Polyphonic Hmi Case Analysis

Polyphonic HMI Case Analysis

Badm 329

5 Nov 2018

Polyphonic HMI was a start-up technology subsidiary of Grupo AIA that uses artificial intelligence (AI) and natural sciences to solve business problems. Polyphonic HMI was created in hopes of using AI technology in the music industry. Polyphonic HMI had one product in particular that it was focused on. This product was known as the Hit Song Analysis (HSS). HSS was an AI tool designed to analyze a song breaking it down into 25 mathematical characteristics and then compare it to the characteristics of past music hits with the intention of determining its hit potential. After doing six months of music analysis with predicting hits, it was determined that HSS can achieve a success rate of 80%; which, could greatly improve music industry success since the current rate using traditional marketing technology only had a 10% success rate. During the first year, Polyphonic HMI failed to successfully market the product which left them with a “shoe string” budget of $150,000 to identify a target market, develop a marketing plan, and quickly generate revenue. In addition, despite having a team with well respected industry insiders, the use of mathematical science technology to predict hits left several music industry members skeptical. Polyphonic HMI narrowed down their target market to three potential customer segments: artists, producers, and record companies.

Artists comprises the largest group of potential customers with approximately 10,000 signed artists and tens of thousands of artists hoping to secure a contract. Unsigned artists often send in three to four hundred demo songs per week to record labels. Despite unsigned artists’ desperation for a hit, they tend to have a tight budget, which may not allow for an extensive usage of HSS. Signed artists are potentially more feasible as they have some success since they acquired a contract. Signed artists typically are paid an up-front fee (which is generally considered a loan) plus 5% to 15% of sales revenue depending on if sales have exceeded cost. Signed artists have relatively low chances of making money, especially when company costs could be around $100,000 for a new artist’s first album. Unless a signed artist makes the top 40 mainstream music singles list, it is unlikely that an artist would pay for both the royalty fee and a HSS song analysis.

Producers are the second largest potential customer segment with only 20 to 30 top producers responsible for the majority of song hits, followed by a group of a few hundred producers who have had the occasional hit, and finally with thousands of people trying to establish themselves as a producer. It would likely be more profitable to focus on the outside producers who have one to two hits as they are likely