Are super fans the key to saving physical product in the music industry and beyond?
That's what ZinePak founders Kim Kaupe and Brittany Hodak were banking on as they waded the treacherous waters of ABC's Shark Tank on Friday night (April 24). ZinePak’s mission statement and main pitch sought to prove that physical products marketed towards the most devoted of fans are still needed alongside streaming and downloads.
The concept of ZinePak is simple: celebrities and brands partner with the company and create tangible entertainment packages for fans. For example, Beach Boys fans were able to purchase The Beach Boys 50th anniversary commemorative ZinePak through Walmart. The set had lots of goodies, including a newly recorded version of their 1968 song, “Do It Again” as well as photos, collectible postcards, an 11-track CD and interviews with Brian Wilson, Mike Love, Al Jardine, Bruce Johnston and David Marks -- all conducted by Hodak and Kaupe.
For Frozen, a ZinePak was coupled with a 64-page magazine complete with games, puzzles, comics and interviews, along with collectible stickers, a poster and a holiday ornament. Katy Perry fans were gifted with a magazine, deluxe 16-track CD and merchandise exclusives that included a patch, tattoos, nail decals, and a “Killer Queen” fragrance sample. Walmart purchased 250,000 of the Prism ZinePaks, which supported a national campaign with partners Monster Headphones, Cover Girl, and in-store marketing program Popchips.
The co-founders asked the sharks for $725,000 and 10 percent of the company’s stake. During their pitch, the owners revealed that ZinePak had made $3 million in the current year, and $30 million in overall sales at Walmart since its inception in 2011.
The two women also went in with a polished and professional demonstration, showcasing examples of their product and even more impressive client list that includes Katy Perry, Brad Paisley, Florida Georgia Line, KISS and American Idol, which featured its ZinePak as part of the marketing for the Season 11 tour.
“We recognize that we are not chasing every single music buyer” said Hodak during the pitch. “Super fans are passionate about owning something physical [to] touch and hold and have on their shelf. ... The problem that we were trying to solve was trying to make physical music tangible and relevant."
The company’s focus is primarily music based -- but the plan is to expand into other “verticals,” Kaupe tells Billboard.
“I see lots of awesome opportunities expanding outside of retail,” Hodak elaborates. The expansion, she says, includes sports, film, television and live events.
Luckily for ZinePak, two very big sharks bit. Lori Greiner -- the “Queen of QVC” -- and Robert Herjavek made a joint offer of $725,000 for a 17.5 percent stake in the company.
“Lori has a great angle on how to sell [ZinePak] to the masses,” says Kaupe, noting Greiner’s affiliations with Bed Bath and Beyond as well as Home Depot.
You could say that that ZinePak already started on solid footing. The self-funded company’s first customer was Walmart, and while only five years old, it boasts ten full-time employees -- all female -- and is looking to hit $8 million in sales this year.
When shark Kevin O’Leary scoffed that the company only worked with one retail store, the women shot back that Walmart’s music sales were more than Target and Best Buy combined.
“Bam!” replied an impressed Herjavek.
Although the episode aired last week, the two filmed the pitch last September. Waiting for their time in the tank to come to the surface was “nerve-wracking,” Hodak says. Many of the company’s clients couldn’t wait either, and tweeted support the night it aired. Paisley tweeted excitement that his ZinePak was being presented, and although it did not air, American Idol Scotty McCreery filmed a pitch of support from the “golf course” that was shown to the sharks. “That was a huge boost to us,” says Hodak.
So what’s next? Hodak and Kaupe envision ZinePaks at sporting events, or as an extra value for fans walking into the stadium (portfolios, player profiles, interactive items can be in the ZinePak) or possibly partnerships with popular cable shows. On the wish list: Game of Thrones and The Walking Dead.
Of course, negotiations with the sharks are still ongoing, but so far, the ZinePak website has seen over 100,000 visits following the ladies' TV appearance. "It’s a wild ride,” says Kaupe.