Musical Identity

Understanding who you are as a music fan and what that says about you.

 

White Paper: How Music Services Can Acquire, Engage, and Monetize High-Value Listeners

August 12, 2013

Every business knows that the key to monetization is a deeper understanding of their customers. It’s true for retail, media, live events, apparel and yes, for online music services. With over 40 customers in the streaming music space, we’re seeing an encouraging trend towards a more analytical understanding of audience.

By applying our understanding of a person’s “Musical Identity” — who they are as a music fan, and what that says about them beyond their music listening habits — The Echo Nest has started to help music services better understand, predict, and target high-value listeners.

Monetizing online music users

It’s no secret that user monetization is a tough road in music. Ad-supported services are working to better engage premium advertisers to keep their advertising CPMs higher than their costs of licensing content — a challenge exacerbated by the explosion in mobile listening and its limited, for now, monetization. As a result, subscription services are casting wider nets to reach more potential paying subscribers, which requires a balancing act between customer acquisition costs, subscriber conversion, and subscriber retention.

A report from MIDiA Consulting suggests that 60-80 percent of ad-supported accounts on services like Spotify, Pandora, and Deezer are effectively inactive. These inactive listeners contribute little value to the music service. After all, if someone never logs on, they’ll never see ads.

The MIDIA report confirms something we’ve seen happen with many services: A small segment of hyper-engaged users is responsible for the majority of overall engagement and listening hours in any given month.

Interestingly, we’ve noticed that the characteristics of these high-value users vary from service to service. The traits that make one user “high value” to one service don’t necessarily apply to another.

As such, it’s really important for a music service to understand who those high-value listeners are for their service specifically, and, ideally, to target acquisition and engagement strategies directly to those listeners. It’s possible. In fact, it’s exactly what The Echo Nest has been working on.

How It Works

Our latest white paper outlines a process we’ve developed for music services to predict high-value listeners based on just a few data points around what someone listens to and how they listen to music. After understanding the attributes of high-value listeners on a given service, we can outline a series of acquisition and engagement approaches to help that service attract, retain, and increase the overall ARPU of these high-value listeners.

It’s important to reiterate that the specific aspects of music taste and activity that are predictive of high-value listeners vary among music services. There is no one-size-fits-all solution. However, we are able to identify and help implement the optimal solution for any single service.

We’re excited to apply our understanding of Musical Identity and work more closely with our customers to help them better understand their customers, ultimately building more successful businesses as a result.

You can read the White Paper explaining how this works here, and the Billboard article about this work here.

Feel free to contact us if you’re interested in finding out more.

Tagged as: , audience understanding, white paper, engagement, monetization, high-value users