The entertainment industry, especially record labels and movie studios, are waging what they see as a war of survival against the Internet.
No company knows this better than streaming music site Grooveshark, which is currently dealing with a number of lawsuits levied against it by the music industry.
But the service, which builds its library of music through a combination of label partnerships and user-uploaded tracks, also has a host of solid relationships with smaller players and indie labels.
And its 30 million unique visitors a month, including 14 million registered users, provides a treasure trove of customer information. Grooveshark's business model comes from a mix of advertising and subscriptions that, like Spotify, provide a more elaborate experience for users than free streaming.
We spoke with Chris Nagy, Grooveshark's VP of Brand Strategy, and PR rep Danika Azzarelli to discuss how Grooveshark has convinced the entertainment business that it's a friend, not an enemy.
1. Stress that you're complementary, not a competitor. Grooveshark and the labels are in the same industry, but they're not mutually exclusive — they can help each other. Just as Grooveshark needs the music the labels produce, the labels need to find new ways to reach consumers.
2. Maximize revenue streams. This seems obvious, but plenty of music-sharing sites have done without providing any sort of monetary benefit to the industry before and ended up being sued out of existence.
Cut your partners in on subscriptions and give them a mobile and international presence. In a way, streaming is the new retail, particularly in a world where consumers don't care about owning the music.
3. Show them how you can help improve their product. Grooveshark gathers data from its registered users, including location and listening habits, and it offers fully flexible ad and media platforms for artist-specific advertising and branding.
Research and branding are two areas that labels are heavily invested in, and if they can receive a 360-degree experience from one service, that's beneficial. And because information comes in real-time on the web — no need to wait for the results of focus groups or market research — strategies can constantly be tweaked.
4. Tell the industry they don't need to resign themselves to piracy. In many international markets, piracy is the only model. But working with a product like Grooveshark can help the industry use new payment strategies, like streaming subscriptions, to monetize emerging markets that otherwise won't pay for music.
5. Take advantage of how you differ from competitors. In Grooveshark's case, Pandora and Spotify provide similar but not identical services. Grooveshark says it has a higher level of engagement from listeners, though, and it allows users to customize the service heavily, unlike Spotify.
This means that labels can benefit from both Spotify and Grooveshark, particularly when Grooveshark says there is little user overlap between the two products.
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