About Me

John Fahy is the Professor of Marketing in the University of Limerick and Adjunct Professor of Marketing at the University of Adelaide. He is an award winning author and speaker on marketing issues around the world.

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Tuesday
Sep232014

How To Make Money Online

One of the biggest challenges facing the ever growing digital business sector is how to generate a consistent revenue and profit stream. A good illustration of just how to do it is provided by the photo image website Shutterstock which recently again set a new high for quarterly earnings. It is a company that demonstrates how a well thought out business model can help to generate early and on-going profitability.

 

Shutterstock was founded in 2003 by Jon Oringer who had been frustrated in his attempts to find good quality images for marketing materials like brochures and blogs. His first investment was in a $800 Canon Rebel camera with which he took over 30,000 photos and uploaded them onto his website. Customers could either purchase photos individually or pay a subscription fee to download up to 25 images per day. This option was then expanded to allow unlimited downloads. The company’s primary customers are businesses operating in creative industries that Oringer reached through search advertising and direct sales. Shutterstock’s business model meant that, unlike many start-ups, it got paid first making it instantly profitable and it has generated revenue growth in excess of 30 per cent per year since its formation. In 2011 the company reported gross profits of US$105m on sales of US$169m and went public in 2012 making its founder a billionaire. Its stock currently trades at a price-to-earnings ratio significantly ahead of stellar names like Apple and Google .

On the supply side, the opportunity was opened to any photographer anywhere to submit photos and they were paid from 25 cents to US$120 if these were downloaded. But its decision to provide feedback to photographers on what was and was not selling was innovative and helped it to generate a supply for photos that customers were looking for. By 2014, 55,000 photographers around the world were uploading 30,000 images per day giving the company a total database of over 30 million images. Since 2006, the company has included video images in its library and in 2014 it decided to expand its business with the launch of Shutterstock Music, giving musicians everywhere the opportunity to make money from the music that they create.

 

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Wednesday
May282014

There is Still Money in the Music Industry

It wasn’t just all the little hearts that were fluttering when the boys rolled into town at the weekend. The cash registers were singing too!! One Direction, or 1D as they have been branded, are not just the most popular boy band in the world, they are also a veritable money making machine as well. And in their short career, they have demonstrated that despite all the technological disruption undermining margins in the music industry, there are still some serious returns to be made for innovative outfits.

 


One Direction was formed in 2010. Initially each of the five members of the group had auditioned as solo performers for the successful British reality TV series, X Factor. They failed to progress but were put together as a boy band and signed to Simon Cowell’s Syco record label on a recording contract reputed to be worth £2 million. Concert Tours and studio albums quickly followed. But it was their use of social media that really helped to propel them to global stardom. Both the band as a whole and the individual members exploit the power of channels like Facebook, Twitter and Instagram. The boys have received coaching on how to respond to messages in order to appear close and accessible as opposed to distant from fans. Interaction is high, with band members asking for suggestions about what to wear or where their next photo shoot should be. Loyal fans are given access to exclusive content. While traditionally, bands have had to rely on radio play to build a following, 1D were the first group to build a global audience largely via social media.

 

And the money is pouring in. About 50 per cent of their revenues are generated from concert tours. Tickets for their shows normally sell out in minutes and it is estimated that concert sales have grossed the band close to US$500 million. With their singles and albums rocketing to number one in the charts around the globe, the group is estimated to have sold in the region of 30 million albums worth a further US$300 million in revenues. Other income streams include movie ticket sales (US$150 million) and DVD sales (US$15 million). Even their wide range of merchandising products including everything from backpacks to pillows to pajamas is estimated to be a business worth US$68 million in its own right. In short, it is estimated that 1D have earned close to US$1 billion. Not bad for four years work and a £2 million investment!