As the Internet quickly eroded the music industry's revenue model and threatened the existence of independent labels, one entrepreneur embraced the disruptive technology and created a path for musicians to promote themselves and build a following.
Jed Carlson became an entrepreneur right out of college, purchasing a mass printing company that he operated with his cousin. After selling the company and consulting for a business that printed CDs, Carlson was exposed to the industry’s fears over how the internet would change its revenue stream. Before embarking on his next venture, Carlson decided to attend Duke University's Fuqua School of Business to gain a better understanding of how to build a business.
Carlson recently spoke to FOX Business about his path from MBA student to a new-age mini music mogul and what it took to grow ReverbNation
What really stood out to me was a class called Managerial Effectiveness. It taught me how to make decisions with inperfect information and how to become a better manager and decision maker. The public speaking course was also really important to me. A lot of entrepreneurs don't put enough value on the ability to communicate effectively with a group.
Formative to ReverbNation was the business plan writing workshop taught by a local venture capitalist and adjunct professor. It was 2004--right when the Internet was still dramatically impacting music--and I roped in the smartest kids in the class and they helped me craft the business plan that would be the seed for ReverbNation. To this day I have a three-drawer file cabinet and two of the drawers are filled with three-ring binders full of notes from my classes.
I tried to convince my partners who wrote the business plan to start the company with me, but they were more interested in consulting and finance. I took the plan and started shopping it around to find a team. It took eight months of drinking coffee at Starbucks before I met my partner Mike Doernberg. At first we explored other businesses, but then we decided to go back to the original plan. We started writing the code in December and officially launched on Halloween 2006.
The first few months we would get so excited if we got 10 new artists to sign up in a given day. The early days were about artist recruitment; at the time we only had free services. Slowly the word began to spread and we went from 10 to hundreds and then to thousands of bands a day. Back then our worries were more focused on "can we create something that people will want for free?" A lot of companies don't get past that point.
In terms of products, 50% of the products we offer are truly free. For example, we offer a widget that allows musicians to embed music, a gig finder that lets them search venue databases and email services that let artists email up to 500 fans for free. That is part of our artist commitment because when they are starting out they are long on talent and ambition--but short on money.
We also offer premium products, like software that allows them to put their music on Amazon, iTunes and Spotify. We do that for $35 or $60 a year depending on the type of stores the artist wants to be in. Artists also keep 100% of their royalties. We also offer a premium version of email products, mobile apps, and digital press kits.
We are spending a decent amount of effort focusing on the live music space. We survey our users a lot, asking them what they spend money on and where they get revenue from. A disproportionate amount of revenue is derived from playing gigs. We are spending a lot of time developing the live feed and bring venues, clubs and promoters into the ReverbNation community so that they can find bands.
The Internet might not have killed the radio star…but it does threaten the livelihood of independent labels. And this business school grad is fighting back.