Business Matters: How Extensive Pre-Sales Can Help Indie Albums to Top 40 Debuts
Business Matters: How Extensive Pre-Sales Can Help Indie Albums to Top 40 Debuts

Ed. Note: Benji Rogers is the founder and CEO of PledgeMusic, a fundraising platform that works with artists to develop a way to engage their fans in helping fund their projects, such as albums and tours, in exchange for exclusive content. PledgeMusic has worked with hundreds of artists, and are currently helping Ben Folds Five pre-sell their new album, among other projects.

Most albums begin their lives with little or no fan interaction, and the so-called "DIY" album is no exception to this. Worse still, the majority of albums begin their lives in debt to either an investor or a label. In the case of another group of artists, the album will be created cheaply at home or in downtime at studios, often with tons of compromises being made along the way. I know this because I have been a part of all of these scenarios.

Every Monday at midnight another slew of albums will be released by another slew of bands and labels, and within these thousands of artists' creations, most will achieve the same level of diminishing returns as they have for the past decade or so. More posters will be put up, advertisements bought, singles serviced to radio and album prices slashed to move a few more units. Groupon-type deals will further devalue the art, and marketers will try to add a new spin to what will all achieve the same end -- not much.

More "DIY" artists will be in debt to their parents, friends, investors or their own savings accounts, and more "signed" artists will be in debt to their labels and will never see a royalty check or get themselves out of the hole.

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We have a saying at our company: "We are not subject to what was, only to what works." And this is why the above is not only madness but is also entirely unnecessary.

At PledgeMusic, we first began to see a new path spread out clearly before us when a few of the artists we worked with started making money. Not a little money; a lot of money. In fact, some of the artists we worked with were already making a profit on albums that were still in the demo phase and, in one case, the album was still a Photoshopped mockup of what it was eventually going to become.

Additionally, we began to notice that, by going direct-to-fan while the artist was still in the studio and thereby elongating the regular release schedule, the artists' mailing lists and social numbers increased by an average of 30 percent, with the largest increase to date at 300 percent.

By generating all of these pledges/sales in advance of retail, our artists were not in these early stages subject to large retail cuts.

Lastly, certain numbers of our artists would, whilst their PledgeMusic campaigns were in process or completed, sign with a label, generating further income in the form of licenses. Combining our pledges, their pre-sales and marking muscle, the artists would achieve more sales than they ever could have before, chart in the top 10, 20, 30 or 40 and do all of this while raising money for a charity of their choice.

So let's compare the two methods. In scenario 1 (Graph 1) below, the artist's entire marketing momentum lies in the existing pre-sale of the album with press, radio, etc. all beginning a month or so shy of the album's release and then the big push happening once the finished album is in hand, leading with singles, etc. As you can see, the revenue line begins once the pre-sales start and then post street date with all sales not included in the direct-to-fan pre-sale portion subject to retail at anything from 30 to 50%.

graph1 In Scenario 2, you can see the straight, direct-to-fan release. This is what the revenue line looks like for a large number of our artists. It's worth noting that an average of 37 percent of their income is made after the first eight weeks the campaign has run. None of these sales are subject to retail cuts.

In Scenario 3 the two are combined. Leveraging our average per-fan spend of $64, or £54, the album's release cycle is elongated, thereby engaging the fans at an earlier stage and enjoying the benefits of what a label can bring to the table to augment what the fans have already done. With traditional direct-to-fan sales averaging $26 per fan (thanks to our pals at Topspin for sharing this number), it's clear that an artist can enjoy the benefits of both the old and the new.

(Redline based on actual artist total raise of $275,000+ from 5,800+ pledgers with break-even achieved within 6 hours of launch)

DIY is a myth. No artists really go DIY. They may go through the release process without a label but not without their fans, and this cannot be emphasized enough! The reason I'm picking on DIY is that it implies that fans are a part of the process much later than they should be. If they are on your email list, they are involved. If they follow you on Twitter or like you on Facebook, they are involved.

To me, the single biggest mistake an artist can make is to let a label try and sell to their fans. I'm not talking about selling to the public at large. I'm talking about selling directly to an artist's fans. With incredible platforms ranging from Nimbit to Topspin, Bandcamp to Bandzoogle and even our very own PledgeMusic, there are literally thousands of ways to make music available to these fans directly. But, as I have said before, fans don't need more ways to buy - they need more reasons to. Our process is a unique one, as we use a system of Pledgers-only updates to engage the fans from an early stage, and by adding a charity into this process it creates a further reason for fans to want to get involved.

But this is done with Pledge as a partner and with the fans as a part of the process and not - I repeat not - as an afterthought.

There may be great comfort in the traditional release model as it stands today. Sure, there's a yearning for things to go back to the way they were, but it's not going to happen. In fact, the traditional model is going to get acutely worse as streaming gathers momentum, placing consumers one step further away from buying anything. And as retail diminishes, the ability to buy physical products from a shop will become an increasingly rare transaction as well.

There is still a place for the label, just as there is still a place for music to be released directly from the artists. Direct-to-fan, when used to its maximum potential, will be a vital bridge from one to the other, as it currently succeeds (for us at least) more than 90 percent of the time. Labels deal in consumers and retailers whereas artists deal in fans. This is the way it should be, and as you can see from the above, it works like a charm.

Perhaps it's fair to say that the myth and the madness as stated above are almost identical, with DIY in most ways excluding the fans, and the traditional release doing the same. Labels deal in consumers, and artists should deal in fans. Let us never forget that it's the music that creates the fans. Let us also never forget that the Internet makes it possible to engage those fans in a wider and deeper experience that has never before been possible.

Because every artist's release can be amazing and immersive, it absolutely should be. Because every release can go far above and beyond a simple "consumer" experience, it absolutely should. The more time an artist has to share their experiences with the fans - and not just offer them a sale - the more the results will show up on the bottom line.

( Special thanks To Bryan Mead from InGrooves/Fontana for his graphic inspiration)