Fan Acquisition Cost


o I’m here in Nashville with my ear to the ground. The music industry is in upheaval. The game is changing. Some are holding on to the ‘industry’ as Seth Godin describes, while others are done predicting the future and starting to react to the tools and platforms available. Gary Vaynerchuk makes this point clearly. Reactionary business is now the name of the game. Spend time on what is happening now instead of worrying about the future or holding on to the past.

I recently went to hear a buddy play downtown, and he had been touring on his own to small crowds as any hardworking musician does these days. His CD sales were lacking, and he was racking his brain on what to do next that would get him to that next level. He gave a solid performance, and after the show he had several well wishers pat him on the back as they walked out. His eyes lit up in gratitude as he stood around his merch table.

I congratulated him for a job well done and watched for the interactions at the table.

Almost everyone who said they had a great time, enjoyed his music, or were glad he came … kept walking.

They didn’t buy his CD or t-shirt, or even touch them. Maybe they remembered his name and how to spell it, will go home to Google it, find his website, and buy his music there. Or maybe they were all fans already. I doubt it. They paid to have a relaxing time after work. They weren’t interested in being a fan or following anyone. They got what they wanted. The question is, did he?

Did he get what he wanted when he drove all hours of the night and day to get there? When he lugged his gear in and sound checked it? When he played his heart out? When he heard the cheers from the crowd? When he was the star for a moment and all eyes were on him? When he belted out that melody? When he fought the club owner for his fair share of the door? I hope so because without sales, these are his profit.

I asked him what he thought about giving his music to all those that talked to him after the show. His face immediately scrunched up. “No way!” he said with conviction. “I don’t believe in giving music away for free. I worked hard and spent a lot of money to produce a quality product! I’m not just going to devalue my work like that.”

His mind stood exactly where many in the industry still stand. In the past. The accepted way you make money as a musician. Somewhere between the radio and the internet, artists forgot that they had been giving away their music on the radio for years in exchange for mass exposure. The blind spot? Mass market exposure is on the way out; word of mouth is on the way in. Radio play doesn’t guarantee much anymore, but personal word of mouth does. Niche markets with small groups of people do. If the new radio is the iPod, you must ensure you are getting airtime. If that involves giving your hit single to thousands more tiny radios, it’s time to start using that creativity. I am of course speaking specifically of the unknown artist trying to stand out.

“Can I ask you something?” I paused, hoping he would following me. “Did any of those people who said they loved your music buy anything?”


“So it’s safe to say that they probably won’t buy anything when they get home either, even if they remember your name?” I asked as nicely as I could.

He started to squirm, “Maybe.”

“What if you gave them a CD or a free download?” I said as he started listening. “You would have not only gained potential new fans for the future, but they might have told some friends about you, as they relayed what a brilliant time they had tonight at your show. They would have probably listened to your music all the way home and sang it in the shower in the morning.”

He was starting to nod like he was swallowing some not-so-tasty medicine.

I went for the closer. “How much is it costing you not to give your music away?”

He had to think about that one. I’m sure he had to think about his goals and what he was trying to accomplish driving to Nashville to play. Was it for the love? For the money? For both? I started to think about it too. If you set aside your ego and doing music purely for the love of it, and break it down into a monetary transaction, you are left with customer acquisition cost. Not a phrase artists like to think about.

How much money does each new fan cost you to win over? This is an important measure to think about because without fans, or potential customers, you are not in business. You are in a hobby.

Now, you could argue that the club was really his customer and if he made enough to profit after all his expenses and time, he came out on top and can sustain his music career. And that argument might work if you are in the business of selling beer. But most artists I know are selling the experience, their music, their message, to their audience, not other businesses.

Of course, this begs the question, is the game leaning more toward music as an advertising vehicle? Or has it always been? How will you react?

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