Troy Carter believes that knowing user behaviour spells success and partnering with Silicon Valley is the only way to win in the record business.
Troy Carter, the force behind Lady Gaga, isn’t just a talent manager. He epitomises an emerging group of creatives who are finding that partnering with Silicon Valley types is the way out of a broken business.
Not only is Carter making a good fist of reforming the music industry’s business model by challenging its distribution methods – Lady Gaga’s next album will be an app – but he is building and sharing a new social media platform which aims to rival Twitter and, in his spare time, running a private angel fund for technology startups.
Through his AF Square fund, Carter has invested in 40 online services and apps, ranging from the music streaming service Spotify, to the US taxi-booking app Uber and Rap Genius, a website dedicated to explaining rap lyrics which was set up three years ago by a bunch of Yale graduates.
One of the startups Carter is most excited by is Summly, a news scanning service launched on Friday on iTunes. It is designed by a British teenager, Nick D’Aloisio, and – having been described as one of the most disruptive apps of 2012 – is a venture that may be viewed warily by the newspaper industry.
But first, Lady Gaga. Some joke that if she and Justin Bieber left Twitter it would collapse. She is the most followed individual on the service with 30.9 million fans and counting – one million ahead of the teen popster and nine million ahead of the fifth most followed tweeter, Barack Obama. Her Facebook following is even bigger, with 54 million fans, but Carter’s focus is on the fans on Gaga’s new social network, littlemonsters.com.
A hot turn on the media conference circuit, Philadelphia-born Carter is disarmingly optimistic about his sector. “The music industry is healthier than ever right now and it’s a fantastic time to be in it,” he says. A bold statement, considering how difficult it is for many artists to make money.
“The way consumers interact with music is different now,” he explains. “It’s not an albums business any more, it’s a singles business again and the industry has gone through that before. People are experimenting with streaming, with subscription services, whether it’s a Spotify or a Pandora or a Rdio,” he says, naming some of the many services that allow users to listen to tracks of their choice free.
“I think piracy itself is going to end up going away,” he adds. “If you can get something for absolutely free [instead of] stealing it, and the quality of free is actually better than the quality of stealing it, the choice becomes easy.”
This is the point where managing Lady Gaga and his involvement in social media meet. Her next album, Artpop, will be launched through a paid-for app and she promises “chats, films for every song, extra music, Gaga-inspired games, fashion updates, magazines and more still in the works!”. The idea is that the customer will want to pay for it because of all the extras.
With her previous album she was also pioneering, marketing Born This Way through FarmVille, the hugely popular Facebook game, in partnership with the games company Zynga. Visitors to her farm, which was populated by unicorns, crystals and sheep on motorcyles, got exclusive access to songs a week ahead of launch.
“I think the idea of having an application is the future,” says Carter. When asked what hope he holds out for the newspaper industry, also struggling against the internet, he replies that publishers simply have to adjust their ways. “People don’t buy horses to ride around any more for transportation. I just think the world changes. As a business, we have to make the proper adjustments.”
For Carter, the key is creating a two-way relationship with Gaga and his other clients’ customers. The quantity of readers or listeners is not what is important. “A ‘like’ [on Facebook] doesn’t necessarily translate as a fan. It’s a very passive relationship. It’s more important to have the one million diehard fans, than to have 54 million people who aren’t necessarily fans or they might have liked one thing you said, or one video. It’s being able to segregate those audiences and knowing who the super-fans are.”
To this end, he and Lady Gaga decided to build their social network, littlemonsters.com. Launched three months ago, it has one million registered users and is already seeing respectable dwell-times, with fans staying on average “14 or 15 minutes” per visit. “These kids live on the site,” says Carter.
In the yesterday world of CD sales, the data about customers that record companies held was “shit”, says Carter. “You have names, you have cities and you have credit card information, but it’s not user behaviour. You don’t know where else they are going on the internet, you don’t know what other artists they like, or what music they listen to. You really don’t know anything about them.”
Through littlemonsters.com, Carter has, in effect, moved into customer relations management, which is all about “getting to know your fans – when did they become a fan, when did they drop off, what other artists are they listening to?”
The album app will be promoted via littlemonsters.com, and he is hoping to replicate the experience with “millions” of tiny social networking sites, employing his Backplane platform from which Gaga’s site emerged. He is already working on one site for a Christian group and another for a baseball team. “We think the future of social media are micronetworks and communities built around specific interests,” he says.
Backplane is his third company, alongside AF Square and Atom Factory (his talent management arm), and raised $5m from blue chip investors including Google Ventures, Sequoia (one of the oldest tech private equity firms, which was among the backers of Google and Apple) and Founders Fund – a fund backed by Facebook’s co-founder Sean Parker and PayPal’s founder Peter Thiel.
Carter, who started his career working with Will Smith and Sean “Diddy” Combs, still has his eye firmly on the talent, though. Just before this interview, he told the Wired 2012 tech conference in London that he takes tips from the TV star Ashton Kutcher, one of the tech world’s new powerbrokers whose investments have helped to propel startups such as Foursquare, Airbnb and Flipboard.
“Ashton is probably one of the smartest guys when it comes to tech,” he enthused. “There’s not too many people who understand product as well as Ashton and we co-invest alongside his company a lot.”
In the UK, where Carter will this week return for yet another conference turn, he sees Summly as the one to watch. “Nick [D'Aloisio] is 17 years old, one of the most super-smart people I have met,” says Carter. His startup’s app summarises large newspaper articles, breaking them down to two-paragraph bullet points.
“For young kids consuming content, that’s kind of how they read anyway and they can choose whether they read the lot. The science behind it is absolutely fascinating.”
If it gets kids reading newspapers, that cannot be a bad thing.
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