Dumbo-based startup Headliner.fm was already a few months into its partnership with SoundCloud, the white-hot Berlin-based music storage startup, when Tumblr decided to jump on the SoundCloud love train apparently rolling through New York. But at the SF Music Summit today, Headliner.fm co-founder Mike More announced he was sweetening the deal on his app, currently one of the most popular offerings in SoundCloud’s App Gallery.
For the uninitiated, Headliner.fm is a social media recommendation tool that helps acts like Diddy, Akon, and Maroon 5, all of which have signed up for its service, to connect to new fans with a simple proposition: letting one artist recommend another to its fans on Facebook, Twitter, or MySpace (yeah, yeah, we know, but music was the only thing it was ever good for).
Using an incentive system called “Band Bucks”–here’s where it gets more complicated–Headliner.fm levels the playing field between larger and smaller acts. The more you promote similar musicians, the more Band Bucks you receive. Those can then be cashed in to have larger acts like Weezer or T-Pain, also members, to promote you on their social media page. But artists only agree to recommend each other about 15 percent of the time, which helps make their recommendations more trustworthy.
Today’s announcement has to do with Headliner’s pro account, the startup’s only revenue stream for now. For the next six months, SoundCloud users who sign up through the App Gallery get 100,000 Band Bucks, three months of its Pro Account for free, and a entry ticket to its Band of the Month contest, where acts like Pitbull, Maroon 5, and Panic at the Disco pick a winner and then recommend the band to their fans.
Betabeat got Mr. More on the phone to talk why everyone’s so hot under the collar for SoundCloud, why they didn’t want artists to shill out their fans, how Justin Bieber fits into all of this, and the view from Silicon Beach.
How did you hook up with SoundCloud?
We were one of the technology companies that built on their API, I think they have 200 developers, maybe more at this point. If you go back and look at what SoundCloud is: YouTube for music would be a really great way to understand it. They’re a big audio platform. We liked their product so we went and build this app and we were notified by SoundCloud that we were one of their top-used applications.
I could tell you, but they don’t want me to.
Oh, it’s above the top ten. This is how we got to the partnership deal. If you’re the number [redacted]-used application, doesn’t it make sense to partner in a way that’s a little more substantive than passively being listed in your gallery? SoundCloud is such a huge company. They have all these different types of sound applications that are not necessarily about marketing new music. But most of their seven million users are artists or DJs and people that are uploading music there to share with other business professional and also share with their fans on Facebook and Twitter. It seemed pretty logical to us that at that point when someone makes a new, fresh track, why don’t we offer them the opportunity to share it with a wider social circle? [Our app is] shown to all their artists who have more than five tracks on there and its been doing really well.
It’s popular because most SoundCloud users are artists?
Yeah, we got to it organically. Artists are keen on artists recommending other artists. There’s a value because it’s not really passively shared. The way our platforms works is that you have to ask another artist to recommend you to their fans. The artist completely has the ability to say, “No. I will not do this. I will not recommend you to my fans because you’re not a good fit.” So we have a highly-curated artists base–almost 90,000 artists now– and if you send a recommendation request on our platform, only 15 percent gets approved. Artists are being very picky about what they’re sending.
Is it really the artists themselves? Is it Weezer picking it? Or Weezer’s publicity manager?
Well, with the bigger well-known artists, they have companies and people who manage their screen names. But T-Pain, who we work with all the time, manages his own Twitter stream. From what I can tell you, that’s T-Pain. And he was a sponsor of our artist of the month contest. It was absolutely him who picked the artists, because we talked to him. That’s not always the case with larger artists. But digital media is so important to them now, how these artists talk to their fans—even if it’s Britney Spears, I can’t believe that she’s that naïve that she completely lets people create a voice for her. Even if she’s not doing it, she’s involved in the curation process.
How does the platform work?
So if you’’re a rock band in New York—we have over 80,000 artists, tens of thousands of rock bands in New York—you can create a post that you want to share, as though you were posting yourself, then you send that request to the artist that you pick. Those artists can view those requests and they go through them and curate them. The average small artist on our platform has over 5,000 fans [on Twitter, Facebook, and MySpace]. So if you do that 15 times. . . 15 times 5 . . . I’m horrible at math . . . I believe that is, oh God, 75,000 new fans you will reach? Instantaneously, effectively, organically.
So they agree to share it, where are they seeing it? Weezer recommends your band and you see it on Weezer’s Facebook page?
Correct. If there was no Headliner, there’d be no platform to do this, but you could go pester all these bands yourself. You could phone them up, spank them, pester them on Facebook or Twitter and ask them would you recommend me?
How are you monetizing this?
We have a freemium model, most of our platform’s free. We spent a long time—over six months—thinking about an incentive platform to give artists who recommend each other a fair trade. Artists have been cross-promoting each other for years, it goes back to the days of Motown when they went on the Motown Review together or more currently you’re looking at Eminem introducing 50 Cent and Dr. Dre introducing Eminem. Or really currently Justin Bieber being introduced by Usher.
So cross-promotion really only works for really large artists and there has to be an incentive to do it. Like Usher basically owns 50 percent of Justin Bieber, maybe more. He owns his publishing, he owns everything that guy does. What happens at a label level nowadays is artists want to do this, but guess what, it never happens. They won’t even shout each other out through Twitter and Facebook because there’s no clear incentive to do it. The artists think it’s good, but the business people are saying, ‘Why would we do this?’
What we didn’t want to do was exchange [real] currency, so we created a virtual currency called a Band Buck. Say you have 5,000 fans, every time you recommend someone, you earn 5,000 band Bucks. The only thing you can do with those Band Bucks is request recommendations from other artists. And every time when you join the platform, if you have 5,000 fans, you automatically earn 5,000 Band Bucks. It gives you a good enough incentive to make the recommendations fair, but not good enough to have people shill their audience, which is really important. We do not want artists shilling their fans. We only want recommendations that are really appropriate to their audience.
I still don’t understand what the incentive is for larger acts.
For larger acts it’s exactly the same. They all have a marketing need. We work with Pitbull and we work with Akon and Pitbull has the number R&B one record in the country, and he used our platform to market himself because he thought it was a very credible way by having other artists recommend him.
Even Pitbull and Akon–they’re going to need virtual currency?
Akon uses his band bucks all the time! To ask other artists to recommend him.
So they get a smaller act that’s more grassroots?
It’s not about a smaller act. Akon has 22 million Band Bucks, and we have over 90,000 artists on our platform that reach over 290 million fans. I can tell you right now 80 million of those fans that are not already his fans on MySpace, Facebook, or Twitter like R&B music. Why wouldn’t he want to reach those fans? What’s his alternative?
So do you get any revenue from the SoundCloud partnership?
No, there’s no money changing hands. By definition our product helps usage on their platform because when someone does marketing on our platform, it includes the SoundCloud link in their status update. You can hear the track right there on Facebook. That helps their usage grow. SoundCloud wants to be the biggest nastiest cloud-based music platform. Ever. So our marketing execution helps drive usage for them.
You were saying you used to be in the music industry?
I did various things. I was a record producer, I was a songwriter, I also owned a music publishing company—Mike More Media. The biggest challenge is how do you market yourself.
Isn’t the biggest challenge how you get people not to pirate your stuff?
Yeah, but you have to create demand first. Why are people going to pay for things they don’t know about? It’s hard to discover new artists. There’s not really a great recommendation engine on any of these platforms. Pandora’s is the most interesting one, but they build the whole company around that.
Where in the city are you based?
We’re in Dumbo, which we love. We’re on Jay Street, actually, right overlooking the water. We love it.
So do you get together with the other Dumbo startups?
We do, all the time. In fact, one of them was sold to Facebook—my friend Sam Lessin’s company called Drop.io.
Do you hate it when people try to call it Silicon Beach?
No. [Laughs] What’s the matter with Silicon Beach?!