Last week I presented on a music technology company myself and two other recent Boston College graduates started two years ago called EchoMe .
Creating a consumer app nowadays that is claiming to be a new social media is a type of occupational suicide; most people pat you on the back but are likely heavy critics behind closed doors. To those of us in the start-up community, skeptics are what motivate and push us to make a better product. This polarizing dynamic can be leveraged by those creating any product to get the necessary criticism that they so desperately need. This criticism helps successful start-ups be outwardly arrogant in the confidence of their product’s future success while internally remaining their biggest skeptic. This means building assumptions that are foundational to their business, while also questioning if they still hold true, often tearing them down, only to replace them with assumptions that often need more vetting than their predecessor. Here are some of the assumptions that we have relied on at EchoMe:
- Communal, real-time listening offers the potential for disruption in the music industry
- Consumers are looking to connect to their favorite influencers: athletes, artists, celebrities, etc. in real-time and potentially be a part of an exclusive group to do so
- Streaming music users are highly likely to get music from their friends & favorite influencers
- The unsatiated need for more social interactivity on current streaming services outweighs the switching cost of using EchoMe over those services
Through extensive amounts of beta testing we have found all of these assumptions be true in some capacity. However, what we have struggled with the most is our fourth assumption. Our fourth assumption is most largely reflected by our attrition rates during our alpha and beta testing, which in all truthfulness, we knew was going to be near 100%.
What we decided to do was to break up our users into cohorts, groupings of users based on a certain criterion, which was time of usage on the application. This meant that those who used the apps for 0-10 minutes a day were in cohort 1, 11-30 minutes were cohort 2, and so on so forth to the highest time usage. We predicted that the reasoning behind leaving EchoMe would be similar amongst members of the same cohort.
We put our Student Brand Managers, whose job it is to get user feedback, to work with a standardized questionnaire. The questions tried to understand the reasons behind why a user ultimately left EchoMe and asked what type of features, if any, would make them stay. Our results proved our hypothesis to be correct, members of individual cohorts had similar reasons for leaving our application. This posed two seemingly obvious questions. What type of user is most valuable to the platform and what features can we feasibly build for them? The answer to these questions was therefore the recipe for creating an engine for user growth, more specifically, to increase our daily active users. To end our due diligence, we evaluated the demographics for the cohort who used EchoMe the longest and then cross-analyzed that with the features that they had identified would be most valuable in prolonging their usage. We found that our most active users were between the ages of 14-18, used more than one streaming service, and identified a list of about ten features they’d like to see on EchoMe (this version will be released in early March)
Now… How the hell are we making money with no users?
How will you?
“We have no idea…
The road to monetization in any social media company is largely speculative without a steadily growing user base. With that in mind, it is no reason for us to say that we do not have roadmaps for differing revenue streams. We have been testing the waters to see what types of companies would pay for access to our (future) users and what that exposure is worth. One revenue stream we have, which I was not able to identify in my presentation, is something called a sponsored station. A sponsored station is when a company or brand pays us to be featured on our users’ live streaming page (the page where they can see which of their friends are streaming music now, who has listened recently and what songs they listened to). Sound familiar? It is a very similar model to that of Snapchat, who took years to begin making money in this way. Here’s a mock up of what it may look like:
An enormity of companies pay different influencers to represent their products, whether that’s Ciroc with P. Diddy and DJ Khaled or J.J. Watt for Bose headphones.
These influencers, just like the brands they represent, are constantly looking for new mediums to connect to their fans on a deeper level. This shared desire creates the space for us to build EchoMe in a way that is centric around this type of connection. A company like Bose could showcase the experience of listening along live with their sponsored athletes, without any type of additional advertisement (which is better for the experience of the end user). This could be J.J. Watt as he warms up in the locker room or Rory McIlroy practicing on the back 9.
Another revenue model we are heavily considering is based on scarcity. The way in which scarcity has been leveraged by successful entrepreneurs to drive product sales is a phenomenon of our time: Kanye West’s limited Yeezy shoes sold out in just seconds, Supreme consistently sells out entire product lines in minutes by heavily limiting their inventory, and musicians like Anderson Paak have found ways to slingshot their listener base by limiting the amount of venues they play at. Consumers don’t just want to be a part of something, they want to be a part of something that only a select few of others experience as well. This desire is a projection of their identity, an often skewed representation of their social status that so many others yearn to be. Whether or not you support this type of consumerism and materialistic disposition is irrelevant to the fact that it exists and in grand proportion. We believe this actually presents an opportunity for both EchoMe and the artists that come onto our platform. The opportunity lies within giving artists the ability to charge users to listen to their EchoMe station. Artists would not be able to charge their following base at all times, but at points in time that are exceedingly relevant. For example, when an artist pre-releases a song or is about to release a new album, they can give their fan base an opportunity to listen to this music, before anyone else, exclusively with them. EchoMe would take a small percentage of those profits.
The journey ahead of us at EchoMe is long, riddled with uncertainty, but full of excitement, so please comment with any ideas, thoughts, scrutinizing opinions or whatever you please. Thanks for reading! Sorry this was a long one!