Ian Kwon On Fanatic.fm’s Platform To Monetize Music By Connecting Artists With Brands & Charities

Volumes have been written on how to monetize music in the post-Napster age. Most recently, streaming music and selling direct to fans are touted as industry saviors. But Ian Kwon, who I met and began advising last year offers a different solution that's a four-way win for artists, brands, charities and fans. In this interview, Kwon explains fanatic.fm in depth.

HYPEBOT: fanatic.fm connects bands and brands. What do you see as the implication of your model to the music industry?

KWON: Historically, music business has always been centered on “physical products” that you sell. and it was all about extracting money from the fans through LPs, cassettes, and CDs.This business model is now dead.

The reason is simple: although fans still love music more than ever, they simply do not want to pay for it. they do not want to be the revenue source that sustains the music industry.

We felt it’s about time we address this issue head on – by completely changing the business model.   Instead of relying on fans , can’t we find other sources of revenue? fanatic.fm believes that brands can be the next source of revenue for the music industry going forward.  

HYPEBOT: How is fanatic.fm different from ad supported music services, many of who have had trouble gaining traction? 

KWON: Ad-backed streaming services focus on monetizing traffic on their sites, and, there is no direct association between the music and advertisers. Listeners don’t like their music interrupted by ads, and skip right through them, some even paying to avoid them altogether with the “no-ads” option.

The key difference that fanatic.fm brings is the concept of “sponsorship”. I’ve been a long time fan of the football team Manchester United, and I still clearly remember all the corporate sponsors that had their logo on the players jerseys over the last 10 years. (It was Sharp, Vodafone, AIG and Aon if I’m not mistaken) If I were just a consumer of the entertainment the team provides, these sponsors would have absolutely no meaning to me. However, becoming a fan is different. There is an emotional bond that forms with your favorite football team, your band, your singer, guitarist, and so on.

What fanatic.fm wants to do is help brands advance beyond just a product-consumer relationships and tap into the sticky relationship that forms between musicians and their fans. 

For example, let’s say that Radiohead publishes their latest album through GM’s sponsorship. If this happens, GM is no longer just an advertiser. They are directly responsible for the free music Radiohead fans will enjoy, and they will be appreciated by these fans in a completely different level. It’s a new way for GM to maximize its branding/advertising impact.

Another difference is the relationship between musicians, fans, and music sites. In older models, musicians were merely ‘contents providers’ for these music sites. Today, thanks to social media and the direct relationship between musicians and their fans, musicians don’t need to be a part of the music sites. They already have twitter followers and facebook friends who are completely up to date on what they are up to.

What musicans can now do, rather than trying to reach into their fans’ pockets, is encourage them to listen to the sponsored plays of the band’s new album.

HYPEBOT: Do you think this will be something that musicians will readily accept? This association with the corporate world goes against the grain for some artists.

KWON: Our concept of sponsorship is different from “endorsement”.  Their music won’t be plastered all over commercials and ads.

fanatic.fm  offers musicians complete control over choosing their sponsors. If they don’t want to get sponsored by, let’s say some mortgage company that invited them, they have the freedom to decline.. A sponsorship happens  only when both sponsors and musicians reach mutual agreement.

HYPEBOT: Are musicians with huge fan bases the ones best served your model? What about developing artists?

KWON: We think brands could become extremely powerful DJs these days. We already see brands like Converse really pushing to discover cool, emerging artists. If the music fits well with the brand’s identity or if the musician has a unique fan base, I think even unknown bands will have a good chance of being sponsored by brands and further maximize exposure through the brands.

HYPEBOT: You also involve charities. How does that work and how much is donated?

KWON: Musicians get 70% of the sponsorship revenue and fanatic.fm takes 30%. And together, we (musicians and fanatic.fm) donate 2.5% each. In other words, 5% of the sponsorship goes to charities.

Musicians always have been in front line helping people in need. With fanatic.fm, musicians, sponsors and fans literally unite to create a virtuous cycle: brands sponsor bands, bands sponsor charities, fans support this eco-system by listening to music on fanatic.fm.