The state of superfan engagement tools

One of the biggest music/tech trends of the pandemic has been the industry’s sharper focus on direct-to-fan online experiences, especially those outside the dominant streaming ecosystem. At Water & Music, we’ve published several pieces outlining how artists have taken advantage of this burgeoning direct-to-fan tech stack for music — spanning paid memberships, one-on-one digital VIP experiences, Discord communities and more — to foster deeper connections with their audiences and fill in revenue gaps left behind by the absence of live events.

Expanding on this coverage, we’re excited to share a brand-new, members-only, curated database of over 40 startups focusing on helping artists and online influencers engage with their superfans.

Unlike some of our previous databases, this one combines multiple forms of fan engagement and monetization — across monthly memberships, à-la-carte VIP experiences, SMS marketing and more — into one central resource for you to browse. Now that we’re 15+ months into the pandemic, we approached building out this database with a more reflective eye, seeking to answer questions like these: What has, and hasn’t, changed about the digital superfan landscape in the last year? Which platforms are coming out on top, and which ones are struggling to differentiate themselves? How should artist teams and investors make decisions about which of these platforms to use or partner with in the future?

You can either jump directly to the database below, or read on for more context around how we structured the database and what key trends we’ve gleaned from our list so far.

Database walkthrough

Our superfan engagement database is broken up into three different tabs:

I. Direct VIP experiences

These are apps that enable artists to productize and monetize exclusive digital interactions à-la-carte with their superfans. Key examples of companies in this category include Cameo, pearpop, Chatalyze and Memmo.

• Many of these apps take the form of a two-sided marketplace, where fans can browse and compare products from dozens, if not hundreds, of different celebrities and creators. Occasionally, apps will also give artists the opportunity to build their own custom landing pages, where they can offer multiple different kinds of direct-to-fan products and experiences from a central hub. We previously called this latter model the “premium experiential storefront.”
• In most of these cases, fans are the ones initiating the interaction with the artist — e.g. by requesting a one-on-one video call or a personalized video shout-out on the platform — rather than the other way around. Usually, there is no startup cost to the artist; rather, fans pay upfront for these interactions, with the platform taking a fixed percentage fee (usually 20% to 30%).
• As we’ll discuss later, fan loyalty tends to be stronger to the artist using the platform than to the platform as a whole — potentially creating a challenge for startups in this vertical who are trying to differentiate and sustain themselves in the long term.

II. Direct Subscriptions/Memberships/Communities

These tools allow artists to create their own long-term subscription, membership and community experiences for fans. Key examples of companies in this category include Patreon, OnlyFans and Fave. While most of the apps on this list have existing music customers, we’ve also included apps that cater to online influencers and creators in general, including Circle, Geneva and Islands.

• The emphasis with these tools tends to be on cultivating long-term, interest-based communities among fans who can stay in touch with each other and with the artist over time, rather than just one-off VIP experiences or top-down marketing campaigns.
• The vast majority of companies in this tab focus on a paid membership- or subscription-based business model. The three exceptions on our list are Geojam, Fave and Discord, which each focus on free, horizontal fan communities.
• In the vast majority of cases where the fan is paying a subscription/membership on these platforms, they are paying individual artists directly, rather than subscribing to the platform as a whole.

III. General Fan CRM

These tools help artists and their teams manage, segment and market to superfans top-down through CRM-like functionality, from SMS marketing to more advanced, cross-platform audience analytics. Key examples of companies in this category include Community, Fansifter, Wavo and Audigent.

• In most of these cases, the artists are initiating the connection with fans and marketing to them, not the other way around.
• Startups’ revenue models in this category tend to be more B2B — i.e. the artist and their team, not the fans, pay for the service. Hence there’s a good chance that the fan is not aware of the platform at all. (For instance, if you’re a fan who signed up for SMS updates from Megan Thee Stallion’s phone number, you most likely think you signed up to Megan Thee Stallion, not to Community.)

Initial takeaways and analysis: The sameness of digital VIP experiences

The first main takeaway is that the market for digital superfan experiences is relatively new: Nearly 70% of the companies in our database were founded in the last five years (2016 or later).

It’s easy to see why the music industry has been increasingly embracing these tools for the past few years, including during the pandemic. Not only are these experiences an effective marketing tool and revenue stream for artists, but it also creates clear, paid incentives for the kinds of “non-core” content creation and fan engagement (i.e. activity outside of creating and performing music) that is expected of most artists today. In the process, as we previously covered, it encourages artists and their teams to ask fundamentally different kinds of questions about the valuation of an artist’s business — i.e. not “how much do fans value my music?,” but rather “how much do fans value me?”

While dominant social-media platforms like Facebook and Instagram are increasingly investing in direct-to-fan monetization tools for creators, such as tipping and subscriptions, many artists would prefer not to have to turn to these platforms for more bespoke superfan experiences, for a myriad of reasons like data privacy concerns and the costs of digital advertising. Instead, they turn to other third-party apps like Cameo that pay artists for deeper, more intimate interactions with fans at a much higher margin (as much as a few thousand dollars for a minute-long video) — the opposite of streaming and social-media economics, which incentivizes consumption at scale but at a lower margin.

With all this said, there are a few major issues facing this market from the platform perspective:

I. Cameo copycats and the advantages of category creation

Cameo, which sold its first video in 2017, excelled at what business professors and executives call “category creation,” or the act of establishing an entirely new class of products within a particular market. A study found that from 2009 to 2011, companies that took category creation seriously accounted for only 13% of the Fortune 100, but a striking 53% of the list’s incremental revenue growth and 74% of incremental market value growth. In the words of strategists Eddie Yoon and Linda Deeken: “Category creators experience much faster growth and receive much higher valuations from investors than companies bringing only incremental innovations to market.”

The hype around Cameo, whose name has essentially become synonymous with celebrity shout-outs, is an excellent example of this dynamic in practice. In their case, the new class of products consisted of helping an underserved market — B- to D-list celebrities that still had rabid followings, but that the mainstream media had largely forgotten about — deliver on-demand, personalized, one-to-one video shout-outs to their biggest fans. Several stories emerged about how the likes of Carole Baskin and Brian Baumgartner were earning six to seven figures a year from Cameo videos, and investors immediately got interested. The company most recently raised $100 million in VC funding in March 2021, from the likes of UTA, Google Ventures and the Amazon Alexa Fund.

Couple this commodification of celebrity access with the rising number of people who self-identify as “influencers” or “creators” around the world, and you get a whole bunch of Cameo copycats.

There are now at least 12 different startups around the world offering a near-identical product to Cameo — namely, personalized, on-demand shout-outs and interactions from B- to D-list celebrities. According to our database tab on Direct VIP Experiences, personalized videos and shout-outs are by far the most popular feature that VIP-focused creator platforms now offer, followed by one-on-one video calls and virtual group live events (e.g. meet-and-greets).

The benefits of category creation for Cameo are also the drawbacks for everyone else in the market. Many competing apps that were founded in 2020 seem to be glitchy, stuck in development or no longer existent at all. And if there is any differentiation, it seems to be more on the talent level than on the actual product level — which brings us to the next section…

II. Competition for talent and the irrelevance of exclusivity

As of right now, the superfan platform landscape is defined not by incremental product innovation, but rather by competition for supply, i.e. talent. This is an expensive, arguably unsustainable strategy that favors companies with enough cash to execute exclusivity contracts with bigger celebrities, and/or buy out competitors that don’t have that privilege. (The music livestreaming sector is currently going through similar challenges as well.)

In a recent interview, Gustav Lundberg Toresson — CEO of Cameo competitor Memmo, which announced a $10 million raise in February — argued that focusing on talent localization can help differentiate earlier-stage startups in the market from their larger counterparts. By localization, this can mean either geography-specific offerings (a sound strategy given the vastly different timelines in adoption of direct-to-fan business models in, say, Asia versus the U.S.) or interest-specific offerings that span different geographies (like soccer fans across Europe). Hypothetically, more localized offerings can also have higher fan retention rates. But, as we mentioned earlier, fans are platform-agnostic: Their loyalty at the end of the day is still more to the individual artist or creator than to the platform as a whole.

Ironically, exclusivity contracts with talent also would not line up with existing celebrity behavior. Just as the commodification of music encourages artists to make their catalogs available across multiple DSPs, the commodification of celebrity access encourages artists and creators to offer personalized, one-on-one VIP experiences across multiple different platforms, not just one.

Today, the most active celebrities have a strong presence on as many as three or four different superfan platforms simultaneously. For instance, 24kgoldn has active profiles on Cameo, pearpop and Geojam; Tay Zonday is active on Cameo, Thrillz, myFanPark and Memmo. While this will likely set a standard for future generations of creators looking to maximize both reach and revenue, it can also quickly get overwhelming in terms of having to manage a fragmented digital presence across so many different channels.

This suggests that the winning platforms in this sector in the long term will not only have a clear talent acquisition strategy, but will also build features that can easily integrate into artists’ and creators’ existing social activities online, instead of adding further to the noise. Which brings us to our final takeaway…

III. Integration and diversification

From Cameo launching paid DMs (under “Cameo Direct”) to startups like Jemi and Fangage building multifaceted landing pages from the outset for creators to offer a variety of paid experiences, we’re seeing platforms increasingly branch out from just personalized videos to a wider variety of ways to engage with and monetize fans. Under this model, each artist’s direct-to-fan “stack” can be more modular and customizable, tailored to the artist’s own preferences and availability.

For now, the companies across different tabs in our database have little overlap in terms of the features involved; for instance, most apps focused on intimate VIP experiences don’t have direct subscriptions or memberships built-in, and vice versa. But this will likely change in the future as artists seek to reduce glut and streamline how they manage their online fan relationships, which in turn could lead to a better and smoother experience for the fans as well. Outside of music, apps like Spore.gg are emerging that make fan CRM easier for creators by combining SMS marketing, email newsletters, direct tips, real-time chat and web analytics all into one place.

Some platforms like With The Band and Geojam are also hinting at hybrid online/offline VIP bundles that integrate well with artists’ existing touring schedules. This is a smart, proven business move, given the commercial importance of in-person VIP experiences: Depending on the source, VIP packages can account for 5% to 25% of gross revenue for an event, amounting to low seven figures for larger tours.

Our assumption is that artists’ availability to offer these online VIP experiences to fans will decline in the coming months as in-person events ramp up again, especially for larger, more in-demand celebrities. Assuming the law of supply-and-demand applies to this space, we may also see prices increase. In terms of evaluating partnership opportunities for the music industry, one key question to ask platforms in this market is whether they have any plans to complement and work with performing artists, or if there will be further fragmentation and a shift in focus towards digital-first influencers (e.g. on YouTube and TikTok) who aren’t spending as much time on the road.

We will continue to watch and track this space closely. If there are any companies that you think we’ve missed, please let us know in the comments or via email at members@waterandmusic.com.