What do you offer over the likes of Bebo and Myspace? Mike Clark, GD Worldwide:

197

Chapter 4 E-environment

In any business, you segment your high value customers and you treat them accord- ingly, but in the music business that doesn’t really seem to happen at the moment. In terms of visibility, we are looking to build this as a strategic business and we know we are not for everyone. We are in that long tail and finding those people is going to be important. We are looking for other alternative communities. Our marketing will take a kind of grassroots approach, in the venues themselves. Q. How do you earn your money? Mike Clark, GD Worldwide: We don’t want to be in the business of horse-trading an artist’s audience as that’s the most valuable thing the artist has, so we create an audi- ence community but don’t hit them with advertising or sponsorship. We take a 20 cut of every transaction that happens in the Usync channel – which is a recognition that we give the artist as much money back as we can, so they can decide how to reinvest it. We don’t ask for exclusive rights deals or touch their copyright and don’t ask for a share of future earnings, and don’t ask for a cut of sales outside of Usync. They can also set the prices they want to. If they want to give their material away for free, that’s fine by us. Q. How much have you generated in sales so far? Mike Clark, GD Worldwide: I don’t have specific figures I can share at the moment, but the situation we are at as an organization is that we have around 30 artists that are either active or building their backstage areas with us. We’ve only just enabled people to come to the site remotely and sign up, and we’re signing up around two or three people a day at the moment. And we haven’t really started any heavy promotion of that yet. We’ve started to work with companies like Sonic Bids [which allows musicians to produce electronic press kits] to promote ourselves to the artists in their database. But we’re also not overly aggressive in terms of acquisition – we don’t want the 3m Myspace artists, we want the hardworking, independently-minded artists who want to put the effort in to make it work. Q. What’s your position on DRM [Digital Rights Management]? Mike Clark, GD Worldwide: We use MP3. Everyone’s started to talk about it but we’ve heard from various people over the last few months that DRM is dead, and that consumers are starting to vote with their feet. DRM has definitely run its course and I don’t think it has a future. There will be much more sophisticated non-DRM models that will emerge in the future. Q. How can bands get access to financing outside of the label system? Mike Clark, GD Worldwide: We are looking at different tools that we can use to support artists from a financial perspective. We feel that copyright needs to be supplemented by some other device or right, and we are looking at ways we can bring those tools. We have looked at Creative Commons and it is interesting, but it is focused on bringing flexibility to current copyright law. We feel that there is another step we could take that is completely outside of copyright, and we are talking with some top entertainment lawyers here in the UK and in the US to help us develop that, and we will probably bring that to market in around a year’s time. In terms of financing, for a small band, getting money together is difficult. So we are working on how to solve that problem. We are thinking that in an artist community, other artists may be willing to put up some money to help other artists, maybe in the form of a levy on some of the transactions. 198 In this section we look at the social and cultural impacts of the Internet. These are impor- tant from an e-commerce perspective since they govern demand for Internet services and propensity to purchase online. For example, in Figures 1.10 and 1.14 respectively we saw how businesses and consumers have adopted different online services. Further aspects of the social influence of the Internet are described in the references to the Information Society Initiative in this chapter and in the section on the online buying process Chapter 9. Complete Activity 4.2 to start to review some of the social issues associ- ated with the Internet. Factors governing e-commerce service adoption It is useful for e-business managers to understand the different factors that affect how many people actively use the Internet. If these are understood for customers in a target market, action can be taken to overcome some of these barriers. For example, marketing communi- cations can be used to reduce fears about the value proposition, ease of use and security. Chaffey et al. 2009 suggest that the following factors are important in governing adoption of any e-commerce service: Social and legal factors Q. How can a band use the site as a marketing tool? Mike Clark, GD Worldwide: The fact is that 45 of new music is discovered through personal recommendation – word of mouth. It isn’t about watching TV ads or looking at who’s bought the front window of HMV this week. If you look at the online communities and sites like last.fm and Pandora, there is a lot to be said for recommendation as a means of discovery. What we’ve done on the site is to help you develop your fan base. There are tools to allow you to share tracks and you can give fans rewards for doing so. I think it’s a far smarter way of marketing artists and creating that buzz. Very often, marketing money is spent against things that are certain. With a new album, people will say ‘let’s do a huge advertising splurge’ across the UK but no one will get fired as they know that album will be successful. They very rarely use those tools unless the artist has already become a success and they want to sustain that success. Q. Why have you gone down the route of e-commerce rather than ad-supported content? Mike Clark, GD Worldwide: In some ways, you need to have an integrity in the rela- tionship between the artist and audience, but at a certain stage an artist may say that he or she is prepared to work with a brand or brand owner if I think they can add value to my community. For example, if a brand does want to sponsor an artist, he or she can talk to the audience and ask what they think. They have much more commercial control over those relationships. For us, we haven’t ruled out the advertising route but we would never do it exclu- sively inside the artists’ backstage areas. Where we might do it is in the Usync commu- nity itself – if a last.fm or Pandora wanted to create a Usync radio with Usync artists, we may look at a sponsor to bring that to market. Source: www.econsultancy.comnews-blognewsletter3229interview-with-mike-clark-of-gd-worldwide.html Part 1 Introduction