Loving Music is no more

We stopped doing what we do near the end of 2016. This is a remnant of what was, and will be gone soon.

The record label reinvented

Storyteller Written by Storyteller.

There's a lot going on at Loving Music. So far we have done our fair share of research, including interviews with a few with industry professionals. Also, we've had feedback moments from several external parties - all from different backgrounds. Going back and forth with ideas fueled by dedication, enthusiasm and knowhow has proven its value even though we're only halfway our business plan.

The current business model

Right now we're in the process of analyzing the current market situation, especially competitors and their business models. On recommendation of an online strategist we read up on the 'Business Model Canvas' created by Osterwalder and Pigneur. This canvas allows one to visualize cost and revenue structures and allows one to brainstorm about the implications of changing these structures. Ultimately it could be used to reinvent a business entirely.

We took the liberty of adaptimg the business model canvas to reflect the perspective of a generic online record label (which performs no physical sales).

Regular business model canvas for record labels

A quick explanation of how this works:

  1. Customer segments - For whom are we creating this product?
  2. Value Propositions - Which value does the product impose on the customer?
  3. Channels - Which channels do I use to reach our customer segments?
  4. Customer relationship - How do I build a relationship with our customers?
  5. Revenue streams - How do I generate income?
  6. Key resources - What do I need to satisfy the customer and uphold the value propositions?
  7. Key activities - What am I going to do to give the customer what it needs and to upload the value propositions?
  8. Key partners - Which products should I get from partners/suppliers to create my product?
  9. Cost structure - Which costs are generated?

The left half of the canvas is equally important as the right half. However, in this blog post we'll focus on the right side which is all about generating income and creating a relationship with your customer.

Straight from the bat one can tell this record label will earn money through selling music (iTunes) and a presence on streaming platforms (Spotify, Pandora, etc) by putting out great music. The great music they have to offer, as well as their social activities will help create a customer relationship. They aim to sell their music to music lovers and DJ's. Now this is where things start to become interesting.

Value proposition

As a record label you distribute/promote music mainly. One could think what else there is to offer. As most labels consider music the core of their business, offering another (or a second) value proposition could very well be a unique selling point.

Customer segments

DJ's are probably the easiest customer segment to reach. They actively search for great new tracks all the time. They are early adopters and want to be ahead of the pack. If your music is up their alley they're bound to run into your record label at some point. But, do realize that DJ's are just a very small niche.

Music lovers are an entirely different segment; they are more like regular consumers. Any DJ is a music lover, but only a small amount of music lovers are DJ's. Music lovers find great music by word of mouth or through their preferred channels (websites, their favorite DJ, etc). This is why getting DJ support of that famous DJ is so important, without their support it is hard to get the music onto the iPod of any music lover. If music lovers are within reach of your record label one might even be able to make the leap into the mainstream audience, if the music is catchy enough (disregarding the necessary investments involved).


It is important to think from your customers' perspective. The younger generation grew up with free (illegal) downloads, everything available on demand, anywhere, anytime. With that in mind the record label should be where the consumer is at all times, to maximize revenue. It would be even better if one could think of unusual channels to reach your audience.

Revenue streams

So how does a label make money? Generally labels exercise the rights they have obtained on the music in their portfolio. By teaming up with webshops and streaming platforms they'll generate the income they're looking for. But we think there are more revenue streams at the disposal of record labels that could benefit the label and the artist. What about Youtube to promote and stimulate sales? What about Youtube video's with advertisement on them? It's preactically free money, and a lot of labels just couldn't be bothered to take it. What about advertisement in general? Could placing advertisements on any of your own platforms make a difference in income without having a negative influence on customer experience? What about merchandise?

What opportunities do you see?

The biggest opportunity we spotted is to think from the perspective of the consumer. To create value for your potential customers you need to have your music on the platforms your customer uses, next to having a high quality product. Especially in the early days you might be better off losing money on a platform that helps you create a large following rather than starting things slow on a limited amount of channels because you'll need this following to create a steady flow of positive buzz about your brand, and let the following spread the message. Generating a following you can depend on is the most important issue to solve when launching a record label. After that you can monetize your customers.

Second opportunity would be to use Youtube, and use it well. Consumers like Youtube, its 800 million unique visitors a month prove that. But apart from the social benefits it is very easy to monetize your presence on there. Why not put some advertising on your own videos and make an extra bit of easy money?

Streaming audio is another concept that has gained a lot of ground lately. Why would you, as a record label, not get involved? Insufficient income generation from one particular platform is not an excuse to neglect the customer segment they facilitate, especially if it doesn't cost you anything, which is often the case with digital distribution. You want to be wherever your customers are, it is vital for a strong customer relationship.

What about your own website? Does it add any value to the music? Does it help turning interested people into customers? If not you might be better off without a website and focusing more on the social platforms. If your website is a valuable addition, could you benefit from selling advertisement space, without sacrificing user experience and product quality?

Would customers appreciate having a mobile app to stay informed about your brand? Would it help boost sales?

Do people want to associate themselves with your brand? Are you cool? Could you provide interesting merchandise at an interesting price point? There are plenty custom product manufacturers that can provide these services for you. They'll take part of the selling price, but require no initial investment for the record label.

Surely there are plenty more opportunities we haven't thought or talked about. The ones we did are added to the canvas below. If there is anything you'd like to contribute in the comments, we're looking forward to it!

Extended business model canvas for record labels

This article has been published on May 24th 2012.