Songkick: A winner in exploiting streaming behavior to maximize revenues to the music industry

Concert discovery app Songkick is helping improve monetization of the offline side of the music business, by leveraging information from the fans online behavior.

We’ve all heard about the ongoing battle for royalties among different players in the music industry. Even if not experts in the matter, we’ve all at least heard about Taylor Swift removing her music from Spotify as an act of protest to the fees that are currently paid to the artists. What we’re missing here is that the biggest source of incomes to artists is actually ticket sales, a space where attendance rates have plateaued at 50%, mainly because fans do not even know a show is happening.

I just did a random search in Ticketmaster for concerts in NYC in the next 7 days, and I got no less than 273 different results. This is pretty overwhelming if you don’t really know which specific artist you’re looking for. It is then safe to say that supply is vast for fans to choose from; nevertheless, curation is the key to transform this unstructured immense array of alternatives, into a relevant set of suggestions tailored to the customer’s taste. This is exactly what concert discovery app Songkick is doing.

Songkick, as well as its biggest competitor, Bandsintown, integrates with your music library and your Spotify account to learn your taste and notify you of upcoming concerts in your city. What differentiates Songkick from Bandsintown is that they have recently merged with CrowdSurge to integrate the ticket sale purchase process and bypass large aggregators as Ticketmaster or Ticketfly, who usually keep most of the fees.

Value creation to the users

This one is pretty simple. Songkick lets you know when your favorite artists are playing close to your city so you can plan ahead and not miss the show. It removes the hassle of having to actively search for upcoming dates and potentially enables users to go to more concerts, assuming that they would not actually invest time in searching for all the artists they would potentially like to see.

Value creation to the artists

In an industry where monetization has been a big challenge for some time, where physical records sales are plummeting and where the sharing economy has limited willingness to pay to a fixed pay of around $10 a month (regardless of the amount of music streamed), any source of additional revenues is relevant. Business models as Songkick’s are even more relevant to developing artists in the sense that it creates a path for early engagement with the audience if paired with the “discovery” features of music streaming platforms. Up-and-coming artists do not have a large marketing budget to advertise for gigs or tours (moreover, it is likely that they’ll be opening for other artists), so chances are you won’t hear about their concerts unless “someone” who knows you like them tells you about them.

Value capture

This is where the recent merge with CrowdSurge comes to play. Integrating ticketing into their service will allow them to participate in the most lucrative part of the music business, allowing them to start making profits out of the value they are creating to both sides of the transaction.

Challenges and Next steps

The greatest challenge for Songkick to successfully tap into the ticketing space is to flip venues that have already signed exclusivity contracts with Ticketmaster and Ticketfly. With a 10 million highly engaged userbase and a superior algorithm to target the right audiences (compared to traditional ticketing platforms), they should be able to prove that they can bring real value to the venues through increased sales and hence, earn their share of the market.

Going forward, they could leverage the value created to the artists, by providing customer insights on the location of the largest volumes of fans “following” artists for concerts, to help them plan smarter tours in exchange for the ability to directly sell tickets to their concerts.

 

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Student comments on Songkick: A winner in exploiting streaming behavior to maximize revenues to the music industry

  1. I agree that Songkick provides a tremendous amount of value by bringing the information to me. How do you think about the following challenges?
    1. Are they using proper attribution (cookies?) to collect royalties if they were the one to notify a user about a concert? If I, as a user, go directly to the venue website instead of through Songkick, they are cut out of the commission 🙁
    2. I am extreme user and get the daily email digest, but I have to imagine most people don’t do this. How can Songkick prove itself useful for the casual fan? The notification should come at a convenient time, and it should be incredibly easy to make the purchase. Right now, the daily digest comes ahead of when the tickets are actually on sale, so by the time the user can buy them, it’s very hard to engage them AGAIN
    3. What is keeping Ticketmaster or Ticketfly from copying this service?

    Thanks for your post 🙂

  2. Thank you for your comment Jeff!

    The challenges that you mention are definitely real and I think songkick should work on them going forward. I’ll give you my thoughts on each of them:

    1. I did not find any explicit clarification on what happens if a user learns of a concert through songkick and then goes directly to the venue, but from what I understood from their business model, the small fee they receive per ticket sale is paid when the purchase goes through their app. One of the problems that they usually encountered is that some sales would not go through due to technical problems in the ticketing platforms, and that would also decrease their revenues. I believe that finally owning the whole process end to end, will allow them to capture all the value they are creating and be responsible for the platform stability, avoiding those losses in ticket sales.

    2. I totally agree with your suggestions. I imagine they notify as soon as the concert is announced to allow you to save the date and track the event for a future purchase. Notifying when tickets are available is definitely a no-brainer, and I assume that once they integrate the ticketing platform to the app, they will have even more incentives to trigger purchases, so that should be a natural move.

    3. Truth is, I think large ticketing platforms could definitely develop features similar to the ones of Songkick. What I do believe, though, is that it will be easier to change purchase behavior than to change discovery behavior. I see it this way, you get directed to whichever platform sells the tickets because it has the best price or because it’s the only one selling the concert you want. You are not necessarily attached or have regular interaction with ticketing platforms due to loyalty, but due to convenience. On the other hand, you do discover shows mostly in the same place, and this platform redirects you to buy the tickets. I believe that Songkick has an advantage since they already have a network of 10 million users and they are the ones who hold control of the “redirection” process.

    Everything is uncertain still, though. I’m curious to see what happens next!

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