October 6, 2008

A few weeks ago I was introduced to a Nashville-based company that has a different approach to a familiar technology. Bandbox, a start-up founded by a handful of music industry folks, takes the widget and adds a twist: It returns 100% of the sales to the content owner. In return for taking none of the proceeds, Bandbox generates revenue from the small advertisements located at the bottom of the widgets. Artists and labels can choose to use Bandbox to sell physical product as well. For those transactions, Bandbox takes a small fee.

Bandbox enters a digital music market that is searching for new ways to reach consumers. Selling directly to consumers is the goal of many, but artists, labels and managers have few options. "The whole purpose," said Bandbox's Brian Peterson, the company's director of marketing, "is to provide the best platform for them to distribute their content."

The company scored a coup when country star Big Machine Records used a Bandbox widget for the limited edition pre-sale of Taylor Swift's upcoming album, Fearless. (It is currently for sale at Swift's artist page.) Bandbox has worked with Jewel's latest record as well as a charity single by Amy Grant. The company has fewer than 100 acts right now.

The music-selling widget has had its problems in its early days. Snocap struck a deal with MySpace but had little success in getting MySpace visitors to purchase downloads. Other companies in the space -- Nimbit, Hooka, Speakerheart -- have made improvements but are niche players. What could set Bandbox apart? For one, the ad-supported model will make it hard for competitors to match Bandbox's payouts. Second, the ability to sell physical product and digital/physical bundles is a positive.

Thus far, Bandbox has been smart to work with labels and artists to sell exclusive content. Because the content is not for sale elsewhere, the exclusivity requires consumers to set up a Bandbox account and log actual experiences with its technology. Getting people to simply use the widget is an important first step in establishing it as a viable product. Before the direct-to-consumer market can take off, consumers need to adjust to purchasing music away from traditional e-commerce storefronts like iTunes and Amazon.com. "We want to own the direct-to-consumer market," Peterson insists.

Bandbox has been in private beta since February and, according to Peterson, may launch before the end of the year.

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Posted by Glenn at 12:56 PM |

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