music | Consumer Value Creation

In the current streaming industry, it is very hard for startups to fight against the giants like Spotify and Apple Music. Moreover, it is almost impossible to maintain a music streaming company. This is also what the founders of Kollekt.fm ran into. These two entrepreneurs started their business in 2013 while they were studying and founded a platform that transformed links to music into playlists. They soon found out that they did not have an efficient business model; their revenue model did not work properly. It was too hard to offer the service in a profitable way.

When the founders hit rock bottom, they encountered one of the frequent users of their service. He told them that he was a dj and made money from developing the playlists for coffee rooms in Amsterdam. This gave the founders new motivation. They went from shop to shop in Amsterdam and did market research about the shops’ music facilities. Eventually, the founders came up with the idea of Atmosphere, which is a service that connects shops and hospitality businesses to musicians. For a 15% commission, Atmosphere makes sure that the shops get personalized playlist which match the brand image of the companies. In this way, the company was able to make money from making playlists. However, the requirements to join the platform are strict. Only unique music curators are allowed to develop the playlists, since the company wants to maintain its high quality service. The main goal for the coming period is a collaboration with an establish jazz musician or dj, in order to raise more brand awareness.

Nowadays, approximately 20 firms are already using Atmosphere. The customers vary from supermarkets to restaurants, from clothing stores to work spots spread over more than 100 locations. The fee for the service is €30,- on a monthly basis which can be extended with €15,- for an offline streaming cabinet and for €300,- extra the company develops a custom-made website for their clients which contain all of their playlists.

Efficiency criteria

Currently, retailers are trying to distinguish themselves from competition by creating a clear brand image. The in-store experience is very important for customers. In developing customer centric playlists, the companies establish their brand image. This is an important strength in the business model of Atmosphere.
Streaming music in shops is not free, the retailers have to pay a licensing fee for copyrights. Atmosphere is aware of this legal aspect and even anticipates to this by offering their clients the service to arrange this for them to avoid difficulties.

In conclusion, I think that Atmosphere has a bright future ahead. The perseverance of the founders seems to pay off and as the company raises more awareness, the customer base will continue to grow. The streaming business will keep rising and Atmosphere must try to rise along. If the company succeeds to eventually found a community to collect playlists, the possibilities are endless.

Sources:

Tsekouras, D. (2016), Lecture 1: Introduction to value co-creation, Rotterdam School of Management.

https://getatmosphere.com/

https://fd.nl/morgen/1191244/geld-verdienen-met-playlists-maken-dat-idee-sloeg-aan

By: Madeleine van Spaendonck (365543ms)

The Problem Situation

Do you ever pay attention to the music you hear in your favorite store? Many shops and hospitality businesses in the Netherlands still make use of outdated mix-CDs and standard playlists. Considering it has become increasingly important for retail businesses to provide a dynamic brand experience, how can background music be used to optimize the customer journey?

Atmosphere and its business model

Amsterdam-based Rockstart-startup ‘kollekt.fm’ addresses this situation with its new B2B music service, ‘Atmosphere’. Its key resource is its pool of musicians, DJs and producers, called ‘curators’. New clients undergo an extensive intake-procedure that allows Atmosphere to create a ‘music identity’ that reflects the company’s brand identity, target audience and desired customer experience. Consisting of a collection of moods, sounds and emotions, this allows the platform to match brands with the most suitable curators for them. Atmosphere allows curators to use the music on its platform to continuously assemble new playlists on a monthly basis. A streaming app is then used to play the music on-location. (Atmosphere, 2017)

Atmosphere’s value proposition is a better customer experience for brands and a new earning model for artists and music experts. It also incorporates feedback to create better playlists every month and learn from each brand profile to improve its services. Businesses pay Atmosphere on a monthly basis for using the platform, and the curators on the platform decide the price of their service.

Co-Creation Efficiency Criteria (Carson et al., 1999)

Atmosphere is a two-sided platform that connects retail/hospitality businesses with ‘curators’. The business model allows for joint profitability, as it enables businesses and curators to interact to create value together and maximize their payoffs. A study conducted by the Stockholm School of Economics found that background music that matches brand identity can increase store sales by at least 30% (Johansson & Moradi, 2015), which presents a measurable potential financial output for businesses. The curators suggested by the platform are picked by a particular company on the basis of the quality of their playlists and close fit with the brand, which incentivizes them in terms of effort to deliver the most suitable music sets and thus get rewarded in return. To facilitate this, Atmosphere invests in algorithms and models to create accurate brand profiles.

Furthermore, internal institutional arrangements are present in the form of ‘rules of the game’. Multiple curators are suggested to the client, who can make the final choice based on music samples. To stay ‘matched’ with a company, the chosen curator must continuously produce high quality work; otherwise, the company will switch to another curator. In terms of institutional environment factors, the legal environment of the business model poses the most significant threat, as songs are often copyrighted. Atmosphere has addressed this issue by acquiring the license rights for all the music that is available on its platform. This allows it to be used for commercial purposes. However, this is a continuous process; if Atmosphere wishes to attract and keep customers on its platform, it needs to constantly update its music offering.

Sources

Atmosphere. 2017. How We Work. [ONLINE] Available at: https://getatmosphere.com/how-we-work/. [Accessed 14 February 2017].

Carson, S. J., Devinney, T. M., Dowling, G. R., & John, G. (1999). Understanding institutional designs within marketing value systems. Journal of Marketing, 115-130.

Johansson, G., & Moradi, J. (2015). What Does Your Brand Sound Like?. [ONLINE] Available at: https://www.soundtrackyourbrand.com/static/content/press/what-does-your-brand-sound-like_pdf_eng.pdf. [Accessed 13 February 2017].

Kollekt.fm. 2017. Company Web Page. [ONLINE] Available at: http://kollekt.fm/. [Accessed 14 February 2017].

RetailTech. 2017. Artists Select Music For Retailers . [ONLINE] Available at: http://www.retailnews.nl/tech/8TtNf0gzR2OQ2jAgzIUdOQ-28/artiesten-selecteren-muziek-voor-retailers.html. [Accessed 14 February 2017].

Silicon Canals. 2017. Kollekt.fm’s Atmosphere will find the right tunes for every company. [ONLINE] Available at: http://siliconcanals.nl/news/startups/kollekt-fm-atmosphere-finds-the-right-tunes/. [Accessed 13 February 2017].

Create Value "for" and "from" Consumers