The music business is approaching a monetization / compensation tipping point. Long- and mid-tail creators are quickly realizing that even with the most revolutionary changes to royalty structures, streaming will never generate enough revenue. Streaming is a very effective monetization tool for larger rights holders and creators, but presents a pay issue for long and mid-tail. This is still the case with platform companies (which harvest micro-activities to generate income at the macro-platform level). What is different in music is that creators are sold the dream that a) they can ‘do it’ (however interpreted), and b) platforms are designed to democratize the means of. distribution, and thus level the playing field. With the number of outgoing artists increasing by a third in 2020 alone, the remuneration problem is getting worse, not better, because of the simple arithmetic of the royalty pot. which increases more slowly than artists. The solution? Templates that allow artists to build fanbases and compensation, not audiences and monetization. Audiomack has just taken a step in this direction. Here’s how and why it’s a smart move.
A strategy that is both simple and elegant
The simplicity of what Audiomack announced (“support buttons”) belies its ingenuity. The basics are, as Music Business Worldwide explained:
Fans fund artists directly by purchasing “Support Badges” for individual song and album releases. Once a fan purchases a badge, Audiomack says their contribution is “forever remembered” on their Audiomack profile and on the artist’s song or album page.
It does three things simultaneously:
- Manage the remuneration of artists
- Monetize the fandom
- Strengthens the identity of fans
Audiomack is small, but when it is small can also be beautiful
With 3% Weekly Active User (WAU) penetration in the United States compared to Spotify’s 27%, Audiomack is a small but important player in the streaming world. Still, the scale is starting to seem less important to many designers. Streaming services are great at building audiences, but they’re much less capable of building fan bases, and worse yet at enabling artists to engage with those fan bases (with the exception of YouTube and Soundcloud in particular. ). Large streaming numbers might sound good, but risk being little more than vanity metrics unless they’re huge, especially when they don’t give enough value directly to the creator.
In many ways it’s like the good old days of radio. An artist may feel good about getting radio spins and that exposure may in turn have led to other things, but the spins themselves have yielded little or nothing in terms of actual income. So the creators are bound by inference to think of streaming as cool marketing that drives everything else. Yet, if this is all about marketing, then a) and if there are other less stressful marketing alternatives, and b) shouldn’t they put more effort into nurturing the places that generate significant income? While streaming drives audiences and marketing, long and mid-tail creators should instead focus their efforts on places that generate fanbases and pay. As we have already explained, “middle class” creators need niche, not scale.
Audiomack achieves the golden mean by combining the advantages of the streaming scale with a focused and super-engaged user base (Audiomack usage is increasing among many important music segments, such as playlist curators, karaoke users and hip hop fans). The likely conversion rate for fans rather than listeners will likely be higher for WAU Audiomack than, for example, WAU Spotify.
You don’t need NFT to make digital collectibles
But the pay is only half of what Audiomack does here. Particularly interesting is the game of fandom and fan identity. By allowing fans to collect badges on their profiles, they become a way for these consumers to demonstrate their fandom and express their identity. This also happens when the digital sphere is electrified by the NFT buzz. Support badges are an illustration of how NFTs don’t even have to be NFTs. Even though Audiomack WAUs are much more likely to know what NFTs and Blockchain really are, they are especially much more likely than average consumers to want to buy digital collectibles from their favorite artists, regardless of the technology.
It always helps to remember not to get too carried away with a specific technology, but rather to focus on the underlying needs of the users. The value of collectibles of all kinds is related to context: where you have them and who can see them. However, currently, TVNs do not have a universal focus and their cultural impact is therefore not maximized. Audiomack’s support badges show that digital collectibles don’t need to live on the blockchain. For further proof, take a look at the multi-billion dollar business Tencent Music Entertainment has created by selling “social entertainment services” (VIP giveaways, badges, etc.) to users of its music apps.
Audiomack’s Support Buttons aren’t about to set the full pay for music creators, but they represent a milestone on the path and set a standard others should follow.