1. What value does Hit Song Science create? If you were Mike McCready, CEO of Polyphonic, which target market – unsigned artists, producers, or record companies would you pursue? Before we analyze the value Hit Song Science creates, we should be clearly aware of the substance of Hit Song Science. Hit Song Science refers to comparing the mathematical characteristics of music with characteristics of past music hits to determine a song’s hit potential. From my point of view, the value Hit Song Science creates can be classified into two aspects — technology and business.
On the technological level, Hit Song Science is an advanced technology in that it mixes music and math which cannot be perceived as relevant in a daily life. It is a milestone that exhibits the perfect application of math (technology) in music which, in certain extent, can impel the interconnection of knowledge in different fields. People will be inspired to utilize natural sciences to deal with things considered irrelevant with math or physics. On the business level, Hit Song Science can radically improve the odds of success in the music industry.
It primarily changes the way singers become hit, and assures that fabulous songs would not be ploughed under. For record labels, Hit Song Science can be helpful in deciding whether to market an album, in choosing the song to be released first, and in determining whether it is worthwhile to make a record for new artists. For producers, Hit Song Science offers a chance to test songs or albums during production process and tweak them to maximize their hit potential. For unsigned artists, Hit Song Science can show whether unsigned artists have a shot at making the song or album in the industry by testing the hit potential of them.
In determining which target market – unsigned artists, producers, or record companies would pursue, three key considerations are critical— size/growth of the segment, opportunities for obtaining competitive advantage and profitability. Size/ growth of the segment Labels may receive three to four hundred demos a week from unsigned artists — at most 19200 demos a year. Speaking to producers, there were only 20 to 30 top producers and a few hundred producers who had a hit once in a whole. Comparing to demos of unsigned artists, it is a smaller portion of market scale that Hit Song Science would not have enough room to put to use.
But the record companies, says the five big companies, dominated the recorded music business. Each of those companies had various labels and music publishing companies. In the U. S. alone, there were tens of thousands small and midsized record companies. It is not difficult to figure out from the data that the record companies which had the largest market share represent the largest opportunity for Polyphonic. Opportunities for obtaining competitive advantage In fact, it is the case that record companies are not sure about the outcome when they spend millions of dollars to release an album.
Thus, before the advent of Hit Song Science, record company utilized many other methods to predict the outcome — call-out study, Internet polling and focus group research which are all expensive methods. Call-out study costs record labels between $5000 and $7000 per song. Internet polling costs as much as $3000. And focus group research costs record labels around $10000 per song. However, it only costs $300 to analyze an album with 10 songs. A method with higher accuracy at a lower cost would be more attractive and competitive to records labels.
Profitability. In the respect of profitability, most of unsigned artists don not have earnings because they spend most of their time writing song lyrics, composing music and performing music. Only when the record companies are interested in recording for the artists, can artists be paid an up-front fee and sales-based payment varied between 5% and 15% of the record’s suggested retail price. Evan a record contract is a loan from the record company to the artist. Thus, unsigned artist would not pay for the fees or royalty of Hit Song Science even though they are eager to know whether their songs have the potential to hit.
Producers are in the same situation. Inside producers only receive salary plus some royalties as compensation. While outside producers received a production fee and negotiated a royalty of 1% to 5%of the suggested retail price. Production fee varied dramatically, which means the production fee producers received depends most on the level of the producers themselves and the level of the artists they helped. However, they were only about 20 to 30 top producers who may receive so high production fee that they would like to pay for Hit Song Science.
Other producers with low or relatively low production fee may not be willing to pay for Hit Song Science out of their slender income. It makes sense that famous artists prefer top producers who can help them make a hit and in turn, receive benefit from the hit. If artists, unsigned artists and producers only received a small portion of income from music, the biggest winner in the process of recording activity is record company. Managers and talent agents alone extract between 25% and 40% of a performer’s income. Record labels have the ability to pay for Hit Song Science.
More importantly, they want to forecast sales levels for the titles in their portfolios. Based on the high market size of record labels and the necessity to forecast whether a song can become a hit via Hit Song Science due to high releasing fees, polyphonic should pursue record companies as the target market. 2. Considering your answer to question 1, how would you position the product? What are the implications of your positioning strategy for your marketing plan? The three major components in positioning are customer target, competitor target and core strategy.
We have analyzed in question one that the customer target for Hit Song Science is record companies. The competitor target for Hit Song Science is market research companies in that call-out research is the most popular research method record companies use to forecast sales levels for the titles. The research is that respondents were submitted to a music test if they qualified based on demographics, music listening behavior, or other characteristics. Respondents rate the specific hooks of songs by using buttons or by giving their score directly to interviewer.
Positioning. As Polyphonic targets on record companies as customer and on market research companies as competitor, the core strategy should differentiate Polyphonic from its competitors in the mind of its target customers. The differential advantage of Hit Song Science is that it could generate more accurate results within a shorter time at a lower cost. The results of call-out research vary due to different demographics, music listening behavior or other characteristics of respondents. Considering its subtle process, like selecting respondents, playing hooks of songs and rating, it probably takes longer than two hours for Hit Song Science.
More importantly, the call-out research usually costs the record companies between $5000 and $7000 per song while Hit Song Science only costs $300 to analyze an album with 10 songs. The cost of call-out research is as much 200 times as that of Hit Song Science. Product Polyphonic exploits Hit Song Science on all albums that are going to be released to test which single has the potential to become a hit with the Hit Song Science scores. Pricing Pricing is a highly visible element of a competitor’s marketing mix.
Considering the budget of Polyphonic is only $150000 which does not allow for much advertising and favors a proactive selling approach. It could charge the record company small up-front fee $2000 which is lower than $3000 to keep the price advantage among call-out studies and internet polling. Promotion Polyphonic could exploit methods, such as free-trial in the stage of beginning to test public satisfaction about the new technology. As Polyphonic HMI is a subsidiary of Group AIA which operates in a wide range of industry settings, ranging from energy and finance to telecom and e-business.
Polyphonic could make most of AIA’s relationships net to promote Hit Song Science. Our positioning strategy is to differentiate Hit Song Science from its competitor in the mind of its target customers which focuses on testing the potential hit of songs with higher accuracy less time at a lower cost impel implement of the marketing plan that increase the creditability and brand image of Hit Song Science. 3. What are the potential benefits and drawbacks of Hit Song Science for each player in the music industry? Who stands to gain or lose most from this technology? How does that impact your marketing strategy?
Artists. For unsigned artists, Hit Song Science could help them to test the hit potential of their songs and in doing so, find out whether they have a chance to make it in the music industry. However, the drawbacks are very obvious and influencing to unsigned artists. Many unsigned artists have original and novel ideas about music which cannot match the mathematical characteristics of past music hits due to the new music frame. Then, songs also with hit potential (although not show in Hit Song Science) would be ploughed under and so would the unsigned artists with ingenious talent which may result in a big bang in music industry.
For signed artists, Hit Song Science provides them with a method to check the potential hit of songs gave by producers or record companies. If the first single underperforms (not out of the intention of the record label), it will be the end of the artist’s career. At least, artists have a way to test the songs rather than accepting them mechanically without their own thoughts. It is interesting that disadvantages show in the same way. If record label provide songs to artists for recording only based on Hit Song Science technology, underperformance can still arise due to a failure rate of 20% of Hit Song Science technology.
Producers For producers, the potential benefits are that they could have a chance to test songs or albums at some stage during the production process and tweak them to maximize their hit potential. It would increase the efficiency of testing. As the job of producers includes selecting music, developing music style, oversaw recording schedules, recruiting engineers and watching over recording budgets. Hit Song Science can help producers ease off by doing music selection and music style development so that producers can focus on other duties which, in some extent, can increase working efficiency and effectiveness.
The disadvantage of the technology is that the differentiation among producers would be weakened in that producers are not responsible for the majority of successes of songs any more but the technology takes the responsibility of successes. Record labels With the Hit Song Science technology, record companies could efficiently decide whether to market an album, choose which song to release first and test new artists looking for a record deal. If record labels over rely on Hit Song Science technology, they would ignore many artists with remarkable talent about music which is expressed in the way different from former music style.
It would be a big lose either to record labels or to the music industry as a whole. From the potential benefits and drawbacks of Hit Song Science for artists, producers and record labels in the music industry analyzed above, we can conclude that record companies gain most from this technology. Record companies spent millions of dollars to release an album without knowing whether there be any demand for it or whether it will get any airplay before. In fact, less than 15% of music titles released were profitable.
However, with time goes by, the technology will be mature and developed so that it can achieve a higher success rate than the current one of 80%. They could incorporate the extent to which tastes might change over time by focusing on more current successes among the songs in the universe. As the record companies can benefit from the Hit Song Science technology and stands to gain most from this technology, we should put our marketing focus on record labels to fulfill the demand of them to determine the potential hit of songs and albums. Marketing strategy should be record labels-based.
