How To Build a Music Ecommerce Business With Dan Hubbert of Power Music

Guillaume: Hello everyone. Guillaume Le Tual here, host of the Ecommerce Wizards Podcast where I feature leaders in e-commerce and business. Today’s guest is Dan Hubbert. He’s the CEO of Power Music, he runs the e-commerce store, PowerMusic.com PowerMusiccheer.com, and an app called Power Music Now. We’ll be talking about his career as a music executive, his entrepreneurship journey, and of course, his e-commerce expertise. He did start at first with a sort of home-built e-commerce store and then moved this to a Magento Open Source which is the free version of Magento. Then he evolved this into Magento Enterprise, a former name. Now it’s called the Adobe Commerce website, which is the paid version, so we’ll talk about this evolution.

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Alright, Dan, thanks for being here today.

Dan: Thank you for having me.

Guillaume: I’m not very familiar with the music industry and you have an impressive background. Can you tell us a little bit about your entrepreneurship journey?

Dan: Yeah. My life started out as a musician. When I was 11 years old my brother asked my parents if he could take guitar lessons. I had no interest in taking guitar lessons but I said, I want to take guitar lessons too, so I ended up getting into music at a very young age. I ultimately learned to love to play the guitar. I still do to this day. I ended up going to music school in Hollywood, California to the Musicians Institute. I really got into music, toured a little bit, built a recording studio, and was following my dream to be. It went into a lot of different roads. At one point, I wanted to be a rock star, at another point I wanted to be a studio session player, I had all these different ideas. But one of the things that I always thought about along the way was that I didn’t like the idea of starving artists. I really wanted to focus on the business that I was trying to get into and wanted to learn about. I wanted to know as much as I could about the actual business itself.

That actually led me to work in the area of radio promotion for an independent company. So I started to have relationships with people at record labels, we were getting records played on radio stations around the country, calling program directors and music directors at radio stations. It turned out I was fairly decent at it. I then got hired by Columbia Records when I was 24 years old. I ended up having a pretty decent career in the record industry. I was a senior vice president of promotion for a few labels, it went really really quickly. I was only in the actual formal record business for 10 years, but I had a very good fast track career there. So this idea of getting into and understanding the business side really got me into the business. So I became more of an executive of music than an actual artist, which is fine. Like I said, I still play a lot for myself so I never lost my relationship with my instrument.

Guillaume: I understand that. I’m a former professional visual artist and technologist turned into an entrepreneur, so turned into a business executive. So I totally understand that part. Of course, working at Columbia must have been a great way to build your contacts and then start a music company selling records?

Dan: Yeah. You know it’s funny because going to a music school is not like a proper university. So as far as traditional education, I just played guitar for 15 hours a day. But Columbia Records was really my college, that was where I really learned so much about life, the music industry business in general, and how to run a big staff of people. At the end of my career in the traditional music business, I was running a promotion for Capitol Records. In 2004, I left Capitol. I really didn’t know what I wanted to do. I kind of lost my step a little bit for wanting to do radio promotion. So for a while, I was doing other things.

I was doing music supervision and then I met this guy while I was on vacation who had this fitness music company called Power Music. I asked him what that was and he said, well, we take all the biggest hits on the radio and turn them into fitness versions and we sell them to fitness instructors. I thought that was fascinating and he thought my background was very interesting, so we started a relationship. And I started consulting the company because one of the things that I really thought was, besides the group market, where else could we market and sell this product. From there, I had a small record label, I had a relationship with iTunes and we ended up taking the product and marketing it to consumers. That was a wild story in itself, which I’m happy to share. But that’s just keeping in line with where we’re going here. That was the trajectory of me getting into the fitness music industry, which was something that kind of came down out of the blue.

Guillaume: Sure, because this is the first challenge I had in mind when I heard the concept ‘power music’, music for fitness, that you can change the beat, and so on to fit your fitness session, which is really cool. Once you reach out to fitness instructors, I don’t know how many they are in the country and I have no idea how big that market is, what’s next? So you were able to go direct basically, and distribute on iTunes and so on to get some lift?

Dan: The company has evolved a ton since then which I’m sure we’ll get into. So at that time we were making mixes and selling them to an instructor. The instructor takes that mix and goes into the classroom namely, LA Fitness, 24 Hour Fitness, Equinox, and so on and so forth. They would basically teach a class to our mix. It was a great relationship because we did all the work for them. These mixes were all full of all the latest hits and they were all at whatever tempo for whatever class they were teaching. So if you’re talking about a hit class, it’s 140, 150, 160 BPM mix of all the latest and greatest music, including balance that we would then turn into on-the-floor versions.

Now, what happens next is that the music industry starts to evolve. Spotify happens and it starts to become a thing. And then iTunes buys beats and their whole subscription model. So now iTunes becomes Apple Music. This was a big change because we started to look at this and say, wow! America was one of the last countries in the world to accept subscription models, which was something that was not very American. In Europe, Scandinavia, and Australia, they love subscriptions. I think things like Netflix and Spotify and others to a certain degree opened the door for subscriptions. People started to realize, you know, we really do like these subscriptions.

So that was when we were at crossroads because we realized that without our own subscription model, all these other companies were going to own our customers. So Spotify would own our customers, Apple would own our customers, and we would basically be completely at the mercy of these other businesses for our own survival. That made me very uncomfortable. So back in 2012, ‘13, and ‘14, we took the steps of developing our own app and our own platform. That was the turning point where we stopped being only a music company and started to become a technology company.

Guillaume: So is that when you started your first e-commerce store?

Dan: No. We always had the website, as a matter of fact. The trajectory for me was in 2010, my relationship with the company changed because I actually purchased it. I really liked the business model, I was very passionate about what we were doing. We had had a website, we redid it, we went through the Magento platform and all of the really heavy e-commerce, and we needed a solution for the market dynamics changing to be subscription. We really wanted to own our customers.

So we developed this app and we continue to develop the app to this day, which has been a huge success. It really comes down to taking all of our amazing content and making all of it available for one low price, which was a big deal. Professional mixes sell for more than the normal album. We would sell a mix for $15, but now we’re talking about 15 bucks for 1495 for everything we make, including our video content, which we would talk about, for one low price.

Guillaume: Which is impressive, because then you need to add the volume of users for this to make financial sense for the company because you used to sell each album for at least 15 bucks.

Dan: Correct. You know, you kind of touched on it. The number varies and the total addressable market does vary around the world. They don’t do surveys every year but there are probably a couple of 100,000 fitness instructors in the US. It’s a very fluid profession because people come in and out of it a lot, and there are a lot of people who teach classes part-time. They’re moms, and they’re like, I want to teach three yoga classes a week. That’s it. This summer I’m going to hang out with my kids I’m not going to teach. So you get a lot of influx and out flux happening because it’s just the nature of the business of fitness.

Guillaume: It’s a marketing challenge for you to stay in touch with the new guys that come in the market all the time?

Dan: Yes. A lot of our churn with the app is people who are just pausing because they’re like taking three months off, or they’re going to take a year off and then come back. So it’s a very interesting marketplace in that regard but there are also a lot of new instructors constantly coming in as well. So our job is always to kind of balance the churn and capture the imagination of the newbies coming in so that we can have consistent growth. That is our strategy worldwide.

Guillaume: And before we get into the Magento and e-commerce discussion, the technical side, I’m curious, how do you address and reach out to that market? Is it like advertising campaigns or just trying to grow the subscription list? What’s the approach, because you have such a volatile market in a way?

Dan: We have a pretty robust mailing list. We still are to this day converting people from downloads, we literally this year just stopped selling all physical products. We’ve been trying for years to do it. But some of our older customers have been dealing with CDs and DVDs forever, and they’re like, ‘I just want this’ and so we’ve tried this and so we said, but you know the numbers have kept dwindling. I personally and we as a company are really concerned about the environmental impact of plastic and all that stuff that goes into making the physical product. Gyms are also doing away with a lot of those devices that would support that. So we needed to kind of wean people off of it. We ran a lot of sales, we did a lot of marketing, we also did a lot of tutorials and in some cases hand-to-hand combat with customers where it’s like, ‘Hey, let us sit down with you and show you how this app works. It’s super easy’. We were very successful in getting people to convert,

Guillaume: Which is amazing too. If you have to do the hand-to-hand combat with customers and it’s 15 bucks a month membership, is like wow!

Dan: Well, I mean, a lot of these customers, we did the analysis, they were spending around the average of around 120 to 130 bucks a year buying CDs, buying DVDs. So it was creative for us because now you’re talking about $180 a year for 15. But it was also a much better deal for them because now their library that they get to offer to their classes is infinite. So I look at that as the ultimate win-win. We realized a nice bump, but they also realized the same bump in it.

Guillaume: It is beautiful when you expressed it this way. Because it’s been a question of, you’re assured if you’re Netflix and have millions of users, it makes sense, and if you’re Amazon Prime, it makes sense. But on a smaller scale how does it make sense? You’ve got it now because you increase anyway the certainty of your revenue to 180 instead of an average of 120, sort of yearly lifetime customer value there. So you make more and they have access to more. So it’s a win-win thing and it costs you nothing anyway because it’s a digital download, just a little bit of hosting bandwidth and that’s it.

Dan: Yes. Correct.

Guillaume: Okay. I’m curious because you were, I believe, on a previous e-commerce platform and you decided to move to Magento commerce. What made you choose Magento? What were the challenges and so on?

Dan: That’s a great question. To be honest with you I didn’t know a lot about e-commerce tech. I looked at the different platforms at the time. I didn’t even know if Shopify was available. This is like 2010, so I’m not sure when Shopify came out. But that wasn’t really on the table, our developers had worked and built Magento platforms before. When we looked at everything we all concluded that Magento was robust enough. Mainly for us, it was customizable enough because of our technology, we have very specific technology that we needed a customizable platform. Magento was the one at the time that seemed most suited to what we needed.

Guillaume: It is the strength of Magento versus whatever. Shopify is June 2006 listed, but of course, it had to grow over the years. It was not even a public company.

Dan: It certainly wasn’t.

Guillaume: It’s not what it is today, not exactly. But the strength of Magento is the customizable aspect. So you say you have a pack that needed customization, can you give us a highlight of this?

Dan: Yeah. This is probably the most exciting area of our business and it’s something that I absolutely love. Making mixes is one thing, but giving people the tools to make their own mixes and be their own creators, I think is the greatest thing if they have the time. If you don’t have the time and you’ve got three kids and you’re trying to teach your classes, we got your back. We’re doing all the mixes and that stuff is there for you to plug and play. But if you want to be the creator and you want to go into the library and pick and choose what you want, and not only that, take a song and set it to the tempo that you want because some people want a little bit more dynamism in their mix where it’s not all at 150 or all at 160.

Maybe they want one track at 160, another track at 140 and maybe we made the track at 150, but you don’t want it at 150. So we have technology that can take the track and time to stretch it and move it to another tempo without losing the fidelity, without losing the pitch. That is the technology that is out there now, we were at the forefront of creating this technology. So this is going back to 2010, ‘11, and ‘12. We’ve now taken that technology, put it into the app, and added a time shifting on the fly. So for an instructor or even a fitness enthusiast, being able to play let’s say you create your mix and maybe you weave all these different tempos in because you went on our site and you created your app. But now you’re in the middle of your workout or you’re in the middle of your class and it’s just not right, it’s dragging, or it’s too fast. So on the fly, you can literally pitch up or down the tempo, slow the class down, speed the class up. It’s super cool tech, it’s one of the hallmarks of our app that people just absolutely love.

We just continued to develop it, continued to make it better. We’ve added timers to the app, and tools to the app for instructors to use. We are constantly adding content to the app. We just added all of our educational videos. These are pre-programmed classes, they call it pre-choreography to our app. So we’re trying to continue to add value for the customer. Along with keeping up with the tech and keeping up with all of the things that you need to in order to have a fully functioning reliable app.

Guillaume: Yeah, it’s a fun technology. When you slow it down it just sounds like a slow-motion video. It just sounds so bad and that’s a fun thing. Then on the positive side, the transition to Magento commerce, what kind of advice would you give to anybody who wants to do the transition from a previous platform to this one, in any regard? From your personal experience, any highlights that you’d like to share of things that went well or things to be careful about?

Dan: I wouldn’t say ups and downs, just things we didn’t know. When we first got on to Magento we were using the community version and it no longer exists.

Guillaume: Well, we call it Magento Open Source now.

Dan: We quickly ran into limitations because we were just doing more and we were asking it to do more than the Open Source version. So we quickly ended up moving over to Enterprise. I think that for the most part our Magento experience has been good. For me, I would like maybe a little bit more, I love reports and I like to look at things from different angles. I like to know things like, how many of these did we sell? How many units did we sell? Okay, cool. Well, who bought them? Where do they live? Outside of LA, New York, and London, is there a hotspot somewhere else? Is Houston bigger than Minneapolis? I love the nuances of knowing. And that’s just like the old record industry stuff in me. We always would watch where artists were breaking, like Norah Jones broke out right of Boston, she broke out of a record store in Austin, Texas. She didn’t break out of Brooklyn, New York. So knowing these little hotspots. I always like to know where our stuff is popular.

Magento has been great in building and being able to customize reporting and I think that has been one of the biggest things. I challenge it a lot because I want very specialized reports, but for the most part we’ve been pretty satisfied with the reporting aspect of it. Functionality has been great. Truthfully, I think that us as a company moving into the future where we’re looking at everything now from like, are we just an app company at some point? One of the things is that all of the functionality of the app is built on Magento so I don’t think we’d ever leave Magento completely. We’d have to completely rework the back end but also, where are we going? What is our company look like in the metaverse? What is our company look like? There are so many things in front of us, it’s exciting. I don’t mean to digress.

Guillaume: The Metaverse is a special one, we’ll see where that goes. For sure the internet in the future will not be like it is now. Will it take the shape of metaverse? Maybe it will be called like that. But will it be what is currently seen as ‘what it will be’? Anyway, I don’t want to play crystal ball too much on that one. So were you using Magento business intelligence for the reporting, or you were using the classic reporting?

Dan: The classic reporting. To be honest, I’ve looked at so much data and the reporting demands have kind of gone down a little bit because I have a pretty good intuitive feel for the business. But in the beginning when we first got on it we didn’t know a lot. We were questioning and we really wanted questions answered. We used the traditional reporting quite a lot.

Guillaume: Yeah, sure. You do want to do your decision with a mix of gut feeling and data, and not just data or just gut feelings.

Dan: Correct?

Guillaume: Sure. You’re saying your app is running entirely on magenta for the back end. So you’ve built I guess some kind of headless or progressive web app, the PWA set up, and then people install this sort of a shortcut towards that version. So that’s why you’re saying the website is the least main distribution channel for you. It is the app that you installed but the app is just some sort of shortcut to an altered version of your Magento back end?

Dan: Yeah, good question. The comment there as I mentioned, we just finished selling physical. We still sell digital and streaming videos on the website. I think my kind of comment leaning towards the future is, I wouldn’t be surprised in the next say, two to three or maybe max four to five years if you were to come back to Power Music and it was simply a website, promoting and pushing you towards the app.

Guillaume: A few companies have done that, it depends on your marketing channel and where the business is at for you specifically. If it’s a cream and beauty shop, we know all of these happens online on Amazon and it’s competitors, all the business mainly happens on the website, but for you, you have such a strong relationship with the direct app channel installed. Anyway, it’s the same back end, it’s already built. You’re using your website’s back end to feed the data in your native app, so it’s the same.

Dan: There are still some things that people want to do on the website, which is like build your mix, like going into the area of customizing your mix. Because whatever you do there you save it in your account and then it’s on the app. It’s just easier to build these things, you know what I mean. So the evolution of that is in progress. How we deal with web three, of course, nobody knows for sure. But I think that we’ve in a way followed a little bit behind the traditional record industry just because of the way that our customer operates. They’re kind of like, if it isn’t broke don’t fix it. But now the traditional music industry is exclusively streaming. I don’t know what the actual ratio is, but it’s got to be 70:30, 80:20, at this point.

So we are now seeing that our subscription model is accelerating while the others are decelerating and we’re fine with that. That was the goal. So that we have a North Star, our North Star is a number of subscribers now. It’s not like before where it was all about driving certain sales on certain releases. Now that’s no longer even in focus. So the business has changed a lot just in the last five to seven years.

Guillaume: That makes a lot of sense and it’s sort of what we see across the board on so many things even Adobe is switching from, you buy a Photoshop, pay several $100 for it, you buy a subscription license you pay like 100 bucks a month, or whatever it is. You have access to all the creative apps now. So we can see the shift globally in many industries being reshaped in this way. Of course, it’s important to stay current with the new technology shift because you cannot just stay in the old ways unless you become a specialty selling vinyl records or something.

So just to wrap up, is there anything that you would suggest like some kind of personal lessons learned as you were building all this traffic on the app, the volume of sales that you have on the website, and on the app? Are there any lessons learned that you’d like to share with other entrepreneurs trying to build their e-commerce websites with

great success?

Dan: This is really great question. Yes, I think that some of the mistakes we made along the way were all financial in nature. The endeavor of a build-out even when it was just a simple e-commerce site, you have to really budget accordingly. If you’re under budget you’re just going to be in pain the whole time. So what we thought it was going to cost, costed much more. So that’s number one, you just have to understand, that’s the reality. Number two, we were eager in the beginning and at times we embarked on build-outs with firms that weren’t qualified because it was a cheaper pice. We literally, on two different occasions came to a dead end. In other words the project had to be abandoned. This was after spending serious amounts of money where the developers were beyond their experience.

So it wasn’t until we engaged with a major firm that we were able to kind of successfully build out. Our stuff is complicated. Even in this firm your stuff is very complicated because you’re talking about music files, they’ve all to be specifically edited in a certain way. You’re talking about beat mixing technology, you’re talking about a lot of interfacing and live action with the server back and forth touching onto different touch points. So it wasn’t easy. My main thing would be just to make sure you budget accordingly and make sure you go to the best of breed when you’re doing these things. Because I am sad to say, and it’s an old trope, but you kind of get what you pay for. We really made the mistake and burned some serious amounts of money chasing a saving versus chasing the quality product that we needed to have a business. I don’t think those two are actually comparable, it was a lesson learned for me and a hard one too. That’s it.

The last thing I’ll say is, after you have it built, you really need to think about in advance the maintenance part of it. How is it going to be maintenanced, who is going to maintenance it? What I would recommend is having someone on staff who knows the system inside and out, who can do triage on those mornings when you wake up and the site is down and really making sure that you have that properly vetted. Build it with the best in breed, have a maintenance plan, have a person that is available 24/7 so that you can sleep at night as a business owner knowing that your system is going to be taken care of and you’re never going to be in a situation that’s kind of catastrophic or existential to your business.

Guillaume: Pretty good. And your in-house developer can collaborate with external agencies if you need more diverse skill sets anyway. Because, of course, it just like building a house, you’ve got the plumber, the electrician, the foundation guy this and that. So there are so many trades also involved in this kind of technological build up there. Then they can use a version control software like Git so they don’t overwrite each other’s work and so on. So you can have your internal staff collaborate with external agencies, we do a lot of that. It’s very common to have in-house staff there to do the regular content updates and whatever else that is there.

Dan: And then the last thing with that again, going back to the budgeting is that the spending goes up. You build it, we turn it on, and now we’re done. No. The tech spending goes off. So just make sure in your business plan, that you have that budgeted, that your tech is never going to be zero. I feel like I’m making a very obvious statement here but I think a lot a lot of teams overlook that. Like budget X amount, or it’s probably going to be X, Y and Z amount.

Guillaume: Building a website is not pouring a foundation and concrete and never touch it again. On the contrary, it’s a live thing that you always improve on especially when it’s profitable and successful, you reinvest money in what’s making money to make more. And there’s always more ideas and more stuff to do and more channels to explore and new features to add. It’s like a never-ending game. It’s always evolving. All right, well, thank you Dan for sharing your entrepreneurship journey and your lessons learned there on e-commerce and running on a Magento Enterprise shop. If people want to get in touch with you what’s the best way?

Dan: My email directly is [email protected].

Guillaume: All right. Thanks for being here today Dan.

Dan: My pleasure.