Yesterday I wrote about ReverbNation’s approach to helping bands spread themselves across the internet by providing an easy means to create distributable resources and track how those resources were employed and with what success. Jed Carlson, CMO, gave me a guided tour of the site recently, and in this second part, I want to discuss their view of fans, Street Teams, and the business model on which they’re banking.

They view fans as a funnel. At the widest end are the people who listen to the music. Then there are those likely to buy (converting ‘fans’ to ‘customers’ is one of their missions). Then there are the “promoters,” those who place widgets around the net and spread your music on your behalf. ReverbNation gives the bands easy ways to give fans what they need to be promoters and to track which fans are doing the most and the most successful promoting.

They see Street Teams as the narrowest end of the funnel. Fans can sign up to be on a Street Team. Band can launch ‘missions’ (spreading the music, promoting shows, recruiting new fans, driving traffic, and spreading the word offline are the five mission types built into the interface). Bands can build in rewards (e.g. backstage passes for the five team members who bring the most hits). Street Team members can choose whether they want to join a mission or not, and on their site, the mission and those who have been most active in accomplishing it are displayed. In contrast to a site like FanCorps, they have very limited means for Team members to talk to one another – no chat rooms or forums. Instead, the focus is on the bands.

Right now the Street Team piece is in Beta. Four bands are testing it, and it is set to go live no later than mid-June.

I asked where the money is to be found for them in all of this since all of these services are free for the bands and the fans. They have three primary revenue streams. First, the pages have ads (which I think are rather discreetly tucked into the corner) and artists share 50% of the revenue that views of their pages generate (in other words, the more page hits a band gets, the larger their share of ad revenue will be). Second, the artists can sell their music on the site using SnoCap and ReverbNation takes a modest cut. Finally, they offer bands some “premium services” for a prices. These include what they call “Fan Reach” which allows bands to do highly targetted fan contacts (like: send an email to all the fans in Ohio), and the ability to have the ReverbNation resources appear without ReverbNation branding.

What I like about this scheme is that there are no built-in motivations to screw either the bands or the fans. The more money the bands make, the more they make, and the less the bands make, the less they make. If they don’t put the bands and their needs first, they won’t make money. That’s a powerful incentive to remember their own mission.

Update: Fan Reach is free, not a premium service.