Shopify

Shopify, Crypto, Music & The Lightning Network

Lessons From the E-commerce Leader.

Last month, the Single team visited our neighbors to the north - during Shopify Unite 2019 in Toronto. After this sneak-peek at their upcoming developments, we’re even more fired up about the future of the Shopify platform.

As just one example of their recent success, last year’s Black Friday sales through Shopify-powered stores peaked at a mind-numbing $37 million per hour. Even more, an incredible 63% of these Black Friday purchases were completed on a mobile device or tablet.

But… How?

In our estimation, Shopify’s success can at least partly be attributed to its willingness to bet on growing trends and emerging technologies. Building out integrations before these technologies reach a tipping point ensures Shopify (and the thousands of stores powered by Shopify) stays ahead of the curve - and is ready when these trends reach the mainstream.

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When Shopify launched its first mobile app in 2010, most consumers didn’t feel comfortable making large purchases from a mobile device. To put it in perspective, the Apple App Store had only been around for two years. Consumers weren’t ordering pizza from their mobile devices, let alone spending $86.37 - the average 2018 Black Friday online order size from more than 650,000 Shopify powered stores.

But Shopify has notoriously played the long game - positioning itself as a mobile-first platform when phones were phones and computers were computers.

This is why we’re paying special attention to Shopify’s recent move towards integration with cryptocurrencies. Mobile devices have advanced tremendously over the past 8 years, and we expect the same from crypto. One technology that we’re watching closely is Bitcoin’s Lightning Network.

Lightning in the Music Industry

The Lightning Network is a “second layer protocol” which allows for instantaneous transactions at virtually no cost. Seems like a good fit - the music business has long been plagued by a lack of transparency and timely payments, mostly at the expense of creatives. Fortunately for artists, technology tends to eliminate inefficiencies.

The first and most obvious outcome of the Lightning Network on the music industry would be a reduced transaction cost for fans purchasing music, merch or concert tickets. These transactions, happening online or in person, would be immediate and cost a fraction of a penny.

New models for music consumption could be introduced. A streaming service that utilizes micro-payments, as opposed to Spotify’s existing “pro rata” system, would result in a much fairer distribution of revenue to smaller artists who aren’t charting on Billboard.

Here’s another example: At the end of a concert, fans could send a small amount of crypto to a posted QR code and immediately receive the official audio from the show. Imagine the quality of fan-captured content that would emerge if iPhone concert videos were matched with official audio.

These are just a few ideas. It’s up to all of us to apply new technologies and bring about a music business in which creatives are paid fairly and on time. But how does this technology work? Where is this all coming from? Let’s take a closer look.

Crowded Places

Cryptocurrencies finally reached a point of popular awareness during the insane run-up at the end of 2017. Hype was at an all-time high and the sheer number of transactions overloaded the Bitcoin network. As a result, transactions became slow and expensive. The brief explanation is that every transaction took place “on-chain”.

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When a user sends bitcoins to another wallet address, they broadcast a digitally signed message to the network, which is essentially a small amount of data accompanied by a transaction fee. Unconfirmed transactions are gathered together in “blocks” and wait to be confirmed by miners in the network.

As per the Bitcoin protocol, blocks are confirmed every 10 minutes, with a maximum block size of 1 mb. As the network expanded and more transactions were broadcasted, this became a problem - and a major source of contention between two opposing parties.

One camp believed that Satoshi’s original implementation (fixed block size) was best, despite the crowded network. The other group (led by Roger Ver) hoped to modify the Bitcoin code and increase the block size. They couldn’t come to a consensus, and this resulted in the first Bitcoin hard-fork and a new crypto was born - Bitcoin Cash.

You can find an excellent visual comparing the transactions taking place on the Bitcoin and Bitcoin Cash Networks here.

The Off-Chain Solution

Joseph Poon, creator of the Lightning Network, explains in the LN whitepaper,

“If only two participants care about an everyday recurring transaction, it’s not necessary for all other nodes in the bitcoin network to know about that transaction. It is instead preferable to only have the bare minimum of information on the blockchain. By deferring telling the entire world about every transaction, doing net settlement of their relationship at a later date enables Bitcoin users to conduct many transactions without bloating up the blockchain or creating trust in a centralized counterparty.”

The LN is a network of bi-directional payment channels. This creates a scenario where any peer on the Lightning Network can pay another peer, even if they didn’t directly have a channel open between each other.

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You can think of the LN like a third-party arbitrator - but instead of a central entity that must be trusted, trust is spread across the Bitcoin network and is subject to the same cryptographic security as the rest of the network. Through this method, transactions still happen on a peer to peer basis, as was initially intended with Bitcoin’s creation.

This is possible because these transactions are happening “off-chain”. For those interested in the technology behind this innovation, take a look at HTLCs (Hashed Timelock Contracts).

Looking Ahead

Despite the LN’s rapid growth this year, we’re still a long way off from a successful mass-implementation. But once the Lightning Network is popularized, the capability of the Bitcoin network as a whole will surpass any payment network in existence today.

A settlement layer that offers instantaneous transactions at virtually zero cost, in an environment that is cryptographically secure and easy for fans to use will open up the music industry in ways we cannot imagine.

In the meantime, we will continue exploring different use cases - each of which expands fan access to music and puts more money into the hands of artists. We believe it will be well worth the wait.

And judging by the way Shopify is positioning itself, they think so too.

- Joe

Let Single Help With Your Next Album Release

Build a Pre-order Campaign & Sell Directly To Fans

The moment has finally arrived - the album you’ve been perfecting is now released to the world. One of your closest friends and (obligatory) diehard fans texts you and asks, “Hey, where should I go to pick up the new album?” You quickly think through the list of services your digital aggregator has sent your music. After a moment of hesitation you say, “iTunes?”

Using a digital aggregator (like Ditto, DistroKid or CD Baby) is a must. Your music should be available on as many services as possible. But if you don’t have a way of distributing directly to your fans, you’re missing out.

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Using Shopify + Single Music, you can create a fully functional artist store tied directly to your existing website. You’ll have access to powerful release management features, as well as tools to create a pre-sale bundle campaign. This is a great complement to releasing your music through a digital aggregator, because when you control your store, you keep the data and more revenue.

Release Management Tools

Publishing music through Single gives you full control over your release, because it exists on your webstore. As a reward for fans purchasing directly from you, you can provide an “instant grat” track that arrives immediately after they place the order. You can even stagger releases of single tracks leading up to the album release date, which we call “cascading releases”. Simply choose the dates for each track and the music will automatically be delivered, otherwise known as “set and forget”.

Finally, when release day rolls around, you can be sure that fans who purchased the pre-sale will receive a link to download the album via email. Unlike iTunes, fans have the choice of downloading an MP3, FLAC or WAV. Let delivery happen automatically, behind the scenes.

Pre-sale Bundle Campaigns

One of the best ways to build hype for your upcoming release is creating product bundles for pre-sale. This idea was proven by the success of PledgeMusic, through their “direct-to-fan” campaigns. The problem is, Pledge holds the money until the end - and if the campaign doesn’t reach its goal, every fan is refunded.

While the company eventually failed (and hurt many artists in the process…) they demonstrated that fans wanted more than just to hear the new album, but instead be involved in the creative process.

Single + Shopify powered presale campaign w/ product bundles by  HEALTH

Single + Shopify powered presale campaign w/ product bundles by HEALTH

Bundles through Single Music are structured similarly to PledgeMusic. You can tie products together to create different “tiers”. Your digital album can be attached to each tier, and even to intangible things like producer credit or a music lesson over skype. Offering these top level tiers allows your most passionate fans to be a part of the album, and provides you the means to keep creating.

What about the $?

As we mentioned, PledgeMusic pays out funds to the artist after the campaign is over. With a Shopify + Single powered pre-sale, money is sent to the artist as it comes in - throughout the duration of the campaign.

Pledge takes 15% of every dollar you earn. This is true for t-shirts, physical CD’s, bundles, and even the highest tiers. Taking 15% of the revenue from a $3,000 private house show seems excessive - when all Pledge really does is provide an online storefront.

Aside from digital delivery, Single doesn’t touch your revenue. Our digital delivery rate is capped at $2 / album - whether you’re selling a digital standalone album or if the album is attached to every single product bundle / tier.

Pledge popularized the concept of a pre-order campaign surrounding an album release. They familiarized the world with different level product tiers, music + merch bundles, and high-dollar intangible opportunities for artists to engage their top fans. With Single + Shopify, all of this is possible AND you keep more revenue and data.

For the price of a Shopify monthly plan ($30 / month) you can operate your own storefront, maximize the release of your new album and give fans the opportunity to become part of the process. In a world where there are hundreds of ways to find and listen to your music, give fans a way to buy directly from you.

Questions about creating your pre-sale campaign? Talk to us! We’d love to help.

- Joe

The Musician's Automated Store Part 2: Print-On-Demand

Staying Lean Through Print-on-Demand

If you are an independent artist, you’re also an entrepreneur. Whether your goal is to make just enough from your music to keep creating, or if artistry is your career path - you operate your own small business. The sooner you accept this, the better.

Major labels have seemingly infinite money to develop and market artist merchandise. They have entire departments dedicated to exactly this. But what about you, modest independent musician? How could you possibly stay relevant in a world like that?

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Believe it or not, without millions of dollars at your disposal, you are actually at an advantage. By utilizing lean principles you can automate, optimize and efficiently manage your e-commerce, without the large overhead required in the past. Thanks to print-on-demand, you now have the tools to design products and test them out in the real world - with minimal investment and time from your end.

What exactly is Print-on-Demand?

POD is a service that allows you to design products and put them for sale online, without having to physically create anything. Whenever a customer completes an order, the item is printed, packaged, and shipped. In other words, print-on-demand companies also handle third-party-fulfillment. This makes POD an integral part of any musician’s automated store.

We’ll walk you through the process using Amplifier, however there are many print-on-demand companies that offer similar services. Amazon Merch specializes in branded t-shirts, but is currently invite only. Zazzle, Redbubble and Printful offer a variety of products to be printed on. Fine Art America and Society6 specialize in art prints. Before we dive into POD, let’s talk about what it means to be lean.

Lean Principles Applied

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As an independent artist, you’ll try many strategies that don’t work. It’s by going through this process continuously that you find your sweet spot - a place where your music, merchandise and fans’ preferences perfectly intersect. To operate leanly means to reduce your initial investment when developing new products, and instead get something up for sale as soon as possible. The ultimate goal is to quickly figure out what the customer wants and is willing to pay for. This underlying concept was made popular by Eric Ries in his book, The Lean Startup, and discussed in great detail on his website and podcast.

Print-on-demand perfectly illustrates lean principles in action. Bulk ordering merchandise is no longer necessary. Never again will you have to guess the quantity you’ll need of each size. As we mentioned in our musician’s automated store intro, how to order the right sizes of t-shirts has been an unsolved problem for generations. Ordering 500 t-shirts is undoubtedly a nerve racking ordeal. For an artist just starting out with an online store, bulk purchases are risky.

Print-On-Demand in Action

When you subscribe to Amplifier’s Starter Plan, you’ll have access to their design studio. Select which product you’d like to create then decide how much to markup the price. Pick a starting color, upload your logo or art and position it on the product. Hit save and when you’re ready and upload the design to your Shopify store to start selling.

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Print-on-demand makes A/B testing easy and instantaneous. You can create 2 different designs and put them both for sale on your artist store. Keep what sells, adjust the price if you’d like, then take down what people aren’t buying. You can experiment with tons of products: t-shirts, hoodies, posters, phone cases, popsockets, and bandanas, to name just a handful. By avoiding a large upfront bulk purchase of merchandise, you are mitigating nearly all of your risk.

Amplifier offers print-on-demand service in parallel with fulfillment. Meaning… you can sell print on demand products and items that you’ve ordered in bulk side by side in your shop. Amplifier will handle the fulfillment of both.

Say you test out a print-on-demand product that ends up selling really well. You could analyze your store data and predict future sales of this specific product. Through the same Amplifier design interface, you can order this exact product in bulk, increasing your profit on each product sold. Take this as far as you want; you can do basic calculations for every product in your store to determine when to order in bulk. POD allows you incredible flexibility. Test away without drowning in overhead costs.

Be You.

Ultimately it’s up to you, the artist, to choose which tools that work for your music and career. If your goal is simply to keep making music, create few print-on-demand products and essentially let your store run itself. If you want to maximize the revenue of your business and create a lasting and identifiable brand, focus on analytics and adapt.

Print-on-demand services are generally built to be hands-off, or “set and forget”. For the first time, you as the artist don’t have to rely on a major label to have access to affordable design, manufacturing, and automation. You can set up various aspects of your business and continue doing what you love.

Up next in our Automated Store Series: The Musician’s CRM.

-Joe

The Musician's Automated Store Part 1: Third Party Fulfillment

Outsource order fulfillment and headache, spend time making music

This is the year of the independent artist.

Avoiding a record deal means creating your own path, but there’s still no tried and true formula for success. Instead of relying on labels to provide tools, today’s musicians must integrate services from a handful of different music businesses.

These services can be used in parallel to create a musician’s automated store. Today we’ll focus on one artist service: third party fulfillment.

What do you mean “fulfillment”?

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Order fulfillment simply means getting your products into the hands of customers who purchase them. If you’re operating your own store online and making just a few sales a week - you can likely fulfill orders by yourself. This is called merchant fulfillment.

Note: If you are an artist and haven’t yet set up your e-commerce, check out our past blog, “Using Shopify Lite to Sell Music From Your Site”.

The process of merchant fulfillment is a familiar one. First, you order boxes of CD’s or other physical merchandise to your house and store it as inventory. When someone places an order, you pack a box with merch, print out a shipping label and bring the completed package to the post office. Send the customer a tracking number and voila! Sale complete. Fulfilling a few orders a week on your own is a cost-efficient and manageable task. But eventually your growth may exceed your capabilities - or you may simply wish to allocate your time elsewhere.

So… what is third party fulfillment?

Third party fulfillment is part of a larger subset, third-party logistics. Large third party fulfillment services maintain a warehouse and complete the same tasks as a merchant fulfiller. In summary, they:

  • Receive and store inventory

  • Package orders

  • Ship boxes

  • Send shipping info to your e-commerce hub

Bringing on a third party to fulfill orders saves you time each week. As most fulfillment services integrate with e-commerce platforms like Shopify, outsourcing this segment of your business can be a key component in automating your entire store. For help deciding if you’re ready to bring on a third party fulfillment service, check out this great Shopify Blog Post.

How do I choose a third-party fulfillment service?

Shopify integrates with most fulfillment services. In fact, their only requirement is that the warehouse can process orders by email. We’ve selected some of our favorites based on ease of use, integrations and resources available. Warehouse fulfillment centers have very specific requirements for receiving boxes of merchandise. So any mistake on your end will translate into late orders and unhappy customers.

Amplifier: a powerful self-service logistics platform

Amplifier stands out to us because of their excellent help center and seamless integration with Shopify. They walk you through packaging and labeling boxes of merch to expedite their receiving process, so your customers get products on time.

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Amplifier also allows your suppliers to send merchandise directly to their warehouse. But you can still stay on top of the entire supply chain - Amplifier gives feedback about your suppliers, in real time. If there is a late shipment, an incorrectly labeled box, or missing inventory, they’ll let you know asap. The Amplifier platform is packed full of these features, and many more.

Shopify orders are sent to Amplifier automatically and inventory is synced between the two. They can process incoming shipments from multiple sources (CD manufacturer, screen printer etc). Once Amplifier packages and ship an order, tracking info is sent to Shopify and on to the customer automatically. Whenever a service uses the phrase “set and forget”, that is a good sign - and code for “automation”.

FBA and more

We also love Fulfillment by Amazon - another service completely integrated with Shopify. Products listed by FBA are eligible for free shipping through Prime, which your customers are sure to love. Selecting one of the top e-commerce companies in the world to handle your order fulfillment ensures reliability and cost efficiency.

For tons of fulfillment services that integrate with Shopify, search “fulfillment” in the Shopify app store.

While each service offers something similar, there are variations that may work better for your business. It all depends on how your e-commerce is set up, your sales volume, and of course personal preference. The goal is to find a service you’re comfortable using. But don’t be overwhelmed - once you decide on a third party fulfillment service, you can spend less time managing your growing business, and more time making music.

Up next in our Musician’s Automated Store Series: Print on Demand.

-Joe

The Musician's Automated Store

The Musician's Automated Store

Musicians who avoid traditional record deals have more freedom in both their music and overall business strategies. But this leaves a gap in artist services that labels used to provide. Fortunately, there is a batch of new music companies who provide services that were once only accessible as a package through a record deal at a major label.

Shopify Adds Venmo Integration

Use that money Nancy sent you for brunch last week to support your favorite artists

Shopify recently announced that they’ve added Venmo as a checkout option. Here at Single Music, we couldn’t be more excited. Venmo has already proven itself as one of the most convenient and useful peer to peer payment solutions.

We strive to make artist and fan interactions as direct and straightforward as possible - this is why we chose to build our app using Shopify.

According to their press release, 67% of Shopify purchases are made on mobile devices. Many of us already use Venmo - so introducing it as a payment option will only help fans better support the musicians they love.

Artists using Single Music know how simply they can create digital releases, tag for physical reporting, build bundles and publish everything to their Shopify storefront.

Learn more about how Single turns Shopify stores into virtual record shops by scheduling a live demo!

Using Shopify Lite to Sell Music From Your Site

You drive traffic to your website. Why do you send fans elsewhere to download your music?

Not only are you giving DSP’s a cut of your revenue, you’re also missing out on data that accompanies the sale. Who purchased a digital version of your album after they bought your new t-shirt? If 1,000 fans purchased the deluxe version of your album, where are these passionate fans located?

This is crucial information when planning releases, bringing on a producer, collaborating with other musicians, hiring a manager, getting radio airplay, working with a PR firm, and booking a tour.

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One way to create your own web store is through Shopify, a powerful e-commerce platform packed with tons of tools for merchants. From invoicing, setting up a domain, building out a web store, managing products and inventory, fulfilling orders and handling payments - Shopify does it all.

But what about artists who already operate a store on their own website, or aren’t interested in a full-featured service?

Welcome Shopify Lite

Shopify Lite’s Buy Buttons help you to integrate your store with your current website - whether you use Squarespace, Wordpress, Weebly or built it entirely yourself.

This $9 / month service is a great way for artists of any size to manage e-commerce. It allows you to sell music directly from social media and provides a POS system so you can take your store on the road. Communicate with customers via messenger - to both provide support and even complete entire orders.

When paired with the Single Music app, Shopify Lite provides even more benefits for artists:

1) Physical & Digital sales reporting to Nielsen Soundscan for the Billboard Charts

2) Bundle a digital download with any product sold through your store

3) Release management tools including automated digital delivery on release date

Shopify Lite + Single Music = Freedom for Artists

Questions? Our team would love to chat.

- Joe