New Wine and 1000 Fans

by vernsanders on January 7, 2010

Yesterday I posited that as a church musician or worship leader, our contribution to economics was Intellectual Property (IP). That’s what we do. But what can we do about it? Today’s post is also an extension of my article Music/Ministry/Equal Pay: Pick Two?

Back to economics for a bit… When I was growing up, most Americans lived and/or worked on farms (not true any more). And I was born and raised in California’s “original” wine country — the San Joaquin Valley. We lived in Stockton, which was about equidistant from most of the grapes, which were around Lodi, and the Gallos, who lived in Modesto. Long before there was a Sideways movie, and before the infamous 1968 taste off in which Napa Valley wines  beat French counterparts in blind tastings, there were two kinds of California wine: red and white.

My father was an insurance broker, and I often traveled with him as he visited his clients, some of which were grape farmers. Essentially (I’m waay oversimplifing here) they had two things they could do with wine grapes: sell them to Gallo, or make home made wine.

Fast forward. After getting my doctorate, I accepted a position at a Canadian university. When I left California in 1974 there were (again,  oversimplification) about 10 wineries in the whole state…and you could buy (ta da!) burgundy, or zinfandel, or chablis (or Ripple, or Thunderbird, depending upon your economic strata), in addition to red and white. I vividly recall coming back one Christmas a few years later and attending a lunch at which somebody ordered a Petite Syrah…from a winery I had never heard of. What?

By the time I moved back to California in 1983, there were literally hundreds of wineries…and now there are thousands. In the process, “wine” shifted from being a commodity (you can have any kind of wine that you’d like…as long as it is Gallo) to being, in a sense, IP. Each little (“boutique”) winery specialized in something that made it unique (there is, as far as I know, still, a winery near Healdsburg that has a pipe organ in the tasting room…used to be terrible wine…but I haven’t been there in years so it might be better now…).

How do all these wines compete? How do they sell their IP/product? There are essentially three options:

  • Distribution through wine merchants
  • Restaurants
  • Wine Clubs

Let’s focus on the last one. Essentially wine clubs can be a very profitable variation on the 1000 True Fans economic model. (If you follow the link, notice that there are contra-arguments that also make sense.) The 1000 fans model works this way: you can make a living with your IP if you can get 1000 people to believe in your work so strongly that they will pay what you ask for it (i.e. 1000 people x $50 provides a gross income of $50,000). You can change the number of fans or the payment amount (i.e. 500 people x $100 gets the same result), but it becomes a fairly easy way to understand how to value IP…or a product (like wine produced by a boutique winery) that is valued on an IP model. Many boutique wineries nowbasically only produce enough wine to serve their wine clubs. 1000 fans economics.

So let’s summarize before we go on. As a church musician or worship leader, you produce IP. Using the 1000 true fans model, we have a way to value IP in the economic marketplace. How do we value IP in a church? More tomorrow…

In the meantime, think about how many true fans you have.

{ 3 trackbacks }

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{ 2 comments… read them below or add one }

Doug January 7, 2010 at 1:09 pm

I love this analogy!

vernsanders January 7, 2010 at 2:58 pm

I worked in a tasting room for a winery in Healdsburg for a while (not the pipe organ one), and they sold less than 1% of their output to merchants, and probably 80%+ to their wine club…and, of course, at the tasting room…

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