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Understanding The Growth Funnel

Music Growth Hacking is fundamental to the current music marketing. As the music business becomes a multi-format industry, the growth funnel sits at the heart of concepts such as The Fan Economy and The Artist Economy.  

First, please let me make the following point, because it bothers me:

When writing about music, I feel uncomfortable referring to fans as ‘Customers’. Terms like “Acquisition”, used in everyday marketing, seem a crude way to describe the artist-to-fan relationship. For instance, when I discover an artist I like, then follow them on Spotify and perhaps join their mailing list, I hate to think I’m ‘acquired’ by them.

However, when describing growth funnel techniques, it’s difficult to avoid marketing terminology to describe the tools and processes. So, I’d ask that for this article, let’s both agree the terms suck, but for the sake of describing growth hacking, let’s put our unease to one side?

For this article I teamed up with data analyst, Jackson Bull. He’s based in the US and together we describe how social media, plays and artist growth interlink. I know this is not a revelation, but we want to get ‘under the hood’ and provide analysis and practical actions for an artists and their network to put in place.

What Is Growth Hacking?

Growth Hacking is the process of moving fans along a ‘Growth Funnel’. 

Acquisition

The first step is, be heard.

As we all know, getting heard is a battle in itself. This is the role of marketing, getting on Spotify playlists, creating a buzz and promotions. I’ve written articles covering these subjects so won’t dwell too much here. 

Activation – Likes, Follows & Subscribes

This is a major change across all media. The ability for people to Like, Follow or Subscribe. For instance, on Spotify, listeners can Like (❤️) a song or Follow an artist. 

I’ll explore the benefits, although most people know that it’s generally a good thing for a fan to do.

The growth funnel concept is to encourage listeners to become Followers. This is an activation.

Retention

Having a lot of Followers and Subscribers is welcomed. However, it’s not the same as having a direct relationship. Unfortunately platforms such as Spotify, Facebook, Instagram, TikTok etc make it difficult to build these direct relationships. There are some justified reasons for this. We’ll be exploring those, plus techniques to get personal details.

Referral

The most powerful form of marketing for music is word of mouth. No matter how large your marketing budget, it pales in comparison to one friend saying to another, “Hey, have you checked out this artist? They’re awesome!”

Turning your fans into advocates is key to growing your fanbase organically.

Revenue

Fact is, revenue from streaming isn’t going to pay the bills for most artists. The Artist Economy describes how the music business is now multi-format, i.e. revenue comes from many different sources. The good news is there are lots of different sources. The bad news is they require time & care to ensure they’re harnessed properly, managed effectively and maximised.

The Music Eco-System

Music, artists and fans currently inhabit a complex mix of social media and DSP’s. These platforms assist discovery, likes and follows. However, they make it difficult to build a commercial relationship, i.e. direct from artist to fan. There are a variety of reasons for this:

  1. The platforms don’t want to lose their position as central to the relationship – most are based on advertising.
  2. They want a percentage of any transaction, if possible
  3. There are some legitimate privacy concerns

Several huge players dominate the music eco-system. Using broad definitions, these can be summarised below.

Social MediaRetailLive Stream / Radio
FacebookSpotifyTwitch
InstagramAmazonMixCloud
Tik TokYouTube MusicPandora
TwitterTidal
YouTubeApple
Soundcloud

Let’s look at the common traits: 

  • The relationship between an artist and their audience is built on the concept of Likes and Follows. 
  • Some of the services enable chat or comments between the artist and a fan. However, this is strictly on a one-to-one, not one-to-many, basis. This makes it difficult to scale for large fanbases.
  • Where services allow one-to-many, e.g. a Facebook or Twitter post, the actual number of Followers who read the post is variable and difficult to know.
  • Services such as YouTube, Facebook and Twitter encourage fans to advertise to reach fans.
  • Events can be advertised but ticket sales tend to be forced through a preferred partner of the platform
  • Merchandise can be sold via links but there is limited opportunity to upsell
  • None of the services enable artists to offer their own subscription
  • There is very limited scope to segment the audience to enable effective targeting.

Music Platforms Make Growth Hacking Essential

These problems are exacerbated at scale. For artists with thousands or millions of Followers, it’s difficult (and costly) to send targeted, relevant messages.

I can’t deny social media platforms and the DSP’s have made it extraordinarily easy to discover and share music. Personally, as a music fan, I love Spotify. I’ve been a subscriber since 2009. I listen to it pretty much every day.

However, as someone who works with artists, it’s frustrating. I can see artists with millions of plays but with virtually no way to build a direct relationship with their audience. 

Spotify introduced a couple of features – live listings and merchandise – but use third party suppliers.

To build a direct relationship, an artist must work every opportunity available to them to encourage fans to leave the closed environment of the platforms towards the only place where a direct relationship can be built; the artist website.

In fact, the platforms have done such a good job of making it easy to upload music and video, there is a generation of artists who think websites and mailing lists are, in a way, “old fashioned”. It’s not surprising the likes of Facebook do what they can to perpetuate this, since it benefits their advertising revenue if artists push their fanbase to use the Facebook platform.

The focus of the Growth Funnel is to move casual listeners of an artist towards being fans with a direct relationship.

Since the platforms do not make this easy, we employ Growth Hacking techniques to move fans along the growth funnel.

This is a similar concept to Click Funnels that are well documented & understood by companies working within direct marketing. Advertising and landing pages are used to maximise conversion rates and work out the most efficient ‘cost of acquisition’.

The Fan Journey In Growth Funnels

The most common ways to draw fans into the funnel are:

  1. Links, wherever possible
  2. Incentives
  3. Text
  4. Images
  5. Videos
  6. Offers

Not every platform allow these. For instance, Spotify won’t allow marketing messages to be placed on photos. However, they allow text in the bio.

To understand growth hacking, it’s probably best to ask yourself, what do you do when you hear a track you like on Spotify? 

I’ll describer my process:

  1. I hear a track on a playlist that grabs my attention.
  2. I have several playlists, so consider for a brief moment, which of my personal playlists is the most appropriate and save the track to that playlist.
  3. If I really like a track I go to the ‘About’ section and read the Bio.
  4. If I like what I read in the Bio, then I might, MIGHT, Follow the artist

That’s it. 

Years ago I would have made a trip to the record store and bought the artist’s album. Now, I make a decision about which playlist their song belongs on and whether to Follow them.

My initial engagement with an artist typically consists of reading their Bio. If they’re a ‘Current’ artist then I’m more likely to Follow to stay updated with new material. 

Ask yourself, what do you do?

Perhaps you’ll click on a link to the artist Facebook page? Perhaps you’ll do a search for them on Wikipedia. Or, if really intrigued, visit their official website?

In other words, our initial engagement is often small, tentative and non-committal. 

And, it’s precisely because these initial steps are so small, it’s important to make them, first as easy as possible and second, maximise every opportunity.

The Spotify Touchpoints

Despite the fact the first thing I do after discovering an artist is read the Bio it strikes me how few artists pay it attention, beyond copy and paste their press bio or think they can create mysticism by being minimal.

Imagine, in the ‘old days’, an artist review in the NME that simply said “Hi, thanks for reading”. Would that be enough to get you interested?

The gig listings are just as bad. Pre-COVID I would often look at the Spotify concert listings to see if any of the bands I Follow were playing near me. Occasionally I’d see one playing in a venue not far from me. But what then?

For one thing, I had to find someone else who would go with me. Look, I don’t mind going to gigs on my own, but I much prefer making a night of it – drinks, see friends, food. 

But also, I find the way bands treat their gig listing on Spotify is very remote and detached. Rarely a mention in the Bio. No incentives to join their mailing list with an offer. 

Given the perilous state of artist’s current finances I can’t understand why they don’t take this opportunity to move fans through the growth funnel and towards a direct relationship.

The Artist Economy means, building stronger relationships with fans. It recognises that artists are central to the relationship but fans are at different stages in their journey. Understanding the growth funnel is the key to building direct relationships.

PART II – Growth Funnel Analytics

The following section is written by Jackson Bull of Bull Analytics. Jackson is a music data analyst. We wanted to collaborate on this article since a lot of our work crosses over.

In my last article, we examined the data behind some of the top trending artists on Tiktok. Within that analysis, we discovered just how important it is for an artist to engage with their fans.

In the case of Olivia Rodrigo, having a robust fanbase (which was bigger than 75% of other artists in the sample) before a big release can have a huge impact on your streaming success.

But where exactly can you find your audience?

The music industry today is an overly convoluted marketplace with lots of redundancy; choosing the option best for you can be overwhelming and risky.

Afterall, there are only so many hours in a day to spend online; so the trick is to find the path that’ll gain the most exposure with the least amount of detours. So the decision ultimately comes down to which platform people within your community are using.

This article focuses on the growth funnel, as explained by my co-author Neil Cartwright of The Artist Network, and how some social channels lead to more growth than others.

Specifically, I will be analyzing data for artists across three big channels to find out which ones are most correlated with Spotify follower growth.

These three channels are Twitter, Instagram, and Tiktok. The sample of observations include artists who had previously been added to Alternative VIBES, an independently curated playlist on Spotify. VIBE Lifestyle’s playlist has 117,000 followers who are interested in alternative, emo, pop-oriented, rock.


The Data

Before we move on to the analysis, it’s important to take a moment to describe the dataset.

  • 98 unique tracks
  • 89 unique artists (several artists had multiple tracks on the playlist)
  • All tracks have been added and removed between July 10th, 2020 – February 6th, 2021

Checkout my Github page for a detailed documentation of variable names and descriptions.

Dependent Variable – Net Follower Gain/Loss(Spotify)

Whenever an artist lands on a playlist, a bump in their streams should be expected. Imagine: Seemingly overnight, a completely different group of people see your name on the playlist, never having heard of you the day before.

Italian rock duo Atwood (13,124 monthly listeners) on the same list as English rock duo Royal Blood (3.7 million monthly listeners)…quite a testament of talent.

The true sign of success, however, is an artist converting those additional listeners to followers who remain by them even after being removed from the playlist. So by subtracting the number of followers 7 days before the playlist from the number 7 days after the removal date, we end up with our dependent variable: Net Follower Gain/Loss(Spotify).

We’ll use its values to measure what kind of an effect our independent variables may have on it.

Independent Variables

  • Number of Twitter followers 7 days before playlist add date
  • # Instagram followers 7 days before playlist add date
  • Tiktok followers 7 days before playlist add date

Analysis

Our research of each platform includes a quantitative analysis of two continuous variables: the number of social media followers 7-days before each artist’s playlist add date and the net gain of Spotify followers.

We’ll then use Pearson’s Correlation Coefficient to measure the relationship between the two. If you’re not familiar with this test, PCC is based on a scale from -1 to 1; the latter is positive correlation and the former negative correlation.

Secondly, we will illustrate what portion of the sample has an official presence on the platform at hand.

Twitter

Insights

  • Pearson’s Correlation: .60
  • 74% of artists have Twitter accounts
  • 26% do not have Twitter

Instagram

Insights

  • Pearson’s Correlation: .77
  • 72% of artists have Instagram accounts
  • 28% do not have Instagram

Tiktok

Insights

  • Pearson’s Correlation: .50
  • 20% of artists have Tiktok accounts
  • 80% do not have Tiktok

Net Gain – Spotify Followers

Min: -5 / Mean: 32,127 / Max: 373,108 / 25th percentile: 354 / Median: 2,226 / 75th percentile: 24,226 / Interquartile range (IQR): 23,872

  • Green dots indicate artists with Twitter, Instagram, and Tiktok accounts
  • Red dots indicate artists who do not have Tiktok accounts
  • Blue indicates those who only have Twitter accounts
  • Black dots only have instagram accounts

Insights

  • Top performers all have Tiktok accounts, despite only 20% of these artists having an official presence within the app
  • Artists with only Twitter and Instagram accounts is the second most successful group in terms of growth

Final Insights

  • Instagram & Twitter are the most popular social channels for these artists, however Tiktok has the most potential for gain given that the most extreme outliers  are all on Tiktok
  • Instagram’s influence on Spotify followers is greater than Twitter’s impact as indicated my Pearson’s Correlation Coefficient
  • The majority of artists on Alternative VIBES had between 1,500 and 280,000 followers on Spotify before added to the playlist
  • The median gain in Spotify followers for artists with Tiktoks is 15,323 vs. 1,688 for those not on the platform
  • Most of the artists who have either Twitter or Instagram experienced average growth between 354 and 24k Spotify fans. In my opinion, Baby Queen(3,045 net gain), Spacey Jane(7,545 net gain), and No Love For The Middle Child(1,688 net gain) could have higher growth if they focused more on fan-first-marketing techniques and engaged more with fans through video app-sharing platforms like Tiktok.
  • The Flaming Lips, who only has a Twitter account, is the one exception to this group with a gain of 26k followers. But they already had a huge fanbase, built by their world-renowned live performances back in the day.
  • One big emerging trend to watch is the notion of fan-first-marketing strategies that prioritize direct-to-fan engagement. With The Band is the latest platform to focus on this type of artist marketing. As we’ve seen throughout this research, having more fans before a playlist-add generally yields higher fan growth and therefore…more streams.

Further Analysis

In my next post, I will dive deeper into this playlist selection to find out why some artists who are on Tiktok didn’t gain as many fans as other artists who have the same social presence. Are certain subgenres not as popular? Does release frequency have an impact on growth? Or does engagement play a role?

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