family. Some but not all of them are huge fans of your band. Regardless, they’ll support you along the way. They’ll go to shows, contribute to crowdfunding campaigns, and generally get really excited when they see you gaining more exposure and career success. Some musicians have huge inner circles, some don’t have anyone. At the beginning, the scale of your musician business will depend on how much support you get from your inner circle.

Superfans – The next most important group of people are your Superfans. These are the people who love your music and can’t wait to hear the new song. They listen to your music, go to shows, and buy merch. They like and comment on your band’s Facebook posts. They send you tweets. At the beginning, you should get to know each superfan on a first and last name basis. Keep a spreadsheet list of them and their contact info. Respond to their messages. Send them links to exclusive stuff, or mail them a special gift. To use a technology analogy, these are your “early adopters” and “brand evangelists”. They will support crowdfunding and invest in the band early on, they are critical for financing your small business. Many of them will do more to generate fans of your music than any marketing you can pull off. They like your music for all the right reasons. Do something nice for your superfans right now, and watch the support you get back the next time you ask for it!

Fans – While your Superfans are critical to building your business and your buzz, most of your revenue will come from the general category of ‘Fans’. In the context of a music career, I define a Fan as anyone who has ever spent money on your band. The only exception I make is for Fans that have bought admission to your shows. There are just too many people that are there for other acts, were going to be there anyway, or are only there as a social obligation. I don’t classify anyone that walks through the door as a Fan until they walk through the door of two separate gigs. Of course, they don’t have to attend a live show as long as they support the band some other way online. If a Fan has never spent a dime but consistently listens to a shares an artist’s music, they easily qualify. They may not generate revenue directly, but they may share your music with a new Fan who will.

If you can, you should also try to keep track of all your fans’ contact info in a spreadsheet (particularly city/state or ZIP, email and twitter handle) so you can send geographically targeted promotions. Even if you don’t have contact info, keeping a list of names of people who are willing to spend money on your music is a no-brainer. This is where nearly every small business does when it wants to grow — identify current customers and set a goal to expand the list.

Fans are the most valuable segment as your business scales up — you can actually assign each new fan a dollar value. Simply divide your last year’s total revenue by the current number of fans on your list.

As an artist, this idea may seem uncomfortable to you, but you need to get over that. As a business owner, knowing the dollar value of each fan is a powerful motivator to earn fans one by one. It will drive you to make the extra effort needed to build a fan base instead of the “if I write great music, I will be discovered” passive mindset that results in career failure for most musicians. And isn’t it much more palatable to set goals to try and gain fans, rather than following some abstract profit motive? After all, most musicians would rather be heard than paid.

At the end of the day, it’s about motivating yourself to make money because it allows you to make more and better music.

Fan Lifecycle

The concept of a “user” lifecycle comes from the tech startup world, where value is often measured not in revenue but in user growth.

Now more than ever, musicians should think of fans as users of a service rather than consumers of a product. Treating fans like consumers is the way of copyright exploitation, treating fans like users is the way of patronage.

So, what is the fan/user lifecycle? Many varying models exist, but the general idea is the same: The relationship between fan and musician — just like all relationships — has a beginning, a middle and an end. The fan lifecycle is a way to understand how a fan is attracted in the beginning, how that fan “falls in love” with the music and helps support it, and what if anything causes that fan to stop wanting to be a fan.

The beginning of the story is the most important part, because if your service is useful — particularly in music — you’re going to make a fan for life. It’s the value of a new fan we talked about in the last section. If your average fan spends $25/year on your music, and is around for 10 years, that’s $250 in value just for knocking someone’s socks off at a single show. And if that person tells 10 friends, you could be looking at $2500. This is why artists will tell you that giving your all when performing for a room of three people is still worth it — you never know if your next superfan is in the audience.

We will focus on the beginning and middle of the relationship because the end is usually out of the artist’s control. Times change, tastes change, bands break up, and even then your fans will remain loyal, if only to the part of your catalog they fell in love with.

If you zoom in on the beginning of the fan lifecycle, you’ll see a marketing funnel. Google “marketing funnel” and you’ll find thousands of diagrams like the one included here from Social Fresh. To matter how you slice it, the marketing funnel always breaks down into the same four basic sequential steps:

• Awareness – In music, this is when the fan hears about your band from a friend, website, streaming service… you name it. Don’t confuse “awareness” with “discovery”, that comes later. It may take several moments of awareness before a potential fan takes the next step and listens to your music.
• Education – Fans needs to be educated about your music, and the best way to do that is to find some place to hear it. Sure, a fan might look for a video, a website or a review before deciding to listen, but the next step always begins with music. This is why you want access to your music to be free.
• Engagement – When a fan hears your music and likes it, they will start to become engaged. In music, this means song plays. Fans don’t generally listen to one song and then add you on all their social networks. There is a phase of “falling in love” with the music during which time you have the best shot at making a fan for life, if you can manage to get them to the next step.
• Action – Action is where the value is. It signifies you have made a fan. The action can be joining an email list, attending a show, liking your band on Facebook, subscribing to your YouTube channel, etc. They key is that the action has value, whether in a real dollar amount, or in the expected value of future purchases. For example, collecting a fan’s email address may not directly generate revenue, but if that gives you the opportunity to put an action in front of them, they may take it and generate real money for your act.

Once you’ve got fans taking actions that create value, patronage starts to pay off.

The next step in the fan lifecycle — the “middle”, so to speak — is a matter of attention and retention.

Before the post-scarcity music economy, much of a fan’s value was anchored on the album. You spent a year or three composing, rehearsing and perfecting an album’s worth of material. It cost a lot of money to record, manufacture and distribute. The stakes were high with every LP.

The album release model still makes a lot of sense for a lot of reasons, but it’s being augmented and for some artists replaced by a steady chain of single releases. For example, the band Chvrches released singles every few months for a year and a half leading up to their debut album release. They landed on many Top Albums of 2013 list and went from playing 200-seaters to 2000-seaters in no time. The music was fantastic, but so was the strategy: build buzz and anticipation and maintain it as long as possible. During the buzz buildup, the band acquired new business team members, signed to an indie label, and orchestrated licensing deals among other smart business moves. When they singed with Virgin records to put out their debut, they had already done as much as possible to build value around their music, and their deal was more favorable because of it.

Getting the fan is only half the battle. After that initial Awareness > Education > Engagement > Action cycle, maintaining the fan relationship becomes a repeating loop of Engagement > Action. Social media plays a huge part in this cycle. To feed this cycle, you will find yourself creating lots of music and lots of media to give it context — artwork, photographs, blog posts, videos, etc.

In an always-connected world of seemingly infinite competition for attention, you can start to see why making a fan is so valuable. It’s an incredible feat just to get someone to join the tribe you’re creating through your music. From a business perspective, your financial success depends on how many fans you can make, and how much you can engage them and get them to take actions that generate value for you.

Finally, consider that eventually fans move on. In the tech world is is called “churn rate” — the percentage of users that abandon a service over the course of a year. This data point balances out your user growth to give you a clearer picture of how effectively you’re creating value for your fans.

In music, it’s not so black-and-white. Fans are often fans for life, but fanship follows an arc of engagement. After you make a fan, they may be engaged and active for weeks, months, years or even decades. Some fan lifecycles — Grateful Dead fans for example — only stop when the music dies. Others are prematurely ended when a band breaks up. Practically speaking, most fan lifecycles never abruptly end, but rather trail off as the fan’s tastes and circumstances change over time.

Artists shouldn’t spend much time worrying about losing fans unless it’s happening rapidly, which might indicate you’re doing something to alienate them (for example, suing them for millions of dollars).

Recap

The concepts of fan relationship management and fan lifecyles are not rocket science. They’re kind of obvious. The thing is, most musicians don’t think about their fans in this business context.

There are many other factors to consider when thinking about fans — of particular concern is understanding how to engage with your audience. What are the channels through which they want to communicate? What are the demographics of your target markets? What else do they like, and how can you get in on it? What do they want from me to stay engaged? The concepts outlined above will help prime you to think more deeply about how to engage your audience, and what kind of actions they’re likely to take to generate value. Ultimately, finding out what works and what doesn’t is a process of trial and error, making it more important that you actively try to engage your fan base as much as possible.

Part 6: Goals is coming up next, and if you’ve ever read anything slightly motivational, you’ll know goals are a big part of success. You can’t achieve what you don’t set out to do unless by accident. This sets us up for part 7: Deals, where we’ll go over how to network with the people you need to know to achieve your goals, and how to make deals to do business together. Finally, we’ll talk about coaching in part 8 and show you how to get the support you need to put everything you’ve learned in this series to work.

Read Part 6 now!