Recommendation: Target the record labels for promotion of HSS reports. Start with the initial enthusiasts like Ken Bunt of Hollywood Records and use their testimonials to win other record labels. Make use of the business connections of the advisory board at Polyphonic to get better reach to decision makers at record labels. Offer free trial reports to convince record labels and an initial lower cost for buyers along with discounts for high volumes ordered over a fiscal year.
In the long run, promote Human Music Interface as a complement for Hit Song Science to maximize the revenue earning capability of a song (by ensuring better listener penetration) that is marked as a winner by HSS.
Rationale:
Target segment rationalization: The record labels constitute the segment with the biggest budget (deepest pocket and hence least price sensitive), highest influence in the music industry and positioned to obtain the greatest benefit out of HSS’s accuracy in music selection suggestions. There are initial enthusiasts in this segment who are already impressed with HSS’s capabilities. The market pie can be restricted to the USA (Exhibit 1)
Value for the segment: The HSS program will enable record labels to select only those songs for promotion and advertising that has 80% chances of being successful compared to the 10% success rate offered by the tradition ways of selecting a song. Thus, the labels will considerably reduce the amount spent on marketing (Exhibit 2) and as a result will increase profit margins (Exhibit 3). Thus tremendous cost savings and considerable improvement of profit margins are the primary aspects that should be promoted to the record labels.
Pricing: Initially price the reports at $7000 per song or 60,000 per album of 10 songs for the first one year of the contract and then go for a $10,000 per song or $80,000 per album. The discounting on album cost