CMU Trends Digital

Trends: What challenges remain to truly unlock the power of direct-to-fan?

By | Published on Monday 17 October 2016


The single biggest impact that mainstream adoption of the internet has had on the music industry is the direct-to-fan relationship, the fact that artists can now connect directly with core fanbase.

Yet it seems like the music business in general has taken a long time to truly capitalise on the new opportunities here. Technology and logistics may have provided hurdles in the past, though it’s probably now more strategy and politics that are stopping artists from truly tapping into the potential of D2F.

Speaking at CMU Insights @ Canadian Music Week earlier this year, the boss of D2F platform Music Glue, Mark Meharry, conceded that it had taken longer than everyone expected to build the technology side of direct-to-fan, so to enable artists to become global retailers in their own right.

“To create a service where fans come to you as an artist, to buy tickets to your shows, to buy merchandise, digital content or even just experiences; to create a platform where managers can do this without any help, and to do this globally in any language, that is difficult”, Meharry explained. “We all thought ten years ago that this was going to be such an obvious thing and easy to implement. Five years in we [realised that wasn’t going to be the case]. But ten years on, we’ve more or less got there [in terms of the technology challenges], and now we’re seeing a shift”.

Which brings us to those new challenges. First and foremost, while the D2F platforms may now be ready to truly power artist-led online stores worldwide, someone – probably artist management – needs to hone each act’s direct-to-fan strategy, which can’t just be bought off the shelf.

D2F specialist Jessie Scoullar – whose company Wicksteed Works has just published the second edition of its comprehensive review of direct-to-fan platforms – agrees that strategic matters are now the real challenge. “While there is a lot of awareness now about the existence of various platforms that can be used to assist with a direct-to-fan strategy, there isn’t yet a widespread understanding about how to plan the strategy that must underpin any direct-to-fan campaign in order for it to be successful”, she tells CMU.

“So artist management get this nagging feeling that perhaps they ought to try a PledgeMusic campaign, because they are hearing about how successful others have been”, she continues. “But they may not grasp the planning and work and resources that go into executing for success. There are many tools to support fan engagement, but managers are so busy with every other aspect of the tasks before them that they don’t have the time to figure out what they want to achieve, which is the best platform for those goals, and how to go about reaching them in an effective way”.

Beyond having the time and know-how to plan a decent direct-to-fan strategy, there are also political issues for more established acts, in that successful D2F activity usually requires bringing together the different elements of an artist’s business – recordings, tickets, merch, and so on – but each of these may be controlled by different business partners who will likely have their own agendas.

Meharry is a big advocate of the bundle. “If you are selling tickets, the products you sell alongside them can be worth $30 per person”, he says. “So if you sell tickets through your website, you could be making an additional £60,000 from secondary products”.

But will the promoter, which will have its own deals with ticketing agents, give the artist a decent allocation of tickets to sell direct-to-fan, especially when it probably isn’t cut into the profits of the upsell? If management is going to lead on D2F, they not only need to be good strategists, they also need to be able to deal with the differing priorities and agendas of key business partners.

While at least some of the D2F platforms might now be ‘there’ in terms of providing the facility to offer fans everything they might want to spend money on in one place, wherever they may be in the world, those platforms are nevertheless still evolving. And new platforms emerge from time to time, while others fall by the wayside.

Which means that, in addition to deciding what products and services to sell when, and how to market those products and services to fans, whoever is leading an artist’s D2F strategy also has to decide which technologies to utilise. Which is where the Wicksteed Works report comes in. Because really, each artist wants to use as small a number of platforms as possible, not only to reduce the workload, but because of the aforementioned power of the bundle and the upsell, which is only really possible when everything is sold through one channel.

“To ensure a smooth purchase experience, ideally artists would use a single platform that encompasses all commercial activity on their website”, Scoullar agrees. “This means that fans can add to the cart as they browse and it avoids a disrupted shopping experience”.

However, she concedes that running everything through one single platform may not always be possible. “It’s common for artists to offer a ticketing pre-sale through one service, while a merchandise store is run through another”, she notes. “Usually this won’t cause any problems as fans are visiting the website for different reasons”. Though it will reduce bundling opportunities.

Meanwhile, behind the scenes, artists may need to use other tools for data management and analytics. She says: “The key data generated through direct-to-fan activity is subscriber information and sales data, and none of the platforms have developed anything in the way of the sophisticated customer relationship management – or CRM – that we might expect from retail enterprises. For users who are really serious about getting to know their fans and who are generating significant revenue, this means investment in a separate CRM setup”.

There are other options though. “For everyone else, I’d recommend exporting this data and keeping it safe – few of the services are offering comparable email marketing with what you can find elsewhere, so chances are this will be happening anyway for subscriber data. For sales data, most platforms will offer a sales dashboard for snapshot reports, and/or CSV exports so it can be analysed elsewhere. This is sometimes a necessity for customer support situations too”.

In terms of what each D2F platform offers, and how they are evolving, that’s what Scoullar’s report outlines. Key trends between the first and second editions of that report include the increased importance of the mobile experience, dealing with issues like the new VAT rules on digital products in the EU, and offering functionality of interest to labels, like chart reporting, as record companies become more involved in the D2F proposition.

Meanwhile, another trend we are starting to see is the streaming services slowly offering more marketing and upsell tools to artists. Are they becoming D2F platforms too? “Streaming services and platforms like Shazam are beginning to offer artists the opportunity to take advantage of their data, which is an excellent development and one I’d like to see more of”, says Scoullar.

“On SoundCloud, artists can actually identify and message their top listeners”, she continues. “These services have so much information about who is listening to what, how often – far more than artists can collect on their own. Being able to access this data is a huge deal. I would say that these opportunities will continue to develop as the ecosystem matures and services invest more in label and artist relations”.

So artists will potentially have more direct-to-fan channels to choose from in the near future, which means more options, but also more choices, and possibly more work. And what if artists or their business partners decide to invest time into building a store or channel on a D2F platform that then disappears or merges with something else?

“There are risks”, says Scoullar, as we note that some key D2F platforms are no more. “There is a risk in terms of the investment in knowledge – getting to grips with how to manage a platform can be a steep curve as they each operate in slightly different ways – and potentially financial risks too, with any costs involved in developing online systems and infrastructure”.

The level of risk differs depending on whether an artist is using a platform for a short-term campaign or to power their entire online commercial operations. In the latter scenario, “if the service you use fades away, changes significantly or is outgrown, there is a need to re-invest and perhaps start over”. Which is an issue. Though, as Scoullar then notes, artists are constantly having to evolve their own websites anyway – given the rapid advances in digital technologies – and even a proprietary solution would probably require a radical overhaul from time to time.

Whatever, Scoullar adds that artists and their business partners should “always take care to have the best understanding they can of the assets that matter – their fan data, in terms of subscribers and purchaser data, and inventory. I would set up regular checkpoints – perhaps monthly – to export this information out of whatever service you’re using as a safeguard against untimely demise or any kind of software error”.

Beyond selecting which platforms to work with, there remain the aforementioned strategic and political challenges. Question one on that front is who should lead on direct-to-fan? Does D2F inevitably sit best with management, or can a label or third party direct-to-fan specialist manage this side of the business?

Some record companies see direct-to-fan as a competitor, while others treat artist stores as just another retailer, and others still see D2F as something they should be getting involved in much more proactively. Given the label generally has more resource, and the marketing team, there is a logic to letting the record company get involved in the D2F business, even if many managers are nervous of giving up even some of this part of their artists’ businesses to the label.

“This is always going to depend on the artist’s unique situation”, Scoullar says when asked about the label’s possible role in direct-to-fan. “It depends on how active the label is in day-to-day marketing, and where the initiative lies for product management”.

“For some artists, management will have very developed ideas about the campaign and what they hope to achieve, and will rely on the label for resources to assist with execution. For others, management and the label may work with a third party – such as the platform’s own team or an external specialist such as Wicksteed Works – to help tease out goals, advise on strategy and to assist with getting things done on a day-to-day basis”.

However, she reckons, management will always play a key role. “Ultimately the more understanding and insight that management has into the operational aspects of the campaign and platform, the better it is probably going to be for the artist”.

Whoever leads, a successful D2F business surely requires all of an artist’s business partners to work more closely together. Scoullar agrees. “Communication is really important so that all stakeholders are on the same page. Simple things like regular check-in calls between management, the label and any key third parties will help, as will setting up agreed processes for signing off on marketing email copy, social media messaging, and the use of shared documents”.

Which brings us to marketing. For signed artists, traditionally the label will be most proactive on marketing, though mainly around an album’s release. For the record company, the key messages of any marketing campaign will be to buy the new record, or increasingly to stream and playlist the new music.

For the artist, driving new sign ups to the mailing list and more customers to the D2F store is also a key objective. Will the label do that? What’s the incentive to do so; and even if they are cut into the direct-to-fan business through a multi-revenue stream deal, does the label’s marketing operation remember to include D2F in its messaging? Here lies some of the politics.

And, of course, even if the label does get the D2F messaging right, there’s still the need to balance promoting the artist’s own channels with other retail, streaming and ticketing platforms. The latter still need to be supported, partly because they will offer support in return, and also because a significant portion of fans will still want to engage with an artist in more familiar places.

Scoullar: “It remains of utmost importance for artists to be building their own channels for communication with fans, which means collecting fan email addresses, as well as building out other important data points such as location, gig attendance, purchase history and so on. However for many artists, it is necessary to balance this with the need for the support of key retail partners”.

“The challenge here”, she goes on, “is to find ways of building one’s network and offering the fans a choice, for example setting up Linkfire or SmartURL widgets where fans can self-select their retailer or streaming service of choice, which may include the artist’s own webstore. In any campaign, there are going to be points where the artist can be promoting direct-to-fan channels, and points where it makes better sense to promote third party partners”.

So there are challenges aplenty to still be met, even if the technology is now ready to enable truly powerful direct-to-fan businesses. Though, better understanding and utilising the ‘fan relationship’ continues to feel like the biggest opportunity in the music industry in the digital age, so they are challenges worth meeting.

You can buy the latest edition of Direct-To-Fan: Which Platform from for just £29 – plus get a 15% discount by using the code CMU15.


CC: What have been the key developments at some or all of the direct-to-fan platforms between the two reports?
JS: In the interim between our 2014 and 2016 editions, many of the featured platforms have made incremental changes to their service offerings.

For example, as they look to appeal to major labels and bigger artists, more are offering chart reporting in more territories. And more have responsive or mobile-ready template store offerings, in an effort to keep up with our shift to mobile browsing. Some platforms are offering a greater level of administrative support addressing changes to the law, like the EU VAT digital goods requirements, in keeping with the rule change in Jan 2015.

There remains some disagreement over whether platforms should be seeking mechanical/performance licences from MCPS/PRS for the sale of digital goods, with only a handful complying. Of the unlicensed majority, some argue they offer a point of sale, and it is the artist user’s responsibility to seek such licences – while others say nothing at all.

Bandzoogle continues to improve its website building interface, and Music Glue has made many updates, including developing its print-on-demand offering. Songkick has had a number of adjustments following joining forces with Crowdsurge. And we’ve also seen the rise of new services, such as Qrates, which enables crowd-funded or pre-sold vinyl production, with minimum runs of 100.

Another difference this time around is that we’ve expanded our comparison criteria to analyse those services which are offering full merchandise production – including Church Of Merch, Kontraband and Sandbag.

CC: Are there any artists who you think are doing direct-to-fan particularly well?
JS: It’s important to bear in mind that there is no cookie-cutter approach to direct-to-fan, beyond the basic steps of connecting and engaging with fans, and giving them a reason to buy. It’s vitally important that every campaign maintains the authenticity of that artist.

So we see Florence connecting with her fans through a fan-run book club, Mumford & Sons creating a pop-up art and photography exhibition and inviting engaged fans to attend an early screening of a upcoming documentary, and M83 offering their mailing list subscribers the chance to audition to fill the role of keyboardist.

In the last few weeks, Keane singer Tom Chaplin has pulled off some fantastic promotion around the release of his debut solo record ‘The Wave’. Direct-to-fan elements of the campaign included a pre-release global listening event with a goal of engaging the core fanbase and generating a wider buzz. Fans were invited to host parties at their homes or workplaces and invite friends. This resulted in parties taking place in 56 countries around the world, and generated a huge amount of online awareness and excitement a week ahead of the album’s release date.

A catch with assessing direct-to-fan activity is that because it encompasses communications made by the artist directly to their tribe of fans, targeting and segmenting those who have opted-in or otherwise shown themselves to be qualified leads, it can be invisible to the wider world, even while meeting with great success within and beyond that target market.