Music Audience Exchange wants to get musicians paid

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In the late 1990s, Volkswagen approached the music label Rykodisc with a proposition. They wanted to take the music of a then-obscure singer-songwriter from the company’s catalog and use it as the soundtrack to an ad for their new Cabriolet.

The artist was Nick Drake and, though I’m not sure how well the car sold, the ad (VW’s first online) became iconic and brought a resurgence of interest for the long-dead musician. It also became a model for how music and advertising could be paired in a way that exposed audiences to new (or obscure) music rather than relying on proven hits and hit makers.

Now, one of the architects of that success, Rykodisc’s former president, George Howard, has partnered with Nathan Hanks, the co-founder and chief revenue officer at online marketing firm ReachLocal, to create a systematic way to pair brands and artists.

The company, Dallas-based Music Audience Exchange (“MAX”) has raised $6 million in new financing led by MATH Venture Partners and KDWC Ventures. Additional investors include G-Bar Ventures and Gregg Latterman, the founder and chief executive of Aware Records.

Their idea is to bring talented local bands to the attention of national and international brands that are looking to target certain demographics that follow artists who haven’t quite broken into the mainstream yet.

While successful musicians can still become pretty freaking rich in the business, it’s getting harder for bands to get the exposure to take their careers from barroom buskers to top-selling artists. The proliferation of tools to make music more accessible and easier to produce and the methods of online distribution have fractured the industry.

In fact, there’s more music that has never been played on Spotify once than there are played songs, according to Hanks (for a taste, check out Forgotify).

Meanwhile, the loss of the CD business and the advent of streaming has hit musicians and record labels in different ways. Executives at startups contend that labels aren’t interested in doing A&R as much as they’re using their marketing skills on artists and bands that have already broken through with some kind of following.

In some cases, artists are foregoing the studio machine altogether, like Chance the Rapper, who has built a successful career on the back of three (amazing) mixtapes.

Chance and musicians like G Eazy have managed to build careers outside the studio system and develop followings — but not all musicians are so lucky.

Indeed, Hanks’ own family of musicians provided an example for the nearly 40-year-old serial entrepreneur of what can go wrong. “I always watched the music industry, wondering why the gatekeepers of the industry worked the way they did.”

That sense, which lingered, that the musicians were missing out on a vital market opportunity crystallized after Hanks launched his own marketing company. “I saw how [internet] search and display [ads] dominated the digital landscape, but brands needed more storytelling capabilities and [they] had no way to reach back and get content,” says Hanks.

Musicians embody the art of storytelling, with rags to riches stories, or tales of perseverance that are tailor-made for the brand experience, he says.

And so, in 2013, after taking ReachLocal public and seeing its acquisition by Gannett, Hanks was ready to start something new. MAX was created the following year.

For Hanks, and his co-founder Howard, MAX sits at the intersection of three major trends. One is the desire among consumers to move away from the basic product pitch while they consume content; the second is the rise of digital music platforms that have eaten into revenues at labels; and the third is the proliferation of publishing tools that have created incredible opportunities to make and distribute music, but have completely overwhelmed fans.

Using similar tools to the ones that Hanks worked on at ReachLocal, MAX can identify more than 200 different demographic categories of fans for any of the 2.4 million musicians that the company tracks across 765 different genres.

Brands like Ford, Twix, Dr. Pepper and others can reach out to the company with a prospective campaign to reach a particular audience (like bitter, 40ish reporters who would like to wallow in their cynical misanthropy). MAX then identifies artists that this particular demographic cares about, and that fit the budgetary bill for how much the brand is willing to spend; then the company tries to match the two together.

Sponsorships typically include commercial exposure in ads, backing a local or national tour and guaranteeing a certain number of rotations for the sponsored song.

The deal is only signed if the artists agree to the terms… And sometimes they don’t. One famous musician actually turned down a product sponsorship orchestrated by MAX because he was a bigger fan of a competing product in the same category. Artists that have benefited from the MAX platform include NEEDTOBREATHE, Leela James, Aaron Watson and the 2017 Grammy Nominee La Maquinaria Norteña.

Sometimes, the pairings are just serendipitous.

“My life is a series of disintermediating steps,” says Howard of his path through the music industry.

Beginning as a musician at Brown University and the founder of Slow River Records (which put out one of the soundtracks of my youth with Vivadixiesubmarinetransmissionplot), then as president of Rykodisc and as a teacher at the Berklee College of Music, Howard sees his trajectory as removing obstacles between musicians and money.

“The fewer things standing between the content creator and the content consumer, the better,” says Howard. “MAX is a coordinating agent,” he continues, “not a middle man. “It’s designed to coordinate and align values.”

Meanwhile, Hanks sees this applying to influencers of all stripes, from movie stars, to YouTube celebrities, to musicians, to actors.

It’s crazy that an influencer can build a following of 5 million on Facebook, but has to pay to pitch them.

“You’ve got the power of the brand to buy that audience… the power of the media company to deliver that audience, and the power of the artist to tell a story to that audience,” Hanks says of his system.

It could be the future and put more money into artists’ pockets. “This is the new era of patronage; where brands get behind artists,” Hanks says.