The Digital Skeptic: Are Bieber's Bagels Next?

Jonathan Blum

NEW YORK (MainStreet) -- Belieb it, Justin Bieber sells gobs of music, concert and movie tickets. The kid even moves perfume. But in this twisted digital age, the 130 pounds of supposedly pure 18-year-old gold is not so flaxen after all.

Bieber's finances are not mere idle speculation for me. I have locked intellectual horns with some fearsome opponents: two neighbor girls. They ♥ Bieber's flick, Never Say Never. They've have seen it 13 times. Each. They ♥ his music. They ♥ his clothes. In short, they ♥ him.

So when I mused aloud that even their beloved Bieber has it tough in these digital days, I was quickly banished to my -- utterly uncool -- side of the street. So what started as a glance at Bieber's business to restore my teenage street cred has turned into a fascinating deep dive into the finances of the digital content industry.

There is no better case study as to what it takes to make money in these troubled digital times.

Elvis and Sinatra 2.0

Unbeliebably, Bieber turns out to be a legit, new mold in the teen idol factory. Quite literally he is the Sinatra or Elvis of the social Web. He rose to fame without the benefit of a Disney(:DIS) or Nickelodeon(:VIAB) star turn a la Miley Cyrus or Zac Efron. Or really any traditional media industry support. His manager, Scooter Braun, found videos he had posted to YouTube. Social media still rules Bieber's kingdom, which relies on his 24.7 million (and rising) Twitter followers, 45.2 million (and rising) Facebook(:FB) likes and a cool 2.6 billion (and rising) YouTube views to drive the brand.

And this social media hurricane appears to throw off real money.

As of mid-June, according to Forbes, Bieber has sold 15 million albums and grossed $150 million from a total of 157 concert dates. His concert movie grossed $98 million worldwide, according to BoxOfficeMojo. And his Someday fragrance -- one of two; the other is called Girlfriend -- grossed something like $60 million in six months.

Bieber's cut of the action? An astonishing-sounding $55 million in the past year, again according to Forbes.

So what's the problem? Well, considering the scale of Bieber's fame, the reach of his digital network and the power of his brand, "Bieber Inc." suffers from the same inability to get paid by social media-addled Web users as other digital giants such as Google(:GOOG) and Facebook.

As nutty as it sounds, by any rational measure Mr. Bieber is way underpaid.

Being social doesn't pay.

Right off there is a startling gap in Bieber's bottom line. In spite of being one of the most influential social media bodies ever -- ranking service Klout, for example, puts him pretty close to the top of the heap -- revenue from this vast Web network seem not to matter one bit in Bieber's business.

As far as I could find, there is not one single peep about Web sales by anybody anywhere close to his operation.

Next, the same pathetic per-user profit figures that dog the digital fortunes of Google and Facebook drag down Bieber. Assuming all his $55 million net profit somehow spins from his social media network -- which is a stretch, but let's give the digital platform the benefit of marketing doubt -- each of his Twitter followers nets Bieber just $2.33. Each Facebook like yields a mere $1.22!

And keep in mind: His social media following is growing so fast that these per-user stats drop even as you read this column.

Next, the paying riffs of digital content fare nearly as poorly. Billboard says Bieber made $22.4 million last year in combined music sales and concert fees. But only a third of that, or $7.4 million, came from music royalties. The vast majority, $13.7 million, came from sales of actual concert tickets.

Those, by the way, are dogged by the same weak per-person sales figures that haunt the rest of his Web-based operation. Statisticsbrain.com says he sold about 1.4 million tickets to his My World tour, for example. That works out to roughly 1 in 25 of his Twitter followers who bothered to pay for his show.

See the takeaway? If that's the power of the most powerful person in social media, just how powerful is social media?

Bieber's Bagels?

This all points to the same grim picture of the digital economy. The sales sound large. The following feels ginormous. And the Web hipsters find a business logic in all the madness. But the stark mathematics cannot be denied: Considering we are talking about a 6 billion-person Web addressable worldwide market, Bieber's brand value and the reach of the platform he operates, the kid makes chump change.

Just like the rest of us, he's stuck in a brutally expensive race to find the next thing to sell as the current things he sells become worth less and less.

It's no accident Bieber releases tangible things such as perfumes as fast as he does virtual things such as albums. Bieber is not in the business of finding the next hit single. He's really in the business of finding the next hit bit of merchandise.

My advice? I like the idea of a line of frozen-food: Bieber's Bagels, anyone?