The document discusses disrupting the traditional music business model. It argues that the music industry sees music as a product rather than a service, and customers rather than fans. The business model is antiquated and not segmented. It suggests engaging fans through different tiers like whales, dolphins, and minnows to monetize the fan base like free-to-play games and virtual goods do. Successful models like the NFL and Kickstarter campaigns are highlighted that leverage the most engaged fans to support the wider fan base. The key is understanding fan segmentation and developing tailored offerings.

1. Monetizing Music 2012
- Disrupting The Music Eco-System
Hany Nada

2. “You've lost control of the means of distribution,
promotion, and manufacturing. You've lost
[inventory] control… what you sell has become as
free as oxygen”
-Michael Wolff, NYT

3. We’re doing it wrong
• Music is not a product it’s a Service
• You don’t have customers, you have
Fans and Patrons
• Business model is antiquated, its not a
one size fits all business, analyze and
segment
• Lawyers don’t innovate, entrepreneurs
innovate
Fan Engagement = $200B industry
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4. Product vs. Service
Customer vs. Fan
• It all started with sheet music
• Creation, distribution, promotion and
monetization were controlled under a
licensing and access model facilities by
strongly defined structure and a Self-
reinforcing system
Customer
• “One size fits all” packaging of music
• $$$ to lure broke artists/bands ensures
sustainability of old model
• Do you know your fans ?
Patron Fan
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5. Stuck in old mind-set
• Problem with entire ecosystem
• Needs dramatic disruption
• New ways to engage with fans
• Segmented offers/services
• Give away the product, sell the
service
• “Crossing the chasm” moment
Stone Roses Heaton Park performance, 70K fans Video
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6. A Monetization Eco-System
Segmentation + Tools = Data you can act on to maximize your revenue potential
Whales Dolphins Minnows
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Give Whales special Access Reward Dolphins to keep them Monetize Minnows by allowing
engaged and loyal them to extend fan base

7. NFL’s Fan–based $40B franchise
Suites
49ers Stadium: $125k-$500k
$675mm and
counting… Club Section
20k-80k License
+ $400/game
Reserved Section
$2-$12k License
+$100-$200/game
TV rights for “Minnows” worth $6B/year
“Bleacher seats”
$2k License + $85/game Packers – ARPF:$390 / NFL ARPF:$50
TV Rights * CBA states that players get ~50% of revenue
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8. Free to play games
• Heavily data driven
• $50mm-$1B gaming franchises
• 2-10% of gamers actually pay
• 50% of revenue are 5% of payers
• ARPPU of $0.10-$40.00
• Whales spend $10k/month
• Value fan base, game longevity
matters
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9. Virtual Monetization
• Poison made $50k last
month
• Creative monetization
strategies based on human
behavior
• “Front of the line”
• Bragging rights
• Super fan status
• Channel control
• ARPF = $0.16
• ARPPF= $2.38
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10. 10

11. Kickstarter breakdown
949 Fans
Whales- 48% of raise $540k
949 Fans/4% of base 4%
Range of contribution $300-$10,000
Signed album+ book+ surprise gift
“Veblen” Goods
Dolphins- 49% of raise
13k Fans/ % of base
13k Fans
Offers: $25-$125
Prerelease CDs+ booklets $550k 51%
“positional goods”
Minnows- 3% of raise
11k Fans/45% of base
Offers: $1-$5 11k Fans
single track + album downloads
$37k 45%
Facilitates Dolphins and Whales

12. Free To Play Music
• Become very active in social marketing
• Give your [product] to sources that are
willing to share the data!
• Segment and target fans with specific
offers – Fan Relationship Management
• Create specific and scalable offers for
your Whales, Dolphins and Minnows
• Learn economics- there is a science to
this
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13. What’s Your ARPF ?

14. Thank You
Hany Nada / hnada@ggvc.com