What is the true value of an email address?
by David Ross
www.musicrow.com
Artists and record labels historically have had little or no direct fan relationships. CDs were shipped and placed on store shelves and the identities of purchasers were mostly a mystery. As a result, marketers had to use shotgunsinstead of sniper rifles when creating advertising campaigns. The Internet, email and social networks are rapidly changing that equation as shown by a new study completed by Music City Networks, "The True Value of an Email Address." MCN is a web development and interactive media company founded in 2001 that caters to entertainment artists. The study compiles responses from 1384 random fans who opted into the databases of eight artists inside the MCN network. It studies behavior over a two year period. Top level findings show that the average fan email address is worth $111 per year in artist revenue both online and off. "Of that $111," says MCN President Lang Scott, "the vast majority is being spent away from their website ($98) on artist stimulated revenue streams like iTunes, ticketmaster, and at retail stores."
According to the study, only about 38% of users actually make purchases, therefore key ingredients in increasing revenue is building the number of unique visitors to the website and the size of total email network.
Demographics
Breaking down respondent demographics, the largest age categories were 35-44 (27%) and 45-54 (26%). Surprisingly 25-34 year olds were only 17%. Gender breakdown was 68% women and 32% male. About 39% were artist fan club members. Engaging customers online was also found to benefit future purchases. Of respondents, fans of a particular artist said they were 88% very likely or likely to purchase the artist's next album and 81% very likely or likely of attend
their next concert.
"It reinforces the fact that artists should be making every effort when out doing live shows to acquire email addresses," says Tim Putnam, MCN Partner and VP of Marketing. "The email list is complimentary for all types of revenue both online and offline. It's really about relationship building. If we are hitting them once a month with a newsletter, we are keeping the brand on the brain. But if we bombard them with spam emails they will be gone."
Like this MCN study, the recent CMA research also shows a very small percentage of the consumers responsible for a disproportionately large share of revenue. One interesting difference between the two studies is that the CMA data included digitally engaged consumers and those that still rely mostly on traditional media. The MCN study by definition focuses on digitally engaged consumers, those with email addresses. Also MCN's study has the added perspective that is is comprised entirely of fans. Even so, it seems to mirror the CMA findings which place fans into high spending countryphile and low-funding musicphile categories.
"My hope with this study is that management and labels will recognize that by increasing their email database it actually does create return on the investment, there is a reason to invest in it," says Putnam.
"If you are an artist what's one of your most valuable assets other than your music? It is your fans," adds MCN Partner Paul McCulloch. "Do you have their email, phone number, where they live, etc.? An artist may be on one label today, but a year later have a different deal. Developing a fan database is career critical."
Summary
The study was conducted by Ellery Long, an MBA student at Vanderbilt University Owen Graduate School of Management with concentrations in Marketing and Strategy. His research is primarily focused on new media and social media marketing. Ellery executed this project for MCN while working as an MBA Marketing Intern this summer. He will complete his MBA May 2010. Email: ellery.long. 2010@owen.vanderbilt.edu
www.musicrow.com
Artists and record labels historically have had little or no direct fan relationships. CDs were shipped and placed on store shelves and the identities of purchasers were mostly a mystery. As a result, marketers had to use shotgunsinstead of sniper rifles when creating advertising campaigns. The Internet, email and social networks are rapidly changing that equation as shown by a new study completed by Music City Networks, "The True Value of an Email Address." MCN is a web development and interactive media company founded in 2001 that caters to entertainment artists. The study compiles responses from 1384 random fans who opted into the databases of eight artists inside the MCN network. It studies behavior over a two year period. Top level findings show that the average fan email address is worth $111 per year in artist revenue both online and off. "Of that $111," says MCN President Lang Scott, "the vast majority is being spent away from their website ($98) on artist stimulated revenue streams like iTunes, ticketmaster, and at retail stores."According to the study, only about 38% of users actually make purchases, therefore key ingredients in increasing revenue is building the number of unique visitors to the website and the size of total email network.
Demographics
Breaking down respondent demographics, the largest age categories were 35-44 (27%) and 45-54 (26%). Surprisingly 25-34 year olds were only 17%. Gender breakdown was 68% women and 32% male. About 39% were artist fan club members. Engaging customers online was also found to benefit future purchases. Of respondents, fans of a particular artist said they were 88% very likely or likely to purchase the artist's next album and 81% very likely or likely of attend
their next concert.
"It reinforces the fact that artists should be making every effort when out doing live shows to acquire email addresses," says Tim Putnam, MCN Partner and VP of Marketing. "The email list is complimentary for all types of revenue both online and offline. It's really about relationship building. If we are hitting them once a month with a newsletter, we are keeping the brand on the brain. But if we bombard them with spam emails they will be gone."Like this MCN study, the recent CMA research also shows a very small percentage of the consumers responsible for a disproportionately large share of revenue. One interesting difference between the two studies is that the CMA data included digitally engaged consumers and those that still rely mostly on traditional media. The MCN study by definition focuses on digitally engaged consumers, those with email addresses. Also MCN's study has the added perspective that is is comprised entirely of fans. Even so, it seems to mirror the CMA findings which place fans into high spending countryphile and low-funding musicphile categories.
"My hope with this study is that management and labels will recognize that by increasing their email database it actually does create return on the investment, there is a reason to invest in it," says Putnam.
"If you are an artist what's one of your most valuable assets other than your music? It is your fans," adds MCN Partner Paul McCulloch. "Do you have their email, phone number, where they live, etc.? An artist may be on one label today, but a year later have a different deal. Developing a fan database is career critical."
Summary
- The No. 1 most influential factor in building revenue is the size of the overall network, the study concludes.
- There is very little statistically significant variation in spending between different demographics and member types.
- Only a small sub-set of users make purchases
- Concert tickets and brick and mortar album purchases are the largest sources of revenue
- Fans that opt-in to a client's database are invaluable resources for future revenue growth.
The study was conducted by Ellery Long, an MBA student at Vanderbilt University Owen Graduate School of Management with concentrations in Marketing and Strategy. His research is primarily focused on new media and social media marketing. Ellery executed this project for MCN while working as an MBA Marketing Intern this summer. He will complete his MBA May 2010. Email: ellery.long. 2010@owen.vanderbilt.edu
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