It’s easy to feel encumbered by data. We consume it 14 hours a day, we use it to decide where to eat dinner, we analyze it for our businesses, and we mine it to create a sense of prediction in an increasingly unpredictable world.

For my new start-up, MoodSnap, an image-based music discovery application, data is critical. Not only to understand our users and create the best, most personalized, and relevant experience possible, but also for the fabric of our revenue model. If we measure the right things, we’ll have a database of comprehensive and actionable behavioral analytics on how people associate music with their mood. If we measure the wrong things, we’re doomed from the start. Like everything else it’s “garbage in, garbage out.”

This weekend, I attended Billboard Magazine’s Future Sound Conference in San Francisco, CA. It was a gathering of music industry thought leaders, entrepreneurs, executives, and creatives. Like a mini TED conference for all things music and commerce. I had a great time.

The one session that really resonated with me as something that’s attributable to all businesses in today’s age was delivered by Jason Feinberg, Head of Digital at Epitaph Records, titled “Reinventing the Analytics Machine.”

I hope you find my main-takeaways relatable and useful for your own journey through the marsh that is data & analytics.

- Vanity Data is of limited value. How many followers, subscribers, likes, comments, and re-tweets give you little perspective on your business. Maybe this data looks good to you..we’ll so what? While these ARE all based on transactional value, how is it ACTIONABLE? How is it useful? How can you use it to translate to sales? How can you sub-segment and identify your superfan customers and give them a premium experience so they champion your brand? Caveat: for a business that has ZERO understanding of their effect in the digital world, these at least can give some perspective.
- Raw Data – same rules apply. Google analytics, Facebook insights, # of people on your newsletter list (and for music: soundscan reports for album sales, Spotify streams, # of concert tickets sold). What patterns are you looking for? How will you use what you read to tweak your product, marketing, budget,cost structure, or pricing model?

The bad news about data:
- there’s no magic bullet
- correlations are not always helpful (ex: we spent money here, what did we get from it?)
- data on it’s own is useless.
- We measure too many variables, the wrong variables, and often making assumptions from an outdated model.
- Often the people aggregating the data are not the ones who need to understand it.

The good news:
- there’s large and long-term sample sizes out there
- data integrity is improving
- patterns are emerging: reliable behaviors, effective drivers, consistent corrections.

What to do?
- Get smart on your available data. Know why you’re measuring what you’re measuring. What is not actionable is not useful.
- Break it into ratios. ROI and ROE aren’t your only two friends in ratio land. Try, monetized views/all views; streams(aka taste tests)/purchases; sales of product A/sales of product B.; active users/total users (social virality)
- Encourage ALL team members to contribute! Have your data experts explain what things mean in laymen terms. Don’t do this is Silos.
- Look for needs, questions, patterns, and reliable behaviors. Not just to the “specialist” who monitors the data.
- Build your machine based on your business needs and powered by metrics for segmentation, activity levels, purchasing behaviors.
- A/B split test for fast feedback, and thus corrective intelligence.

A final and more general note on music in it’s ever-bounding tie to commerce.
What makes music such a tough business, aside from rapidly changing consumption patterns, pricing models, and ability for fans to circumvent the system entirely to consume product, is, that music is art, and data is science. The two can mingle and flirt but will never marry. Some of the best (and sometime still commercially successful) music defies all rules and predictions. If Radiohead were introduced in the 1950′s people would have gone running for the hills.

Barriers to entry for artists have crumbled and everyone has a platform to get their music heard. But being on the platform isn’t enough. Fans have infinite channels to discover, play, buy, stream, or steal music. The landscape is as fragmented as it gets with niches upon niches of genres. While the gates are flooded with music, it’s harder than ever to break through the clutter. We are at the early adopter stage on the diffusion of innovation curve for music as an “all you can eat” service, and no longer a product. It’s the promotional vehicle that adds value to the artist’s brand, and fuels revenues in touring, merchandise, and licensing to film/tv and commercials. Expect this trend to continue and in the next 5-10 years, the notion of owning mp3s will be a thing of the past. The big debate is whether the increased scale in subscription services will foster a sustainable business model for royalty payments. Currently, it’s fractions of pennies per stream.

Music changes the world when it comes from a place of authenticity, originality, and sheer talent. It’s infused in everything in this world that we do and love. Creating something that resonates with others is only a result of it resonating with yourself first (the artist). The major label star-making machine model is nearly dead. It’s all about demand-pull today. Be true to your voice, your art, and earn your fans one by one. DIY isn’t scrappy or shameful. It’s what differentiates you and makes others believe in your cause.

One of my favorite authors, Seth Godin, often speaks about music and its “tribe” like mentality. It’s a secret handshake. You identify with others who like you, “get it”. It’s a club and you’re on the inside. It’s what made Facebook happen. It’s what made the Grateful Dead so successful.

Identify your superfans, know why they follow you so loyally, and serve them. They will support you till the bitter end. They will pay more money, they will jump through hoops, they will evangelize your brand/band/product/service to all who will listen. They are the reason why you succeed.