How much money did you earn in the last 12 months? If you got a chance to operate a business that earns $50,000 in after-tax income, would you be satisfied? What about $250,000 annually? How about $2,089,568 in eight months?
If you're wondering why I’m throwing these numbers around, don't worry. I'm not going to try and sell you a self-help book promising you riches. Instead, I'm going to talk about how successful new-media businesses such as podcasts, blogs, YouTube channels, etc. are turning numbers into numbers – and how to start thinking about using these online vehicles for your music business. What I mean by “numbers into numbers” is that these businesses are building large audiences that consume their content, then finding ways to monetize it.
What would you say if I told you that I'm going to start a podcast, and by year three I'm going to make $2,089,568 in net profit? Well… that's exactly what John Lee Dumas did when he started his podcast, Entrepreneur on Fire, in 2012. If you don't believe me, here’s the proof:
John discloses his income because it supports the content he’s creating. They are self-reported numbers and might be exaggerated, but that’s not the point. If you were to analyze his model, you’ll start to understand the power of a large audience.
In addition to John Lee Dumas and his Entrepreneur on Fire Empire, many more new- media businesses are doing really well. One of them is a relatively new blog by Abby from JustAGirlAndHerBlog.com, which earned $107,000 from January to July 2015. Another comes from a powerful YouTube star, PewDiePie, whose annual earnings are estimated to be $7 million.
These new-media businesses are successful because they create solid content, use the power of the Web to attract a large audience, then find ways to generate revenue from these large audiences.
If you’re an artist or a music-industry professional, this makes sense to you. You’re constantly trying to get new people to listen to your music, so you can create new fans for you or for your artists. What’s different though, is that for many artists the acquisition of each fan costs much more than what that fan brings back in revenues. Based on my experience with clients, it could take up to $500,000 to break an artist internationally. On the other hand, the cost to launch a new-media business could be as low as a few hundred dollars.
Technically, you could record music for a couple of hundred dollars and distribute it through TuneCore or DistroKid for a few dollars more. This might go viral and you could hit it big. But you could also win the lottery tomorrow. Trust me: it takes plenty of hard work, investment, and many hours to make a great recording.
The cost of acquiring new fans is different for each artist. Someone who has a label that can snag the artist some airplay and attract publicity will ultimately gain more fans than an indie artist who doesn’t have the same resources. The label artist will also generate more revenue, because better charting on radio and more press exposure leads to better-paying gigs.
So what’s the difference between a new-media business and an artist? Other than the fact that it costs much more for an artist to generate content, not much. I would argue that artists are also new-media companies. Many are applying the same strategies.
Traditionally, the best way for artists to break out is through the radio, a medium that unfortunately has a large barrier to entry. But radio is an impactful mechanism for breaking artists and creating a mass audience. If you have a team, money and other resources, radio is still a phenomenal tool.
But what if you don't have the resources to go after radio or your songs are unlikely to create a top-charting hit? How do you build your audience? You’ll have to do what new-media businesses do, which is build relationships through the web. There is no easy way to building a large audience. You might be able to buy 100,000 followers on some social media platforms, but those are not true fans, and the followers mostly have non-active accounts. The way to build fans on the Web comes down to hard work and networking.
“The Web is the gateway drug to building one-on-one relationships.” – Gary Vaynerchuck.
At the end of this blog post, I have included links to two keynote speeches by Gary Vaynerchuck and Tim Ferriss that will give you in-depth knowledge of online marketing and face-to-face networking. Hopefully, you can apply this information to grow your audience.
Okay, I’ve touched on the need to focus on growing your audience, but I haven’t gone into detail on the strategies that new-media businesses use to achieve great success. Please revisit our site or sign up for our newsletter, as we will be posting a second part on this subject.
Here’s a video that will give you some insight on how to market in 2015. It’s a keynote speech by Gary Vanyerchuck, who’s a leader in social media and Web marketing. It’s about an hour long, so find the time to absorb it. You’ll gain great knowledge from it. Knowledge is power, my friends.
In addition to online marketing and networking, face-to-face networking is still a fundamental aspect of growing any business, including your music business. The following link is to Tim Ferriss’ podcast, “How to Build a World-Class Network in Record Time”. This is also an hour long, but it’s also fundamental for gaining some incredible insights.