Insurance and Technology and Real Estate & Retail

PAN founder focuses on another IT venture: BubbleUp aims to standardize musicians' Web sites

September 11, 2006

It didn't take David Pfenninger long to get back into the game.

Just months after selling Carmel-based Internet-test provider Performance Assessment Network Inc. in April for $75 million to St. Louis-based TALX Corp., Pfenninger is betting on another Internet venture: an online music marketing and management startup called BubbleUp.

Pfenninger initially remained part of PAN's local management team after the acquisition, but stepped down this summer, retaining a role as a consultant.

"I thought it was time to make a change. I'm not really a big-company type of person," Pfenninger said. "I complain about the long hours of entrepreneurship, but it's what I thrive on."

Pfenninger co-founded Houston-based BubbleUp in 2004 after a conversation with his friend and PAN board member Coleman Sisson, a veteran of several hightech ventures who helped musician Jimmy Buffett establish his online Margaritaville domain. In recent months, Pfenninger has extended his board member role at BubbleUp, devoting 20 hours a week to offer hands-on help for the startup.

Musicians' Web sites often were developed for free by fans, Pfenninger said, and most aren't managed professionally. BubbleUp aims to create a system that can easily allow musicians to wring the maximum revenue from their brand identities.

By creating much more than a billboard, BubbleUp allows bands to sell their Tshirts and paraphernalia, stream live audio and video Webcasts, create digital mailing lists for fan clubs, and much more.

"My philosophy on it was the artist's site should have one cohesive look and feel, and fit the genre they're in," Sisson said.

Pfenninger said BubbleUp's revenue is already "approaching seven figures" and the company is profitable. Its investment circle has been limited to a close group of friends and family.

Pfenninger, Sisson and a handful of others started the company with less than a $100,000 investment. Rather than raise more cash as BubbleUp grew, Pfenninger has personally provided it a line of credit.

So far, BubbleUp is attracting clients through word of mouth. BubbleUp derives the bulk of its revenue by taking a percentage of the sales it generates.

"Right now, business is coming to us," Pfenninger said. BubbleUp's marketing materials list 16 customers, including Buffett, Hall & Oates, Musik Mafia and Sirius Satellite Radio.

At this stage of its development, Pfenninger said, BubbleUp is growing faster than PAN did at a similar juncture. The company should double revenue next year and take off even faster after that, he said. BubbleUp is considering a move to Nashville because of its importance to the music industry.

BubbleUp's other key service is analytics. Unlike most fan-produced billboard sites, BubbleUp can track user behavior and report trends that allow marketing campaigns to be tweaked. BubbleUp also offers services to maximize an artist's MP3 sales.

"If you can't measure it, you can't improve it," Sisson said. "It's scientific in its approach."

Eventually, Pfenninger said, BubbleUp should be able to apply its Web technologies to other businesses where brand identities are important, such as real estate or insurance agents.

Approaching a niche market like musicians first sounds smart, said Gene Alvarez, vice president of Stamford, Conn.-based technology research firm Gartner Inc. But the company will have competition, Alvarez said. Several major online merchants-such as Yahoo!, Amazon and eBay-already are debuting services targeted to small-business owners.

"I can see them doing this repetitively for multiple bands, and using the same technology over and over again," he said.

"The real service here is they're providing a professional Web site, with all its intricacies and capabilities, but allowing the band to leverage their brand. When you're doing that, you become a trusted partner. So the experience has to be excellent and security has to be there."

The key to BubbleUp's prospects, Alvarez said, will be ensuring that it can meet fluctuating demand. When traffic suddenly spikes in conjunction with a new album release or tour announcement, BubbleUp must be ready. If it stumbles in execution, the company can lose credibility quickly.

Raul Zavaleta, a partner with locally based technology consultants Volatus Advisors LLC, was an early investor in PAN. He's not surprised to see Pfenninger involved with another Internet venture so quickly.

"I think he's an entrepreneur at heart, and he's been looking for a new challenge," Zavaleta said. "Knowing him, I think he'd be instrumental in helping it be a success."
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