#fan.si

13 years ago I stood in front of 18 congregants at a tiny little Finnish Pentecostal Church in northern Ontario, Canada. I remember it clearly. We played four well-known hymns: Three at the beginning of the service and one at the end. After the last song, as we were packing up our gear and getting ready to leave, an old lady came to me with a stack of cheques…

"Here you go young man. I want you to have these. I was a musician once and I know how hard it is to pursue this as a career. You all need this more than I do". 

Are we insane? 

Starting a music/tech startup is like looking over a vast field of dead bodies (http://allthingsd.com/20130713/take-a-trip-down-music-startup-memory-lane-dont-trip-on-all-the-craters/), turning a blind eye, and saying that despite the live-fire, you’ll make it to the other side alive. You have to be insane to start a music startup today. The cards are heavily stacked against you even purely from a funding standpoint. Many VCs and Angel investors have been burned by the music industry. It’s hard to even start a conversation about the opportunities in the space with “money guys”. And yet, fundamentally, it’s in times of great flux when there are a lot of problems to solve that opportunities arise. I personally think we’re dealing with a “breach in the levy” type of situation when it comes to problems in the music industry. Call me an opportunist if you like, but a flood of change is coming and I happen to have been privy to one of the many canaries in the coal mine: Social Games.

Social Games: My canary in the music industry’s coal mine

I spent 6 years co-building a social/mobile gaming company on Facebook/iOS/Android. It’s still doing well. Very well. After a lengthy sabbatical from my role as CEO, I asked my co-founder if I could step away. We came to an exit agreement. All is good. What I learned during those 6 years opened my eyes to the opportunities screaming at me from the music side of things. You see… I was signed as an artist and songwriter to a major label just as my gaming company was starting to do well.   The moment I was signed, was the moment I stopped making money making music. You heard that right. It’s a good thing my social gaming company came to be, otherwise, I’d have been in a rather precarious position (just married, baby on the way - nothing to fall back on as a high-school dropout). It was this dichotomy/irony that struck me the most: I was signed to a major label - which made me look good from the outside, but made me less money than ever from music; while my independent/direct-to-the-players social gaming company, with no marketing spend and no publishing company was raking it in online - one tiny transaction at a time from a dedicated 2% of the user base. I asked myself if the same could hold true in music. If I had somehow secured ongoing revenue from the very dedicated group of music fans I had built over the years, could I have made a respectable living? I did some quick napkin math and…..the answer looked like a resounding “YES!”. The problem was not a lack of support from fans. The problem was the business models were not built with support for the artist in mind. It was in this topsy-turvy world that the ideas for Fan.si were incubating. 

An illustration

Indulge me by following along with this illustration. Imagine the artist being the social gaming company, and the gamer being the fan. In the music industry, much like in the gaming industry, there are gatekeepers. These gatekeepers own the pathway (read “sales channel”) to the end-user. The gatekeepers in the music industry have traditionally been labels and publishing companies (Sony, EMI, etc.). The equivalent in the gaming industry have been publishers (EA, Activision, etc.) If you wanted your game/record on a shelf, where the fan/gamer foot traffic was, you first needed a relationship with one of these few gatekeepers. You paid a lot for this access to fans/gamers. For games, the Publishers held (and still hold) most of the retail space where the vast majority of physical game-buying happens. In the music industry, for the most part, these sales channels also belong to the major labels/publishing companies. 

Then came the internet…

Here’s what the internet keeps doing - it introduces systems and mechanisms which deflate the cost of once-expensive processes and makes them really affordable and sometimes free. iTunes is a great example. The trip to the record-store shelf has become a couple swipes, a few characters and a flick from anywhere you’re sitting (and it’s become even less steps if your phone has a fingerprint reader like the iPhone 5s). Deflationary economics is something Brad Feld coined (I think) in this blog article in 2011 (http://www.bothsidesofthetable.com/2011/12/22/the-amazing-power-of-deflationary-economics-for-startups/) and in my opinion, is the reason Fan.si is off to such a great start and will continue to be an important tool for artists and fans to come together.

In Fan.si, we’ve combined a recurring payment model, analytics for artists to bring value to the relationship with their fans, and a simple way to keep supportive fans happy. It’s a nice rounded, relationship-oriented tech package which allows artists to be supported directly by their fans on an ongoing basis. Truly, the technologies that allow Fan.si to exist have only been around for about 12 months now. Some of the technologies we use at Fan.si aren’t even publicly available yet. 

Nothing new under the sun…except…

Direct support from fans to artists is not a new idea. It’s been happening for centuries. Before record labels ever existed and were the “in” thing, if you were an artist and wanted to make a career of making art, you needed a patron. The patron would shell out enough money for you to survive as you created the piece for them. They might get this work of yours months, or even years later. Perfectly reasonable right? Well… it meant you really had to be good and you had to catch the eye of some wealthy bugger who felt you were talented enough to give you the resources you needed while you crafted your piece. And as a patron, you had to singlehandedly, or as an organization, have enough money to support the artist in an ongoing way. It was expensive and time consuming, and quite risky…. but it was direct from fans. 

The world has changed a lot since then, but fans haven’t much changed. We still love music. We still want a connection with the artist. Unfortunately, for the last 100 years or so, the gatekeepers were the ones controlling access to the foot traffic. That is… until foot-traffic became internet eyeballs. Before the era of internet crowd-funding there hadn’t been a simple way for those of us who wanted to connect with artists to do so for nearly 100 years (unless they were local and we knew them personally). The internet on our mobile phones breaks down that barrier, much as it did between my social gaming company and the players it continues to serve in 180 countries around the world. Now, a fan base can be built entirely digitally without anything more than a webcam and a dream. (Throw in some talent and your chances are even better).

Crowd funding is almost good

There are some major problems with the current crop of crowd-funding platforms however. The predominant problem for artists is consistent revenue. Crowd-funding platforms have primarily been offered for creators to use on a project-by-project basis. These project-focused crowd-funding models provide artists with the same lump-sum funding model that labels have provided to artists for the last hundred years. For example, Artist X has Project Y and will request funds for said project from online supporters. Online supporters can contribute to Project Y until the campaign for Project Y is over. Project Y’s campaign completes and lump-sum is delivered to Artist X. Once Artist X spends the collected resources, completes Project Y, and delivers it to supporters, a whole new cycle with all of the relationships needs to be rebuilt. Artist X is now forced to consider how to approach Project Z to convince supporters to contribute again. Why? Because they’ve spent the money they committed to spending. Why is this the default model? If the problem for artists is a consistent revenue from their ongoing work toward their craft, then there has to be a better way - or at least a different way. In my opinion, there is a better way: It’s called monthly micro-patronage. 

Anyone can be a patron

With Fan.si, any music fan can be a patron. For as little as $2 per month, fans can contribute to an artists’ career. The fact that (nearly) everyone has a payment terminal in their pocket makes it more viable than ever to cast a wide net and get many micro-patrons. With Fan.si, the artist has a wealth of tools to offer any number of perks to these fan-funders. An artist can grow an active pool of supporters and build a healthy career for themselves without pandering to any gatekeepers at all. The relationship with fans is direct and intimate. The business model is also incredibly self-balancing. If you suck as an artist, fans will simply not support you. If you’re good, fans will get behind you. It’s in the artists’ hands to make that connection or not. Fan.si’s responsibility is simple: make the tools to connect artists and fans amazing. The simpler, and better the tools, the greater the relationship between fans and artists. This will lead to longer support, which will extend the career of artists and increase the value of the platform. 

That old lady wrote us twelve cheques for $100 to support us for a whole year. She committed $1200 to our collective future. She believed in us after hearing only 4 songs. That may not seem like a lot to you, but it was a LOT to us. We were floored. She had a chequebook with her, and the time to help us out in a massive way.

Here’s the sad truth. What happened to us that day is happening right now somewhere in a dingy bar, or in a church, or at a massive EDM festival or on some Youtube channel somewhere: Some artist is connecting with a fan in a deep way. The problem is that either the tools aren’t there for that fan to take action, or that fan doesn’t have the time. Fan.si is just starting to provide these tools, making it easier and faster for fans to support artists. Our goal is to make supporting artists so easy that the name Fan.si becomes synonymous with being a serious fan. We can’t wait to see what artists and fans accomplish together. 

Thanks for listening :)

J.