Many music fans won't even spend 99 cents on a download. So why do so many pay $3.99 to send Trey Songz a virtual bottle of champagne and some imaginary chocolates?
Santa Monica-based company Handmade Mobile Entertainment created an app called The Angel Network, an online fan club and social network for the R&B star. Since launching in December, the app (called TAN for short) is raking in over $50,000 a month from about 52,000 users. Songz's rabid fan base purchases credits to put towards virtual gifts, greater access to their idol, and pure bragging rights.
A spot at the top of the "Instant VIP" board, for example -- which gets your profile on the app's homepage -- can set users back more than ten dollars. Credits can also be earned through sharing TAN content on Twitter and Facebook, thereby luring more fans to the service.
Another way the app generates revenue is through Songz's day-to-day interactions with fans. If he posts a text message, for example, that might be free to all users -- but to view a photo or listen to a recorded message might cost 100 credits. (Credits run on a sliding scale, from 99 cents for 100 to $24.99 for 5,000.) Eventually, some premium content, like behind-the-scenes videos or song clips, will probably cost more.
Handmade CEO Neil Goldberg is reluctant to discuss the details of TAN's business model. "I don't spend my time thinking about money, money, money. I spend my time thinking: How do I make people have a great experience?"
Ok. In any case, when asked to confirm the Billboard numbers, the pride in his voice is unmistakable: "When Trey has 300,000 people on this thing, we'll make him $250,000 a month." Considering that Songz already has over 6.3 million Twitter followers, it's not a far-fetched goal.
Goldberg traces his interest in changing the way people consume entertainment back to a light-bulb moment in the late '90s, when he was introduced to the first video-on-demand service. A Dutch company called Diva had been pitching the concept all over Los Angeles with limited success, but Goldberg, then a vice president of production at Warner Bros. Pictures, was instantly on board. "I think I look at the world differently," he says, sipping an Arnold Palmer at a café in Brentwood.
After his work with Diva and other early on-demand providers like Akimbo and On Demand Media Group, Goldberg next ventured into social media with a company called SayNow. The concept was simple: Allow users -- especially celebrities -- to record short voice messages and post them on Twitter, Facebook and other social networks.
"Voice and video matter a lot," Goldberg explains, because they forge a connection between artist and fan that goes deeper than a 140-character tweet. "When you give people something that's meaningful and emotional, good things happen."
One of the early adopters of SayNow was Trey Songz, who was introduced to the service through his manager, former Def Jam Music Group president Kevin Liles. After Goldberg left SayNow when it was acquired by Google in early 2011, he and Liles quickly picked up where they left off at Handmade.
"The great thing about our partnership is we enjoy each other," Liles says, speaking by phone from New York, the home base of his talent management firm, KWL. "We understand each other. We understand that we're pushing the paradigm of the fan club to another level."
Liles is no stranger to pushing paradigms and, in the process, wringing new revenue streams out of an increasingly cash-strapped music industry. At Def Jam, he expanded the label's branding and marketing efforts into clothing, television and even videogames with titles like Def Jam Vendetta, a hip-hop-themed wrestling game. Later, he joined Warner Music Group to head up their controversial but highly successful "enhanced artist partnerships," better known as 360 deals, in which the label took on a greater role in their artists' touring and merchandising efforts, in exchange for a greater share of the profits.
Still, Liles is careful to echo Goldberg's insistence that TAN was never intended to be, first and foremost, a money-making venture. "Neil and I didn't do this to create another revenue stream. We wanted to disrupt the fan club experience. We decided to create something together that we're gonna roll out across many platforms."
So far, Songz is one of only two Handmade celebrity clients, along with actor/model Antonio Sabàto, Jr. They've also built custom social networks for brands, publications and TV shows, including Inked magazine and the dating reality shows Take Me Out and Excused. But having successfully ramped up TAN, Liles and Goldberg are already plotting their next move.
"This is how much Neil and I are partners," Liles says, on a conference call with Goldberg. "Neil, will other KWL artists create their own networks with Handmade Mobile?"
"Absolutely," Goldberg replies.
"And I'll say abso-fucking-lutely," Liles adds.
They won't name names, but considering that KWL's client list includes D'Angelo, Big Sean, Nelly and Mike Posner, it seems almost certain that future Angel Network-style apps will be connecting more music fans--and raking in some serious coin--in the not-too-distant future.
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