Moneyball For Music: The Rise of Next Big Sound

It’s a cloudy midwinter morning at Next Big Sound’s
New York headquarters, and the scene is pure
startup. The walls are exposed brick. The bagels are
free. The music is guilty-pleasure indulgent: ‘N
Sync, in honor of Justin Timberlake’s newly
announced album.
But here they’re not just listening for fun. As the
singer’s falsetto soars over the clatter of ergonomic
keyboards, Next Big Sound’s employees are
quantifying the impact of Timberlake’s news,
counting 308,200 Twitter followers, 335,800
Wikipedia page views and 4.6 million Vevo views
more than the two weeks prior–data that weren’t on
the radar when his last album came out in 2006.
“The consumer in that world heard ‘SexyBack’ on
the radio and went to Virgin Megastore,” says Alex
White
, the 26-year-old who cofounded Next Big
Sound four years ago. “The consumer now goes to
Spotify and streams Justin Timberlake’s entire back
catalog and then follows him on Twitter to see real-
time updates and watch his behind-the-scenes
YouTube videos. It’s a totally different consumer
experience, but the industry still needs to track that
behavior.”
White’s company is the one doing the tracking.
Think Moneyball , but for music. Next Big Sound
takes all the data spewing into the ether–Pandora
spins, Facebook likes, digital downloads–and
packages them into one central dashboard. For $20
per artist per month, the Billy Beanes of the music
world (managers, concert promoters and label
executives) can access the service in hopes of
finding the next Nick Swisher (or Justin
Timberlake).
The music business is ripe for disruption. According
to one study, artist discovery and development is a
$4.5 billion industry, and Next Big Sound removes
some of the guesswork. For example, the company
has found that musicians who gain 20,000 to 50,000
Facebook fans in one month are four times more
likely to eventually reach 1 million. With data like
that, Next Big Sound promises to predict album
sales within 20% accuracy for 85% of artists, giving
labels a clearer idea of return on investment.
“The market is under pressure to become more
efficient,” says Foundry Group’s Jason Mendelson,
an investor who, along with IA Ventures and others,
has helped Next Big Sound amass $7.5 million in
venture funding.
Just as advanced analytics took time to infiltrate
baseball’s wizened ranks, Next Big Sound’s
numbers weren’t universally accepted by
executives who’ve long touted their “golden ears.”
But White’s data finally have them listening. He’s
got multimillion-dollar deals with two of the three
major record companies, and with many sublabels
of the third.
“In the past year most labels have started using
tools like this,” says Jason Feinberg, vice president
of digital strategy at Epitaph Records. “Next Big
Sound is kind of leaving them all in the dust.”
White, who grew up playing three musical
instruments, seems ideally suited to run the show.
In college at Northwestern he majored in
organizational change with a minor in business and
a concentration at the music school. During his
senior year he came up with a site that would let
anyone create his or her own fantasy label–and
discover “the next big sound.” The first user to sign,
say, Justin Timberlake would get points for every
virtual mogul who signed him subsequently.
After raising $25,000 in angel investments, White
ditched a job with Pricewaterhouse Coopers to build
out his brainchild. He and cofounders David
Hoffman
and Samir Rayani landed a slot at startup
incubator Tech Stars in Boulder, Colo., but their idea
died on arrival. “We didn’t know how to build it into
a big business,” says White. “We were almost out
of money, and we wanted to switch to something …
but we didn’t know what we wanted to switch to.”
On a whim they decided to see what would happen
if they started tracking streaming music. From 2
a.m. to 8 a.m. on June 5, 2009 they recorded the
number of plays for Akon on MySpace–and awoke
to find the singer had logged half a million plays
overnight, an order of magnitude more than they’d
expected. That turned into a free weekly e-mail
report to industry insiders; by the following summer
they had an audience in the tens of thousands and
officially launched Next Big Sound.
After Foundry led a seed round of just under $1
million in September 2009, White went to work on
winning industry players like music consultant Mike
“Goon” McGinley, who said Next Big Sound would
never work. Then White sent him numbers that
showed the inefficacy of a Live Nation ad campaign
run on behalf of Tom Petty, one of McGinley’s
clients. Goon changed his tune. White discovered
this when he received a call from an irate Live
Nation executive: “How the hell did Goon get these
numbers? We need to have this to be protected.”
Later that year Live Nation bought Next Big Sound’s
chief competitor, BigChampagne, for an
undisclosed sum. That makes sense: Both
companies offer intelligence on where an artist’s
music is being played, which helps when planning
tours (Jay-Z, for instance, used Spotify data to
guide where to play shows in the U.K.). Next Big
Sound could be an attractive buyout target, too. It’s
already pulling in seven figures annually and
expects to be profitable by the end of 2013.
Meanwhile, there are numbers to crunch, and the
company’s ranks are swelling with new hires,
poached from the likes of Apple, Microsoft, William
Morris, the NSA and even the New York Yankees.
White remains mindful of his company’s Moneyball
heritage–he took his board of directors to see the
film the day it came out.
“Data has transformed industries before,” says
Alex White. “Music’s the next one.”

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31 thoughts on “Moneyball For Music: The Rise of Next Big Sound

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