BitTorrent’s Matt Mason On Rethinking The Music Industry Business Model: ‘The Hustle Is Changing’

It’s been a big year for BitTorrent, said Matt Mason, the company’s executive director of marketing. Mason and his team have been working with big names like DJ Shadow and Tim Ferriss to figure out how to turn file sharing into a source of revenue.

I met with Mason (who also wrote The Pirate’s Dilemma) last week to discuss how BitTorrent can work with the music industry and the company’s plans for next year. Mason joined BitTorrent almost exactly a year ago, and since then, the company has run a total of 16 artist campaigns. It hasn’t found the One True Solution to monetizing music yet, and Mason said the answer won’t come in the next few months, but the next quarter “will get us closer.”

Not that he actually believes in a single answer. Instead, he said BitTorrent wants to provide “the layer of tools” that artists need to monetize file sharing in whatever way makes sense for them.

“We don’t want to dictate what the business model is, because we don’t know what it is,” Mason said. “There’s not a business model for content in the digital world. There’s a new business model for every piece of content you release.”

The emphasis is very much on artist partnerships, not deals with record labels or movie studios. Since most people associate BitTorrent with illegal file sharing, I assumed the big entertainment companies want nothing to do with it, but Mason said that’s not entirely true. (He also pointed out that BitTorrent drove 124 million legal music downloads in the first six months of the year, accounting for nearly one-third of the total 405 million music downloads on BitTorrent that were tracked by Musicmetric.) The bigger problem, he said, is that the entertainment industry’s terms are too onerous: “The deals just don’t make sense.”

So BitTorrent works with artists on one-off experiments. For example, it collaborated with DJ Shadow and his digital marketing agency Fame House to create a bundle with exclusive content around his release Hidden Transmissions From The MPC Era (1992-1996), and it ran ads for free software alongside those bundles. Mason said the company wasn’t happy with the download interface, so it limited the ads to a few geographies, but even so, the campaign saw 18.5 million impressions, with 4 million people agreeing to check out the free software — an impressive conversion rate of around 21.5 percent.

Mason described another partnership where BitTorrent worked with the filmmakers behind the movie Kumaré to create a bundle of promotional content (including the first 10 minutes of the film), spurring a fan campaign that helped expand the release from a single theater to 15 cities.

Listening to Mason’s examples, I noted that they covered a lot of ground, but never involved charging the consumer directly — instead, BitTorrent drove purchases elsewhere (for example by promoting movie ticket sales or iTunes downloads) or monetized through advertising. He responded, “That’s what we’ve been able to do so far, but maybe we’re just not very good at this.” As BitTorrent expands its efforts, it could add tools for fans to pay artists directly, Mason said. At the same time, he said the company doesn’t want to repeat its past mistakes, which include an unsuccessful experiment with opening a storefront (an effort that eventually led to the company giving back its Series C and downsizing dramatically). BitTorrent needs to focus on his strength, he said, namely “moving data,” and around that core focus it aims to build whatever tools artists might need.

Mason was willing to make one generalization about the way the music industry is changing. Music was once a “fast-moving consumer good” and could be marketed accordingly, he said. Now it’s more “relationship based.” Instead of running an ad and trying to convince someone to buy a song or an album immediately, musicians need to focus on building a relationship, then in six months they can sell their fans a t-shirt or a digital download — and hopefully continue selling to those fans for the rest of their career.

But doesn’t that sound like a lot of work for relatively little reward? Mason countered that in the traditional system, convincing radio DJs to play your single wasn’t easy, either.

“It’s a hard business — only 0.1 percent of people are going to make it,” he said. “That’s always going to be true. People ask me, ‘Shouldn’t artists have all the time in the world to create great music?’ But most of the creative artists I’ve had the fortune to work with have also been great hustlers. The hustle is changing, and what it means now is understanding data.”

Source: http://techcrunch.com/