David Dufresne, Bandzoogle CEO, visited Nashville last week to participate in the Americana Music event but found time to visit the NEKST conference room where we engaged in a spirited discussion about his views on the new music business and what it means for artist careers.
Bandzoogle is celebrating its 10th anniversary this year with a redesigned website and renewed commitment to empowering musicians by offering them a platform with all the tools necessary to build their website and promote their talents online.
Dufresne joined the company about four years ago and is based in Montreal. Previously he worked as a venture capitalist placing bets on software, web and video game startups. He is obsessive about music and plays soccer and hockey.
Dufresne points to the artist/fan relationship as a fundamental building block of the new artist economy and how it relates with streaming revenue, fan communication channels, the fight for attention and the need to market an experience.
NEKST: Bandzoogle seems like a swiss army knife loaded with tools for musicians?
David Dufresne: I used to like the swiss army knife analogy, but then I went camping and tried to use one and found out that everything in it was a tiny scaled down version of what it should be. So I prefer to describe Bandzoogle as an all-in-one, best-of-breed solution. With a relatively small team we compete with the bigger names when it comes to creating a web site with media players, advance calendars, a mailing list tool plus providing direct-to-fan (dtf) digital and physical commerce. It’s robust and perfect for people that want something easy to use. You can sell any kind digital file— music, books, sheet music, guitar tabs, instructional videos and/or tour documentaries. We even have electronic artists selling loops for remixes. Each artist’s fans can become a buyer of more than just an MP3, a t-shirt or a concert ticket. Bandzoogle offers all these tools in one place, accessible with one user name and password.
NEKST: How do you see music industry dynamics for 2014 and beyond?
David Dufresne: The music industry has become an attention economy. Tools for getting your music out there, recording, publishing and building your website have become so affordable that there is no real barrier to entry, but that means that musicians and artists are competing against each other plus entertainment like sports and TV. Getting lots of fans to pay attention has become more difficult. So it is becoming an industry where the focus has shifted away from quantity to refocus on the quality of those artist/fan interactions. Social media and mailing lists are making it easier than ever to have a conversation with your fans. The one missing link is we haven’t been able to monetize that rich interaction happening between the artist and maybe a few hundred or couple of thousand fans. So the next phase of the music industry is to find a way to introduce that next layer of revenue into the value chain.
NEKST: How has the process changed?
David Dufresne: In the new economy artists don’t need as many middleman to first reach and then interact with a fan. The downside is you are probably reaching less fans today because there is so much new music and we still only have two ears and a maximum of 24 hours a day to listen. Ultimately the quality of the artist/fan relationship becomes extremely important because that is what you are going to monetize.
NEKST: Is developing an email list still essential?
David Dufresne: Most importantly artists need to write and perform amazing music that engages fans on an emotional level. Then your job is to keep in touch and communicate with them. So yes, the mailing list is still the most effective way to do that. The act of a fan giving you their email address and allowing you to invade their inbox is the ultimate in permission marketing. No one gets 100% of their mailing list to pay attention, but if you get 40% or 50%, those are the fans that truly care about you. Trying to get a million views on YouTube or hundreds of thousands of “Likes” doesn’t really mean anything. They haven’t given you permission to market to them. Your fans on FaceBook aren’t your fans, they are Facebook’s users and you don’t own the data. But you do own your mailing list. A manager friend of mine considers her artist’s mailing list to be like a retirement plan. And it’s true. You might have those fans on that list for a long time.
NEKST: Can we monetize streaming sufficiently to support an industry?
David Dufresne: There’s a light at the end of the tunnel, but it might not be what people expect. The money earned from the marketing of physical products like CDs, is never coming back. That economy was built upon huge market inefficiencies that don’t exist anymore. If I heard your song on the radio and wanted it, I had to get my butt out of my chair and go to the mall. Now I just click and can enjoy it instantly either for free or almost free. There was also market inefficiency around the actual price not being related to consumption. For example, I bought 2 CDs. One I listened to only twice, but the other I listened to thousands of times, yet I paid the same price for both discs. With streaming technology that model no longer makes sense. Streaming might not pay a lot per listen, but if fans enjoy your song for the next 50 years you will get paid over all that time. But of course so much music is available, making it extra difficult to get that attention. I hope that five years from now everyone in the US and Canada will have a $10 music subscription so every songwriter and performer will get that money to trickle down to them. But I don’t think it’s going to happen. So what is the light at the end of that tunnel? It will be the challenge to transform enjoyment into a monetizable experience. The tollbooths have moved further down the highway and we need to make them bigger because not as many people travel that far down the road.
NEKST: Do those tollbooths represent music or something else of value?
David Dufresne: People never paid for music, they purchased experiences. They bought CDs for the experience of listening in their car or house and maybe to collect. They are still willing to pay for musical experiences so I don’t think it is true that music has been devalued. It still has value when put in a context where an experience gets created. That’s why a lot of music festivals are doing so well. You probably like 1,000 artists, but maybe you really really love only 10 and would crowd fund their next record or pay extra if they offered to play in your living room? Why? Because the experiences you get from those artists have value to you. So the challenge is to properly identify those uber-fans and engage them. Turn them into more than just buyers, help them become patrons or partners. We need to do a better job as an industry of growing the pie.
NEKST: How big is Bandzoogle?
David Dufresne: Bandzoogle turns 10 this year and we have 15 full-time people across Canada, the U.S., U.K. and Spain plus a few part timers. We also hire consultants for specific things when needed. We have over 22,000 paying users in our platform, meaning 22,000 websites. We are a software platform so once our software runs, having 1,000 or 22,000 doesn’t change our costs much. The most complex task in our company is customer support. We have a team of four full-time and four part-time people. We’ve worked hard to streamline that process. We’ve also kept our overhead low because we are self-funded. We have to grow at our own pace using our own profits and that has made us prudent when it comes to hiring and investing in different resources. The upside is we are extremely reactive. When we see an opportunity or if our members request a new feature it usually only takes a week or two for us to build and deliver it. We don’t have R&D we just listen to our customers.
NEKST: Explain the Bandzoogle revenue model?
David Dufresne: It’s a flat fee with three plans at $10, $15 and $20/mo. For example, the Lite plan at $10/mo. allows you to build 10 pages and upload a certain number of tracks. It is a good way to get started and quickly develop a web site. As you move up you get access to more features. Our Pro Plan at $20/mo. offers everything plus advanced commerce features, more detailed data reporting and no limits on tracks, hosting or the number of fans on your mailing list. We don’t take any cut of your sales either. So if you sell music, CDs or merch through your web site the revenue is 100% yours. Currently about 40% of our members use the Pro Plan, 35% use Standard and about 25% are enrolled in the Lite plan.
NEKST: What do you see in Bandzoogle’s future?
David Dufresne: A growing number of artists that used to be on labels now must manage their web sites themselves, so the marketplace is moving in our direction. You don’t have to be technical to use Bandzoogle which makes us a perfect solution. To keep growing we have been working with organizations like ASCAP and we’re trying to work with SESAC and BMI as well. We work with SOCAN in Canada. We are working with people at the Folk Alliance, Americana Music, tons of songwriter associations and technology peers like TuneCore. We are also making our platform multi-lingual so over the next few years we can attract musicians in Latin America and Europe. We also want to create a new platform that will reuse our technology, but cater to actors, comedians, authors, athletes and maybe politicians. This morning I saw a high school quarterback sign up for Bandzoogle. He’s probably trying to get a college scholarship so he built a website with video reels of his exploits and it makes perfect sense. Likewise, everyone in an elected position has to get supporters, post their stance on issues, build mailing lists and reach out through social media as well. Music is always going to be our focus, but these are additional ways for us to grow the business.