Evolving Fandom: Monetizing Engagement in the Digital Age

There's a very important difference between what fandom used to mean pre-digital era and what fandom means today. This idea of super fandom today is qualified not necessarily by its level of income transaction. It's about engagement levels. Not every super fan, you know, intends to be the commercial avenue for which an artist makes all their money. But the reality is it does represent the group of people who are like deepest into your funnel that have the potential to spend.

Josh Greenberg is the first guest of Had On Twice. And there's a reason for that. Today we're going to talk about super fans or rather maybe not super fans, recurring revenue. How does that differ? Josh is one of the best strategic minds in the music industry. And this is a long episode, really deep diving into this topic. Thank you for being on, Josh. Guys, welcome to the Sound Connections podcast. Today we have a mentor for me in the studio, Josh Greenberg. Welcome. Thanks, man. Thanks for having me. Back. Having me back.

Yeah, back. You were the first guest on the podcast. And you asked me, it's because if I don't have any more people to call. And I definitely do. So you're here because you bring consistent levels of value. And we were chatting back and forth about a concept that we're going to talk about today, which I think is really interesting. And I hope if I can give the context is I talk a lot with companies and I talk a lot of companies about super fans as anyone who does business development. But you had a really interesting commentary on that word.

Kim, before we begin the episode, like for real, could you very briefly tell me about that commentary? And then we'll get back to who you are for the listeners who don't know you. I think I guess that what we were just talking about and what became the reason why we came back together on this was there's a very important difference between what fandom used to mean pre-digital era and what fandom means today. Right. And pretty much the definition of becoming a fan pre-digital implied you discovered something, you were interested in it and you went and purchased a CD or you went and purchased a record.

Or a cassette tape or something and then you purchased a ticket and then after those two purchases, you sort of defined yourself as maybe I'm a fan. I'm going to continue getting into this and the word super fandom we didn't really use before. It was more like you would go from being a fan to in a fan club or in something else like that. And what that pretty much meant was just retained support, right? Like ongoing support behind what you're doing. And this idea of super fandom today is qualified, not necessarily by its level of income transaction.

You know, it's not it's not a revenue related consideration. It's about engagement levels. And so in certain cases that the idea of super fandom, not every super fan, you know, intends to be the commercial avenue for which an artist makes all their money. But the reality is it does represent the group of people who are like deepest into your funnel that have the potential to spend. But that doesn't mean that everybody wants to be a super fan. Some people just want to be fans. Some people just want to be, you know, casual consumers.

Some people want to go to the occasional show and things like that and not necessarily be involved in every single thing that you're doing. So the problem that I'm sort of seeing in the market right now in particular is it's like you go from attracting somebody, getting them interested in what you're doing, into engaging them into socials and whatever. And then the leap is from there to super fandom. Like there's people are missing a lot of the steps in between, which is like, how do I get somebody across the line on a first purchase? How do I get somebody across the line to try and engage twice or a third time, you know, some sort of like regular support level before I disqualify them because they're not willing to love every single thing that I post on social media and buy every product that I have and travel everywhere in the world.

I go to play a show, you know, as my biggest fan, like there's a big there's a big gap between some of that. I think that's really interesting. Like and to take it, I'm a funny person when it comes to music because I like music, but and I have the artists I'm fans of, but I've never really spent money on them. Yeah. Which is funny because like you would assume that I would, right? You know, I have I have a poor taste in music, to be honest, like, but my two favorite, I wouldn't say poor, but it's a very mainstream. Like my two favorite artists that I love right now that I've left like five years consistently is Coldplay and Estreles, which is a small Norwegian artist.

And I have what my five to 10 year relationship with those artists is I've bought a concert ticket to each of those once. Right. And so that's my relationship. And at a price point of like a Coldplay show, probably 150 euros or something like that, 125 euro. I think actually I got the cheapest tickets. So I almost couldn't see something. It was like 55. So 55 amortized over five years is an average, an average investment in that artist of 11 euros a year. You know, like, are they going to now Coldplay at their scale?

If they can get 100,000 fans spending 11 euros a year, you could do the math. That starts to add up pretty nice. But, you know, that's not the reality for every artist in the world. And even Astrid S, you know, her international brand is okay, but primarily it's Norwegian, you know, and getting 100,000 Norwegians, you know, to spend 11 euro equivalent on an annual basis probably is a very hard proposition. Yeah, and it was, you know, the ticket was 28 euros and I'm pretty sure she didn't hit break even on that tour.

Yeah. Like, so what is the actual value for the artist? Other than, you know, being present and touring, like that's important, engaging, but like the actual monetary value, the margins on my investment, she probably didn't see it all. Well, that and also, you know, I'm sure we'll dive into this too, but merchandising, not as in merchandise, but the idea of merchandising a shelf of things that have financial offers that are available to buy into is a strategy that like music doesn't really take in a lot of times.

The idea of like, here's a portfolio of, you know, you go into a department store and they have a front rack that has a couple mannequins with some looks on it and a bunch of products that fit together that are all priced and positioned and, you know, put in front of you in a way that it's like, oh, here's how you can put together, you know, what you want. And, and if we take that out of just something to wear on your body and we talk about like the whole portfolio of music, you know, a lot of times what we offer people to buy is a stream, a concert ticket and a t-shirt.

Like that's, that's about it. You know, it gets pretty, it gets pretty shallow once you go past that level of like a merchandised range of, of services that are offered. Some people are playing with NFTs, some people are, you know, playing with, uh, you know, different subscriptions or service propositions. But it's, it's still a pretty narrow lens of like what I can, what I offer my fans, uh, you know, to, to participate in my, you know, my business or my universe. Before we go too deep into the rabbit hole, which I'm looking very much forward to, I want to introduce the audience to you.

And then the concept is there, there's two people in my life that made a pivotal shift into the industry to some sort. One was Uldry, I was bid on, he made me, he made me, it made me come into the creative music industry and you made me come into the tech side of it. Uh, so I appreciate that so much, but you are also, in my opinion, one of the foremost thinkers in this space. So enough compliments, Josh, who are you and what do you do? That's a, that's a much bigger question. Uh, who, who am I? Uh, well, I guess, you know, the, the definitions of me are probably a musician, right?

That's the, the core of all of this. So, uh, like most other people in our industry, uh, failed, uh, in the, in the musical category, when it comes to the definitions that everybody else gives to what success looks like. Um, but for myself, actually my choice to move into the business side of music was a conscious one because I was really struggling with the commercial exploitation requirements of my art and the need to like make commercial product. Uh, I don't necessarily write music that way. And so I actually found that, uh, how could I make money from a different channel, uh, in order to continue to make music without having to compromise my art for commerce.

Uh, and so I was actually happy to not distribute my art widely, uh, and continue making it with pride and, and sort of intention and then go work in another area where I could stay close to music. I could, you know, be involved in it and utilize the skills I had learned, uh, but not necessarily have to exploit my own music as, as a core product of that. And I know that does sound like giving up. And in certain cases, I look back at it and go, yeah, it would be nice to have, you know, toured for a little bit longer and, you know, done some more studio work and stuff like that. But I had that fill, uh, and now I've got the studio at home and it's, you know, it's all fine and good, but I think, you know, I, uh, I made a choice in, you know, kind of around the time of, of Napster and piracy.

And I was studying to be a recording engineer and, you know, I, I had Rick Rubin in my sights as far as like aspirations and what I was going to do with my life. Uh, I used to, I used to follow him around tower records on release day, which used to be Tuesdays in the U S. Um, and yeah, I used to follow him around at midnight on, on releases where he would walk around and shop for new records. And I would just like see what he picked up and then pick that up too. Are you serious? That is so cool. Um, at the tower records in Marina Del Rey, he would come down from Malibu, uh, from Shangri-La and, uh, you know, go, go shopping there.

Um, but, uh, but yeah, I had aspirations to do all of that. And then I think because of piracy and because of just what was happening in the, in the music world at the time and my own music, I sort of just stepped back and said like, ah, you know, maybe I should rethink my approach to the entire, you know, landscape and what role I want to play in all of this. Um, and, and then I ended up randomly meeting the guys at Red Bull and that started a 15 year journey, uh, into figuring out what music meant as a part of a brand ecosystem and, you know, became one of the most celebrated sort of brands, uh, to play in music, you know, overall.

And, and that was a real privilege to be a part of all of that growth, uh, at the time. But yeah, I started there in, in 01 and then went there until 15. And then I went to, I went more into core music and went to Spotify for a couple of years. Uh, and then in 2018, uh, I broke out and, uh, and started my own firm, um, kind of working at, you know, as a more traditional management consultant, but specifically for the music industry. So I work with people on long-term strategy. I work with people on, you know, uh, long-term planning, uh, sort of transformational growth, uh, innovation strategies, things like that, the stuff that somebody might go and hire, you know, McKinsey or Bain or Deloitte to come in and do at a, at a major company.

Uh, I come in and be, be that partner with them, but with a very clear musical lens. Cause I've been working in it for, you know, 20 plus years. Hmm. And if people want to have a longer entry into that, you know, you go back to, I think the, the first guest episodes, the second episode in, in total, go and listen to that. Um, but, but Josh, we are lucky to have you here and you bring a lot of, um, weight to what you say. I, I was at a, um, at a conference where you did a presentation about, um, monetization of an artist career, revenue streams.

Yep. And what was really funny about that, uh, that session was, this was with a lot of very cool people there and you asked the question, so how can we make money in new ways? It, it was a resounding silence for 15 minutes almost like there was a lot of suggestions, but like, no, there wasn't really, which really struck me as like, wow, I'm, I'm sitting here. I'm pretty, I'm just a young, dumb guy that's had the opportunity to be here, but I'm sitting like with amazing people. And this question comes, which seems essential and we're kind of lost.

Yeah. So, um, let's try to break that down today. Not from, because you know everything, but, but I do think you think a lot about it and you come from a vantage point of perspective. And that was, as a little bit of an asshole, um, that was, that's part, that was part of the exercise, right? That was part of the intention of the exercise was to excavate that silence as a proof of concept, right? As, as some of the smartest thinkers, uh, and this isn't a criticism of, you know, any individual person, but you know, some of the smartest thinkers I think about in music, you know, they're not, they're not thinking about diversification of revenue.

They're thinking about fixing existing revenue streams. And, you know, I've done a, I'm not an economist. I'm not, you know, will page on that side of things. I'm just, you know, a little bit more of a strategist when it comes to like how to play inside this space. And I work with a lot of artists and I work with a lot of labels and management companies and, you know, bigger music organizations and tech companies and everything internationally. And, you know, most everybody's still trying to go through the same channels to, to figure this out of like, okay, Royal royalty based revenues, you know, uh, on, on both sides of the equation, obviously master side or, or copyright side, you know, uh, live revenues, sync revenues, brand partnerships, merchandising, like that tends to be the core of where everybody's head goes.

And so we did an exercise, which was sort of like a, a scale versus revenue. I think I did like an X, Y matrix or whatever. And we were just trying to like excavate ideas from the group of people of like, okay, let's, let's put the obvious ones up there. And now let's think about, you know, the, what else there is. And oftentimes with artists, with management teams, with a lot of different people, I, I hear people just stumble on like, you know, where else, where else can you make money to contribute to a business model?

Uh, and so that was, that was sort of the, the catalyst of what became almost like 18 months of different, you know, keynotes and conversations and things just talking about like, okay, well, how do we think about things? If we're not thinking about a music industry career, how would we think about things? If we were building a small business, if you have to go in to a bank and ask for a loan for, you know, for a business or something, uh, you have to come with a business plan that says, this is how I'm going to spend.

And this is how I'm going to generate revenue to recoup that spend. So it makes a viable business that you as bank would justify giving me a loan for to invest in. Yeah. It's, it's all, I would guess the number is 0.001% of artists walk into a record label deal with a business plan on. Here's how I intend to take your investment. Here's how I intend to utilize that. Here's how I intend to make money. Uh, here's the diversification of where, where revenue is going to come from.

And here's how I'm going to set up a, you know, a financial structure for myself that makes this like a viable business long-term. Uh, that takes, that takes some maturity to it for sure. But, you know, it also might be easier if we had a few other products that were easy for people to just, you know, opt into, to be able to sell or to, to be able to add to their portfolio, uh, in order to do that. So that, that might be the long-winded version, but this is, this is sort of where my passion lies. Cause I get quite frustrated when people are like, well, I can't make money from music.

I was like, well, you can't make money from the same, you know, structures that everybody else is trying to make the same, not that much revenue from, right. There's, there's splits of this. And obviously streaming does work for a small group of people at scale, but you know, the revenue from streaming alone cannot make up a business plan. And, and live is also proving to continue post COVID to be, you know, challenging as far as making money. Like usually the way I describe, you know, live to people right now is it's like, you can pay your daily wages for yourself and your staff and your team and you kick the can down the road.

So when you come off the end of tour, you're probably at the same place you started. You know, there, there are very few artists that come off the back of tour and go, man, I'm flush with cash. I don't have to work for six months because I've got salary to pay myself on all of this stuff. It's more like, no, I was able to pay myself for the last three months while I was out on the road and now I'm back. And now I got to figure out where money comes from again. So I think like those are not necessarily, you know, perpetually sustainable business models and the, in the state of the music, you know, world that we're in right now. So I'm just passionate and trying to find, you know, alternative ways where, you know, the art that I love, uh, and, and the, the artists that I think, you know, do deserve to work hard and cut through some of that can figure out how to, you know, mobilize the people who are willing to invest in them into products that are worthy of investment.

Yeah. This is really interesting. Uh, I'm, I'm very curious to hear your thoughts on what you believe could be new revenue models. Uh, I'm going to bring my own things to the table, which is very basic, but that's sort of what, and that's why I'm talking with you because I'm generally interested. Like, but, but I, I'm, I'm very curious about sort of what happens in the East and how they sort of monetize fandom in a different way. And I would assume that at least some of those core concepts can be used in a, in a different context as well, uh, probably not translated directly.

Uh, and I hope you're going to speak about that because I assume there's something in there, but, but yeah, I was going to say, maybe we should cover, cover off on that before we, before we dive into the sort of new monetization for the people who don't understand the East structure, maybe we should talk about that first. Thank you. Right. Um, please, please. So, so in, you know, particularly in Korea and Japan, um, it's interesting because the, the record label construct in Korea really doesn't exist, right? Uh, most of the rights are held by agencies that sit centrally that are sort of management, brand agency, all of the above.

And they are individual rights holders that then license their rights out to different use cases, whether it's image and likeness rights or whatever. And they sign contracts that are sort of holistic 360 for all purposes with a client when they bring them in. And a lot of times, uh, for a K-pop group, uh, in order to come through the system, which we, we don't have a ton of individuals who start out as K-pop icons by themselves. They usually are a part of a group, then they break off and maybe do something on their own.

But, you know, most of the artists that we celebrate in Korea worldwide are parts of bigger configurations and groups. And the artists that go into the K-pop ecosystem go through a trainee program, which is basically, uh, it's somewhere between military training and like, you know, education in order to get the skills, get the tools. So that's vocal coaching, choreography, you know, fashion, aesthetics, media relations, all of these things. They go through all of these skills in order to qualify that they're somebody worthy of being in a new packaged group.

And the costs that are associated with that can range into the hundred to $300,000 range. Right. So, so these artists are taking on a huge amount of debt in order to take a gamble. So they are paying for that. They're paying for that or, or they're getting money from different services or different solutions, you know, to try and raise money to, to participate in that thing. And then, you know, if they make it out the other end of that, and they actually do get assigned to a new group, right? Normally it's not like four friends just coming together and create a band in their garage.

It's like four trainees that went through the trainee program are like, you guys would fit well together. You guys go write songs, you know, with this group of people get into the studio, record some stuff. And then they get kind of packaged into something. But on the back end of that process, the fans are all totally transparent to what the artists have gone through to get to this point. Right. So they know that they've spent a hundred thousand, $200,000 or whatever investing and gaining all of this stuff. And so if, if we count maybe five, 10 total K-pop groups really cut through in a year, and there's a bunch that do not, right?

They don't make it. The people that do make it through, the fans really feel like a, uh, an obligation to support those artists, to help them recoup all of the investment that they made to get to this point. Right. They're like, they're very grateful and they're very thankful for the fact that they're bringing their art to them. And it's very transparent that they've, you know, they've spent this money, so they need to get them, you know, back to whole. And even in certain cases, like artists will celebrate with their fans once they've repaid their debt, you know, uh, for some of this stuff.

So it's like, there's a very clear role in that. And the thing is, is it's not like Western artists don't go through the same process, right? We invest, we invest in, you know, my daughters started guitar lessons when she was seven years old. Like we're already starting to invest in that. She's got, she's got gear in a room. She's got other stuff. My son's got, you know, drums, the, the kids, Santa Claus brought them an electric drum kit. Maybe Papa plays it a little bit more than they do, but you know, whatever. Um, but like, you know, we're investing in giving them the exposure to this already at age five and seven.

They're going to continue going through this stuff if they find the passion in it and want to. And by the end of, you know, by their 20 years old, we'll probably have spent 50 grand, 60 grand, you know, between lessons and skills if they decide to pursue this in certain ways. Uh, but we don't tell our fans that number. And, you know, there's no responsibility in, in our fans in the West to like help us recoup that money, right? Make it back or, or whatever, uh, you know, in, in some of that, that way. And, and I would say even in certain cases you get education access or grants or things like that, uh, for free and some of the, you know, the, the Western European countries.

So it's, uh, you know, there, there's a very different relationship with what role money plays in fandom in the East versus the West. And so when it comes to what you were talking about of the idea of productization, a lot of times they will create products to justify reasons to mobilize those fans who are willing to support financially into purchasing something, uh, because that allows for the ability to contribute to those goals. And then once they surpass those goals, then obviously, you know, the, it's more about celebrating your icons and helping them lift up so that, that culture doesn't necessarily go away.

It's not like, oh, you've recouped your money. Okay. That's the case. But, uh, you know, it, it continues going from there. Josh, I have a question and I'm going to divert a tiny bit from the topic now because you really said something that intrigued me and that is just plainly, uh, they're transparent. The fans know what went into it. Uh, we're not transparent. Uh, people don't know what went into it. And one of the, the core, um, problems I struggle with and how to sort of address it over a long career is the perceived value of music.

Um, it, my question is, because now you sort of come into that point, do you think the lack of transparency plays into the perceived value of music from a consumer standpoint? That's, that's a heavy, that's a big question. Um, there's parts of it. Yes. And parts of it. No. Right. Because I think that if you're talking about the value of music, it depends on what the, if you're talking about the commercial value of music or the culture, or the cultural value of music.

No, I'm not talking about cultural, I'm only talking commercial. Yeah. I'm more specific there. So, so in the commercial value of music, a lot of times that's defined by the market, right? That's not necessarily defined by the artist. I don't think there are many artists that go, you know what? I know albums sell for $20, but I'm going to sell mine for 200 because I think that's what it's worth. Like that, that doesn't necessarily, that doesn't follow economics, you know, as a, as a, you know, philosophy, like as a course of study, like economics is based on supply and demand and, and sort of, if the demand is there at a certain price point and you price yours as a premium, there has to be a reason why you differentiate as, as a premium offer, you know, in, in that proposition.

So in a lot of cases, the value of music is defined by what, you know, tower records at the time, or, you know, HMV or whatever was willing to sell, uh, sell an album for in the past. And now, you know, the, uh, the value of music is defined by the amount of total revenue that's coming into a streaming service between ads and, uh, ads and subscriber fees divided by the total amount of consumption, right? So that definition is a value, a commercial value of music is being defined by that as, as a proposition, not necessarily by the artist saying what it's worth.

Obviously James Blake's trying something different. Well, I'm sure we'll get into that, you know, as, as what values worth later, but you know, on, on the live side, it's the same thing, right? Like, uh, okay, what's a ticket worth? How much can we flutter this up or down? You know, we've seen slight changes, but realistically, like, you know, in the late 1980s, early 1990s, there were some shows that I was paying close to a hundred dollars for a ticket for, and I'm still paying about the same price with, with inflation and everything else associated. So like a hundred, a hundred dollar ticket in 1990 should probably be worth a $350 ticket today.

But like consumer liquidity is not built around that. You know, the, there's a lot of different things fighting for entertainment value. Obviously we don't, we don't want to say music is worth way more than films or cinema or something like that, because then people choose self films and cinema as a cheaper entertainment alternative instead of music, you know, so that there's a, there's a balance in that value. But I think a lot of that's defined by the market, not necessarily by the artists. So if you were to say, you know, or be more transparent about what the, what the costs were associated with your, your music itself, the product of your music and what you make and, oh, this is what I've invested into getting to a place where I can make this.

I don't know if that changes the value of that asset, but if you're talking about the relationship between you and your audience specifically and how to transact value between you both, I do think that you can create a narrative to that, um, that, that does create value, but it, it's not necessarily, I think it's a very tricky balance between brand building and, you know, and sort of, uh, I don't want to, I want to say this gently, but like helplessness, right? Like, oh, I'm broke, you know, because I spent all my money to, to learn how to play music and now I'm making it for you.

Help me get less broke. You know, um, we, we have a bigger cultural shift to do on that, but I, I think that there's maybe a, a middle ground in that idea of like, you know, transparency, like you would in a, in a traditional business, you would probably calculate, you know, the cost of goods sold, right? You would say, okay, this is what it took to manufacture and make the goods. And, and then I would utilize that to, to create, you know, margin structures for myself. Uh, it costs me this much to make, make this product. And then I need to sell it at this amount so that I can cover overhead and everything else to create, you know, the difference between my gross and my net.

Uh, so, so that principle, if it was applied to the idea of like lifetime value in, in a career, here's what I invested to make the product, uh, of this thing. Here's what I need to make in order to create margin on that over my lifetime to justify, you know, that same calculation. How do I create a business model that ensures I'm contributing to that level to recoup the costs of goods sold, right? Like what, what did it take me to make it? So I think there's probably some more thinking to be done, uh, around calculating that, that principle or that idea for, for artists and, and how to introduce that more to fans in a way that's just not that I think I really like when artists say, you know, my music is worth paying for, uh, and, and I'm going to sell things to you, but you know, it's a, it's a matter of like being transparent of that, that point, I think then mobilizes the audience to say, you know what?

You're right. If I'm in your camp, it is worth paying for, and it's worth this much. And I agree. I will subscribe to that thing, but you may lose people in that journey. And then the question is, do you only want them to subscribe to this product? EG the, the James Blake vault situation or nothing, or is there something kind of to the first point we were talking about? Is there a gap between a stream at, you know, a fraction of a cent per stream and a $5 a month subscription fee? I would guess there are a few things in between there that could allow people to engage financially in a conversation and contribute to some of this.

I really like there's, um, I'm actually a little bit ashamed that I don't have the name offhand, but I was, I was reading, uh, and a few articles recently where an artist was like a total open book on their finances, right? They were just like, it's transparent. Like, here's, here's how much it costs me to do all this stuff. Here's what I'm making in touring revenue. Here's what's coming in and royalties and publishing and, you know, all the different channels, here's recoupable debts I have and, and all of this. And it was like a total open book. And I think that, that level of radical transparency, even artist to artist doesn't exist that much more or less, you know, artist to fan or artist to audience.

So, so the ideas of like, you know, exposing yourself a little bit and saying like, actually here is how little revenue some of these core elements make. So here is why I'm choosing to go into a subscription tier. I'm choosing to go into some services businesses or, you know, choosing to diversify my, you know, product offers, uh, because like this economic model isn't, it's not really a viable business for a lot, for a lot of people. It is for some totally, but not for everybody.

So there's one funny thing when I talk with you, uh, Josh, it's, it's positive, but it's also really annoying because every single time I talk to you, I have like three or five questions I want to ask you in a deliberation of how you think, uh, but I'm not because I do want to divert, but I'm not, we have a topic. Uh, so, so let's just quickly go back to the East, even though I'm, I'm really annoyed that I can't ask you all the questions I had, but let's go back to the East and let's stay two minutes there before we go into sort of the, let's call the more practical aspects of what we're talking about.

Uh, could you elaborate a bit? Okay. So there's the transparency, fans, uh, fan support, and, you know, want to be a part of that journey of recouping that. Um, but, but what, what is the actual, uh, existing, uh, practical solutions to monetizing that relationship that they do uniquely? Yeah. So, so I think, you know, there's the traditional sources, of course, right? It's primarily YouTube and, and streaming service stream. So if we're talking about K-pop or whatever, it's primarily melon, uh, you know, obviously the WeChat ecosystem and some of the other ByteDance environments, uh, in the East tend to have a little bit more infrastructure than, than Spotify, Apple and Amazon.

Amazon's actually quite big in Japan. Um, you know, and, and so those, those do represent a decent size or scale of, of audience there. But what happens is that their audiences will take, uh, like a due diligence, you know, to go on and repeatedly perform that video on YouTube or at Amazon or whatever it might be with high frequency in order to try and, you know, create compensation from that. And it's not to say that they're not listening every time they are.

So it's reinforcing their fandom by listening to the music. But part of the reason they're streaming so much is to create royalty performances, right? So it's like they're, they're even doing that as part of their conscious, you know, conscious thing. So I think it's so interesting when it, when we're going to talk about, you know, uh, like, you know, new royalty structures or whatever. And the idea of like how many total streams to a single song by an individual user count as part of your whole pro rata stack of royalties, like that's going to be a challenge if we're talking about the East, because if one person listens to one song, 2,500 times a month, uh, does the royalty calculation stop at 10 or at a hundred or, you know, or whatever, like the, the unique, you know, unique listens, listeners versus total listens.

Some of those structures are being, uh, fiddled with a little bit when we talk about some of the, you know, some of the centricity of, uh, artist centric, major centric, whatever we want to call it, or user centric models. There, there's a few different things that way. But so that's one of the first things is like just the core base level streaming propositions, their relationship to those, uh, tends to be a lot higher. They'll, they'll overperform on streaming something at YouTube or whatever. Then their management companies will create, uh, merchandising lines that are pretty robust and they think about them more like fashion brands think about fashion, right?

So they think about, uh, autumn, winter, summer, uh, spring, uh, collections of merchandise that come with things that are, you know, seasonally relevant, that are holiday relevant, that are repackaged items, you know, new colorways, constant innovation in merchandising, regardless of touring cycles or, uh, or album cycles, right? So it's like, you can almost participate in their brand as a fashion brand as much as you can participate as, uh, you know, a musical ecosystem.

Uh, so they're constantly bringing new innovation to the market there. The ways in which they're, because they're not controlled by mostly major label ecosystems, it does exist, right? They're, they're still there to help create global amplification and stuff, but, um, you know, they tend to think about their licensing structures with a bit more creativity. So, you know, they're handling micro licensing in a lot of cases themselves. They're doing, you know, uh, a lot of sync deals. They're, they're managing a lot of brand partnership opportunities. The, the sell through on some of that stuff, uh, is, is pretty heavy.

So this is obviously the, the core products, you know, of what's available. And then once you get beyond that, they have, you know, meet and greets are monetized in a way that we don't do. And that's not just before or after the show. That's Tuesday afternoon at the burger restaurant, you know, that, that kind of thing. They, they're, they're constantly repackaging service access. They're, they're bundling up the ability to get chat bot and AI versions of self, you know, personalized greetings and personalized messages that are paid for.

Ringtones are still, you know, people are still paying for ringtones. Uh, so, so they're, they're just thinking about like, you know, what are the things that my audience wants and needs to represent their fandom? Uh, how do I create products that service those needs or those interests? And then they're constantly repackaging and introducing those things. And when they think about the whole business, instead of just thinking about, oh, I'm only responsible for the master rights side, or I'm only responsible for the publishing side, or I'm only responsible for the touring side because they're a central agency that looks after 360, all interests of this whole thing.

Then they flight all these products together, like, you know, tech product releases, right? It's like, here's a feature, here's a feature, here's a new opportunity, here's a new thing, come and get it, come and get it. And so it's like the, the ability to continue offering opportunities for people to participate financially isn't like, oh, I'm only touring once every two years, or, oh, I only have a new full album that you can actually purchase something physical for every, you know, eight, eight to 12 months, like that they are constantly offering people opportunities to participate in their financial ecosystems.

Um, and I think we, you know, just in an evaluation of the West, we don't necessarily do the best job at allowing people to participate financially with us. We're six months onward, we're still pointing backwards to the record that we released as that's the thing you can purchase. If I haven't purchased that in the first three months, and I'm already a fan, is the likelihood that I'm going to purchase it in the next three months higher? Like, probably not. You probably need to offer me something else, right? To get into your system. And if you don't have a tour on, and you're not making merch because it's not touring, you get what I'm saying?

Like, it kind of gets into this interesting channel of, you know, what is there for somebody to buy. Oh, this is interesting. For the audience listening, uh, this is, this is one of the things that I'm most curious about right now, because I have called myself out multiple times on this podcast. And that is as a, uh, I'm not trying to jump in the bag way, but like, like as a white guy from a previous country, I, thank you for no doubt. No doubt. You, you and me both, buddy. I, I'm, I'm very conscious of this a lot. I, I struggle with the ignorance I have of these boxes I've created.

Like, elements of like, you know, uh, I, I thought until you said, like, talked about eight minutes ago that I had nailed the user-centric model and understood it. And then what you, you didn't say directly, but what you maybe implied is maybe if you apply the user-centric model to, to the East, that would maybe not be in favor of the artist. It might actually be not be beneficial. So the pro rata model, uh, might be good or not be good. And that contextualization is really, really important.

That's also why in the podcast, uh, we're now getting some amazing, uh, speakers from the East and from Africa. Awesome. Because this is what I'm seeing, seeing is happening. It's like this bubble I had, and I, I would assume, well, I can see my statistics. Most of these guys are, the listening to a podcast are from the West, uh, needs to understand what's happening over there. Uh, but I, but I do have, um, I do have a question that I do think I know the answer to, and we'll keep it really brief. They'll go into the practical stuff is, do you believe, and I think the answer is no, but do you believe you can just take the agency model of the East and put it in the West and it would work?

No. Explain to me why that wouldn't work. Well, I think, I mean, I think that is, uh, in big parts, the indie music, uh, industry, but I think, you know, the, the reality is, is that sort of rise against the major constructs, you know, in, in the, in the traditional industry and, um, on all sides, right on the live side of things, there's, there's two major players that control 80% of the world's, you know, activities. And then a few regional players that will, will do a bit more, but you know, between live nation and AEG, that's mostly controlled by them, right.

To, to play outside of the ticket master boundaries or something like that can be a very hard proposition for an artist at a certain scale. Um, the same, the same thing on the recorded side and the publishing side, right. To, to play outside the bounds of some of those, you know, historical ecosystems and scale your business, uh, can be quite challenging. And, and I think, you know, I've always looked at it actually from the top down as like, if I was going to start an agency model, I'm thinking more in the lens of Drake or Eminem or Kendrick or something like that, like, why is it that I still need to partner with a major label?

Like, you know, the, the reality is, is why can't I create my own 360, you know, business model around all of this? And I would say what, what top was able to do with top dog entertainment, you know, with Kendrick on the front end coming in was sort of that, right. They built a collective model around multiple, their artists walked in with, you know, kind of full 360 thinking to what they were doing, um, in certain ways, but I, you know, still the, most of these label deals are joint venture deals. They're 50, 50 splits, you know, there's lots of upfront capital, you know, to, to do that.

And I think the reason why that's going to be more challenging is because you still can't walk into a bank, even as a successful artist and ask for a credit against, you know, royalties or against whatever. And I, you know, if you look back to like even 1997, uh, prudential insurance company sold something that they called Bowie bonds. So I, you've probably heard about this, but like basically David Bowie's royalties performed at a certain rate every year, year on year, uh, you know, to a point that it was almost like a predictable revenue stream.

So they, they bonded this out and sold this as investment portfolios that institutional investors invested in, you know, for, for the purposes of participating. Uh, but what they couldn't see was that piracy was coming and all of the traditional royalties for David Bowie's, you know, stuff went in those, those bonds all exited as junk bonds. Every investor lost their money, uh, by a lot, right? So that the predictability of the market and where it's headed, if streaming all of a sudden, you know, if all the major labels decided, we don't want to license our catalog to streaming anymore, streaming is done.

It's, it's a, you know, it's a hard proposition. So you still can't walk into a bank and get a loan. Right. Uh, and I think that the availability of capital becomes tricky, uh, in, in some of those conversations to kind of go against this and just go the agency model. However, you can see the percentage of independent performance at royalties on streaming services, at independent artists that are doing things non-traditionally at touring, uh, at people who are building, you know, unique, let's call it, you know, creator economy ecosystems for themselves, you know, that aren't necessarily tied to all the traditional stuff.

I mean, some artists are saying, we're not going to tour anymore because, you know, it's not, it's not healthy for the world. Um, that's going to leave out some fandom, but they're trying to find alternative ways to create, you know, access and connection to audiences and things like that. So, you know, there's, there's people that are trying things differently and there's new amounts of capital, you know, that, that are coming up. Like I just saw, you know, that this is in a, a totally independent, it's somewhere in between, but like downtown music got, you know, bank of America just gave them a $500 million credit facility, uh, to, to kind of support their independent ecosystem, you know?

So this is people gambling on an independent sector. Now there's a lot of business maturity in their organization, you know, that, that allows people to succeed, but it's not a major, right? Is it's like, it's, it's somewhere in between. So I think, you know, the, that's probably why the agency, the Eastern agency model wouldn't work, but that's not to say that like a lot of the stuff we're talking about when we're talking about diversified revenue, in some cases, isn't even included in a 360 deal with a label right now. Right. Like some of the services, some of the, you know, fan development stuff you can see, obviously the majors are, are starting to dive deep in, in both UMG and, and Warner's, uh, you know, keynotes for the year and their letters to their employees and, you know, their Q1 reviews, which have both just come up.

They've sort of reinforced this idea of super fandom platforms. I made air quotes for anybody who's listening, uh, you know, and not watching the video, but, uh, you know, uh, super fandom platforms as a, as a proposition and trying to find ways for them to own that, that artist to fan relationship themselves. Cause I think, you know, they're very conscious of if they get carved out of that life cycle, that maybe represents a larger future state for total revenue than just streaming alone. Right.

Like if they could figure out, you know, each artist on average on their catalog is streaming at, you know, a thousand dollars a month or whatever, if I can get, if I can get a hundred fans to spend $10 a month, that's the same value. Right. Uh, in, in aggregate. So it's, it's more, you know, finding ways to, uh, participate in that conversation, I think is also them trying to future proof themselves to not be, uh, eliminated in some of those conversations when it's, when it's related to, you know, the agency construct or whatever. But I mean, there are, there are some really strong management firms that are building systems around, around their artists that are starting to look a little bit more like what we see in the East.

Yep. Josh, uh, I, I wish I could break this episode into like six sections and then have an episode in each. I talked too long. I'm so sorry. No, it's, it's great. Like, I think I'm going to invite you back all the time until they say no. Um, but, but for the sake of entrepreneurs listening to this podcast, um, could we spend 15 minutes being hyper practical and also have some quantity to examples of how you could look at this space?

You know, you, you mentioned James Blake. Maybe we should start there when it comes to a practical example of how to utilize the fan, fan relationship in a consistent revenue stream. Yes. Um, so let me, let me qualify in the fact that this isn't a new idea and, and I'm not necessarily the biggest fan of it. Right. Um, in, in certain ways. So, uh, I was quite interested in, uh, 2019, 2020 when Neil Young released his archives platform, right, he basically offered everything historical, all of his recorded material, plus demos, plus, uh, live sessions, plus lyric sheets, you know, in the studio, video content, memorabilia, everything into a singular packaged asset that was $2 and 99 cents a month for, for users, uh, in order to access it.

So his entire musical history and legacy in a place for $3 a month. Um, and he was able to, in the first month of operation, generate 40,000 subscribers, right? So you, you do the math at $3 times 40,000, you know, over the course of the year, that's a pretty significant line item of revenue that's coming from that. Now he has 50 plus years of catalog and material to feed into that. But what he learned pretty quickly is even all of that, he had to continue to sim, to stimulate it with new things that are being added.

Right. So, so he was able to sustain it. It fatigued a little bit, but he kept that thing going for a while. And I've seen other people try similar iterations. Obviously Patreon's model is sort of built on that as well. Uh, but the, but the challenge on some of the Patreon thing is that the upfront commitments associated with what you're going to do on Patreon, uh, you have to commit to that regardless of if you have two subscribers or 2000, right? So the, the economies of scale only start to make sense once you get to a certain place. If you're going to say, I'm going to do a live session every month, I'm going to do a merchandise drop every quarter.

I'm going to do, you know, these things. Uh, what happens when you have to make merchandise for two people instead of, you know, you don't get any economy of scale and, and making that. So, uh, those are kind of challenging. The vault thing is an interesting one because this is just James Blake tired of the economic realities of the rest of the world. And that, you know, he, he's what most people would consider a very successful artist, right? Like as a producer himself, as a, you know, the, the man who shall not be mentioned collaborator, um, you know, often collaborator on, on that side of things, uh, you know, can headline the Hollywood bowl, can headline festival stages, all of the above still raises his hand and says, look like the, the economics around my recorded music just don't make sense.

Um, so I'm going to package this into, into this place. And if you're interested in buying it, you can pay $5 a month to get it. Now, what, what that message real in reality is, is you can get the entirety of the history of recorded music, everything that's ever existed in the world ever for only two times the price of, of what you can get for only James Blake's music.

There is a, there's a psychological barrier for value for certain people in that exercise, right? Like there's a certain group of people who might say, yes, I want that, but they aren't going to opt out of Spotify in the process in order to go there. Right. So they're going to keep Spotify and now they have to add this on top. So it's an incremental economic expenditure for them on top of, of what they currently have. The, the question is how many artists would you be willing to do that for as a fan?

If, if your top 50 artists, your top 50 favorite artists all had this portfolio available, would you invest in all 50 of them at $5 a month to increase your monthly expenditure by $250? You know, what, are you willing to be that level of fan? Um, you know, and I think that's hard because it's recurring expenditure. I, you were talking about like, uh, your, your relationship to Coldplay and to, um, Astro S, Astro S recently.

And I just had a, I just had an interesting, like of my own psychological exercise. Cause I took my record collection and I, uh, decided to put, uh, inserts into my record collection, like at a record store. So I have genre, you know, sorting kind of elements or whatever. And I got to a point where I decided I have enough catalog of certain artists that like in a record store, even when you're in the new wave section, there'll still be a cure section and the Depeche mode and new order and Susie and the Banshees or whatever. Right. Uh, and I was like, oh wow. Like I have enough catalog of certain artists here that it justifies me having its own section in my record collection for this.

Right. So death cap, the entire collection, LCD sound system, the whole collection jungle, you know, whatever it might be, uh, the far side tribe called quest, uh, you know, all, all of this stuff, everything that they've ever released that I can get ahold of with within reasonable value. I, I have in my collection, right? So it's, there, there's a certain, uh, value, but those were one-time purchases where I, as a fan have recurring value. I don't have the psycho, the psychology of opting out of something, you know, and then that maybe relates to my level of fandom.

Right. So if, if somebody goes five or six months down the line, I know we're diving deep on the vault one, but it's important to me to think about if somebody goes five or six months down the line and is spending $5, you know, each time for, uh, James Blake subscription. And after five or six months, they don't get the value out of that platform. That's worth $5 in their mind. What does that do to their fandom? Yeah. Like, does it, does it move their fandom down? Because the artists that they love wasn't able to give them the value that they want out of that, you know, out of that thing, because he has some obligation to continue delivering on some of this.

So I think, you know, we're also seeing this a little bit, just generically in the tech marketplace with some SaaS fatigue, right? Like people, people can only justify so many subscriptions in their life. And in a lot of cases, when there's a recurring subscription revenue, obviously that's good for business and good for what you're doing, but the audience is only going to, you know, I've just unsubscribed from two video services because I'm like, I'm not getting enough value from them and I'm already spending as much as I pay. I used to pay in cable, right? When it, when you add together Disney plus Netflix, plus HBO, plus Apple, plus, you know, Showtime max or, you know, what all the, uh, the other ones are called.

Um, so I think, you know, if, if the entire music industry moved to a subscription model for exclusive content behind paywalls, I think there's not going to be critical mass anywhere that makes it make sense. So it has to be, it has to be a balance between some products that offer subscription and some products to just offer one-time value that you can continue to aggregate. Right. So like if, if you give me, if I have an old copy of a record and you give me the 180 gram pressing, I'm buying the 180 gram.

I might not even get rid of the old one. I might keep the old one or I might sell the old one and move that onward into the market. As far as fandom to keep the more premium one. Right. So, so it's like, and if you give me a red one, oh shit, like, you know, uh, now maybe I need the red 180 gram, not the black one. Uh, right. So, so there's, there's opportunities to continue to, to bring some of that, that forward. But I think, you know, it's, uh, I'm very interested in some of the other ways. Like, uh, I think you, have you connected with Jekyll from Fave before?

Yeah. So, so she's, she's one of my good pals. Like we, we sort of, uh, had a joint like, uh, support group with each other in the midst of COVID. Cause we were both starting new businesses, uh, around that period of time. Um, and she's obviously gone on to be far more successful than my, my startup at the time did. Um, but I love like they, you know, fan art is real as once you get to a certain level of, of audience. And for the most part, if you were going to talk in legalities, it is illegal to sell an artist's image and likeness for profit.

Right. But the amount of transactional value that goes and happens, uh, in the world of fan art that's being sold is huge, but the artist doesn't participate. If, if you went to the person who made that fan art and asked them if they would be willing to share a percentage of what they made from selling that art with the artist or even better, what if the artist was to promote your fan art to their fans? Right. Yeah. They probably say, take the money. I don't, I don't even care.

Right. Like I'm doing it for a different reason. So like fave has figured out in a, in a cool way, how to take the entire fandom communities of, you know, and these are, these are what we would qualify as probably more super fans right around BTS army and, and Swifties and, you know, some of these audiences that are aggregating on fave, but taking these communities of fans. Who create a lot of fan art and creating a marketplace where they can sell things to each other. And the artist participates on every transaction. So if I'm taking a, you know, 10% commission on everything that's sold in the secondary market with my name and likeness on it, uh, because fans are transacting things to each other, that's passive revenue.

Right. So like, that's really interesting to figure out, like, how do I start to think about participating in those conversations? What happens if I, instead of me having to go out and pay a graphic artist, what happens if I invite my fans to contribute to my new merch collections, you know, and they're, and I'm sharing royalties or revenue with them. What happens if one of, what happens if one of my fans happens to be a designer at Supreme and they're doing this on the side for fun, right? Like there's, there's obvious ways to think about, you know, incorporating some of that stuff into, into some of those, those elements.

But I think, you know, we, we are still talking about the traditional outlets and it, it becomes more interesting to get into the non-traditional ones, uh, when you start to think about other products and things that you can sell. Uh, just one comment and then one question, and then we can go into the new stuff. Um, a funny comment is when it talks about sort of the East not being applicable to the, to the West. Uh, then I had a conversation with a Korean person a year ago who sort of studied the Korean interaction and she showed me this app she had where basically she should describe $5 a month, uh, where this was sort of a Snapchat feed where the assets was just directly to those who were sort of behind the paywall to talk with them.

I was like, that's amazing. That sounds engaging. And then going back to SLS, which I'm a fan of, uh, you know, I just got an Instagram group, uh, five months ago where it does the exact same thing for free. Right. Uh, and, and I was just confused by that. I was like, oh, these have a service where like they can interact with their fans directly. And now it happens with free. I mean, I think it's just a, yeah, I think discord was doing a really good job at trying to productize that. But the super interesting thing, which I just thought was hilarious was like, Patreon didn't build this functionality themselves.

Patreon built a payment unlock structure that basically allowed you to be invited into a third party platform in discord to participate in that conversation. So like, you know, in certain cases there was like a paywall barrier to being invited and having access into, you know, into a certain community. Um, and I've seen that work in certain cases, you know, the, the new WhatsApp, uh, kind of brand ecosystem is actually quite interesting in, in some of that, uh, and, and participating in certain channels based on payment and feeds.

But yeah, I mean, I think, you know, just to be in a, in a fan conversation. And I think that the other thing that's, that's really important to think about in that version that you were talking about is, uh, and, and actually like Fred again is a masterclass on, on how to do this. Right. Like he, and, and his manager is a close friend of mine. And like, uh, you know, I, I love watching the journey of all of this cause it's so smart and calculated the way that they're doing it. But you know, the, the value at a certain level of fandom is not necessarily in the relationship with you and the artist.

It's actually the relationship with you and the other fans, right? The idea of like, how do we build each other's fandom? How do I create social hierarchy with myself on the value of my own fandom based on the fact that I've been to more shows than you, or, uh, I was, I listened to that record before you did. Oh, you've only heard the new album. Like you, you got to go back to this other one. Well, now my hierarchy of fandom in my own psychology is slightly higher than you. Right. And, and we as humans tend to rank things this way. Uh, so in, in a lot of cases, when we talk about the BTS army, how much do you think the BTS members participate in the BTS army?

It's very low, right? It's, it's probably sub a half of a percent of the total activity of what the BTS army is doing. They are fanning to fans, right? Like they're, they're basically facilitating the brand ecosystem to each other in an ongoing way. Uh, you know, and Swift's fans obviously do the same thing. They have meetups for a concert in a city, you know, uh, to go to a show. Taylor's not there. She doesn't, you know, she doesn't necessarily come.

She's going to play on the stage and you're all going to go together and sing, but it's about us coming together and sharing something, you know, uh, with, with individuals, having a sense of community, having a sense of belonging and then taking that to, you know, the, to experience something together. Can I, can I make a comment to that? Because I think that's really interesting. Um, uh, actually an episode that dropped today, so you guys can go listen to it. It's, uh, from the Vice Festival. I talked with a lot of VCs about music tech and Tira Bajah, uh, he talked about, there was a question in the audience about superfans.

And what he said was, which I thought was really interesting and really supports your point is that rather than thinking superfans, think communities when you build companies. Of course. Because the individual aspect to it, it seems, seems not as sustainable as investing in community-based, uh, into action. So that really speaks to that point. Joss, I, I only have you for a few more, uh, minutes and I want to respect your time. I'm all right. I'm so happy about you being, being generous. Okay, good. Well, then I will continue. Um, when you talk about new productizations.

Is it? Um, no, before we go to that, actually, I had a question because you talked about Fave. Uh, Chiquelle has also been in the podcast. Go check it out. Um, what, what I hear you saying is that she takes, um, the impact of the East, which is having a fan structure that can monetize the artist, but putting it into a Western model context, which is, this is where transactions are happening right now. It's, it's not regulated or monetized on behalf of the artist.

This is a revenue stream that's already existing outside of the ecosystem we can tap into. That's basically what I mean, if you really want to break it down even simpler than that, she productized it, right? Like she, she was able to create a marketplace and a foundation for that to happen. And there was all kinds of other things that were, that were taking place there. And, you know, for context for any, uh, startup entrepreneurs that listening, it's not like she just started with this. She used to, she's like a very, very smart engineer that was inside Google and YouTube for years, you know, and, and was a core part of their, their engineering and creativity.

But, uh, but you know, she, she sort of looked at this, at this space and was like, let's figure out what to do. And she took an MVP type mentality to it. It's like, all right, let's, let's kind of, uh, you know, put a bunch of little pilots in with different fan communities, see what they react to. And based on how they engage, then let's scale the service. So it's, it's very much a tech and product, you know, thinking to the way in which to facilitate these interactions. But you know, the, the point was she was not looking to just build a popularity platform.

This was about a commercial platform for herself and for, you know, for other people. So obviously, you know, I don't think, uh, you could, you could check me if we're, if I'm wrong, but I don't think we need more popularity platforms. Like, I don't think we need another social media channel. I see people that are doing more, you know, music, social media propositions. And, you know, realistically, if you look at what most artists are trying to do, they're trying to mobilize shared audiences into own channels, right? How do I get an email address? How do I get you into my world so I can control the communication flow with you?

Um, you know, I think that's, that's the reality. So like building another shared popularity platform, I, I just don't believe that's something we need, but to figure out how to productize. You know, in easy, simple ways for the audience of people, you know, uh, services or value, uh, that, that allows artists to do things that way. And, and maybe I should, uh, because you have, you know, a lot of stories of people, maybe I should talk about the failure of my own, of my own startup in this space.

Right. Uh, as, as a part of this, so it's like, I, I had a platform called gold mill that I started with a couple of friends and basically this was kind of at the front end of masterclasses exposure, uh, explosion. And, you know, I, I was looking at like, if, if you really want to, uh, it came, it came up as a part of an innovation, uh, exercise with myself and a buddy, Adam Soldinger, who's now at range media in, in the U S. Um, and we were doing this just for fun during, during the pandemic, just looking at, you know, ways to solve problems in music as a whole.

And we were talking about music education specifically. And it was the fact that like, you know, there, if I want to learn how to play bass, like Thundercat, where, where do I go to do that? Uh, and the answer is I go look at a bunch of YouTube tutorials from people who are interpreting. I go read articles. I try and interpret stuff and I listen to records and do my own version of this thing. Thundercat is not participating financially in any of that conversation.

Right. Yeah. And so I was like, this is stupid. Like, why shouldn't the artists be able to participate when people want to aspire to make records, write songs, you know, perform in a certain way, like an artist, why can't they participate in the conversation? And that could be as simple as one-to-one interactions at a premium value based on, you know, mobile facility that could be AI kind of productized versions of, you know, of stuff for them. That could be, you know, uh, the idea of lessons is, is sort of not what we were trying to solve for because most artists don't want to sit around and teach lessons, you know, in that.

But I was like, what about just knowledge sharing is value. Most of this is given away, as you said, like in the Astrid S, uh, facility. Um, most of this is given away for free on social media for, for some exchange on fandom. Right. I see Chromio doing this every week right now where they're breaking down how they made a song and inviting people to ask questions. I was like, that's so valuable for a group of people who want to make music like Chromio. Why are you giving this away for free? This is a really good product. Uh, it doesn't have to be free. Um, and so with gold mill, we created a proposition that kind of allowed for that to happen.

Uh, and you know, had calls just based on my relationships with the industry, had calls with almost every relevant management firm in the world, spoke to some of the biggest artists in the world, offered them equity in the business, you know, a lot of different things. And it just didn't work because it was too much work for the artists on top of everything else they were doing. The idea of like having to answer a couple of questions was a bit too much. So it's like, I wasn't able to figure out that like product market fit on the two side marketplace thing. We could get the audience there, but we couldn't get the artists to, you know, want to participate.

And I think, you know, when thinking about how to productize some of these things, it is about looking at areas that seem like a viable business construct that currently aren't being exploited. Right. Especially if we're talking about tech, there's obviously the physical side of things when we're talking about, you know, media and, and different things that way. But, uh, if we're talking about technology, it's like, okay, cool. What, what part of this artist's, uh, total offering when you're talking about their image, their likeness, their art, their music, derivative works, and fandom community sort of abilities to come together.

All of those assets. I held five fingers up for the people who aren't listening because I was counting. I love doing podcasts because then it's like, oh, you have to reiterate what I'm actually doing as I talk with my hands a lot. But, uh, you know, but between those, those areas of focus, uh, you know, what, how could you come up with, uh, ways to exploit? And I use the word exploit gently because artists don't want to be told that they're being exploited, but to help them exploit those products or those tools in ways that are low lift for them.

Right. Like ways that don't require them to add a whole new business to their existing business. And, and when you're going to do that, fans don't want to go to 27 different places to do everything. Right. So this has to be able to easily plug into their touring ecosystem, into their web ecosystem, into their email strategy, into their social media strategy, into their streaming ecosystem. You know, it shouldn't be like, oh, we're creating another platform for fans to gather. Uh, that can be a challenge because fans don't want to go to 17 different places.

They want to centralize conversations into singular, you know, assets. So like that was a really interesting thing I saw happen for about a two year period where people were creating bots for the discord ecosystem, you know, that allowed for fan communities to exist there. Artists to insert these bots that were integrating, uh, you know, new feature sets, they were integrating emoji sets, they were offering people skins for their, you know, stuff or whatever against revenue. And it just plugged right into a system that they already had, you know, in motion and going.

So the big thing that I learned, uh, in, in my own process of failing with gold mill was like, I was asking artists to go to a totally new system to mobilize their audience from the existing places where they exist into my world, you know, uh, in order to figure out how to transact them. And they were like, this is too much. I didn't take that product into, into their systems, right. I didn't help them make it easier for themselves to, to utilize. So it's a, it's, it's kind of an interesting, you know, thing. Cause I was really trying to solve for something that I don't see, you know, when you get down the line to indie artists, uh, unless they're giving lessons, music education primarily isn't monetized.

Uh, you know, and so it's like, how does an artist make money from sharing knowledge with, with the audience? And I was like, this is a cool way to do this. Uh, also, you know, I talked about an example recently with some friends where I knew a DJ in LA and I'm not going to mention them because, uh, they may, may or may not want to be mentioned for this because it could, uh, bite them in the ass to have to like re reignite this thing. Um, but I knew a DJ in LA that set up very early, uh, a kind of a subscription service, but a non-traditional one where they were always out record shopping, right? Like all the time, anywhere they traveled in the world, they were record shopping.

And so they set up something with their fans that for $30 a month, uh, you would get a record handpicked by that DJ shipped to you, uh, with a note from them that was like, Hey, here's why I picked this out for you. Right. So they do at the front end of, of them subscribing to the service or whatever they do, like a onboarding form and a call with you. It's just like, Hey, what are you looking for? What are you into? You're into my music. Cool. But like, let me get a little taste for you. And then would go record shopping and would take a list of 40 or 50 customers that were a part of it and just buy records.

But if you think about it in the economics of his own business model, if he walks into a store and tells the store owner, I'm going to buy 50 records from you right now. How much does his own records cost, right? The, the store is not going to charge him a premium on the stuff he wants to buy for himself because he's already transacting value with the store for all of those things. So he made a model that he was not going to spend more than $5 a record on average across his entire thing. $5 a record, $25 margin per person.

You start to do the math on this. It's like, Oh wow. Actually, all he was doing was just curating an exercise that he was already doing. Maybe it took him an extra 25 or 30 minutes in time to pick out some extra records from a bin that he was looking at or a shop that he was at, you know, in, in order to buy those and, and offer them to his fans. And the fans felt a deeper connection with him, you know, in the ability to connect with like, Oh, my favorite artists actually picked that record out for me. Uh, you know, and, and now I have that in my collection. So it's like, you know, there, there's interesting ways to think about the different services or the value or the things that you do, um, already as part of your day-to-day operations as an artist that can, you know, that can benefit people.

Uh, you know, there's a lot of people like, um, uh, Dave from, from Minus the Bear and, and Botch and stuff like that. Like he does all these tutorials. He's a super mathy guitarist. Right. Um, but he does all these tutorials. He does all these tutorials online on like how to play all of his stuff, but then he productizes all of those tutorials into the full versions, plus tabs, plus everything else in his website ecosystem. So people that want to learn how to play like him or whatever can go in there. He does, he manufactures it once and puts it there and it's there for, for people to, to get ahold of, you know?

So it takes a little bit of innovation to think about like, okay, how, how do I create, you know, if you're trying to scale a tech business or whatever, how do I create a specific product functionality that helps artists figure out how to offer a product to their fans? That isn't the same product as what they already offer somewhere else. It's solving for a problem that they don't have and then figure out how to make it really easy for the artists to participate in this, that they don't have to do a lot of cross promotion on their own channels for this thing, that they're not expected to be your marketing vehicle, uh, all the time. If you're, especially if you're going to participate in revenue, you probably have to figure out how to market to their audience or bring them an addressable audience, not go tap into their audience.

Cause that's going to make your tech bigger. Um, so I think, you know, that there's, there's certain things to think about in that way, but before you even get to the tech solution, step back and just think like a small business, right? Like if, if I'm going to create, if I'm an artist and I'm going to create a small business for myself, go look at other small businesses, go look at the, you know, the, the local shop that's able to figure out how to, you know, exist with selling soaps. Like, how is it that they make this work? You know, how much, how much soap do they have to sell through the door in order to make this make sense? Does their e-commerce shop, do they do licensing to hotels? Do they figure out like all this diversification of revenue in order to pilot all into this bucket and make it make sense? Uh, what would you do if you were looking at the entirety of the product that you have soap, you know, but music and your image and your likeness and you know, uh, your brand and all the things around it.

What are all the ways that you could kind of squeeze that, uh, in, in different and new unique ways and then figure out if there's a problem that you can actually solve with technology. Cause in some cases it might just be a problem that could get solved with a better merch booth, you know, or, uh, a smarter product line that's expanded or whatever. It's like, you know, you, we, we see how much money Fenty makes or Yeezy makes or, you know, whatever. Like the, uh, the, the Dan, you know, Trapital, um, Dan Runcie in case anybody doesn't read Trapital, but like a big part of his content and his, uh, his thing is about how hip hop stars become billionaires. Right. And, and the roadmap to that is not further exploitation of licensed music.

The roadmap to that is productization and sort of expansion of media ecosystem in order to create other products that allow people to buy into your line. So I can buy Fenty at every major department store in the world. I can buy, you know, the Britney Spears, uh, perfume or whatever was in every department store, you know, in the world at a point. So she was participating in revenue from a perfume sale. That doesn't necessarily make sense to this level of indie artists, but what's the version of that?

For this level of indie artist? How can they participate in that conversation now? Maybe it's not a fragrance line, but maybe it is, you know, uh, a smaller productization of something that's important to them or make sense, make sense for their own business. This is amazing, Josh. I hope it is. I hope I'm not confusing people. No, I don't think you are at all. Uh, but, but I think what could be really helpful here is if we can spend five minutes tops coming with a few conclusions based on what we talked about so far and make it as practical, but still conceptual as possible. And I'm going to give my own of what I'm thinking about. So, so what I hear you saying is there, there's probably a model in tapping into existing transactions in the industry, such as Fave.

Um, and having the artists being a part of that. So there's a model for entrepreneur journey to have something that does that. That's one thing. Uh, what I also hear you saying is, um, there's probably also models of, uh, looking outside of the music industry and say, okay, take the trap tool example of hip hop billionaires of. They're not trying to exploit their music more, but they're trying to exploit the surrounding ecosystems that can bring more value into the artist persona and that relationship with a fan.

That's another thing I'm hearing. Sure. I had a few other points, but could, could you in very short bits, maybe come with some more like, try and some conclusions. Yeah. So yeah, I think that there's two pieces of this one, like in order to develop a relationship with a fan, you first have to attract them. Then you have to engage with them and then you have to get them to purchase one thing. And, and I'm, I'm going to drop a bomb here and maybe you might not think that, but a stream is not a purchase psychologically, you know, for the consumer, when they click play on that, they're not thinking, Oh, I just spent that money.

To do this. It's, you have to get the consumer through a barrier where they feel like they have purchased something. They've been willing to go out of their pocket and invest in you as an artist directly, get them through one purchase. And if that purchase is only a physical record at $25 and I don't own a record player at home, then I can't buy anything. Right. So it's like maybe the first point of purchase could be some other ways to productize some of that image likeness music.

Media, all of this together. So that's the first thing is like the first purchase. Then the second part of that is about retention and how do we keep people purchasing continued support, ongoing support. I'm really like ongoing support is more important to me in certain cases than super fandom. If I'm trying to build a business, super fandom is important for advocacy and promoting things out into the world, but it's sort of an enhanced engagement, super fandom and ongoing support is tied in the East. In the West, that's what we've talked about. In the West, these things are decoupled. Ongoing support and super fandom are not the same thing. So how do you figure out how to move those two a little closer together? Right. How do I take super fandom and come up with ways to create ongoing support? And that doesn't always have to be a SaaS model.

It can be a SaaS model. It can be just the ability to release new products into the market on an ongoing basis to diversify the ways in which you introduce things that are exciting. Maybe, you know, maybe it's hard to get through another song, another song, another song, buy another song, buy another song. At some point, I choose not to buy a song. But if you offer me something different, if you offer me the ability to hang out, you know, online with you for a day or whatever, ooh, that's maybe an option I want to participate in.

Or maybe I can join you for an in-store appearance or something like that does have a fee structure associated with it. Okay, cool. Maybe I want to participate in that. Maybe there are merchandise drops. Maybe there are NFTs. Maybe there is, you know, a digital platform that I can participate in, you know, so there are different ways to kind of get that ongoing support happening. So first, to think about what's the first product that people can purchase? Are there creative ways we can think about diversifying that first product or that first way in that somebody makes a psychological purchase into an artist?

And then second, how do we create diversity in the services or the products that we sell after we get that first purchase? Not just continue offering people albums and t-shirts and tickets, but what goes beyond albums and t-shirts and tickets when you're not in cycle and marketing an album or marketing a tour? What other things can we sell or how can we productize some of that? So hopefully that kind of puts this together in like just a logical way to think about those two actions to take place.

And I wish I could say that I have all the solutions. I think about this problem a lot. I work with a lot of clients on it and we talk about ideas that I can't necessarily share, but like, you know, I don't have every solution, but it's definitely the time is now to figure out how to help artists at all scales. Big artists want to find ways to diversify revenue. Small artists need to find ways to diversify revenue and don't necessarily have the tools to do it. So everything in between, you know, is fair game to play. Josh, I have one last question and it might just be for me.

So if the audience don't want to listen to my question, you can go now. But one of the things that confuses me the most about entrepreneurial activities and opportunities in this space is that people need to venture into new platforms, new models. It's very confusing. When you say people, who are we referencing? Consumers? Consumers. Well, artists as well. So my question is, and it might be colored with an opinion, does the businesses that's supposed to navigate this space and these opportunities need to think about that they need to be placed within a product ecosystem?

Where, for example, now I'm not going back to metaverse, but like if you're talking about Roblox or whatever, like there's ecosystems of existence within this artist where your product can be a part of that ecosystem and offering. In order to have a combined access to services that doesn't take you from platform to platform. Is that a thing that needs to happen in order for this to succeed at scale? So let's take this metaphor out of this and go into just a traditional business model, right?

Thank you. There's two things. If I have a store and I want to put a store out there, I can pay for premium real estate and put it on the main street where I have all this foot traffic that's going by and is going to see it, right? So there's that piece of the puzzle. Or I can choose not to put it on the main street and put it on a side street and then I have to market to get people to come to me, right? There's two different options you can choose. So you pay a premium, but you have a lot of foot traffic and a lot of visibility or you'd create an outside destination and I have to spend a lot of money to try and get people to the outside destination.

This is the metaphor of what you're talking about, right? It's like if I go into Roblox, there's an audience who's there, right? That's already participating in that thing. Whether or not they're a fan of this artist or not, they're there. There's a captive audience of people who may be willing to participate. Travis Scott in Fortnite, perfect example, right? Most of the people that went to see that performance there were not Travis Scott fans. They were just Fortnite players, but something was happening in Fortnite, so they went and participated in this thing. So there's that piece of the puzzle. But then you have to layer on an additional level of cultural anthropology to all of this, which is how music fans interact and value brand.

And two, where are those artists' fans already existing? Because, again, converting an audience that doesn't know anything about you yet is not a strategy. You need to get the attraction and the engagement first. You have to go to the main street to do that, right? And then at some point, you can move off of that and bring the audience with you somewhere. So, you know, if an artist has all of their fans and they've focused, you can see they've focused on TikTok or they've focused on Instagram, the place that you and they are going to reach those fans is there.

It's not about like, hey, let me get everybody who exists here and try and move them all over here, right? Getting them to come off, you're going to have to spend a lot of money marketing to get people to leave the main street and come to your side street. You know, so that's a challenge. So you have to find easy fluidity to move between this. So when you're talking about, you know, new platforms, new products, things like that, I think integration and UX design is as important as like, as the idea itself. The ability to make this a seamless movement between the artist's website, the artist's social media channels, the artist's streaming services to this product in and out, that there's referrals that make it really smooth, that you've thought about like, oh, here's how this could be positioned inside Spotify.

Here's how this could be positioned inside YouTube. Here's how this could be positioned at a live show. Here's how this could be positioned in their website. Here's how this could be positioned at social. If it's really fluid and easy to move out of that environment into yours, that's one strategy. The other strategy is don't think about building your own environment. Think about building something that works in their environments. How can I integrate it into their website? How can I integrate it into their, you know, Spotify ecosystem? How could I integrate it into those products where it makes it simpler for the user's experience to flow straight through and not even have to leave that environment?

That's where I think, like, Shopify really got something right with Spotify by doing a top-to-top deal with them, is that now every artist, if you don't have your merchandise range on Shopify, it's like you're missing a major important thing because that's the only way to get your merchandise into the Spotify platform, unless you're a major label working with a platform like MerchBar, you know, to integrate it. So, you know, Shopify is the way to get your merchandise on Spotify, that's really easy, right?

They've made it simple, they solved that problem where the user does not have to leave Spotify, they can buy merch right in the flow of all of this by doing a top-to-top deal with Spotify and making it easy. That was an answer to my question, so thank you so much. Josh, this has been a goldmine and I'm left with around 13 questions I would like to ask you at one point. I apologize for the editing exercise you have next. No, I will leave it unedited. Like, this was gold all the way through, I think this is perfect for me and there's so many questions I had that was answered and more importantly, there's new questions I have, which I think is the exercise that is good.

It's like, because we need to challenge our mindsets, we need to challenge sort of what we've been through. I need to challenge that I'm a white guy from this place of the world and that is a healthy thing. So, if I leave with more questions than I came in, I consider that a very positive thing. So, Josh, thank you. I know you're a very, very attractive man with consulting and I don't know if any of these guys are going to need you at one point, but just to give you an opportunity to plug what you do. Yeah, sure. If there's a great founder who might grow something big at one point, how do they contact you?

GreenMountainLodge.dk is my website. That's sort of the ideal place to get an understanding of, you know, what I do and obviously you can reach out to me via email, jg at GreenMountainLodge.dk. LinkedIn works pretty good too. Come knock on my door, you know, whatever your strategy is in building a relationship and, you know, I'm usually down to have a conversation with people and talk about things. When it gets to, you know, what the business relationship looks like, that can be a little more challenging based on just demand of, you know, clients and what's going on.

But, you know, I really do support if somebody's got hungry ideas in this space in particular, I'm really passionate to hear them because, you know, I love indie music. I love artists. I love people who are making incredible art and I want to see them be able to only do that thing. And I don't think, you know, the current music constructs alone, I don't think we can live without them, but I don't think they alone will allow people to continue doing this at scale forever. So I think we're going to need more and, you know, I'm looking forward to people's ideas on trying to solve those problems.

Thank you, Josh. It's been a pleasure. And maybe we'll see you a third time at one point. I'm looking forward to being your first third repeat guest as well. Yeah. Great job, buddy. Have a great day. Bye.