The internet hasn’t killed the music industry, however it has killed their traditional revenue model. The days of banking on traditional record sales are long gone. As a result, many of the record companies that were still in full force in the 80’s and 90’s are now swallowing each other up and creating mega companies. Not only that but record companies are wanting more and more of their artists action.
New artists signed to record labels are giving up merchandising, touring and even parts of tv deals. The new deals record companies are doing with artists are often called “360 deals” which means the record company takes a piece of everything.
This isn’t sitting right for many artists and as a result they are turning away from what used to be the glitz and glamor of having a major record deal. Now, they’re opting to do it themselves. As technology evolves it’s gotten easier, and much more affordable for artists to record their own music, sometimes even in their apartments, and of course to promote it as well.
Toronto startup Tunezy is leveraging tools that are already in place and building them on top of their platform to become a crowdsourced record label and promotional vehicle of sorts. Tunezy uses social media and gamification to let fans discover and support music they like with virtual currency that Tunezy calls “notes”.
Tunezy users can “tip” their favorite new artists with their “notes”. The artists can then turn their bank of notes into real world stuff that they need for their recording career. Artist rewards include access to contracts, studio time and even discounts on gear.
Tunezy uses a freemium model. Everything on the service is free and “notes” are rewarded to users through different avenues on the site itself. However, like with most virtual currency based models, users can opt to add more notes to their bucket with real money. The hope is that as the fans engage more and more with these independent artists, they’ll in turn support them by purchasing more notes.
We got a chance to talk with Tunezy co-founder and CEO Derrick Fung about their unique new profile that looks like a great tool for musicians in 2012. Check out the interview below:
What is Tunezy?
Tunezy is a Music Experience Marketplace – a place where Independent Musicians and their fans come together to amplify their connections with one another. We have a virtual currency on the site, called “Notes”, powered by how engaged fans are, and the unique experiences musicians offer on Tunezy. It’s been a fantastic 7 month journey so far, having just launched Public Beta and being featured in numerous media articles, segments, and events. You can learn more about the site first hand by signing up at Tunezy.com.
Who are the founders and what are their backgrounds?
Derrick Fung (co-founder) has relevant experience in both the Technology and Music space. As an avid Musician since the age of 4, Derrick built one of the largest sheet music sharing communities on the Internet called QualitySheetMusic.com when he was in High School. The website had over 50,000 active users and was sold to a U.S. investor in 2006. Prior to co-founding Tunezy, Derrick worked in the Investment Banking industry at CIBC World Markets. Before he began full-time at the bank, he worked at the Clinton Foundation in New York City where he was inspired to change the world. These skills and experiences will be transferable to his current role as CEO of Tunezy.
Brandon Chu (Co-founder) was previously an Associate Finance Manager at Kraft Foods, is a Certified Management Accountant, and has experience in gamification modeling through his work in creating a successful poker playing bot. Based on these experiences, Brandon is well equipped to succeed in his role as COO of Tunezy, and guide the company’s trajectory into a sustainable and profitable business.
Where are you based?
Tunezy is based out of Toronto, Ontario – we think it’s a hotbed for startups rich in resources, access, and opportunities for the music industry. We’re lucky to a city culture that’s rich in music festivals, concerts, and an underground indie scene. We have additional presence in New York City and Los Angeles.
What’s the startup scene/culture like where you’re based?
The start up culture in Toronto and at large is an exciting one. We see consistently talented people come together to make technology magic happen, and we see Tunezy as being one of these companies. Things literally can happen over night, changes is constant, and every day is dynamic.
How did you come up with the idea for Tunezy?
We came up with the idea after looking at the music industry and trying to find the next business model. My co-founder Brandon and I both went to University together and actually worked on a project in Entrepreneurship class in which the product had some similarities to what Tunezy is today.
What problem does Tunezy solve?
Tunezy is an incumbent in the $15 billion global independent recorded music industry. This market encompasses all activities involving recorded music that is not associated with a major Record Label. Given the current state of the Music industry, Record Labels are trying to find new ways to monetize their roster of Artists. As a result, an increasing amount of Musicians are chosing to stay Independent to retain rights and royalties to their music. We believe that this trend creates a need amongst the “long-tail” of Independent Musicians for services that a traditional Record Label would provide, including management and marketing support.
Musicians are artistically talented individuals; however, many of them lack the proper business experience to help build their career. Because more of them are choosing to stay independent, it is important that they are proficient in managing their careers, which is where Tunezy will help. We offer “self-serve” services to emerging Musicians who are looking for resources to grow their music career.
What’s your secret sauce?
Tunezy’s uniqueness stems from four major competitive advantages:
i. Our Notes system provides a new way for users to support their favourite Musicians, and for Musicians to extract value from the attention of their Fans
ii. Our focus on Independent Musicians means they are no longer drowned out by Top 40 music
iii. Our design and interface is superior and more conducive to how a user actually thinks when they are searching for new music
iv. Our model creates an engagement level between Musicians and Fans that does not exist on any other site
A very unique characteristic of Tunezy is that Fans get 360-degree validation of their support. How cool would it be to know that the Musician you supported ended up getting studio time, or a licensing deal because of your contribution? This is the type of engagement our site offers users.
Finally, the discovery experience on Tunezy is meant to be an immersive one, where users can explore the Independent Music space to find relevant Musicians. For example, users can select how they feel (“Pumped”, “Happy”) and the site will suggest Musicians that have music that fit those descriptions.
What’s one challenge you’ve overcome in the startup process?
Our main challenge and risk is competition. The music start-up space is very active, and our ability to get to market and expand the product quickly will be vital to our success. We plan to listen intently to our users’ feedback, and let them determine the product that will enable our vision. As a management team, we are actively networking and building the relationships that will be required to scale the site quickly should we grow faster than expected.