Can transparency give fans a reason to buy?

Question

We wrote an article for our blog detailing the NET revenues we get from the many different ways people can consume our music, including direct sales of Digital, CD, and Vinyl, indirect sales of the digital album on iTunes and eMusic and the streaming of the album on services like Spotify and Deezer.

We inserted a link to the article in an email that was sent to about 700 people on our mailing list the day we released our third album, One Frame Per Second. The purpose was to ensure that our fans were aware of how best to support us. That was just over a month ago. 

A few hours later, we noticed that a few people we knew had picked up on the article and were mentioning it on Twitter. The next day, we observed that people we didn't know were tweeting about it. The feedback we were getting was that it was interesting information and that people really appreciated the transparency.

Some of the Tech Music press starting reposting the article and it all got rather out of hand with our name appearing on some high profile websites such as Gizmodo, TechDirt, HypeBot, Paste Magazine and DigitalMusicNews. 

This resulted in our blog being visited more than 50,000 times. That's rather huge compared to what we normally see.

Since the article was published, we have received over 50 emails from new fans, bloggers, journalists, music tech companies and music industry professionals.

Some of them were from fans thanking us for our honesty. Others were from music tech companies trying to sell us their services! A few were from music industry professionals offering us advice or publishing and licensing deals. Others were from music industry professionals telling us how stupid we were for not selling enough records!

A few cheeky individuals asked us about how our 'high profile' had affected our sales, plays and website hits, so let's take a look at the numbers.

In one month, we went from 380 active users on our Facebook page to 620. (+63%). Our mailing list grew from 732 emails to 990 (+35%).

If we compare sales, plays and visits to our website in September to the 3 previous months, here's what we get.

Visits to our Bandcamp page increased 300%. Visits to our website increased 240%. Plays on our Bandcamp page (which we use as a player on our website as well) increased 310%. Album downloads increased 225% and direct sales increased 90%. More importantly though, the download to purchase ratio went from 10:1 to 5:1.

This means that for every 5 people who downloaded our album for free, 1 person purchased something.

iTunes sales skyrocketed. +2000%. (The sales in June, July and August were rather low to begin with though - see raw data)

Funnily enough, we don't have any data on Spotify plays to share for the moment! We have to wait until January 2012 before we can get that information.

(The raw data used to calculate the percentages above and some ugly looking graphs are at the bottom of the article if anyone wants to look at the finer details.)

We were blown away (and still are) by the support we were getting.

We received an email from a lawyer called Jennifer Newman Sharp who asked us if she could repost the article on her blog. Jennifer went on to explain her theory about why she thought our article had been so popular:

"As independent bands are increasingly being financially supported directly by their fans through digital sales, streaming and services like Kickstarter, it makes sense to have transparency in accounting and I know your fans must appreciate it.  They want you to make money and be successful as much as you do, so you can keep delivering new content for them to enjoy."

I think it sums it up perfectly. Many music fans have no idea how much effort and and money go into making music and by being transparent about it, you give your fans the choice of actually make a knowledge-based decision, not a fantasy-based one. After reading some of the comments about the article we wrote, it became clear that some music fans think that musicians don't need their support because they drive around in expensive cars and eat caviar for breakfast, lunch and dinner! By disclosing the reality, you give them a tangible reason to financially support the artist and all the knowledge they need to make a conscious decision about how to provide that support.

Here are some excerpts from some of the messages we received that illustrate this.

"I dont even know what kind of music you do, but just for this article i'm going to buy two copies in vinyl. Wish all the bands were like you!" 

Followed by:

"i did my research and i fell in love! Your web is awesome, and the video game is cool as hell! i'll add your first album to my order too. Totally worth the discovery! Congrats!!"

 

"I just wanted to mention I read the article about you today on Gizmodo.com and was very interested by what you had to say. I did not realize how squeezed artists are, by both digital and traditional media. It is a sad and unfortunate situation for all artists. Even though your music is not in the typical genre I listen too, I found it beautiful and serene, and decided to buy one of your vinyl copies. I hope this helps a little. Please put me on your email list so I can try to see you if and when you are in the States next time."

 

"Thought you'd might like to know how I found your site. It was through a link on brooksreview.net to your post about economics (good luck with the accounting grammy!). I found the post interesting, so clicked through to your music page (which I also enjoyed). Also, the information about your costs and how much you'd make influenced my decision about how much I would pay for the downloaded album. (I wanted it to be a bit above your average to help on your way to break even)."

 

As this is supposed to be a discussion, I won't try to make an conclusions but I would welcome comments, suggestions and especially for others to share their experiences as well.

And here's the juicy raw data that shows exactly how low are sales numbers are!

Answer 1

I think it is interesting to see your demonstration of how transparency helped your fans see the costs associcated with creating music.  I applaud your fanbase for seeing the value in their investment in the success of your band and how that investment would allow your band to continue to produce music.

However, I am not sure whether transparency would help or hinder acts who sell millions of songs.  Would fans be less inclined to pay for an song or album if they knew the artist had already made millions from that piece of work?

There is probably some tipping point where the tables will turn and transparency would become a hinderance to further sales.  Until you reach that point enjoy your increased sales and larger fanbase.

Also, this is a perfect example of how innovation has lead to free publicity.  The increased traffic lead to new fans.

Comments

@justyouraveragejoe Hmm.  That is an interesting question if people would feel some larger acts are "too well off."  I'm not sure if that would always be true.  Even for massively successful acts, people often like to feel a part of things and cheer on their success stories.  I know that I heard a lot from Trent Reznor fans who were *thrilled* about the case study we did showing him earning over a million dollars in a week from the Ghosts I-IV experiment.

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@justyouraveragejoe
I was actually going to make a similar comment. If we were actually making money from our music, would we be as willing to disclose how much we were making?

Hopefully, I'll be able to answer that question at some point!

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@justyouraveragejoe I'm more concerned about innumeracy leading to people not understanding the division of profits on large collaborative projects like films. Will fans appreciate that $10 million (big number -- seems like a lot!) earned on a film that takes 1000 people to make means that the average per-contributor was only about $10,000? (i.e. not a full income).

Will this, therefore, limit the model to smaller collaborations?

However, I don't think it will. People may be motivated by charity for smaller projects, but as the project becomes larger and more important to them, the motivation changes to something more like vicarious participation in success -- they want to see "their team win".

This also isn't very different from the dynamic with proprietary models. People are more willing to pirate works they think have already made plenty of money for the artist. They're more likely to buy remaindered or used copies of such works, even if they know that none of that money will go to the artists.

The main issue behind resentment of wealth, though, is when that wealth is seen as "unearned" or even "ill-gotten".

How many _Apple fans_ objected to Steve Jobs' wealth?

How many _Star Wars fans_ object to George Lucas' wealth?

How many _Firefly fans_ would object to Joss Whedon making a billion dollars from producing a new season of the series?

Now, they may grouse about the middle-men. But most fans are pretty happy to find out that most of their money goes to the artists, and not to holding companies. The novelty of that may wear off in time, but I don't think it will turn to resentment.

Answer 2

While transparency is good, I don't think it is a reason to buy on it's own. The Uniform Motion post is more than just transparency. It is also an explainantion of how things work. If just the raw numbers alone had been posted I don't think the reaction would have been the same.

What it really comes down to is communication and engagement with your fans. Transparency about income can be part of that.

The other thing to keep in mind is that one reason that this got as much attention as it did was that almost no one else does it. If every artist did the same thing one more more releasing an income statement and analysis would get lost in the crowd.

What I like to see is even more transparency about the entire process, not just income figures. I would also like to see a cost breakdown compared to the income. This would help people understand how little net income most artist, even susccessful ones, actaully make.

There is also one other type of transparency that has worked for many years, for many artists. That is being transparent about the creative process itself. Many fans, and many potential fans, just love to hear and read about how an album, book, movie, etc. are actually created. Particularly while it is happening. I know I have purchased a number of books and albums purely because the description of the creation process was compelling enough to grab my interest in the end result.

In the end I think that there really isn't a single thing that makes a reason to buy. The reason to buy for a potential customer is a whole bunch of small things that combine to reach a critical mass of sorts that tips them into a customer and fan.

Answer 3

Fantastic! Independent artists with a vision, a plan, and metrics! Too many young artists approach the creation of their work as something completely separate from any other kind of business venture, as if they don't really want to make money from their endeavors, as if passion were enough. Your approach takes passion as a given, and layers on carefully considered elements of communication, clarity, care for your fans and for the community, and immense generosity of spirit.

There's an old Balinese saying that applies here: We have no art. We do everything as well as we can.

Answer 4

I beliieve transparency is very important for several reasons:

1. It helps everyone in music to learn something. Further, the more numbers we have across the industry, the better able we are to benchmark.

2. It shows the artists and/or their managers know what they are doing, or, if not, are willing to get feedback.

3. It shows accountability to donors, sponsors, investors, and patrons.

Transparency from one artist encouraged me to continue to help her, and lack of transparency from another artist led me to withdraw my help. In both cases I provided a number of things: professional help, sponsorship, and no-interest loans.

In the first case I saw all the numbers and knew I was supporting a very profitable artist. And I felt on very safe ground telling others how well this artist was doing.

In the other case, I could never get any numbers, so I pulled back. There were three consequences of being in the dark: I didn't put in any more money, I didn't encourage others to get involved, and I couldn't offer additonal professional help. The "we'll take your money but not tell you what is going on" was very shortsighted.

Transparency alone may not be enough to attract fans. However, transparency with talent is a great combination. And even if the artists involved aren't the most talented, if they have a fun project and share their numbers, that in itself may encourage fans and patrons to become involved as a learning experience. If, for example, you help fund an independent film, the film might never return your investment, but getting to serve as a producer may be a worthwhile experience.

I really respect Amanda Palmer for sharing so much about her art as a business. She's one of the most transparent people out there. Her blog posts are some of the best I have ever read on art as a business and lifestyle.

Answer 5

This is more of a statement than a question, but I'll say that on the evidence, I'll agree with it. As a counterexample, consider the backlash that Diaspora has encountered, arguably for lack of transparency. E.g.:

Diaspora asks users via email for donations to keep it alive. Will you donate?

One of the weaknesses of the Diaspora project has been relatively poor communication (ironically).