superfans
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The buzzword from music company CEOs so far in 2024? Superfans.
Already this year, the heads of Warner Music Group, Universal Music Group, Spotify and Live Nation have announced an intention to lean into better serving superfans of artists, with new initiatives and already one investment deal on the table. And today (Feb. 27), at the Web Summit conference in Doha, Qatar, WMG CEO Robert Kyncl announced that Warner would be building a new platform aimed at better connecting its artists with their biggest fans.
“Something we’re working on at Warner are these direct to superfan experiences,” Kyncl said, speaking on stage alongside newly-signed Warner artist Nora Fatehi. “I’ve assembled a team of incredible technology talent who are working on an app where artists can connect directly with their superfans, who are generally the people that consume the most and spend the most… and we’re focused on making sure that artists get data on these superfans.”
Kyncl hinted at the new platform, which is still early in development, in his New Year’s note to staff in January, where he said, “We need to develop our direct artist-superfan products and experiences,” adding that some things were already in the works. “Both artists and superfans want deeper relationships, and it’s an area that’s relatively untapped and under-monetized,” he said.
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The details of Warner’s app are still vague, though a source said more information should be coming in the next few weeks, and Kyncl mentioned something rolling out later this year. But already there are apps and platforms, such as WeVerse and Stationhead, that have done significant work in capturing the superfan community, connecting artists — including some of Warner’s biggest artists — directly with their biggest fans.
Other companies have hinted at the beginnings of their own strategies. Last week, Universal announced an investment in Complex and NTWRK, following the latter’s acquisition of the former from Buzzfeed, aimed at connecting artists with an online shopping option for fans; that came a month after UMG chairman/CEO Lucian Grainge’s own New Year’s memo to staff, in which he said, “The next focus of our strategy will be to grow the pie for all artists, by strengthening the artist-fan relationship through superfan experiences and products,” pointing to discussions with platform partners and in-house partnerships. In January, Spotify CEO Daniel Ek hinted at the creation of “superfan clubs” when mentioning new products. And last week, Live Nation execs talked about revamping the superfan experience for concerts, in a bet that it will drive more revenue.
While Kyncl didn’t specify what Warner has in the works, or how it will connect artists to fans, he underlined the need for the app to be available across platforms. “Artists want to work with every single platform… they don’t want to optimize just for one platform over another,” he said. “So a solution like this for superfans has to be a cross-platform solution. We, as a record label, are in a perfect position to do that because we work with all of the platforms. Historically, we haven’t had the technology talent to do this, but now we do… it’s an exciting piece of work that will launch later this year.”
If 2023 was the year of Taylor Swift, 2024 could be the year of the superfan.
While Swift’s The Eras Tour proved that music fans are willing to spend large sums and travel far to see their favorite artist, for years promoters have improved their revenues by selling premium experiences to concerts and festivals. Whether it’s dynamically priced seats close to the stage, VIP access or a revamped cocktail offering, there are more options for fans willing to pay more to enjoy the sights, sounds and hospitality of live music. Expect an even greater emphasis on this in the new year.
The focus on superfans isn’t confined to live music. The CEOs of Universal Music Group and Warner Music Group both started the year by highlighting a desire to better serve superfans. In the recent past, that may have meant NFTs and newfangled web3 offerings. Today, superfans buy multiple copies of albums (both LP and CD) and merchandise, often directly from the artist’s web store. Streaming services could soon be getting into the game, too, by offering “superfan clubs,” Spotify CEO Daniel Ek suggested in a Jan. 24 open letter.
But live music has a unique ability to upcharge for premium experiences — and add to companies’ bottom lines in the process. Tickets for superstar acts have proven to have remarkably resistant to price increases. In 2023, the average price of a Taylor Swift concert ticket on Stubhub was nearly $1,100. Drake, Morgan Wallen and Beyonce prices averaged about $450, $390 and $324, respectively.
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Emphasis on superfans makes sense in an era of higher priced primary tickets that capture value that would otherwise go the secondary market. Artists are increasingly willing to charge more up front rather than lose money to re-sellers. Still, the typical secondary ticket is still almost twice the price of a primary ticket, Live Nation president and COO Joe Berchtold said during the company’s earnings call on Thursday. Currently, about 9% of Live Nation’s amphitheater business comes from premium offerings such as VIP boxes, added president and CEO Michael Rapino. He thinks that should be 30% to 35% instead. To get those numbers, Live Nation is upgrading the concert experience.
This year, Live Nation plans to spend $300 million of its $540 million of capital expenditures on revenue-generating projects. The top four projects — including Foro Sol in Mexico City and Northwell Health at Jones Beach on Long Island — will account for $150 million of the $300 million. The other half includes several projects in the tens of millions of dollars such as VIP clubs, viewing decks, rock boxes and new bar designs, said Berchtold. Those “tactical improvements,” as he called them, can produce a return on investment in the 40–50% range.
Putting more emphasis on revenue-generating enhancements will boost the bottom line in 2024. Following a stadium-heavy touring slate in 2023, Live Nation will put more tours in owned and operated amphitheaters and arenas that allow the company to capture fan spending on parking and hospitality. Stadium shows have higher average ticket prices, Rapino explained, but amphitheater and arena shows produce higher per-person spending. In other words, the venues are smaller but have better margins for the promoter. As a result, Live Nation expects higher adjusted operating income in the second and third quarters. “We’re going to have a fabulous year,” said Rapino.
Dynamic pricing — seats closer to the stage are priced far above seats further away — is just getting started outside of the United States and presents “a great growth opportunity” as it expands from Europe to South America and Australia, said Rapino. There’s room for growth in the United States, too, as dynamic pricing extends beyond the top artists and into amphitheaters and other concerts. “We still think that’s a multi-year opportunity to continue to grow our top line plus [our] bottom line,” he said.
The price-conscious fan isn’t forgotten as concerts increasingly cater to big spenders. Live Nation offers a lawn pass for amphitheaters called Lawnie Pass — the 2024 edition costs $239 each and offers lawn admission to multiple shows at select amphitheaters — and sold an unlimited pass for select clubs called Club Pass in 2022. And company executives have repeatedly stated that a benefit of dynamic pricing is that higher prices for in-demand seats allow for lower prices for seats further from the stage.
But from live music to music streaming, companies are searching for ways to beef up their margins. As such, expect the market to continue segmenting into higher-value and lower-value fans.
The orders are detailed and easily located on X, the app formerly known as Twitter: “We need to tackle Amazon, iTunes and [the French music service] Qobuz expeditiously.” For each platform, instructions describe a strict purchase regimen. “One copy per version with new card/payment method/new email, new IP address.” Anyone hoping to execute this plan properly must plan ahead. “You will need to have multiple new emails, prepaid debit cards like the Cash App card… eGift cards you can buy at different Wifi locations, cafes, gym[s], friends’ and neighbor[‘s] homes.”
Rotating through multiple burner emails, cards and IP addresses — this sounds like the stuff of an elaborate digital scam. In fact, it’s a plan to maximize sales of a recent single (that wasn’t named in the thread). Blueprints like this one, itemized and exacting, are increasingly common on social media and in fan forums, disseminated over the years by fans devoted to BTS, Nicki Minaj, Blackpink, Harry Styles, and more.
Their popularity demonstrates a fundamental shift in the role that charts play in the modern music landscape. Before the advent of social media, “the charts were primarily an industry concern,” says Adam White, who served as the Billboard editor in chief for a time in the 1980s. “And the industry — retailers, record companies, radio stations — were in a position to shape and influence those charts.”
But in recent years, superfans have commandeered efforts to boost their favorite acts’ chart performance. “Fans have become very savvy about how the industry is creating these metrics,” says Michelle Cho, an assistant professor at the University of Toronto who studies fandom and Korean culture. “They will take the time to try to figure out what they need to do to protect their artists from losing some of the visibility that they think their artists deserve.”
That impulse often sets passionate fandoms on a collision course with any music industry body charged with measuring listener activity. In recent months, zealous fans have individually bought a great many digital downloads of the same song — a splurge that actually doesn’t count towards the chart, because there is a limit on the number of purchases from a single consumer that are eligible each week. Still, the strategy in part prompted Billboard to change its chart rules earlier this summer: The rankings now exclude downloads from artists’ web stores, which usually operate with far less limitations than iTunes or Amazon.
Devout listeners also sometimes play their favorite artists’ songs in ways that run afoul of the streaming platforms’ rules. Last summer, for example, an internal SoundCloud email reviewed by Billboard noted that “Bad Decisions,” BTS‘ collaboration with Benny Blanco and Snoop Dogg, was the most popular track in the U.S. that week on the platform. But the same email noted that the song “exhibits suspect play patterns suggestive of abuse.” (SoundCloud declined to comment.)
“The DSPs have to regulate their platforms, cap streams per user, and it creates these battles with the fanbases,” says one former Spotify employee. “Various K-pop fanbases, for example, at most moments hate Spotify, because they think that Spotify is scrubbing too many streams off of the overall stream counts.” (Spotify did not respond to a request for comment. Luminate, the independent data provider to the Billboard charts, declined to comment.)
Coming up with creative ways to manipulate listening platforms — and the charts they report to — used to be the specialty of record companies. Before 1991, Billboard‘s sales charts were compiled by calling up a panel of retailers and simply asking what titles were selling. “Record labels and distributors routinely used strong-arm tactics and bribery to sway the process in their favor,” The New York Times reported in 2001. Geoff Mayfield, then director of charts at Billboard, told the paper that “one distribution company president complained that some of his employees spent two and a half work days per week trying to influence how stores reported.”
The Soundscan system — now known as Luminate — was implemented in 1991, bringing a new level of rigor to chart-data collection by tracking the bar codes of CD sales. But that didn’t stop labels from attempting to tilt the charts in favor of their acts. “You build a better mousetrap and all of a sudden the mouse starts finding ways to get around your trap,” SoundScan co-founder Michael Shalett said in 1996.
At the time, fervent fans did what they could to impact charts, but their means of doing so were limited. They could buy multiple copies of a CD, though that quickly becomes prohibitively expensive. And for charts like the Billboard Hot 100 that combine sales and airplay, they could try to increase spins by calling into a radio station and requesting a song.
Fans’ leverage over the charts has increased exponentially since then. Social media makes it far easier to mobilize a large number of geographically dispersed fans around a common goal. And now that the charts incorporate streaming, everyone with access to a phone or computer can listen during every waking hour — and set a service to keep playing music when they’re asleep, too. “It enables each individual fan to intervene in different ways,” Michelle Cho explains. “You can use your time.”
Many modern fandoms are now doggedly fixated on — and vocally competitive about — commercial statistics. K-pop fans appear especially effective at organizing around achieving specific chart goals. “When K-pop came in, it was like nothing that any chart-juicing machine had ever done before,” according to the former Spotify employee. “Just on a completely different scale and level.”
Bernie Cho, president of DFSB Kollective, a Seoul-based artist and label services agency, says that, “for many K-pop acts, measuring ‘success’ has become a straight up numbers game.” He compares the “massive mobilization of top tier K-pop fan-clubs” to “the impressive precision of an elite military operation.”
This mobilization process can also resemble a music-industry version of the political action committees (PACs) that draw scrutiny in the U.S. every election year. Fans often raise money online to buy extra copies of albums or singles and then disburse the cash among other fans to make those purchases, usually with the explicitly stated goal of pushing a release up the chart. These groups routinely tweet that they have amassed pools of tens of thousands of dollars at a time.
There’s no way to tell where the funds originate, even when @JiminFunds tweets “we received [an] $18,420 generous donation from Chinese fans.” While there are rules dictating where PACs are allowed to raise cash, there are none governing the use of internationally-raised money for purchases impacting U.S. music charts. Still, using funds from abroad to signal demand domestically makes it hard to accurately judge the popularity of a given track Stateside.
It’s difficult to quantify the effect that the fundraising and donations have on a single’s chart position. However, it’s notable that when artists with passionate, organized fanbases debut high on the chart, they often do so on the strength of download counts that are wildly above the industry average.
While the Hot 100 takes into account downloads, streams, and airplay, downloads have not been the dominant driver of singles’ success since 2014. During the first half of 2023, the average Hot 100 entry owed less than 4% of its chart points to downloads. Nicki Minaj‘s recent top 10 hits, in contrast, generated between 25% and 41% of their chart points from downloads. Beyoncé and Britney Spears have also managed to reach download percentages comparable to Minaj’s within the last year on a release apiece.
These efforts pale when compared to top 10 debuts from K-pop, which routinely rely on downloads to account for more than 50% of chart points. Earlier this year, Jimin drew close to 80% of the chart points for “Like Crazy” from downloads. (In 2021, RM from BTS said that “if there is a conversation inside Billboard about what being No. 1 should represent, then it’s up to them to change the rules and make streaming weigh more on the ranking.”) No one has topped Jimin’s mark in recent history on a top 10 debut, though Jason Aldean came close, earning 76% of his chart points from downloads the week he debuted at No. 2 with the controversial “Try That in a Small Town.”
The music industry’s future appears increasingly wrapped up in those listeners who also happen to be big spenders. The growth of streaming is slowing. Superfans, however, shell out “80% more money on music each month than the average U.S. music listener,” according to Luminate’s recent mid-year report. A recent email from the company cited that 80% statistic again, adding that it “provides excellent opportunities for merch upsell to this valuable group.”
Labels have taken note. Earlier this year, prominent executives — including Michael Nash, Universal Music Group’s executive vp of digital strategy, and Robert Kyncl, Warner Music Group’s CEO — said that they hope a new streaming model will offer more ways to harness superfans’ spending power. In May, for example, Kyncl told analysts that he had assembled a team to focus on four initiatives, one of which was “evolving our products to better monetize the artist and songwriter superfan relationship.”
“It’s one thing to get into certain artists because you like their style,” Michelle Cho says. “It’s another where you feel a responsibility to caretake — your efforts are an act of reciprocal support. That idea, even if in some cases it’s illusory, is a really potent one for motivating more investment, engagement, and commitment on the part of fans.”
This can work out well for labels, especially if they can come up with new ways for fans to signal their allegiance that align with chart rules. It’s common now to see artists release multiple alternative versions of a song — often halfway through a week when they’re looking for a sales boost down the final stretch. A more extreme version of this takes place on the Billboard 200 albums chart, where artists are boosting their performance — and revenue — by releasing numerous variants of elaborate packages designed to encourage multiple purchases.
K-pop leads the way here, though other artists are quickly catching up. Take the group NewJeans, who recently debuted at No. 1 on the Billboard 200 with 2nd EP ‘Get Up’. There are more iterations of the Get Up CD — 14, with different packaging individualized to different group members and randomized branded merchandise inside — than there are minutes of music on the disc, which runs 12:13. Fans who feel the urge to “caretake” will happily scoop up multiple copies, stimulating sales.
These developments mean that labels no longer have to spend half of every week trying to influence the charts, as they did in the old days. They just have to give the most hardcore fans more ways to spend money — money that might not even be theirs.
In January, three months before Reservoir Media put rap group De La Soul’s first six albums on streaming services for the first time, the company began taking pre-orders for reissues of classic albums like 3 Feet High and Rising and De La Soul is Dead, as well as De La Soul merchandise. The rap legends’ recordings came to Reservoir Media through its 2021 acquisition of Tommy Boy Music. Negotiations with Tommy Boy owner Tom Silverman over taking the albums to streaming services had stalled in 2019 over a royalty dispute — but not only did Reservoir quickly hash out a deal with De La Soul to reintroduce the world to its Tommy Boy catalog, it also planned a marketing campaign with the group to create exclusive merchandise and launch a slate of LPs, CDs and cassettes.
Selling directly to De La Soul’s biggest fans has meant 30% of its physical product sold worldwide has gone through the group’s website, wearedelasoul.com, says Rell Lafargue, Reservoir Media COO/president. In the process, Reservoir was able to tap into a consumer group of rising importance in today’s music business: superfans. “Twenty percent of wearedelasoul.com customers are repeat customers in just the first six months of the store opening,” says Lafargue, “and we see superfans fill their carts with multiple copies and color variants of vinyl, shirts, hoodies and more at check out.”
De La Soul fans are part of a trend shaping the U.S. music business in 2023: Superfans’ purchases of CDs, LPs and cassettes to help support their favorite artists helped drive increases in all physical formats in the first six months of the year, according to Luminate’s 2023 midyear report released Wednesday (July 12).
Luminate says 15% of the general population is made up of superfans — a group of passionate music consumers with a propensity for discovering new music, connecting with artists on a personal level and being part of a community, or “fandom,” that artists provide. They’re valuable, too: Superfans spend 80% more money on music each month than the average U.S. music listener.
While the average consumer may subscribe to a streaming service, stream for free or listen to the radio, superfans purchase physical formats like it’s 1999. Buyers of CDs, vinyl LPs and cassettes are 128% more likely to be super fans, according to Luminate. They also skew young. U.S. millennials and Gen Z music listeners spend 22% and 13% more on music than the average music listener.
The power of superfans helps explain why U.S. physical album sales improved drastically in the first half of the year. Vinyl LP sales were up 21.7% through June 30 — well above the 1% gain in the prior-year period — and CD album sales grew 3.8%, a huge improvement from the 10.7% decline a year earlier.
Direct-to-consumer sales increased 20% to 4.4 million units, with vinyl sales specifically improving 25% to 3.6 million units and CD sales growing 15% to 1.7 million. Over 60% of direct-to-consumer sales are current releases — defined as titles 18 months or younger. That number rises to 75% for direct-to-consumer sales for both CDs and cassettes.
Golda Bitterli, vp of sales at Revelator, maker of a technology platform for labels and distributors, attributes the trend to the fans’ access to artists online, particularly on social media. “Fans are becoming more active participants in the artist’s career, including involvement in the creative process like we see on TikTok, as well as direct access to artists through platforms like Telegram,” she says. “This gives the fan a greater sense of connection and stock in the artist’s career and leads to more consumption through streaming, downloads, ticket sales and more.”
K-pop superfans are in an entirely different category. According to Luminate, K-pop fans spend 75% more on music than the average U.S. music listener, with much of that spending going to physical products. K-pop fans are 46% more likely to have purchased a CD in the last 12 months, while almost a quarter have purchased a cassette in the past 12 months.
K-pop superfans are on a different level of fandom than the typical fan, organizing and supporting their favorite artists at levels rarely seen elsewhere in music. They buy multiple copies of albums, snap up merchandise and purchase the clothing artists are seen wearing on social media, says Kristine Kim, GM of Korea for business-to-business platform Surf Music. In Korea, fans will even rent out cafes to gather with other fans and purchase billboards to wish their favorite artists a happy birthday. “The investment, the time investment, the energy that they put in — emotionally, physically — and the money that they put in, it’s pretty incredible,” says Kim.
In the United States, superfans’ influence can be seen in the uptick in album sales in the first half of the year. K-pop albums, usually made available in multiple versions and formats so superfans can buy more than one copy, accounted for six of the top 10 physical albums and 16 of the top 50 physical albums, according to Luminate. The only artist to outsell K-pop artists Tomorrow X Together, Stray Kids, TWICE and Seventeen was Taylor Swift, who replicated the K-pop approach by offering over 20 different versions of her album Midnights.
For the upper strata of superfans, buying albums goes beyond merely collecting items or listening to music. “What drives these fandoms and CD sales is they just want to support the artists,” says Kim.