June 14, 2016
Tech veteran Jim Lidestri worked at big companies like IBM and Sprint before wanting to explore his entrepreneurial side. He joined Houston-based Interliant, a cloud-based application service provider, and built it from a 25-employee, $3 million business into a 200-person, $25 million-a-year company before taking it public and growing it further into a $100 million company.
He started Border City Media and BuzzAngle Music in 2012, launching the first charts on Global Release Day last July to take on Nielsen's SoundScan by offering the user daily sales/streaming reports and data which could be accessed in one place. He has already signed up all the major U.S. distributors, the RIAA and a variety of others such as Beggars Group, Country Music Television, Songs Music Publishing, Epitaph Records, Eleven Seven Music, Dualtone Music Group, CD Baby, Crush Management and Q Prime Management. They are now beginning to track streaming data in U.K., France, Italy, Spain and Brazil. In this day and age of instantaneous streaming and "surprise" releases, Lidestri insists BuzzAngle Music is able to improve upon the existing model.
The creation of BuzzAngle is certainly a reaction to the 24/7 activity of streaming as opposed to Nielsen/SoundScan's weekly chart.
There were just a number of things that I looked at from the outside that didn't make any sense. And one of those was the timeliness of the data. It was crazy to only have weekly data. Everything happens on a particular day - concerts, releases, promotions, TV appearances. You want to pinpoint the reaction to those specific daily events. And yes, the activity of streaming just made it that more imperative.
You are out to take on SoundScan?
Yes, we're definitely competing with them head on. We have the same information in terms of the data. I originally had the idea for a consumer application, which I took to Nielsen and proposed a partnership where I would build some business applications for them and they would license data to me for my consumer idea. The deal didn't happen and at that point, I felt I wanted to try to do it on my own. So I pivoted away from the idea of a consumer orientation to take on this B2B service in music. I still would like to put a few more pillars in the company -- maybe include movies, video games or books - before I go back to include the consumer application. It makes sense to put all those categories in one place so companies that have products in each of them - like, say, a Disney - can access that data in a singular platform.
With all these "surprise" releases, the idea of any kind of set Global Release Day loses its meaning.
I don't think that they are incongruous. We've built a system that can handle both the planned releases and the surprise releases. With BuzzAngle, you can look at last week, week-to-date or yesterday. On Monday, when Billboard is announcing the last week's chart, we're already two days into the new week, showing those results.
BuzzAngle uses the same methodology as SoundScan, with 10 tracks and 1,500 streams as equivalent albums?
Yes, we're using the same calculation to make it easy on the industry. We're trying to approximate the revenue. The streaming business model is still so fluid that I think you'll see changes there.
What do you feel is the future of physical product in the marketplace?
I feel the demise has been greatly overstated. People thought two years ago it would be dead by now. It's not dying; it's actually doing well. Digital sales are dropping as some of those consumers are switching to streaming, but the ownership model will still have plenty of support and life. The multiple ways to consume music allow the artists greater flexibility. Look at Adele's "25" on the one hand, and Drake's "Views" on the other. They were consumed in very different ways, but both were very successful. And that's a great sign for the industry, that you can tailor the consumption based on the way your targeted fans want to listen to your music.
Are you releasing retail predictions yet?
Not yet. We're a little way from that. We're still tinkering, but it's on the radar.
What was it in your background that led you to starting a music company?
There were two inflection points in my career. The first point was when I decided to move from Fortune 500 corporate America to a more entrepreneurial role. When you're working for a big company, you don't see the fruits of your efforts as directly. At a small company, everything you do has an impact ... on the product, on the customer. And I enjoyed that aspect. I got a feel for understanding a particular industry and building applications that would work for it. The second point was when I saw the music industry going through change, with streaming coming in and people not really understanding the new business models. Above all, people love music. Music has never been more popular, nor ubiquitous than it is today. Back when I was young, you didn't have the ability to take music with you wherever you went. Everywhere you go, people are listening to music on their headphones. The demand is there, so now we just need the business models to catch up with the transition to streaming. And to develop and analyze these new business models, you need a more sophisticated approach to analytics services. That's exactly the opportunity we are tackling.
So you're bullish on the future of the music business in an age where we're approaching transparency, a long way from when the charts were compiled by retailers filling out paper forms?
I am very bullish. There is some research that says people aren't willing to pay for music. I think that's hogwash. If I can listen to a piece of music for free today, then that's how I will answer a survey question. When those services change over to subscription model, the situation is different, and that's where I believe things are headed. Subscriptions are the fastest growing segment of the marketplace. People are clearly willing to pay for a better product and more convenience. The system is evolving. We just have to be patient.
Have you found companies are willing to abandon SoundScan for BuzzAngle Music?
Many of our customers have already made that decision. And it's not just for technical reasons either, meaning the daily updates, the global capabilities, the ability to drill down better. I believe it's also because of the way they've been treated. Nielsen hadn't made an update to their system in quite a few years when we came into the marketplace. To their credit, they are starting to build new features, but it took our entry into the market for them to do that. The customer has to keep that in mind. The way I've been successful in every one of my ventures is to deliver what the customer needs and wants. We will do that here. We're more nimble and reactive to what the customers want. We will evolve faster.
What are you charging for your service?
We sell a monthly user license fee that's anywhere from $1,800 to $2,400 a year. The price point for user has to be like a monthly cell phone bill, around $150-$200. We want to become a business tool that every music person needs and can afford. Just like everyone in the financial sector needs a Bloomberg terminal, everyone in the music industry will need access to BuzzAngle Music.