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Question: brian lovin is founder of the kollection a blogwebsite dedicated...

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Brian Lovin is founder of The Kollection, a blog/website dedicated to emerging musicians and fans who want to know about the newest music available. He explains below, in his own words, how the site got started as a labor of love, with hopes of filling a gap in the marketplace. It wasn’t long before The Kollection evolved into a popular online venue for music lovers around the world and a revenue-generating enterprise. Lovin’s reflections about the business and his experiences with it provide instructive insights into a number of topics that are relevant to most startups. These topics include recognizing an opportunity, launching the business, dealing with growing pains from enterprise expansion, choosing a strategic direction, and adjusting business models in response to changing conditions.

"It was June of 2010. during the year between my senior year of high school and freshman year of college. I was on vacation in Martha’s Vineyard. without much in the way of entertainment. Back then, my music tastes largely originated from albums I had previously bought or heard online through services like Pandora. I had heard of music blogs. like Pitchfork, but had never really considered them to be anything worth following.
Around that time, mashups, a type of music combining two or more melodically similar songs into one new hybrid track, were becoming amazingly popular. I remembered how my high school friends always seemed to find the coolest mashups on the web. While relaxing in Martha’s Vineyard that summer, I too found myself browsing online for mashups and other music and inadvertently stumbled upon blogs targeted to the college demographic. What immediately struck me about these blogs was their 90’s-era visual design, their lack of organization, and their snail-paced downloads. It seemed painfully obvious that these blogs were set up and run by high school and college kids who had stumbled into the world of blogging and were struggling to find their way.

After checking out the blogs that were out there, I knew that I could do better. I was very confident of this because I had three years of web design and development experience under my belt from building blogs and websites for clients. I had learned how to drive traffic, improve search results, write content. etc. Leaning on this expertise, I pulled up a domain name I had bought the previous year, thekollection.com, installed a quick blog, and began my search for new music online. I ended up finding some songs from lesser-known artists who had put their work online for free. I uploaded those songs to The Kollection. and began sharing them with my friends.

Those first few weeks were pretty slow, I was working hard to find sources of new music that would allow me to post at least one new song each day. Every time I posted a track, a trickle of visitors—just one or two at first—would stop by the site to listen and download. But word spread rather quickly and soon the trickle of hits was growing into a torrent of activity. By August of that year, The Kollection saw 2,800 visits. In September, 85,000 visitors stopped by to find new music. In October, the site had more than 200,000 hits. This rapid growth didn’t continue forever, but by 2011 the site was tracking over 30,000 visits per day and nearly 1 million per month. What had started out as a hobby and a personal project quickly became much more than that. Soon I was worried about being able to pay for our servers (only S200 per month at the time, but enough to be of concern for a college freshman). So in October of 2010, as traffic on the site was growing so fast, I printed my first line of Kollection tee shirts. The design was simple, and quite unremarkable—in fact, it was my first time ever designing for print, so I had to learn quite a lot—but that first batch of shirts sold faster than I had expected.

At that point I was confident that apparel would be a feasible option to make money on the site. We were still growing and gaining a lot of attention, and quickly. Artists begged to be on the site, fans praised the music selection, and people were sharing music across the web. It wasn’t unusual for us to give a previously unknown artist tens of thousands of plays and downloads within a day. In January of 2011, fans began to approach me and ask to write for the site. They saw The Kollection as a fun and worthwhile way to get a taste of the music industry. As a result of the interest, my team of authors grew quickly, peaking at around 15, but finally settling comfortably at around 6 writers in 2012 and into 2013. The team truly made The Kollection possible in 2011 and 2012—they helped me publish thousands of posts to the site in just a few years and upload several new songs per day. We were able to see from our tracking that fans visiting The Kollection were listening to and downloading millions of songs a month. We were revved up and running on a full tank of gas, and it didn’t seem like things could possibly slow down.

But slow down they did. As 2011 turned into 2012, more and more college students and high schoolers were learning how easy it was to set up a blog and start sharing music for free online. Blogs began to pop up by the dozens, if not more, within a few months’ time. Each of these tried hard to bring a unique essence to the game, but for a music blog with such a simple process, there really isn’t much room to expand horizontally. In late 2011 I started to notice that more and more music blogs were consistently posting the same songs as every other site. This meant that the music blogging niche that I was in had become an easily replicable commodity that anybody could copy with very little effort. So it was time to think more carefully about how to differentiate the site. Through 2011 we were able to make The Kollection stand out from the crowd with our emphasis on minimal design, structured organization, searchability, and speed. We always focused on making it as easy as possible for fans to quickly listen to and download new music. But as 2012 was approaching, other contenders had made headway with their website designs. and it became harder to separate them from The Kollection.

After giving it a lot of thought, I decided to take The Kollection in a few directions, which in hindsight probably caused me to spread the business too thin. First. I hired a company to develop an iOS and Android app so that fans could stream our music from their phones. Second, we spent over $4.000 on a run of tee shirts to expand our line of merchandise. Third, I redesigned and rebuilt the site with a functionality that allowed users to build their own playlists directly on the site, using songs we had posted. Considered separately, these three avenues all performed very well. Our apps saw more than 30,000 downloads within two months, with fans listening to more than 1 million songs on their phones. Our apparel sold well, too often with as much as several hundred dollars of merchandise being purchased a day. In fact, we broke even and started to make a profit on apparel within one month. The site redesign was also successful—pageviews continued to stay strong, and fans loved having the ability to build their own customized playlists with their favorite music.

But in early 2012, a few things came crashing down on The Kollection. You see, up until that point we had been using Soundcloud to upload and host all of our audio files. This allowed us to power mobile apps and make the most of the site redesign, while tracking the number of plays and downloads across the network. But, almost without warning, the plug was pulled on all of this due to a handful of copyright complaints. The Kollection has always focused on sharing music available for free from the artists themselves, but occasionally a song would slip through the cracks, one that really should not have been uploaded. As a result, in the first quarter of 2012 we lost our Soundcloud account, and because of that, our mobile apps no longer functioned and the playlist builder on the website could not operate.

We had spent thousands of dollars building The Kollection around Soundcloud, so this was a major disruption to the venture as a whole. We saw trafic stall, and fans became frustrated as a result of the loss of our differentiating features. But we pushed on. My authors and I revived our core focus of sharing new music with fans around the world. We found failsafe ways to share music (legally) without worrying about copyright issues. We stripped the site down to its core features, removing the ability to build playlists, and we pulled our app from the app stores. 2012 also brought with it a host of new problems for The Kollection. Though services like Pandora had been around for a long time, that year the public’s attention seemed to shift quickly toward online radio. Pandora. Spotify. Rdio. and other such services gained enormous traction in the music-discovery market, making it easier for friends to share with one another the music that they came across on the web. The Kollection and other blogs like it had the distinct advantage of being the first to share new music (for example, we could post a new song within minutes of its release), but as soon as these songs found their way into the libraries of big players like Spotify and Rdio, we lost the competitive advantage of having this new music.

Throughout 2012 our month-to-month costs remained relatively stable, but our income fluctuated wildly. We were running banner ads on a pay-per- click basis, earning us anywhere from $300 to $1,000 per month. But at the same time, merchandise sales slowed as inventory dwindled, and I had a hard time making a decision about the best way to move forward with the venture. On the one hand, I was in college and my time was limited, so I knew it was important to focus on one business model and revenue stream. While clothing ultimately made more money, it required a lot more work to design new lines, pack and ship every order, and support customers around the world who had problems with their orders. On the other hand, ads were a passive way to make money and didn’t require any extra day-to-day effort. The downside of this option, however, is that the ads didn’t generate as much profit as the merchandise, and earning $300 to $1,000 per month was just barely enough to maintain our server costs. Ultimately, the biggest decision I had to make as the owner was to determine how much time and effort I was willing to invest in the website. It had grown to such a size that I couldn’t run it on my own and had to have the help of my team of authors to make it work. At the same time, though, we weren’t generating enough revenue to pay them as employees. So, I still needed to decide how to divide my time and effort between school and the venture, and I knew that it was unrealistic to expect The Kollection to continue growing without a new vision and drastic changes that would sufficiently differentiate the site from the competition.

The best road forward for The Kollection is not obvious to me at this point. Some things are nonnegotiable. For example, we still want the site to drive a lot of traffic and remain a respected source in the music blog niche. Also, we definitely want to continue to promote new artists and their music and do this very well, pushing up pageviews and ad sales, but finding an ad platform that will allow us to make significant revenue from the traffic we generate has not been easy. Merchandise sales from The Kollection have been very helpful in the past, but they require a lot of time and attention, and I won’t really have much extra bandwidth to give to this as long as I am a college student with a part-time job. This leaves me with some difficult decisions to make, but I am ready for the challenge and look forward to my future as an entrepreneur—no matter what direction it takes."

1.  Complete a SWOT analysis for The Kollection.

> What does it say about the strengths that the startup can build on or the weaknesses that it must be particularly careful to protect itself against?

> Does this analysis rieveal any promising future opportunities for Lovin and his venture?

> By your analysis, what threats put the enterprise most at risk?

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