The Beat Goes on At MyBandStock.com
Bobby Matson, BBA '10, hopes to re-energize and re-monetize the music industry.
ANN ARBOR, Mich. — Entrepreneur Bobby Matson, BBA '10, loves to make music. The indie-rock drummer always keeps a practice pad close at hand, even when heís working in the Ann Arbor office of his fledgling startup, My Band Stock (MBS).
In fact, Matson drums while reviewing a marketing plan from one of his nine MBS interns. He drums in between pounding out a directive to the MBS VP of promotions. And he drums while explaining the origins of MBS, a company that allows fans to buy shares of "bandstock" in their favorite artists in exchange for unique returns.
"Itís the idea that bands could raise money from their fan base by issuing shares of 'stock,'" Matson says. "Then fans could get exclusive benefits from the band in the form of merchandise, front-row seats, backstage passes: whatever the band wants to offer."
Harmony and Me
MBS blends Matsonís talent for music with his emerging affinity for business. Originally, he was drawn to the University of Michigan for its renowned jazz program, but applied to the Ross School's BBA Program after deciding he wanted to get more out of his college experience.
"Applying to the BBA Program had nothing to do with wanting to make money," Matson says. "My main motivation was that I knew I had a lot to offer to the music business, not just music and business separately."
About a year into juggling business economics and big band, Matson met with Drew Leahy, a U-M student and current president of MBS. Leahy had the idea of creating a stock market for bands in which investors would act as shareholders, collecting monetary returns based on an actís success. Matson, a music enthusiast, immediately got on board as a partner. Unfortunately, the pair soon discovered that certain restrictions imposed by the Federal Trade Commission rendered their idea wholly illegal in the United States.
"Our business model would have to change completely," remembers Matson. "We kept asking ourselves, what inherent need do musicians have that fans can fulfill?"
Reflecting on his own experience as an independent musician, Matson argued that musicians always need startup money for vans, equipment, recording studios, and the like. Fans, meanwhile, want exclusive access to those musicians. My Band Stock was officially reborn.
In January 2009, using bootstrapped capital, Matson and Leahy (along with a team of Web developers, advisors, promoters, and PR specialists) launched MyBandStock.com. Bands sign up with a specific fundraising goal, like recording a demo or renting a tour van, and fans buy shares to support their efforts. In just six months, MBS had sold approximately 715 shares of stock (at one dollar per share) and signed up approximately 300 users. Ten bands are currently signed up to raise capital.
The founders are encouraged so far and believe MBS will continue to connect with fans and bands alike. In a time when the value of a song is "decreasing to zero since you can download almost anything for free," Matson thinks it's critical for fans to realize added benefits for their investment.
"If you spend money on a CD or go to a show now, you have no idea how much of the money you spent is actually going to the band," Matson says. "My Band Stock allows you to give directly to an artist, know where your money is being spent, and then be publicly recognized. We're fostering a relationship between fans and artists that is invaluable."
MBS collects a 15 percent fee from every transaction made on the website. The founders plan to generate additional revenue from hosted events, digital downloads, and sponsorships by music-oriented companies.
Matson credits the Ross School for its part in nurturing the MBS concept. He participated in the Marcel Gani Internship Program, a summer initiative endowed by alumnus Gani, MBA í78, through the Zell Lurie Institute (ZLI) for Entrepreneurial Studies. The program places students at startups and venture capital firms. Thanks to stipends from the Gani program, Matson was able to live in Ann Arbor all summer and further develop MBS.
"The resources from the Ross School really helped us, especially the Zell Lurie Institute and Paul Kirsch [program manager at ZLI]," says Matson. "Plus, being in business school, Iím doing everything in real time. I'll go from a marketing class right to a marketing meeting."
Along with running a company and attending Ross, Matson is piloting the My Band Stock process himself. His band, Farewell Republic, is signed up on the MBS website and has sold about 100 shares of its own "stock" so far. His partner Leahy also has a band on the site.
"But in order for us to be successful, we need to create a success story with another band," says Matson. "If one of our bands is the success story, people will think it's only because we promoted our bands more than others."
The founders also hope to promote a major artist on MyBandStock.com one day. Singer-songwriters Jill Sobule and Liz Phair both have expressed interest in the site, but Matson and Leahy realize they need to start small. Their goal is to become a resource for record labels and management companies to find new talent and jump-start interest in up-and-coming, struggling acts.
The company is now engaged in a round of financing and hopes to obtain a small business loan. The Ross School's Frankel Commercialization Fund, a pre-seed investment fund managed by Ross students, has expressed interest in investing, Matson says. And despite their vow to start small, the founders already envision an umbrella brand.
"We are My Stock Enterprises," says Matson. "We already licensed My Sport Stock, My Movie Stock, My Broadway Stock, and just recently, My Extreme Stock [for extreme sport athletes]. Someday, you'll actually be able to buy real stock in My Stock Enterprises. But that's 10 years from now. At that point, our business model will be a societal movement through which everyone will understand how purchasing stock in entertainment changes things."
Matson admits that getting people to invest in art might seem strange at first. But he contends the MBS model is one of the best ways for the industry to monetize creativity.
"The advent of technology has made a place for this model, and we think it's simply the best way to support artists," he says.
For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, firstname.lastname@example.org