Fly Low

Another sharp insight from Lefsetz:

When you’re a wannabe, when you’re starting out, you give your music away for free. Forget the fact that you want to be paid. The problem is, nobody knows who you are to buy your music. Your free campaign is a way to get traction. Revenue is down the pike!

Kind of like Google. There was no revenue at first. Just the truly great search engine. They got eyeballs, and then they came up with their advertising model. There’s already a business model in music, live, merch and the recorded music sales you can garner, but it pays to look at Google. Google is constantly releasing new products, that are free to use. Google News. Google Earth. Google Video, Blogs and a whole host of other features. You see they want you hooked, they want you to be a member of the club. They’ll figure out how to make money off you later. Funny, but this strategy not only decimated Yahoo, it put a huge dent in Microsoft’s online strategy.

Once again, why was Google successful? Because its search engine worked quickly and came up with the correct result right away. And you didn’t have to wade through ads, you weren’t bombarded by come-ons. You got what you came for, nothing more unless you so desired. This is why the endorsement/commercial tie-in aspect of music is so problematic. It undermines the experience and the trust. Sure, it gets the message out, but it muddies the cred and the belief and the bond. Google’s bond is so good that searchers see the ads on the side as a bonus, a benefit!

And isn’t it interesting that Google doesn’t sell the ads to the highest bidder. Oh, they do at first. But if a subsidiary ad gets more traffic, it ascends the ladder.

Insanely great thought and execution. If only Yahoo could duplicate it. It can’t.

There aren’t that many good bands out there. It doesn’t matter if you sell out or play for cred, if you suck, you’re not going to make it. But if you are good, manage your cred, and your mailing list. Pay attention to the bond with your fans, nurture it. People will do anything for you as long as you don’t trick them, if they believe in you. Have great music, create a fan base, and then collect the money. Yes, this does mean you’ll starve or leave money on the table at first. But if you give it away for free up front, or cheap, it’ll pay dividends later. This is the benefit of Arcade Fire staying indie, of having cheap shows, their fans love them. It’s more than the music. And it has to be more than the music to have longevity today.

Remember, bond first, money second.

This is advice that crops up over and over again in writing about software startups. For example, here’s Paul Graham:

At Y Combinator we advise all the startups we fund never to lord it over users. Never make users register, unless you need to in order to store something for them. If you do make users register, never make them wait for a confirmation link in an email; in fact, don’t even ask for their email address unless you need it for some reason. Don’t ask them any unnecessary questions. Never send them email unless they explicitly ask for it. Never frame pages you link to, or open them in new windows. If you have a free version and a pay version, don’t make the free version too restricted. And if you find yourself asking “should we allow users to do x?” just answer “yes” whenever you’re unsure. Err on the side of generosity.

In How to Start a Startup I advised startups never to let anyone fly under them, meaning never to let any other company offer a cheaper, easier solution. Another way to fly low is to give users more power. Let users do what they want. If you don’t and a competitor does, you’re in trouble.

And here is the head of Craig’s List talking about how they don’t have ads because users haven’t asked for it.

Of course, treating your customers well is good business advice no matter what business you’re in. But it’s especially crucial on the Internet because you’re operating in a single, global market with billions of potential customers. That means you can always attract new customers by treating your existing customers well. Therefore, the short-term revenue you might gain from monetizing your existing customers will almost always be penny-wise and pound foolish if you annoy them in the process. So when you’re promoting a product on the Internet, always go with the least annoying option. And what’s less annoying than giving your product away for free, with no hoops to jump through and no strings attached?

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