Polyphonic HMI:

Mixing Music and Math

Group 8
Tejasvini, 2017PGPM066
Abhijit Kundu, 2017PGPM003
Vikrant Thakre 2017PGPM071
Shivanand Maurya, 2017PGPM058
Prashant Jhakarwar, 2017PGPM047
Shikhar Kewal Verma, 2017PGPM057
Devi Prasad Baliarsingh , 2017PGPM018
Harsha Chandrashekhar Sonavane, 2017PGPM023
Q.1
If you were Mike McCready, the CEO of Polyphonic,
which target market – unsigned artists, producers, or
record companies – would you pursue?
• Polyphonic HMI team felt that HSS would be valuable for
below three target markets –
• 1) Record labels
• 2) Producers
• 3) Unsigned Artists
• As per analysis Polyphonic should target Record labels to
get maximum benefits because of the following factors –
• HSS would reach to new heights with Record labels.
• HSS would be helpful to them in three ways: deciding
whether to market an album, in selecting which song to
release first, and even in testing new artists looking for a
record deal.
• By integrating sophisticated technology HSS can create process of selecting
hit songs.
• It has become important to be cost effective for sustainability in the industry
where piracy and reduction in sales is rampant. As per call-out research,
studies would cost the record labels about $5,000 to $7,000, internet polling
would cost about $3000, and focus group research would cost about 10,000
per song. This would be a huge price in total as compared to HSS which only
costs about $300 for a total of ten songs which would be an immense
reduction in cost. It is also time-effective as it would help record labels to
release hit-songs at a much faster rate to generate more profits.
Q.2
How would you serve this target market? What is a
suitable marketing plan? Specifically, what positioning
do you choose? What considerations underlie your
pricing decision? And how do you plan to approach the
selling process?
 Marketing Plan
• We will continue with the Initial Previews.
• Suitable marketing plan
– Giving free trials to each label under all major record company,
namely, BMG, EMI, Sony, Universal, Warner.
– Such free trials will include providing reports for 1 album (10
songs) for each record label within the major record companies.
– Post the free trial phase, we will sell HSS song reports at a
price of $10,000 per song report, which is at par with the other
song testing alternatives, like call-out research, focus group
research, etc.
 Positioning and Break-Even Analysis
• Our positioning will be that of a premium song analyzing
service, that is much better than the existing alternatives.
• Selling Price = $10,000/song report
• Variable Cost = $30/song report
• Fixed Cost = $150,000+$500,000 = $650,000/song report
• Break-even point (excluding free trials) = 66 song reports
 Incorporating Free Trials
• Assuming each company to have 20 labels each, for 5
companies, we get 1000 song reports under the free trial
scheme.
• The cost for free trial is = $30*1000 = $30,000
• Adding it in fixed cost, the new break-even point is = 69
song reports.
Cost-Benefit Analysis for Record Labels
• Using medium estimates from Table A, for 100 hit songs
predicted, the revenue generated using the old methods =
10($200,000)+90($10,000) = $2.9 million; corresponding
costs = 300($6,000) + $300,000 = $2.1 million
• Profit (earlier) = $0.8 million
• Using HSS, revenue = 80($200,000) + 20($10,000) =
$16.2 million; corresponding costs = 300($10,000) +
$300,000 = $3.3 million
• Profit (HSS) = $12.9 million
 Inference
• There is a huge boost to the net profits of the record
labels, if they opt for HSS.
• Thus, we’ll show them our analysis and sell HSS, using
the promotional technique of free trials.
Q.3
What value does Hit Song Service create?
Specifically, to what extent does Hit Song Service
increase the expected revenues and profitability of
albums and songs by new and established artists?
Polyphonic HMI figured out that there are common mathematical nexus in hit songs and later by
researching Billboard hot 100 they got to know that there were only 50-60- hit clusters and by
leveraging this mathematical pattern to figure out if song is going to hit or not.

They took unreleased album to check in

which cluster they fall.
If a song falls within one of these clusters
then there is high chances that it has the
potential to be a hit one but if a song falls
outside of cluster then probably its going to
be flop.
According to the its closeness to the clusters
it was awarded “hit song science score”
On a scale of 1-10 if song is closer to the
cluster then it was given a higher score
After testing closeness to cluster it led to further refinements by giving different
weightage to different parameters like less recent to more recent and lower sales to
higher sales
 Economic Value Addition by HSS
• As per current market research data it is clear that there is 10% chances of
success of traditional market but on other hand 80% chances in case of HSS
method.
• A single reaching single top 40 would generate revenue of 200,000 and if not
then 10,000
• Chances of single becoming hit without HSS=10%,
Rev.=(.90*10,000+.10*200,000)=29,000
• Chances of single becoming hit with HSS=80%
• Rev.=(.20*10,000+.80*200,000)=162,000
• EVA= 162,000-29,000=133,000
Increase in expected revenue & profitability for new
artist
• As per case there were more than 10,000 new and
established artists but 90% of the revenue comes from
established artists, but for long run they were looking for
new artists .
• The new artist were required to send the
demo(demonstration) recordings to attract the music
publishers but they were facing competition from the
established artists so HSS can help them to analyze their
recordings are hit or not and accordingly they can
determine their success rate and improve their songs .
 Increase in expected revenue & profitability for
established artist
• Previously the artists were paid an upfront fee by the record
companies. It was treated as a loan and the cost of making a record
were to be repaid from that fee. And also there was a sales-based
payment which was dependent on artists’ track record and stature.
• So the upfront fee was a huge risk for the record companies. Now
after the analysis of HSS this risk could be reduced substantially.
• After sales-fee could be increased as the probability of success of an
album increases.
• With the help of HSS, artist can determine if the song has chances
of being hit or not and only release songs with a high “Hit Song
Science score” to maintain his track record and stature which
eventually will increase after sales fee.
Q.4
What are the potential benefits and drawbacks of Hit
Song Service for each player in the music industry?
Who stands to gain or lose most from this technology?
How does that impact your plan?
 Labels
• Benefits:
• Will help them to reduce time invested in listening to recordings of various
artists
• They will save the cost of appointing an A&R
• Will help them in finding new talent thereby saving huge cost of releasing
album of established artists
• Can help in deciding the price at which artists should be signed
• Drawbacks:
• Opportunity cost related to a hit song that is an outlier in HSS review
• HSS doesn’t assure that high rating will result in a hit(20% chance of error)
 Producers
• Benefits:
• Help them with “tweaking” the song that will result in a hit
• Drawbacks:
• Record labels may bypass the producers and directly
consult the artists on the basis of the findings of the HSS
 Artists
• Benefits:
• Unsigned artists will be guided in between their formation of song
so as to do some modifications
• Drawbacks:
• Artists will try to get same type of song in the market depending
on the algorithm of HSS so as to always hit the right score on
HSS, making the offerings homogenous.
• The artist might get a series of rejection from software before
arriving at a hit song. Even established artist will face some
problems. So it might act as a de-motivator.
Q.5
What are the ideal customers for Polyphonic? Is giving
away free trials a good way to stimulate adoption
among those customers? What does it take to satisfy
customers who try HSS?
• Record labels, unsigned artists and producers are identified as the potential
target markets for HSS.
• Unsigned artists would benefit the most from using HSS but the price of HSS
would turn out to be a deterrent for many artists to buy the service.
• Producers may also benefit from using HSS in the short run as it would help
them generate hit songs but from the long-term point of view, it would make
the job of producers redundant and the producer segment would take a hit on
their jobs.
• Record labels turn out to be the ideal customers for HSS as they are the
ones who have to market songs in a very volatile and financially high-risk
market. HSS minimizes risk by identifying hit patterns in songs and, thus, the
central problem of Record Labels is addressed.
• According to us giving free sample trials is a good option to
simulate the adoption among customers. As it is a new product
and based on a novel technology, customers will be unsure about
the results. By trying out they can verify the functionality of the
product.
• With free trials, more number of customers will get attracted.
According Group AIA’s analyses Hit Song Science can achieve a
Success rate of 80% - i.e. they could correctly predict that a single
would reach the Singles Top 40 eight out of 10 times, therefore
there are heavy chances that the results will be correct in the trials
and this will lead to higher sales of HSS.
• Till now, songs have been introduced in the market based
on the opinions of AR&R executives who have convinced
somebody that they have ‘good ears’ i.e. their gut instinct
is quite powerful. Thus, music industry is predominantly
based on intuition. If a technology comes out that shows
substantial results and eliminates song production on the
basis of random hunches, a trial would help convince
customers that HSS actually works and its usage would
be beneficial for everyone involved.
Thank You