Nov. 1 (Bloomberg) -- The holy grail of the music business is the power to anticipate which songs will jump to the top of the charts. Record companies rely on everything from focus groups to superstitions to place their bets on smash hits. Onetime Sony Music (SNE) Chairman Don Ienner says he used to recognize a hit when a song made the hair on the back of his neck stand up.
Now an upstart service from the U.K. is combining listener feedback with computer-driven analysis to create what it claims is a more reliable method of picking hits. Newbury, England-based SoundOut pays thousands of listeners a few cents each to write brief online reviews of songs without knowing the artist or title. Then it feeds the reviews into a linguistic analysis program that captures the responses and compares the results with data on thousands of other tracks. The final reports include measures like “overall market potential” and “passion rating,” broken down by listeners’ age group and gender.
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So far, two major record labels in Europe are using the service, SoundOut execs say, and thousands of artists have also signed on since the service went live last year. And at the end of September, CBS (CBS) launched a new online radio channel called “Tomorrow’s Hits Today’’ based on SoundOut’s research.
North American Market
The company is now targeting North America. It may find a ready market among battered labels that have watched global music sales tumble 40 percent over the past decade and investment on A&R and marketing slip in tandem.
“Big labels used to do research and a lot of those jobs have gone,’’ says Catherine Moore, director of the music business graduate program at New York University’s Steinhardt School of Culture, Education, and Human Development. With labels making cuts across the board, in-house research has become a luxury they can’t afford, she says.
Plenty of companies are targeting the same market. In the U.S., websites such as HitPredictor and Clear Channel Communications’ RateTheMusic chart music fans’ opinions for the record industry. Music Xray, from Platinum Blue Music Intelligence, carries out matchmaking and research for artists and A&R professionals; it also offers hit song analysis based on mathematical patterns in the music. More traditional consultants use focus groups.
SoundOut says its methods are more reliable because reviewers are picked randomly and don’t know they’re taking part in market research. SoundOut has used more than 60,000 listeners and has a bank of nearly 8 million reviews on 85,000 tracks. That includes all major-label releases in the U.S. since April 2011 and in the U.K. since August 2009.
“There are a lot of companies trying to get into the data business,” says Moore. SoundOut has an edge because of the volume of research it has amassed. “[It’s] a lot of good information from one place,” she says.
SoundOut is a product of Slicethepie, a company founded by David Courtier-Dutton in 2006 to help unknown artists get funding. Fans reviewed new music on the company’s website and the most popular artists could raise money from fans to record and release albums. In the process, Slicethepie “stumbled across” a treasure trove of song feedback, says Courtier-Dutton, a 44-year-old former corporate financier and startup veteran. “The data we were generating was extraordinary.”
Pennies Per Review
To produce SoundOut’s analysis, Slicethepie entices music fans to rate tracks online. They get 2 cents to 10 cents for a written review based on listening to at least 60 seconds of an anonymous recording. Artists and managers can upload their tracks on SoundOut and buy reports based on 80 reviews for $30; a more detailed response from 200 reviews costs $149. Courtier-Dutton says reports that record labels and radio stations buy cost “several times” that amount. Customers can pay an annual fee to view an unlimited number of insights on new releases.
Some artists and band managers who have used SoundOut aren’t happy with the feedback. On one blog, artists grumbled that their songs were “absolutely shredded” and the reports were “brutal.” “Our belief is you should tell it how it is,” says Courtier-Dutton. “A lot of the feedback is harsh. That’s life, unfortunately.”
He predicts revenue of 500,000 pounds ($801,850) for Slicethepie through April 2012 and anticipates turning a profit in the third quarter of 2012. The 10-employee company, funded by angel investors, just hired the former head of Nielsen’s (NLSN) entertainment measurement business to build SoundOut’s North American operation, because “the American music industry is far more data-driven,” Courtier-Dutton says.
Ienner, the former Sony Music chief who now has a hand in several publishing, music and advertising ventures, says he likes SoundOut’s approach and intends to sign up. The analysis will complement his instinct, but not replace it. “This testing does have value for me,” he says. “[But] you can’t go by it 100 percent. Otherwise you might as well be a robot.”
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