Real Time Digital Episode 5
In this, our fifth, episode, Emily and I speak with Andy Dunn, CEO and founder of Bonobos, an online clothing store for men. We also chat with Jeff Price, CEO of Tunecore. Our two guests offer suggestions on how to grow your online business without brick and mortar stores. If you missed it live, don’t forget to listen here or check us out on iTunes!
Emily Liedblad: Hello and welcome to Real Time Digital, hosted by TheJARGroup.com, we are your hosts, the digital divas. I am Emily Liedblad.
Lauren Garcia: I am Lauren Garcia. Welcome to the show.
Emily: So we have a really cool show lined up for you guys. We will be interviewing Andy Dunn who is…
Lauren: He’s the CEO and founder of Bonobos which is a men’s online shop. They started out in pants but then they went swiftly into things like dress shirts, blazers, suits. It’s going to be an all encompassing go‑to spot for men’s clothes.
Emily: We’ll also be interviewing Jeff Price who is the CEO of Tunecore which is a huge digital music distribution company based in DUMBO of Brooklyn. They’re rapidly growing. It’s a really cool service that lets independent artists upload their own music onto iTunes and a bunch of other music stores. It’s pretty interesting because they get to keep their own royalties. So, that’s coming up after the break. But before we interview those guys, we, of course, have to do our ‘what’s hot, what’s not’ segment.
Lauren: [singing] What’s hot.
Emily: [singing] What’s not.
Emily: All right, starting out. So what is the first? The iPhone 4G came out recently and that’s pretty hot.
Lauren: Obviously, very hot, very hot.
Emily: Yeah. I’m not seeing as much hype as I have around the 4G than I’ve seen in the other versions. But I actually have gotten a chance to get my hands on one. It is a significantly different model.
Lauren: Yeah, it looks really different.
Emily: It does. It feels a lot more substantial. It’s not as pretty. A lot of people used to complain over how it was just too fragile. So, I think they’ve made a little bit more durable, maybe.
Lauren: I don’t know. Looks like it.
Emily: Yeah, definitely, it’s a lot different.
Lauren: Well, so, the iPhone 4G is definitely hot. But what’s not hot is that everybody apparently is holding it wrong and how do you hold a phone incorrectly? I mean, it’s a phone…
Emily: It’s affecting… Yeah…
Lauren: The reception, when you hold it a certain way, it’s impaired, I guess. So Apple has been having a lot of complaints and problems with that. Apparently, it’s the skin to phone contact in a certain way that’s not doing so well.
Emily: That’s definitely not hot.
Lauren: Not hot.
Emily: You can’t exactly tell a user how to hold a phone. That’s the part that’s… you’re not supposed to have to think about.
Lauren: Right. Exactly.
Emily: Talk and somebody can hear.
Lauren: Exactly.
Emily: What else?
Lauren: What else?
Emily: Sports fever. World Cup fever.
Lauren: Yeah, World Cup. Oh, my goodness. Going off of the World Cup. Obviously, the World Cup is hot. It’s been hot all month. It’s going to continue to be hot. There are so many upsets. They continue throughout the elimination rounds. But what is interesting… and I’m not quite sure, as a former soccer player whether this is hot or not hot. But, I guess recently FIFA has been starting to contemplate using technology to overrule calls that were made on the field which has never been done in soccer before.
You know in football, and I guess sometimes in baseball for scoring purposes, they’ll review plays. But in soccer, that’s never been put to use before. But I guess now, especially more recently with England’s goal being taken away and stuff like that. They’re thinking about using their onfield technology to reverse calls. So, I think people are going to have some strong opinions about that one way or another.
Emily: Yeah, definitely. Well, for all you people who are already looking forward to the London 2012 Olympics, we have a big not hot in the works. Apparently. So Visa is the exclusive sponsor for the London Olympics of 2012.
Lauren: Exclusive, huh?
Emily: Yeah. I’m sure they’re paying big, big, bucks for that.
Lauren: I can only imagine.
Emily: But as such, they have decided to freeze out MasterCard and Amex cardholders. And so people with those credit cards will not be able to buy tickets to the London Olympics in the UK. So, like huge discrimination against other cardholders, definitely pigeonholing people into getting a Visa card.
Lauren: No kidding.
Emily: So, it’s kind of interesting. And apparently, somebody on, you know, a press officer or something for the Olympics totally defended it and said it’s not unusual. I guess it’s true. If they’re paying bajillions of dollars to have their name all over plastered for the entire thing I guess.
Emily: I guess it’s their right I don’t know. But I bet we’ll be having some outrages about that coming up.
Lauren: Wow. So definitely a not hot. Well, I guess it’s hot for Visa.
Emily: So I don’t know how people are going to react though. I don’t think consumers are gonna want to feel like they were forced into doing something.
Lauren: That’s true, definitely true.
Emily: But I don’t know. We’ll see.
Lauren: What else? Is anything else hot?
Emily: You know I’m so anxious to talk to our guests I think we should just jump into a commercial break and bring them on when we get back.
Lauren: Yeah. Well, I’m very excited as well so. Stay tuned we’ll be right back with our guests.
Announcer 2: Realtime Digital will be back after this download from our sponsors. [music]
Welcome back to Real Time Digital, presented by TheJARGroup.com. Online marketing with measurable results. Here are your digital divas Emily and Lauren.
Lauren: Hello, welcome back to Real Time Digital. We are your digital divas. I’m Lauren.
Emily: And I’m Emily welcome back to the show.
Lauren: We’re here from the JAR Group and now we have with us Andy Dunn. CEO and Founder of Bonobos. Welcome Andy.
Andy Dunn: Thanks so much for having me.
Lauren: So do you just want to get started tell us a little bit about Bonobos and how you came up with the concept and how you guys got it started?
Andy: Well, Bonobos is simple. We started the company because we believe that men want to look good but they don’t like shopping. And we looked around at all the companies out there and we didn’t see anyone who was really using the Internet as a way to deliver to men with great clothing and a great clothing experience. And so we started in the category that we found particularly difficult, which is pants. You know, to find a great pair of pants, you typically have to spend four to six hours at three to four stores to find the right pair. We made what we thought was a better cut. Started selling those pants over the Internet paired with our customer service ninjas and simple web shopping experience and, lo and behold, found that there were a lot of other guys out there that had the same problem that we did.
Emily: That’s awesome. It’s incredible where Bonobos has come. You guys have such a loyal following. Because you guys are all over the Internet, there are no brick and mortar stores. Is that correct?
Andy: That’s right.
Emily: So how have you been able to grow ‑ being an online company ‑ so quickly and been able to really boast the merits of your pants?
Andy: You know, it’s funny. I think sometimes when people start an e‑commerce business, they assume that the secret sauce in the marketing is about website and social media and all the different ways that you bring a product to market. We actually believe that it’s about the product. If you have the right product, your first five or 10,000 customers are going to come to you just through great word of mouth and editorial PR. That’s in fact, what happened was we went out, our first year, we sold 12,000 pairs of pants over the Internet to 5000 guys. Those 5000 guys, it turned out, had big mouths.
Today, three years in, word of mouth is still 40 percent of our customer acquisition. Editorial PR is 20 percent. We’re really only, at this point, starting to figure out how we scale online marketing and paid acquisition.
Emily: Right.
Lauren: So, also… recently, more recently rather, you guys have started moving into different categories. I know you guys launched dress shirts last week, I think? And launched blazers as well this past month?
Andy: Yeah, that’s exactly right. So that word of mouth around our pants was really about the fit. The fit issue that we saw was that you could go to a mass market retailer and buy an American cut of pants tends to be boxy. It doesn’t tend to be very flattering to your figure.
The other alternative is the European cut. The European cut can be great, but it tends to assume that you’re very, very slender, very trim. Sometimes it’s hard to squeeze into those pants. So we said, “Let’s take this same model that has made us successful in pants. Let’s apply that to blazers and dress shirts.” So we’ve developed two grade cuts of dress shirts. The alpha on our dress shirts actually launched just late last week.
It’s called The BMT Eliminator which is the Billowy Muffin Top Eliminator, which is taking care of that issue of all that extra fabric you get that bunches up around your waist and your sides with the boxy cut of shirts. We’re doing the same thing in blazers. It’s a tailored cut. Not too tight, but not too boxy. We think it works for a lot of guys.
Lauren: Right.
Emily: Absolutely. Now, our boss wears the Gatsby’s Gone suit to work all the time. Always makes quite the impression. It’s a pretty awesome seersucker pattern. [laughs]
Andy: Ahh, the seersucker.
Emily: I also see that you guys are starting to offer other brands on your site besides Bonobos. What led to you the decision to offer that?
Andy: We’re really excited. For example, we’re partnering with a company called Belted Cow of Maine. Belted Cow is a great American company that makes casual belts that have a lot of color and energy to them. That we think pairs nicely with our product and helps our customer start to begin to pull together their entire outfit. This is a very interesting shift in the landscape. It used to be that when you had a great apparel brand ‑ think about Ralph Lauren or think about where Donna Karan was in the 90s. The model was: you extended that brand into every category under the sun.
You licensed it. You went into sunglasses. You went into lotion. You went into every single category you could to try to make money with that brand.
The problem is that when you do that, you start to lose your authenticity on what made you great to begin with. Because it’s very difficult, from a product development standpoint and a design standpoint and a sourcing standpoint, to be good at all these categories.
So what we realized that there was actually a paradox, which is that if we didn’t go into other categories, we could make our brand. We could make Bonobos be that much of a higher quality. At the same time, we want to offer guys the entire outfit. That’s when we discovered that we had a channel.
So we took a couple of different brands: Belted Cow in belts. Ernest Alexander, who was an intern of mine who makes amazing men’s messenger bags and tote bags here in New York City. We started to use our web site and our email list as a way to market those products as a part of the overall Bonobos suite.
It’s gone incredibly well. Most importantly, from a customer standpoint, what we’re hearing is, “We really view you guys as a solution. What are you coming out with next?”
Emily: Right.
Lauren: So now you guys really are becoming an overall web solution for men in the online clothing space obviously. What else is in store for Bonobos? What else are you guys coming out with soon?
Andy: If you think about the way that guys pull together their outfits. We started in pants. We’ve added shorts. We’re now adding a jacket, a blazer, a dress shirt. We’ve got polo shirts. We’ve really pulled together the basics of the outfit in 2010, and then surrounding that with great belts, bags, shoes, accessories. I think by the end of this year, we’ll feel like we have a web site that offers you the ability to do the basics and staples of your wardrobe. But, we’re not satisfied with the model where all of the input comes from our internal team on what we carry. So we really admire a company called ModCloth on the women’s side which has got a great “Be the Buyer” program. We aim to launch some of these social engagement features ourselves. Where we can really enable our customers to help guide us on what we offer next, what we sell next, and what they need.
So if you go on our Facebook page yesterday, we were asking a question about who makes the best undershirt? We had 47 comments. We plan to take those comments internally. Then sort of figure out how do we forge ahead in this category based on what we’re hearing from the consumer.
A little bit later today, I have some exciting news. We’re gong to be launching social engagement features on our product pages for the first time.
Emily and Lauren: Cool.
Andy: This enables our customers to say that they like a product, to share it and recommend it on Facebook or Twitter. But most importantly, we have an algorithm that enables customers to review the products. Only customers who have bought a product can review it. We plan to establish a scoring and weighting system over time for people that we think are offering the best feedback, and flip the switch on the entire way that the fashion industry is run.
Fashion industry is normally about expert merchants and designers that hand down a product on a runway. What companies like Bonobos and ModCloth are saying is: there are some very tasteful users and customers out there who are exceptionally discerning, who have great ideas and energy. We can empower them to allow them to build the Bonobos brand side by side with us.
Emily: That is so cool. That is really exciting. Also, going off of that, your social media following for Bonobos is amazing. Your Facebook page and with everything you publish, you seem to be over 50 comments for everything to pants to dress socks and wide variety of topics. How has that become such a powerful community and forum for Bonobos followers and fans to really interact with the brand?
Andy: You know, it’s funny. Social media is typically thought of, I think, in the average company as: how can we use this tool to market to our base and talk to our base? At Bonobos, we started with a different premise. That was: how can we use this tool to learn from our base? When your primary goal is learning versus marketing, and when your secondary goal is serving, creating that outlet as an additional customer service channel, I think the customer starts to feel like this is a different kind of interaction and this is a different kind of company.
Let me just give you an anecdote. Yesterday, we had a tweet come in. I think the Twitter handle was Beam_ad. The individual behind that Twitter account said, “I don’t really like this dress shirt Alpha program. You guys announced it six months ago. It turns out if you sign up, you still have to pay $75 to buy a shirt.” I think he was under the impression that the shirt would be free.
So I replied to him, then one of customer service agents replied to him. We offered him the shirt for free. He direct messaged me back and then today… I think actually, I think it was yesterday. He came back and said, “In spite of what I said about these Bonobos guys yesterday, they’ve got a great company. Their customer service is awesome.“
That’s how we think about social media from a Facebook and Twitter standpoint. It’s about learning and serving, not about marketing. I think that creates a different kind of quality of interaction in a relationship.
Emily: Right. Amazing. That’s really cool to hear. You guys totally get it. So tell us a little bit about the experience of buying pants on your website. How does that work if somebody wants to buy pants and, just the sizing and making the selection?
Andy: Well, right now, it doesn’t work particularly well. We have just about sold out of our product which is a first in our company’s history.
Lauren and Emily: Wow, congratulations.
Andy: So it is just not that much available and we apologize for that. We have got a program launched where we are offering store credit out to anyone who is disappointed in that experience. But over the course of the next two to four weeks, we are going to be stocking back in a major way. And the experience is really straightforward. You come in and you pick a couple of sizes you think work for you, starting with your waist size. If you think you are a 32, maybe a 33, you pick up those two sizes.
You add them to your card, you check out. Pants come to your office or your home within a couple of days. Then you try them on and whatever doesn’t fit you send back. The shipping is free both ways, so that you can hone in what your size is. And then once you know your size you can come back as new product comes out and start to add those products to your wardrobe.
The model is based on the fact that you are going to bring the fitting experience into your own home. At the same time, what we discovered is there are some guys who no matter what you do are just scared to buy for the very first time online.
Emily: Yeah.
Andy: We are doing a couple of things to address that. We developed a “fit pod.” Fit pod is what we’re calling it. They can come to corporations and come to public spaces and enable guys to get fitted in person. So we will be out there in the field. We are talking about opening one street level showroom type space in New York City next year that will enable our New York customers to do what they have been doing anyway which is just showing up at our office and demanding to try on pants. And we are dabbling with a couple of wholesale conversations talking to some retailers that we admire. Because what we realized is that while men don’t like shopping in aggregate it is not necessarily a great experience to only be able to buy something over the Internet. So we developed the right complementary fitting channels if you could call them now, to get people into the brand, into the pant and feeling confident with what their size is.
Emily: All right. That’s awesome. Seems like you guys really understand the consumer and can’t really fail if you know exactly who your customers are. So what is in the name, this is just kind of an off base question but, for everybody out there wondering what in the world does Bonobos mean, can you tell us a little bit about history on what is the brand name itself?
Andy: Well, there is a lot made of the Bonobos promiscuity. It is a cousin of the chimpanzee, not known to be different from that animal until the early 20th century. But what I think really makes it cool is it’s the most evolved animal on the planet. They have developed a society with no war, there is a great book out by a Congo researcher named Vanessa Woods about how the Bonobo has developed a really cool matriarchal fun loving spirit society where even the adults retained childlike traits well into older age. And we think that we have got something to learn from this animal.
And so the idea is, our customer is someone that wants to look good, wants to have fun, wants to be confident in what they wear, wants to not take themselves too seriously. But it doesn’t think it’s very cool spending the entire Saturday and Sunday at the mall shopping. And so we view bonobos as a very evolved animal. We consider our guy as a more evolved guy and we also believe that in a whole that we are providing, that guy with a more evolved men’s clothing experience.
And so this is all the inspiration behind the Bonobo and we were excited last year to partner with Lola Ya Bonobo which is a Bonobo orphanage in the Democratic Republic of Congo.
Emily: Wow.
Andy: We sent about $15,000 worth of proceeds which I call more than a 100 percent of profits because we weren’t yet profitable last year, to preserve the conservation of these animals who live in a country where not only are bonobos not safe, human beings aren’t even safe, sadly, in that country.
Lauren: Well. That’s quite a background on the brand name. I am excited to hear.
Emily: I love the meaning. It’s very cool.
Lauren: The actual thought behind it, but Andy we are out of time but thank you so much for being on our show. We really appreciate it.
Emily: We are looking forward to seeing more Bonobos that’s going to come out with the next.
Andy: So are we. Thanks so much.
Emily: All right. Thanks a lot.
Lauren: Thank you.
Emily: Hi and welcome back to Realtime Digital. I am Emily Liedblad, I am here with Lauren Garcia.
Lauren: Hello.
Emily: Back with TheJARGroup.com. We are so excited to feature Jeff Price on our show. He is the President and Founder of Tunecore which is a huge digital music distribution company. Welcome to the show Jeff.
Jeff: Thank you for having me. Really appreciate it.
Emily: Absolutely.
Lauren: We are excited to have you.
Emily: Yeah, we really are. It is of course awesome. Just to get started, why don’t you tell us a little bit about Tunecore’s mission for music and how it works, what is the business model?
Jeff: Sure. Tunecore is the largest distributor of music in the world and Tunecore allows anyone that creates music or sound or spoken word or church choir or comedy album, you name it, to have access to have their music or sound distributed around the world. They hit the website, they upload your song as you click. iTunes is the place as an example where you like your music to be sold, and literally within three to five minutes it has been delivered to iTunes, usually going live within 24 hours, making it available for anyone around the world to buy.
And when your music sells, you get 100 percent of the revenue via a non‑exclusive agreement that you can cancel at any time.
Emily: That’s incredible. And we were actually just reading about how the recent development that Tunecore artists really go live within 24 hours, that’s quite a thing to say. Why don’t you explain on that a little bit more and why that’s so unique?
Jeff: Yeah, well it ties in to the way the whole music industry used to work and it is fascinating. Distribution used to be the thing that was the hardest to get and took the longest to get, which ties into your question. And what I mean by that as an artist, traditionally, if you wanted to get your music available for people to buy, you had to go through a very long, long process before it got distributed.
And the process was getting signed by a record label, so you play gigs and then the record label A&R person would see you play and then if they like you they will move it the food chain to the senior director and then the director to the VP who would clearly do the signing and then a contract and then accounts.
Anyway, it will go on and on and on. Then you go into a studio, re‑record your songs and the recorder will manufacture your CD and they would actually give it to a distribution company. Record labels don’t distribute, the distributors distribute. And a distributor has like, you know, for physical distribution, it has a one‑half a million square foot warehouse with 50‑foot high ceilings. And 30 or 60 people that run around that warehouse picking and packing and shipping orders and shipping them all out to the record stores. Or, what used to be record stores across 3000 square miles of the United States and 10,000 plus stores.
And what was interesting is in distribution, music distribution, every CD or vinyl record or whatever the format was that shipped out could be returned at any point for a full refund by the record store. So now you need a whole second division of the distribution company that would deal with what was called, “Returns.” All these CDs that did not sell. And when they came back, they would be cracked or broken. They would either need to be destroyed or worked further so that they can be shipped out.
And now think about the finance department. You need to keep track of these 30 or 60 or 90‑day credit terms with stores to pay for the inventory that was manufactured up front. And then some of it gets returned for refunds, some of it reshipping out. So just the infrastructure on the shipping and the finance and returns was huge.
And then you need another 30 to 50 people running around the country going into physical retail stores and begging and borrowing and pleading and buying your way onto the physical shelf. Because, if your CD is not on the shelf it couldn’t be bought. And very simply, by the way, record labels make people famous and then they monetize that fame, traditionally, by selling the music.
So, it took a long time to get distribution. I mean, you could, as a band, have music prepared and done and recorded then start this whole process to get cornered by a record label. And you are literally looking at a period of a year and one‑half to two years before this music you created, you know, three years ago, could make it onto the shelf space.
So to answer part of your question I wanted to revise part of that perspective. Distribution took years. And it was also only available to the very, very, very, very, very privileged few that were selected by the record labels to become part of that system. And they would actually put, you know, money on the table and take the risk and in return distribute that product.
And then what happened is you had a change in the way people bought music. It used to be that you had to walk into a physical retail store to get it. Now you don’t have to, you can go online. And what is interesting about an online, I’ll call it a record store, which makes me sound completely outdated, something like iTunes…
Lauren: Vintage.
Jeff: … Yeah, oh well, I’ll go back home and listen to my cassettes when I am off the call. [laughter]
But seriously, all of my old college radio shows are all on cassette and now I don’t have a cassette player anymore. I don’t know how I am supposed to listen to them. But anyway, iTunes has unlimited shelf space, unlike something like Virgin Record store or Wal‑Mart where you have a finite number of things that can be in stock. On iTunes, as an example, everything can be in stock. And everything can be in stock and no detriment to anything else. Whereas in the old school model maybe you could have 20,000 different titles in stock but the 20,001st title can’t be there and if it is, that means something else isn’t. At iTunes, everything is there. If they run out of room, they pop in a new Ray drive.
The second major change in the Online digital stores is you have unlimited inventory at no upfront cost. You have a digital file that replicates on demand as a perfect digital copy and balance. The old school model you needed to front money and manufacture these physical things and hope to God they sold. And if they didn’t you were still stuck with the cost. But in the digital world, we manufacture nothing, you have no upfront costs, you just have a digital file that replicates itself.
So, if you have unlimited shelf space and you have unlimited inventory that replicates on demand for no upfront costs, you have just gotten rid of the need for physical distribution and that physical distribution structure, which is what the traditional music industry was. And that is why there is such a shift going on in the marketplace. Because Sony, yes, they have record labels but it is about Sony distribution. And the same thing with Universal, it’s about the distribution. They used to have a stranglehold on the distribution because of the infrastructure and the costs. But as that shifted, you don’t need that same infrastructure now you just need access.
So getting back to your question, the timing, Right? What you really need to do is create a way for someone to upload a music file, upload an image, click a button or two or three and have that information delivered by the Internet to the new music store, in this case, iTunes. And it all can happen Online. And that can happen very rapidly if you build the right system for it. So, Tunecore has the best system in the world for this. Literally, you can hit our Website, upload your music, upload your art, click iTunes and within three to five minutes it has been delivered to the iTunes music stores around the world.
Next thing that needs to happen is iTunes needs to make it live. Now when we first launched Tunecore five years ago it would take six to eight weeks for that music to go live.
And as you move through time the six to eight weeks got a little lower and then became five to seven weeks and for a while we hung out in the three to four weeks. And the reason for that, be it Napster or Rhapsody or eMusic or Spotify, which we just started working with, or iLike or MOWG or iTunes is that when you send them the music, on their side, they have to actually do something with it. So, to provide a metaphor: Imagine for a moment you shipped a big box of CDs to what used to be Tower Records and they received it and it went into their back room. Right? FedEx can overnight that delivery and it lands there but just because it is there doesn’t mean that it is available for sale. Someone in the record store has to go in, open up that box, pick the CDs out and put them onto the rack out on the floor, put in a little bin card. And until they do that, the music isn’t available to buy.
Well, it is the same thing in the digital world, but instead of a human being opening a box you have systems that process music files or put, I don’t know, wrappers around them, digital wrappers or technology around them. Or, in some cases you actually have human beings looking at the album cover art on the computer screen to assure that it is not pornographic and someone is not claiming that it is a DVD or puts a URL on it or something. So, that is a process that can slow down the ingestion of the music once it has been delivered. And it used to be six to eight weeks, then three to four and what’s happened more recently as Tunecore has gotten better and better and better delivering music and understanding sort of the nuances that the store wants.
For example, if Tower Records said we would like 60 CDs and we need those CDs sent to us in one box. And in that one box, we need four other boxes. And if you do that, we can get it on the floor faster, then you package it like that. So, we learn the digital, sort‑of, analogy of that and we get better and better at delivering. So, as the best music distributor in the world, we have a system that prepackages the music in such a way that it is trusted on the other side. And it moves out on to the “digital floor” more quickly.
So, we have recently moved from three to four weeks now you can get distribution, literally, the fastest it has ever happened, because this is awesome. Someone came to Tunecore, they uploaded a ten‑song album, they clicked the iTunes button, they paid the flat rate of $47 and it was live on iTunes within 28 minutes.
Lauren: Wow.
Jeff: Which I was stunned by. That is not for everyone, but it seems right now that the majority of the releases that are moving in through the system are going live in under 24 hours. And I want to make sure I am clear on this, that doesn’t mean that is going to happen for everyone. But it is much, much faster now than it ever used to be. So distribution, which used to take the longest amount of time to get, now actually is the first thing that you can get more quickly than just about anything else.
Lauren: Right. So you guys have obviously done a fantastic job cutting down the distribution time but since people are uploading their own music and they don’t have a manager representing them and doing all the promotion, how does Tunecore help promote its artists? Are you guys using social marketing a lot or…
Emily: Partnerships?
Lauren: … partnerships? Yeah. Tell us a little bit about how you promote your artists.
Jeff: Sure. Well, there are Tunecore artists but I want to be clear that we don’t control the masters and we don’t take rights and we don’t take revenues. So, we work on behalf of our customers but I want to make it clear that we don’t control them. You have complete freedom. That being said, what is interesting is in 2009, last year, there were 65 million units of Tunecore customers’ music bought online.
Lauren: Wow, that’s huge.
Jeff: It is, it’s ridiculously huge. And that is split between paid streams and paid downloads. And that $65 million generated $35 million in gross revenue for Tunecore artists. The Tunecore artists, collectively, represent one of the most valuable music catalogs in the world and are outselling, in many cases, some major record labels. It’s insane. So, you have artists, for example, like Drake who used Tunecore before he got picked up by a record label. And Drake sold 300,000 singles in 11 days, outselling Lady Gaga.
You have a band called “Never Shout Never” that used Tunecore and uploaded three, four‑song EPs and between those three, four‑song EPs over the course of about seven to ten months sold almost one million songs across those three, four‑song EPs.
You have an artist named Liam Sullivan who’s a comedian, he uploaded a video to YouTube called “Shoes” and over the last two years he’s sold over 2.5 million songs off of his records.
Lauren: I’ve seen that one, yeah. One of my friends…
Jeff: Sorry?
Lauren: Oh no, I was just going to say my friend’s band, I actually just told them about Tunecore, well they obviously had heard about it but I kind of, I saw one of their shows last week over at Brooklyn Bowl and kind of pushed them to sign up with you guys and so they’re really excited, I think they signed up last week…they’re “Darlingside” so…
Jeff: Make sure you say the name of the band, Darlingside.
Lauren: Darlingside.
Jeff: Awesome. So by the way Kelly, the guy who is Kelly, that does Shoes, he actually produced, wrote and directed some videos, webisodes that are launching on Monday called the Showiest Show, sponsored by Tunecore so it actually has a Tunecore tie and that launches this Monday, I believe that’s the twenty eighth of June. Anyway but it’s not just those three, I mean there are literally thousands of bands from Nickasaur who have sold well over you know three hundred and fifty thousand songs off of a couple of releases to Boyce Avenue who have done over one point five million songs to the Medic Droid who sold hundreds of thousands of copies of their single. I mean the list of artists that are selling music in large quantities is, it’s just mind numbing. And what’s interesting is that most people don’t know it because the traditional system that exists to attract music sales, which is owned by a company called Nielsen, and it’s called Soundscan, doesn’t pick up on a good chunk of these sales and of the sales that it does pick up it doesn’t aggregate and present the information correctly. For example, Never Shout Never sells upwards of a million songs across three, four song EPs. That’s the way people buy music now. They buy it by the song across catalog; they don’t buy it by the album anymore.
And in my opinion, that’s the way it should be more looked at is the value of an artist, if you’re putting him on a chart, shouldn’t be about how many copies of an album they sell, it should be how many songs, or units or ringtones or giggings come or merchandise or copies of the song on Rock Band or sponsorship deals, or ad revenue, it’s all these new income streams just combined to really make that chart up. But I have significantly digressed here, so in regards to marketing and promotion, do we market and promote? Absolutely. We have an email, artistpromotion@tunecore.com, send your information, a gentleman here named Chris markets and promotes Tunecore artists aggressively. We do digital storage for features. We’ve had I think about thirty TuneCore artists featured as the free iTunes single download of the day. We’ve had over a thousand featured between Amazon and Rhapsody and Napster and Nokia and all the different places. We’re also tied into a partnership with Guitar Center.
Where our customers’ music is actually played in the stores and on the whole music with front and back tags meaning it will say the name of the band and the name of the song. We do promotions tied in with Yamaha or Rollin or Gibson or PayPal where we’ve actually put together or at the Hard Rock Hotel or Gucci, where they’ll put together playlists of music made available for free download. People can then enter a code at iTunes and these playlists download for free provided the bands want to do it. We provide streaming media players where after your music has been distributed you can just create your own streaming media player which has your songs in it that stream in their entirety. Allow someone to become your fan, you collect their email address. It also lets you put in your Flickr account, your YouTube account toward, and has a donate to the Band button.
But to be perfectly honest, I can’t take credit for what the artists are doing. They are responsible for their success and it’s a testament to them and their art. And what I mean by that is, it traditionally used to be that people would discover music through MTV, commercial radio and print magazines. I mean that was really it. Alanis Morissette sold fourteen million copies of her album because of MTV and commercial radio play.
You know the print magazines didn’t hurt, but that’s why she did. What’s occurred though is the way people discover music has changed. We used to turn on the radio and now we go online. We used to watch MTV, now we go to YouTube.
We used to read Rolling Stone and many people do but now we just got the Internet and read MP3 blogs and see what our friends are listening to or look at Tweets.
So what’s occurring is the media outlets where people used to go to get marketing and promotion had gatekeepers. And MTV would only play videos that were promoted to them pushed by the record labels. Rolling Stone very rarely if ever I can’t think of a single time put an artist on the cover of that magazine that wasn’t signed to a record label. Now, it doesn’t work like that anymore. Anyone in the world can go to YouTube and upload a video. Be it Universal Records, Universal Republic as an example can do that in the exact same way that you can. So, we have equal access to the media outlets. The major thing that needs to happen is the art needs to cause reaction.
For example, Smells Like Teen Spirit is a fantastic song by the band Nirvana. It was played a lot on the radio. If people didn’t like it, if they didn’t react to it, it wouldn’t have mattered how many times you heard it. Having marketing dollars behind you and gaining the exposure is necessary but is not the thing that causes you to break and get popular. It’s the music itself that causes it.
And as sort of further proof of that, 98 percent of what the major record labels have released fail. And they have spent billions of dollars marketing and promoting that music. They have pushed it out through media outlets. Pumped it into the radio, shoved it into elevators, beat you over the head with it. But you know what, if you don’t like it, you don’t buy it. And that’s why 98 percent of the music they pushed out failed, two percent succeeded and sort of offset the costs.
So, in response to how do you market and promote. There is no magic bullet. The magic bullet is your art has to cause reaction. You have direct access to the media outlets. You can go to YouTube you can go to Vimeo, you can go to video for Funny or Die if you want. You can tweet, you can MySpace, you can Facebook. And if you’ve got something that people react to, and you get it out there to the media outlets, and yes, it takes work. It’s not going to happen by magic. You have to actually put it up there and Tweet about it.
But if people like it, you’ll find that people ReTweet. You’ll find people put it on their Facebook page. You’ll find that they’ll take your stream and media player and they’ll stick it on their page. And it’s that viral communication through social networks combined with access to media outlets that caused these stands like Nickasaur, Boyce Avenue, and Megadroid and Drake and so forth to explode in ways that could never have happened before.
Emily: Yeah. Well, we love how Tunecore is eliminating practically every barrier that exists for musicians and their struggle to be heard, and then just changing the face of the music industry entirely. Why don’t you just tell us a little bit just about how an artist can get started on Tunecore?
Jeff: Well, thank you for that. Literally just anybody on the planet just goes to Tunecore.com, you create a free account, you upload your song, you upload album cover art or your release art for a single. If you don’t have it, that’s OK. We’ll make free art for you. You pick a genre, like Alternative. Don’t worry if you don’t have the UPC, we’ll give you one for free. And then you pick the stores you want it to go to. You click buttons. You put in OK, go to iTunes, you know I don’t want it in iTunes Japan, but I want it in iTunes Canada. So you can do anything like that. Add it to one of the twenty some odd stores we have there. Upload the song. And that’s it, you’re done. You know, you pay a check out and you’re done.
And then what happens after that, yeah the digital stores will get it. They make it go live and when your music sells the digital stores report back the accounting information, the sales information. Usually thirty to forty days after the end of the month. So what’s sold in January, for example, is reported in March.
The way the accounting system works is, you can just log in to your Tunecore account 24 hours a day, seven days a week, 365 days a year. See your balance and withdraw your money at will. You can either withdraw it by PayPal, you can mail yourself a check and we have electric fund transfer launching in about thirty to forty days.
Lauren: Oh, very cool.
Jeff: There is no minimum… yeah, there is complete freedom and flexibility at all times, to add stores, remove stores, get your money, see your accounting. We also provide analytics around your sales, you can see your top selling songs on iTunes, you can see on a little graph how many copies you sold last month. You can see your earnings. You can get high resolution PDFs, which you can break down by geo location ‑ the best selling city for your music, the best selling songs, relate it week to week and a whole bunch of other whistles and bells like that.
Lauren: Awesome, well, Jeff, we are out of time but we are so happy to have you on our show and learn a lot more about Tunecore.
Jeff: I really appreciate the opportunity, thank you. I can’t wait to say I knew your friend’s band “when,” that’s awesome. [laughter]
Jeff: One more thing, what is the name of the band again?
Lauren: Darlingside.
Jeff: Make sure you email us at artists promotion with Darlingside so we can see what we can do for the band.
Lauren: Sounds great, thank you.
Emily: Thanks Jeff.
Jeff: Thank you. You’re welcome. [music]
Check out the original announcement here.
