HOW INDIE LABEL MARATHON ARTISTS LAUNCHED ITS OWN STARTUPS ACCELERATOR — Musically.com

If we see an idea or an entrepreneur that we like, we can move fast.” — Jimmy Mikaoui, Founder MarathonLABs

[Reposted from Musically.com: http://musically.com/2016/04/08/marathon-artists-startups-accelerator/]

Thank you Stuart Dredge and Musically for publishing this interview with Jimmy Mikaoui, founder of MarathonLABs.

Forging closer relationships with technology startups has been on many music companies’ agenda over the past decade.

Independent firm Marathon Artists has formalised the process, with its Marathon Labs accelerator. It launched earlier this year as a partnership with Sushi Venture Partners, with six startups part of its first cohort.

Stagelink helps artists plan tours by getting fans to vote on where they should play while indicating how much they’d pay for a ticket. Festyvent makes apps for festivals with analytics and other features for organisers on top, while Funtoad turns gig attendees’ smartphones into a sound and vision show.

Chainvine is exploring blockchain-based IP control and royalty payments; Floviral is a social/viral marketing platform; and Magnetic is a music, photography and film-focused multi-channel network.

According to co-founder Jimmy Mikaoui, the accelerator has its roots in Marathon Artists’ launch in 2012.

“We were going to focus on artist development, but we also wanted to start a modern version of a record label — and that means trying to integrate innovation in the way we launch those emerging artists,” he tells Music Ally.

“That’s where the initial idea came from: it was part of the DNA of the company. It started in an informal way: whenever we met a company that could promote or monetise our artists, we would start trying to work with them, and if those informal mentoring sessions led somewhere, we would try them with real campaigns.”

Marathon has label, management and publishing arms, with artists including Courtney Barnett, Baaba Maal and Jagwar Mar on its label roster.

Barnett was one of the artists to benefit from one of the informal partnerships mentioned above: her website homepage was rebuilt using technology from Berlin social-aggregation startup Socius. But in mid 2015, Marathon decided to take the next step and create its own music-focused accelerator.

‘WE’RE BUILDING LONG-LASTING RELATIONSHIPS’

For Marathon Labs, the company decided to concentrate on startups that “brought something to the table for independent artists or managers”, according to Mikaoui. There are other differences to traditional accelerator programs: for example, it’s not geared towards a ‘demo day’ at the end for its startups to pitch to investors.

“We wanted to focus 100% on business development. The idea is that we are not in charge of finding money for those companies, but we will help them tick every box required for a successful Series A, whether it’s proof of concept, a proper clientele, financials based on real turnover, or a business proposition that’s defined and approved by the industry,” says Mikaoui.

“That’s not to say that some companies don’t find investors in the process of the program. But that’s not the core focus. We’re building long-lasting relationships. This isn’t a program where you all wave goodbye on the evening of the demo day, then some of you keep in touch by email.”

Marathon Labs spends the first two months of its program focusing on business modelling, meeting for a week a month. Its first crop of startups have now finished that, and have moved on to thinking about communications and PR, as well as starting to work with industry clients.

“At the moment it’s all about defining, or shaping a little bit more, whatever service or product they are about. But from next month, they will start to be in one-to-one sessions with managers that come from very different musical genres,” says Mikaoui.

How did Marathon choose the initial cohort of startups? Mikaoui says the key was companies who were trying to “answer questions that we couldn’t”, but with a specific focus on one area of the business: live.

One of the filters when we selected the companies was the very simple question: who comes to my gigs? It sounds stupid, but no one knows! The ticketing agent knows, but that’s not information that they share — or at least, they share part of it for a big fee that no one pays,” he says.

“That question is essential for managers in general, and especially for the artists, who need to cultivate a relationship with their fanbase as a building block of their career.”

‘DEMAND MIGHT NOT BE WHERE YOU THINK IT IS’

Mikaoui says that Marathon isn’t just looking for startups who can answer this question alone. He cites Festyvent, FunToad and Stagelink as three examples of companies whose technology and activities may interweave.

“In Festyvent’s case, the draw is big data on the fans attending festivals. “The way they are able to organise data, analyse it and serve it with a very specific purpose was something that blew our minds,” he says.

“Festyvent had done apps for maybe 10 festivals, and a few artists had played at several of those festivals. So to be able to start looking at a much bigger picture: knowing who was watching what show at what stage or tent was something that, once aggregated, was a tool that we had never seen before as music managers.”

FunToad may sound like a purely-for-fun app, but Mikaoui says that’s the point: it’s an app that fans may genuinely want to download to their phones, to become part of the show.

“For me it’s the best reason to download an app. I’m usually not a fan of all the apps that are out there, especially artist apps but, if you are about to be part of an experience which is as powerful as that one, most likely you are going to download the app,” he says.

Mikaoui is similarly excited about Stagelink, which has just been in the news for its campaign to crowdsource a tour by YouTube music star Tiffany Alvord.

It shows you exactly where there is demand, and that’s very important because demand might not be where you think it is. They have run campaigns for artists and comedians who have been touring for many years and have never visited a certain town, and it turns out that this town is where there was the most demand,” he says.

‘A STEP-BY-STEP — OR BLOCK-BY-BLOCK — APPROACH’

Like the other Marathon Labs startups, Stagelink is now being introduced to Marathon’s network of managers and other industry contacts. In the case of Chainvine, that’s hit on a currently hot topic in the music industry: blockchain technology.

“We’re taking a very practical approach to it,” stresses Mikaoui, adding that digital distribution company Audiotube is one of the partners in the Marathon Labs program.

“What we’re doing right now is building the APIs with Chainvine so that we could deliver audio and metadata through their enablers to the blockchain,” he says.

“Audiotube is now equipped to receive that information via the blockchain, so the next step is to bring a DSP on board so that we can run the test of the digital distributor delivering the content and the metadata to the DSP via the blockchain.”

“We’re not trying to revolutionise the music industry with that technology. We are taking a very step-by-step — or block-by-block! — approach. If by the end of the program we could manage to go full circle with a DSP it would be amazing. Then the reporting and information that artists are going to have access to in real-time are going to be a real help for them.”

Marathon already runs direct-to-fan stores for a number of its artists where there is no DSP involved. Within the next fortnight, it will be testing the system with some of those.

“We’ll be able to demo an entire chain where the content is delivered via the blockchain to Audiotube, then the D2C HTML webpage is generated. If you went on that artist store and purchased a t-shirt or an album, then you would see the artist’s digital wallet credited within micro-seconds” says Mikaoui.

In the future, D2C stores for artists like Courtney Barnett could be using blockchain tech

‘MANAGERS AND ARTISTS ARE READY TO START TESTING’

Marathon says it has received several positive surprises during the first program, including the fact that several of the accelerators mentors have decided to invest in the startups — despite the fact that investment isn’t the focus.

The response from managers and artists has been keener than expected. “Managers and artists are ready to start testing already, and most of the time paying the startup for the service. They are already past that stage of free testing,” says Mikaoui.

That’s encouraging, as persuading artists, managers and independent labels to pay for these kinds of tools — let alone pay a decent amount — has historically been a problem.

Former ArtistData and Onesheet founder Brendan Mulligan put it well in a widely-shared blog post last year:

“New musicians don’t have the money to pay for non-critical things. Their money must be spent on touring, gear, food, and shelter. And unless using your tool guarantees (not just promises) them additional money, they’re unlikely to pay for it.

Established (read: signed) musicians also wont pay you. Actually, it’s their record labels who won’t, because even though the musician seems to be doing well, your customer is no longer the band, it’s the label. And record labels have an unenviable business model right now. It’s hard to get them to agree to pay for anything, and since it’s most likely an unpaid intern who’s using your tool, they won’t be the one making the purchase decision.

Unless you have created something that’s truly revolutionary, asking this set of customers to pay for a service almost never creates a scalable business.”

Is that state of affairs changing? Mikaoui thinks it might be. “People are becoming more aware, more interested and hungry for data. There is a real appetite for that, and there’s a value on it,” he says.

“Plus all these companies in the program should be able to solve a problem — or several — that managers or labels need solving this week, this month, this year. That’s why they’re getting bids for their services: they’re really bringing something to the equation.”

‘VERY FEW OF THEM UNDERSTAND RIGHTS’

For now, artist marketing appears to be the sweet spot for music/tech startups in Marathon’s view. Yet the company has its own publishing arm too. Did it see many interesting applications from startups tackling the problems of publishers in a similar way?

“Honestly? No. Without being cynical, there’s a vast majority of the startups who have an idea or an innovation in the music space just have no clue about rights,” he says.

“Very few of them understand rights, and even fewer understand the difference between masters and [publishing] copyrights. I’ve not seen anyone who came with something that would be a game-changer in the music publishing space.”

How will the accelerator pay off for Marathon as a company? The long-term relationships with startups who can help its audience is the focus, and Marathon does not take equity stakes as a condition for joining the program. It may, however, choose to invest in startups later.

“We don’t ask for equity when companies join, but obviously we develop a very close relationship in the programme, so if we’re really convinced about one company, we will consider investing in them for sure,” he says.

‘YOU HAVE TO BE ABLE TO SPEAK THE SAME LANGUAGE’

Why aren’t more music companies running accelerators or incubator programs like Marathon Labs? There have been attempts of various kinds to build closer links with the startup community, from Universal Music’s investment arm to EMI’s sandbox.

Mikaoui warns that running a good accelerator requires specialised skills, praising Marathon’s partner Sushi Ventures for being essential to the process.

You have to be able to speak the same language as the startups, and to understand their needs. That’s probably not in the immediate remit of the traditional label or music company,” says Mikaoui, with admirable understatement.

He adds that Marathon has “exchanged a lot of ideas” with people working on incubator-type schemes within major labels around the world, and sees a difference in approach.

“If we see an idea or an entrepreneur that we like, we can move fast. Usually if we’re convinced then we will organise a meeting with our A&R or marketing or digital team, and if they survive that conversation and it’s legit, we’ll do a test offline, we’ll bring the artist manager that we have in mind into the conversation, take their input, and then if that is satisfactory we will take it to the artist for approval,” he says.

“All of that can happen in a week to 10 days. Whereas in the incubators that are part of majors, it often takes them months of internal conversations for the same process with their frontline labels.”

Stuart Dredge