Today Benchmark announced a $9mm investment in CountingCrows.com, the official website of the rock band whose music was a staple of radio and MTV throughout the 1990’s.
BAC talked with Cohler in Benchmark’s Sand Hill offices while the plaintive sounds of August & Everything After played from his tasteful Bose desk speakers.
BAC: Matt, thanks for talking to us today. Tell us about the CountingCrows.com deal. How are you guys going to make money?
Cohler: This is a first-of-its-kind deal with multiple revenue streams. We’ll provide fans with suscription access to the band’s full catalog through the website and a premium mobile app. There’s also an advertising component and touring revenue.
BAC: So you get a piece of their concert ticket income?
Cohler: No, that’s separate. The touring that’s part of this deal is the Counting Crows-themed guided tours of Berkeley. You know, like the Seinfeld-themed tours in New York.
BAC: Big demand for that, is there?
Cohler: I think we’ve worked out the economics. They originally had this open air bus that Adam had painted in an Edgar Allan Poe-theme, but it was a little odd and you’re talking big fixed costs there. I helped them see that working on a few Segways was probably a better idea.
BAC: What kind of advertisers are you guys attracting so far?
Cohler: It’s mostly network placements right now, but we’re seeing particular traction around tie-dyed t-shirts, beard-trimmers and DVD-box sets of Friends.
BAC: Powerful stuff.
Cohler: I’ll say.
BAC: Critics of the deal say it was expensive for you and question why anyone would pay $5.95/month for access to like six albums from one band when they can get unlimited music on Spotify for $10/month.
Cohler: Well, it’s way more than just the studio albums. It’s all the live stuff, including bootlegs and full access to Adam’s digitized journals. Subscribers also get unrestricted access to the entire soundtracks of Shrek 2 and Cruel Intentions.
BAC: That’s big.
Cohler: Right? But it’s more than the music – this is the authentic Counting Crows experience. This isn’t just a website and music subscription – it’s a social and mobile platform.
BAC: A social network?
Cohler: A digital extension of the natural social fabric that exists among all Counting Crows fans. So, say you want to chat with other fans about the poignant lyrics of Anna Begins or Mercury – now you’ve got a way to do that online or on your smart phone.
BAC: Wouldn’t users just do that kind of thing on myspace?
Cohler: Not any more. Look, 100% of Counting Crows fans are white, and there simply are no more white people on myspace.
BAC: There aren’t?
Cohler (coughing/laughing): Good Lord, no!
BAC: I wouldn’t know, I haven’t been there for years.
Cohler: Well there you go…and you are exactly the target demo for CC.com – white, balding, pathetically nostalgic. I mean, it’s perfect.
BAC: So how is it a platform?
Cohler: We’ve opened up the api so that developers can build tools on top of the core experience.
BAC: What kind of tools would someone want on a Counting Crows platform?
Cohler: Like a mapping tool. Like say you’re on vacation, but you want to track down other Counting Crows fans or find a hotel where Counting Crows stayed on their 1994 North American tour – you could do that. Or other, non-endemic tools like a stock-tracker so that you can see how your investments are doing without leaving the Counting Crows experience.
BAC: How did this deal come to be? Did the band’s management come to you?
Cohler: No. I approached them. The idea came to me right here in this office one afternoon while I was listening to (the band’s 1995 album) Recovering the Satelllites.
BAC: And you think this idea can scale?
Cohler: I wasn’t going to announce it until next week, but we have signed term sheets with Matchbox Twenty, Marcy Playground and Third Eye Blind. Trifecta, baby!
BAC: Did you have any co-investors come in with you on these deals?
Cohler: Believe it or not, we own this category exclusively.
Cohler: It’s bold, I know. But bold moves is what built this firm.