Music is your business


Always dreamed of being one of the coaches of The Voice or X Factor, but your lack of musical talent is the thing keeping you from this? Or have you tried breaking through in the music industry, but has your beautiful voice not yet hit the masses? In that case the platform ‘My Major Company’ will enrich your life. This platform gives everyone the opportunity to help an artist produce his or her album, eventually resulting in the artists being able to break through in the music industry.

 

How does it work?

My Major Company involves consumers in the selection and the eventual success of new and upcoming artists, since 2007 and reached their peak of contributors in 2010. The website portrays an increasing amount of musicians, containing detailed information about their music and themselves. (Ple et al., 2010) Moreover, consumers can listen to work of musicians, help them with funding and comment on their songs with strategic decisions, development or appreciation. This makes this customer-integrated business model a combination between a community driven business model and a crowdfunding business model. When a project is funded enough the albums will be produced, distributed and advertised, which can be a dream come true for many artists. As the winning amount an artist received from backers was €150.000, which can be seen in the following figure.

Screen Shot 2018-03-08 at 16.18.50Figure 1: Lay-out for online platform ‘My Major Company’ (MyMajorCompany, n.d.)

Crowdfunding business model

Using crowdfunding as business model reduces the importance of traditional geographic constraints for consumers, but gives access to funds and avoidance of financial risk to the musicians. (Mollick, 2013; Matinez-Canas et al., 2012) Moreover, for musicians this is positive because pooling contributions of crowdfunders, and thus redistributing risk, opens up possibilities to release records that would else have never been published. In return backers in the platform will be paid 30% of the net income generated by artists they funded. (Ple et al., 2010) However it has been studied that there ought to be a significant amount of backers, making repeated contributions in order to make the crowdfunding campaign a succes (Galuszka et al., 2014). However, there will always be the disadvantage that rivals will be able to copy ideas developed on the platform (Ple et al., 2010).

 

Online community business model

Having a community on a crowdfunding platform can be very beneficial as this encourages new customers to join, increases quantity and eventually the quality of the product offering (Ple et al., 2010). This shows that not only the financial aspects are vital, but also the social network ties between potential backers and the musicians in this business model have been shown to be extremely important in crowdfunding business models (Agrawal et al., 2012; Galuzka, 2014). Mollick (2013) adds to this the dynamics of success and failure lies in personal networks and project quality. Finally, this business model gives the opportunity in an early stage to identify the actual target audience, for instance the songs people listen to within this business model (Matinez-Canas et al., 2012). Nonetheless, it is found that 75% deliver products (in this case albums) later than expected by the backers (Mollick, 2013). Therefore it is of great importance that founders will be encouraged to set appropriate goals and careful planning. Moreover, outsourcing the firms’ control can be negative due to non-relevance posted within the communities such as spam (Tsekouras, 2018). This might be problematic for firms, as this might not comply with the institutional arrangements set.

 

Produce the new artists you like!

The combination of a crowdfunding and online community business model has proven to be very beneficial for companies, however, for backers this can be of high potential too. Its value proposition lies in of making music your business concerns a broad amount of stakeholders interested in the music industry. By having a say in what music will be produced and helping musicians by funding the and giving them advise, backers’ perception of the music industry will change completely. For just €10,- it is possible to help an artist break through in the music industry. However, bear in mind that it is not possible to buy more than 100 shares of the same artist. (Ple, 2010) Even though this business model has not expanded their business in the last years, in my opinion, this business model was a pioneer of communities and crowdfunding in the music industry and should therefore not be forgotten.

 

 

References

Agrawal, A., Catalini, C. and Goldfarb, A. (2014). Some Simple Economics of Crowdfunding. Innovation Policy and the Economy, 14(1), pp.63-97.

Galuszka, P. and Bystrov, V. (2014). Crowdfunding: A Case Study of a New Model of Financing Music Production. Journal of Internet Commerce, 13(3-4), pp.233-252.

Martinez-Canas, R., Ruiz-Palomino, P. and Pozo-Rubio, R. (2012). Crowdfunding And Social Networks In The Music Industry: Implications For Entrepreneurship. International Business & Economics Research Journal (IBER), 11(13), p.1471.

Mollick, E. (2014). The Dynamics of Crowdfunding: An exploratory study. Journal of Business Venturing, 29(1), pp.1-16.

MyMajorCompany. (n.d.). MyMajorCompany – Tous les projets à financer. [online] Available at: https://www.mymajorcompany.com/projects [Accessed 8 Mar. 2018].

PLÉ, L., Lecocq, X. and ANGOT, J. (2010). Customer-Integrated Business Models: A Theoretical Framework. M@n@gement, 13(4), p.226.

Tsekouras, D. (2018). CUSTOMER CENTRIC DIGITAL COMMERCE – Session 6.

 

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