Livestream monetization strategies, or what we can learn from Inter Miami CF

Posted on | by Maarten Walraven-Freeling

How we monetize fandom in an increasingly online world is a question that doesn’t just exist in music, but also in sports. As such we can learn from each other. Brand new American football club Inter Miami just launched a video strategy that is all about engagement. Let’s see what they’re doing, how they do it, and what it means for those monetization strategies. But first

Some background into US sports on TV

In the US, sports on TV is having a hard time of it. Its ratings having been decreasing for years with a hard slump during the pandemic. Taking the Major League Baseball as a quick example this is what that decline looks like:

Taken from sportsnaut

There are some signs that viewership for sports in the US will stabilize and, as The Hollywood Reporter recently reported, TV networks on the one hand have too much money – roughly $140 billion – invested in sports over the course of the next 10 years. On the other hand, shrinking overall TV subscribers may make sports’ appointment viewing even more valuable. At the same time, shifting audiences will require changes in how live sports will be offered. There are already some examples that try to incorporate other franchises, such as Star Wars or Marvel, into the live broadcast. But other experiments are more interesting to analyse from a music perspective.

The Inter Miami case

A totally new football club dreamed up by David Beckham, perhaps it’s not strange that they also think about branding like Beckham. Last week, the club released an app, which they dub ‘an immersive fan video engagement experience.‘

What fans get

  • Watch Party, viewing with up to 8 people
  • Live chat, with co-viewers
  • Real-time stats, directly on screen
  • Social engagement, focuses on being to share and like while staying with the live video of the game

Many of these elements resemble things that already exist in other live video spaces such as games like Fortnite, streaming services like Twitch, and SVOD services like Disney+. While I’m most excited about the watch party integration, it’s actually the combination of elements that music should look at when it comes to livestreaming, the total package that will help fuel a collective watching experience. This type of live and simulaneous watching is also YouTube‘s number one highlight from their recent Culture and Trends Report.

Inter Miami partnered with a company called StreamLayer on the app. Just last summer, they raised $4 million and their unique selling point is that they create overlays on any video stream. Their first focus is on mobile, because “the proclivity on mobile to interact is just dramatically higher,” as Head of Product Strategy Tim Ganschow told Forbes. The next step will focus on connected, or smart, TVs, which is also an exciting space for music.

Monetization strategies

Interaction and engagement are the key elements of this new football viewing experience. Those are two elements that musicians on Twitch or StageIt, for example, have also learned to utilize and control. However, the watch party element is something that can come in and make a big change for music livestreaming, especially when it comes to monetization. There could be, for example, ‘normal’ tickets, but also ‘watch-party’ tickets that allow you to set up a room with up to 8 friends. This wouldn’t be too dissimilar to group tickets for festivals.

Besides thinking about bringing in extra revenues through a variety of tickets, there are many more possibilities. Overlays present opportunities to show sponsors in a livestream without the need to cut out the live video. Or, it’s possible to do direct merch calls directly related to what’s happening in the livestream. Of course, the livestream itself would need to be unique and different to create interesting moments to print on a t-shirt or mint into an NFT and, most importantly, to warrant interest from fans.

In sum

We need to keep thinking about new ways to create more interactive and engaging livestreams. One way to do so is to look at what others do and develop. Just like StreamLayer looked at Twitch and tried to bring more engagement into sports livestreaming, so musicians, managers, labels, venues, and platforms can look at Inter Miami’s app and copy the watch party. Moreover, these types of developments will continue to give livestreaming a differentiating edge against in-person concerts. Novel ways to connect, interact and engage with fellow fans will be one way to keep people at home with their screen instead of in a venue or at a festival.

Blockchain basics: how to start a DAO

Posted on | by Bas Grasmayer

My recent writing has focused on the community dynamics of blockchain-based ‘Decentralized Autonomous Organisations’ (DAOs). I’ve explored:

In this article I will attempt to explain some of the more technical aspects in clear terms for people with little to no experience with these topics. I’ll be diving into the steps outlined in a tweet by Jess Sloss of Seed Club, a DAO that builds and invests in communities.

There’s a comment section below. If anything is unclear or could be worded better: let me know either with a question or by spelling things out more clearly yourself.

How to bootstrap a DAO

People familiar with English-language startup terminology will be familiar with the term bootstrapping: to start something using nothing but your own funds (or in some cases: zero funds). Continue reading to learn how a DAO might do that.

You can’t have a DAO without a great community. I won’t go into that for this piece, but recommend reading How to grow decentralized communities by pet3rpan (before you click out of this website, consider joining the newsletter, so we can reach you in case you get lost in a rabbit hole ;-)).

📥 Drop an NFT or series (on chain revenue)

I think by now, for many people, non-fungible tokens or NFTs have become synonymous with auctionable digital artworks. This is not incorrect, but it’s a little bit like saying MP3s are music, while actually it’s a technology that has lots of uses in terms of audio encryption. A slightly better way of thinking about NFTs is as collectibles.

Non-fungible tokens allow for tracking ownership, as well as functionality like ‘splits‘ which are commonly used to make sure the original author gets money (in the form of cryptocurrency) every time their NFT is resold. This is done through smart contracts: little computer programs linked to a blockchain database that run whenever certain actions are performed or conditions are met.

Although the most publicised use case is 1 NFT of a unique artwork being sold, there are also countless examples of collectibles where 10 people can buy NFTs that represent identical artworks (e.g. this NFT by musician Sevdaliza). The former case would be described as a 1/1 and the latter as a 10/10 run, like a collectible. A series could be a set of NFTs, like a bunch of 1/1s, multiple 10/10s, or any mix like a 1/1 and a 5/5 drop.

This creates on-chain revenue: value stored on the blockchain that the DAO will use to let the community participate and distribute ownership. That revenue is stored in cryptocurrency.

A recent music-related example of a DAO that funded itself with an NFT sale is Songcamp. With the on-chain revenue, it could afford to cover the fees associated with ‘minting’ (creating) an NFT for the participating artists in its first songwriting batch.

🎁 Give NFTs to dope people (on chain community)

On chain community means that you have a way to track, via blockchain, who are the people in your community. Since tokens like NFTs allow people to see who owns them, it’s an easy way to trace ownership back to a DAO (the link between the DAO and the recipient is forever recorded).

  • Step 1: create an address for your DAO on a blockchain by setting up a wallet which allows for transactions and storage.
  • Step 2: create NFTs with that address.
  • Step 3: send the NFTs to addresses of people you want to add to your community.

Now there is a link between your address and theirs, through the NFT. You can see this happening in the above screenshot, but strip away the interface of the auction house and you get something like this.

Here you can see the transfer of a token from one address to another, here indicated as club.eth, which is the same @club from the Zora auction house screenshot and actually also the Seed Club referred to at the start of this post.

A community or service can let you sign in using your wallet (e.g. Metamask) which is a little bit like the type of ‘Single Sign-On’ you’re used to around the web from Google, Facebook, and Twitter. It can then check your wallet for any NFTs or other tokens (I’ll get into this) and grant you special privileges, ranging from simple access to more advanced features.

I was recently lucky enough to get voted into Mirror, a kind of crypto version of Medium, but way more interesting (thanks for the votes!). To participate in the vote, you have to connect your wallet. If you win, Mirror transfers an access token to your wallet. On Twitter that looks like this:

On Etherscan, a tool to read about transactions on the Ethereum blockchain, the above looks like this:

Here you can see 1 address sending 10 tokens to 10 addresses through the execution of 1 smart contract (you can read the code of that contract here). Bonus points if you can figure out which address I hold. 😉

Overwhelming? No worries, the user experience is easier than setting up an internet connection or email in the 90s. In the end you just need a browser extension like Metamask’s to log in to Mirror and when it sees you hold the correct token it presents you this simple interface for creating your account:

🛫 Launch Snapshot + token gated Discord (gov. infra)

To set up the DAOs ‘governance infrastructure’, you can use a tool like Snapshot to let people submit and vote on proposals, plus you create a community for token holders (I’ve described token gating in the previous paragraphs). The latter is commonly done through Discord.

Here’s an example of a proposal for CabinDAO: a community that is creating a cabin residency program for select creators.

Here the community (or DAO) is voting on a linked proposal. It’s essentially deciding to commit a certain amount of funds (15 ETH) and community tokens to the program.

There’s a list of voters – 15 in total. They’re shown as addresses on the Ethereum blockchain and since Jon Gold has registered his name through ENS, I can recognize him and search for him elsewhere. For example, I can see he used his $WRITE token to join Mirror a few months ago. The votes are ranked by the number of community tokens someone holds (the bottom 13 are cut off). I haven’t looked into exactly how CabinDAO has distributed tokens so far, but usually they’re awarded to early community members and rewarded for participation, contribution, or in exchange for things (or cryptocurrency).

🪂 Airdrop ERC-20 tokens (governance to the ppl)

I’ve explained non-fungible tokens already, but haven’t gone into detail about other types of tokens.

ERC-20 is basically the technical standard for token implementation on smart contracts on the Ethereum blockchain. Remember Mirror awarding 10 people with tokens to join their service? It happened in 1 transaction through the execution of a smart contract.

While no two NFTs are alike (and commonly use the ERC-721 standard), ERC-20 tokens are fungible, meaning that they can be interchanged with one another. In simple terms, if I send you 1 $WRITE token mentioned above and you send me 1 $WRITE token, we end up with the same in the end. Trading NFTs would typically leave us with two distinct items.

Through your community’s smart contract, these tokens can give you voting rights or participation rights in a DAO, e.g. access to a Discord server or the ability to vote on proposals on Snapshot or similar.

This is where you might award the buyers of the NFTs with a certain number of tokens created uniquely for your community through aforementioned smart contract, e.g. if it were for my newsletter’s community, I might call them $MUSICX tokens. You’d also give early community members and other supporters some tokens in your community. This incentivises them to get active and start participating in the governance.

This process of distributing tokens among your community is called ‘airdropping’. Now, there’s just one thing remaining:

Use ETH / Tokens to go do cool shit

Like the Friends With Benefits DAO, you could let people buy their way in through exchanging a cryptocurrency (ETH) for tokens ($FWB). This means as a DAO, you have a certain liquidity from token sales. So as a community, you can use tokens to incentivize certain actions (e.g. creating a residence program for artists in a cabin) and you can use ETH to cover certain costs, from renting the cabin, to infrastructure, to perhaps paying a few developers to build your website.

That’s it. All of the above is using the Ethereum blockchain, but there are other blockchains out there that support similar functionality.

Go organise your community and if you’d like to invite me – send me a token at basgras.eth or a tweet @basgras.

A music service based on zero-knowledge proofs

Posted on | by Maarten Walraven-Freeling

When a technology is new, it allows us to imagine all kinds of utopias. It also means we often don’t quite understand it yet. While I try to explain a little how zero-knowledge proofs work, I’ll also compose a utopia that will make even the most ardent Equitable Remuneration supporter come running for this utopian door.

Zero-knowledge, the shortest history

Zero-knowledge protocols are techniques that we can use to verify a message, ownership, data, etc. without revealing any residual data outside of that verification. In other words, one person, or computing system, convinces another person, or computing system, that what they say, or transmit, is true. One entity convinces another entity instead of sharing actual data in what can almost be thought of as a game. Take the Ali Baba and the cave explanation which showcases how the Prover can prove without revealing the secret and the verifier can trust through a simulation by prior agreement. The ‘zero-knowledge’ stems from the part where the secret isn’t revealed but the verification takes place nonetheless. Or take the ‘hats’ solution, which helps to explain how each question that has a yes/no answer can be brought back to a ‘graph three-coloring’ problem.

Each connector never attached to the same color on both ends
The solution is a secret
The verifier randomly selects one connector in each round of the game

This example comes from cryptographer Matthew Green who, in 2014, wrote a non-mathematical explanation of zero-knowledge proofs. In the end, the ‘game’ has to be played until the verifier is satisfied that the prover isn’t lying, or actually has the knowledge they claim to have. You can play around with this as the verifier in this interactive demonstration.

Privacy

If we think about our personal data and how it’s shared on the internet this can begin to have real-world impact. Instead of actually entering your password somewhere you prove you can enter without revealing information. This is where zero-knowledge protocols first played out. Instead of typing a combination of letters, numbers and symbols, you convince the other that you know the password without typing it. This sounds abstract, so let’s try to make it less abstract. Zero-knowledge protocols are cryptographic and we can turn to a paper called Applied Kid Cryptography, from 1999. In it, the authors take two kids playing Where’s Waldo where one, Alice, sees Waldo before Bob, the other. Alice then has to prove to Bob that she knows where Waldo is without showing him where he actually is. Their solution is to take a big piece of cardboard, much larger than the board, and to let Alice cut out where Waldo is when it covers the page. Then, Alice lets Bob look and he sees Waldo, but nothing else of the drawing. The secret of where Waldo is on the picture isn’t given, but Alice does show Waldo. In a very simplified way, this is what happens when two computers or programs ‘talk’ to each other in a zero-knowledge protocol. Anything more complicated than this example will require more than one verification to prove something to the verifier. So instead of entering a password zero-knowledge protocols simply rely on very different verification processes.

That utopian music service

There’s some real-world practices surrounding zero-knowledge protocols. Packy McCormick and Jill Carson wrote about a few applications, specifically within blockchain tech, but also for cloud infrastructure. For blockchains, zero-knowledge protocols can lead to a drastic drop in computing power for each new transaction.

“Rather than verify the whole ledger, now you can just verify the proof. That proof will never be more than the size of a few tweets, meaning it can be done by anyone — even from a cell phone at your parents’ house.”

Packy McCormick & Jill Carson

Running with this idea of just needing to verify the proof we can make the move towards my music service utopia. It starts with all music stored within the cloud and accessible for everyone. So far, not so different from any streaming service we have today. However, plays are tracked by zero-knowledge protocols and attributed to the rightsholders directly within the same verification process. There’s no need for any intermediaries, so all rightsholders are always the artists involved. They all link up directly with the cloud to provide their music and they prove they’re the creator of said music through zero-knowledge protocols. No sensitive data exchanges hands and nobody gains access to even the metadata attached to the music.

Of course, the metadata is available to the listener, yet their transaction to gain access to the music remains anonymous. Through the music service they pay directly to the artist(s) they listen to and this payment isn’t part of a subscription but represents the value the listener places on the music at that time. It is, again, a zero-knowledge protocol, that determines this value. The artist or band can set the amount they want to receive for a play or a purchase and the listener can prove they want to pay this before they gain access. Conversely, any fan who wants to join to a community around their favorite artist can gain access by proving – convincing a verifier of – any numbers of things. From direct monetary contribution to the possession of social tokens to something as simple as knowledge about the artist or band.

In other words, a music industry built upon zero-knowledge protocols can become the most direct artist-to-fan and fan-to-artist service imaginable. It has the potential to cut out everything that potentially stands between those two. No more labels, no more collective rights organizations, only interactions verified and proved to convince both fan and artist they should connect.

Would you invest in a musician or band? Towards tokenized fandoms

Posted on | by Maarten Walraven-Freeling

Catalogue sales keep dominating the news, but would anyone actually invest directly in a musician or a band? What would the return need to be to get interest for this? And, can we move beyond investing related to future streaming revenues? Perhaps towards tokenized fandoms?

It’s still Hipgnosis that dominates the market news, just recently with their annual report stating that net revenue increased by 66%. Something that MBW learned from the report was that 60.2% of the Hipgnosis catalogue consists of songs older than 10 years. There’s more to the catalogue playing field than just Hipgnosis, with Universal Music‘s acquisition of Bob Dylan’s catalogue back in December particularly eye-catching. More recently, Reservoir acquired Tommy Boy‘s catalogue of songs. All of those catalogues share the common trait of consisting mainly of songs older than 10 years. This makes sense, because those songs have all proven their value and with music’s nostalgia factor will likely hold on to their value or grow it. This is much more difficult to prove or predict for new songs, let alone with the music of artists operating in more niche genres.

Are musicians creators?

First, we need to define what we’re talking about when I say creator here. I like to follow the following definition from eMarketer which they put forward in 2019:

Creators: People or entities that develop original video content for digital properties, and who consider creating that content to be their career or livelihood.

Swap video for audio, and that’s a decent definition of any musician or band. It’s necessary anyway to stretch this creator definition. At Snapchat, for example, creators include people who create AR features.

Looking at musicians as creators, however, puts them in what I’ll call the Daniel Ek corner of needing to create regular output to satisfy the various platforms and their algorithms. This is a very (very) different mindset than the traditional music release strategy of record in studio, release single – single – album, tour, record, and start again. Instead, the creator mindset requires a strategy of audio and video with a big storytelling element that will further strengthen the bond between artist and fan.

Investing in royalties

The easy route to investing in a musician is to invest in future royalties. Quite similar to how a major fund like Hipgnosis works, it’s possible for individuals to invest based on future royalties. There’s a reason Hipgnosis and others are investing hard and growing fast: royalties seem a certain investment. Streaming revenues continue to grow and even if streaming services will be replaced by another mode of consumption, people will still want to listen to their favorite songs.

There’s myriad ways to invest in artists by buying a future share of their royalties. Examples are Songvest and Royalty Exchange, which are basically a marketplaces for trading royalties.

my screenshot

The three benefits for investing in music like this are clear from the screenshot. It’s seen as a safe bet. Moreover, it’s seen as easy investing because music as an asset operates outside of the regular marketplace and its volatility (it’s an uncorrelated asset) and it requires no effort for income generation (royalty distribution is mostly an automated process).

But it’s not just about the investor, it’s also about the fan. Other platforms focus more on fans, for example, helping their favorite musicians or bands create new music. It’s like crowdfunding with monetary benefits for the fans putting in the money. AmplifyX is one platform that allows this type of support and transition.

my screenshot

The details of the investment and the return are as follows:

deal terms Keithian offer on AmplifyX

This type of transaction resembles more regular financial structures. It works, basically, as a guaranteed return on investment. But that’s not how fandom necessarily works. For fans value can be measured in different ways.

Other models of investment and return

Fans are happy to help musicians they love achieve their dream album or global tour. Fans are also happy to help by taking out a subscription, especially if that comes with perks such as access to the artist, limited edition merch, etc. In a way that’s also investing but I would argue that these direct-to-fan monetization models are a small first step towards larger questions around ownership and collaboration. If we look at where we are in the development of the internet as a technology and its impact on our lives those same questions pop up.

Jeremiah Owyang tends to focus on that final stages of this map: modern wellbeing. But it’s interesting to see how he sees the ‘now’ era as the collaborative economy. The facilitator for pushing this economy forward is Web3.

Digital creators, musician or otherwise, have the opportunity through the tools and protocols of Web3 to not just collaborate but also to claim ownership. This is why YouTubers create their own websites to engage their superfans. This is also why locally organized raves should be DAOs.

Towards tokenized fandom?

A community doesn’t have to be big, it can be one artist and some friends or one band and 20 fans. However small or big the community, what’s important is that the model of investment becomes almost reciprocal. Hipgnosis is looking for ROI, but fans are not necessarily interested in purely monetary returns. They would, however, enjoy claiming some form of ownership over what they love. This can express itself in the form of song ownership with the benefit of future royalty revenues. It can also express itself as a form of patronage, where the fan funds the creation of the artist not for monetary reward but different rewards such as insights into the creative process. It’s when this investment becomes collaborative that value needs another revision in its definition. Tokens allow for this because they represent value but do so mainly within a community. All actions to build on that value thus strengthen the community. That’s an ideal worth investing in.

Inspiration for this piece came from this panel discussion on investing in creators.

The community-owned rave: event organisers as DAOs

Posted on | by Bas Grasmayer

This piece explores the intersection of underground rave culture and Web 3 concepts like decentralized autonomous organisations.

Lately I’ve been thinking about an idea I had pre-pandemic. I wanted to set up a local rave night to fill a gap I perceived in Berlin’s nightlife. I mentally prepared myself to do all the heavy lifting involved in setting up a new club night – something I’d witnessed from friends taxiing artists around, losing money on events, having to staff the entrance, handling logistics, and of course doing the promo. The pandemic put all those ideas on hold and helped generate a new perspective on things.

Goal-oriented

I previously explored what artists’ fanbases can look like as blockchain-based decentralized autonomous organisations (DAOs) – I recommend reading it if you’re not familiar with DAOs. One important aspect for DAOs is that they should have a clear reason to exist, so that people have something clear to organise around and identify new initiatives.

For events, that goal is pretty straightforward: for example to run a number of events per year (e.g. 6, 12, 24) with a clear musical and subcultural footprint (e.g. hyperpop meets queer hardtechno).

There are lots of activities to take care of, such as:

  • Artist bookings
  • Travel & accommodation (unless fully local)
  • Artwork & design
  • Promotion
  • Venue decoration
  • Tickets & admissions

Many of these require funds and when starting out there’s always a risk you won’t break even. DAOs can mitigate that risk and distribute the heavy lifting surrounding these tasks to a passionate community.

Community-owned raves

My first association with the above words would actually be ‘free party’ culture and teknivals of the 90s, as pioneered by Spiral Tribe (artwork above). They would travel country & continent with soundsystems and throw public raves that were free to attend (and usually illegal). The idea was that by being at the rave, you were not just audience, you’re a participant – a similar mindset to Burning Man‘s ethos. The teknival scene still exists today, by the way.

But what would a community-owned rave look like if it could somehow be formalized?

  • Persistent community. Most events have an audience that reconvenes and persists through brief gatherings. Part of the audience will be ‘regulars’ and part will be newcomers. It can be hard to know which part is which and to really feel connected. By making sure the community is organised outside of the context of the occasional event, the community can exist in a persistent state and experience connectedness daily. (see also: Why local is the answer to a future of new normals)
  • Shared outcome ownership. The community puts together the events. This may be a representative democratic process, where people get elected to a board or special crews, e.g. for artist selection, brand and artwork, and perhaps various ongoing activities like music releases, mixtapes and podcasts, meetups, listening sessions, etc. This way the output and outcome is a collective responsibility.
  • Tokenized. Participants should be rewarded. Most underground events don’t make a lot of money, and don’t have a goal to make lots of cash, so rewards for contributions could come in the form of tokens which give people the ability to participate in the governance of the DAO or get access to other perks. Event tickets could represent a token, which gives you a way to essentially peg token prices to fiat money and automatically make attendees community members (I’d make sure to only sell 1 per person though – maybe translating actual attendance to tokens, rather than just holding the ticket. I’d also carefully think through the implications of attendance always representing 1 token).
  • Proposals & voting. People can submit proposals for artists, event decoration, and peripheral activities. They can request budgets in the form of tokens which they can hold (for governance or to let them accrue value) or cash out in order to finance their activity.

The exact mechanics would depend a lot on the community and what it wants to incentivise. For example, in some contexts you might want to encourage people to spread the word by sharing photos of the events, but some events might enforce strict no-photos rules so that people can be themselves without the pressures of being seen on social media (or worst case: becoming a meme).

Not public, not private, but community events

One example of how this might work can be gleaned from the Friends With Benefits (FWB) DAO, which is a creative community that requires people to buy $FWB tokens in order to participate. It then rewards tokens, as described in the bullet points above, for certain activities. While I personally would avoid throwing up high economic barriers to participatio, for the sake of inclusivity (which is also why many events in Berlin have flexible entrance prices, e.g. minimum 5, but 10 if you can afford it), FWB has been able to create an economic space where members can reward each other with tokens that can be cashed out in order to finance projects. (I don’t mean to imply FWB in general is not inclusive – it’s just a general concern I have with regards to onboarding people into tokenized communities)

This has translated into a real-life event in Miami recently, with DJs like Yves Tumor and Jubilee, that you could only attend if you held a certain number of tokens. For those from out of town, the community created a city guide which can be unlocked in exchange for tokens. It’s an excellent example of how communities can create value for other members either through direct activities (events) or peripheral (guides) and how that value can then flow around the community. All of this didn’t exist a year ago, so what they’ve been able to achieve and fund is incredible.

Stronger together

Many events already function as decentralized autonomous organisations in informal ways. Connecting it to the Web3 allows the community to persist across the metaverse and leverage NFTs, communal creation, and channel the unique talents of all involved.

It gives a certain predictability too. If you have a big community around your event, it can be tough picking artists for your line-up, since you only have so much time per night, which means not everyone will get to play. If the community becomes self-sustaining and energized, it should be easy for the organisation to make a risk assessment and set up more event nights.

It could even extend its footprint, so that people in other cities can set up local chapters under the same brand. Over time, the DAO becomes representative of a subculture and may see artist exchanges and people traveling to each other’s cities to meet community members there and experience the local chapter’s events. At scale, the DAO and the new subculture might become synonymous, though it’s also possible to think small and keep it to a small, local community of fans & friends.

The choice is yours – and theirs.

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Communities exchange value, or how no artist should care how much YouTube pays the industry

Posted on | by Maarten Walraven-Freeling

Music rights holders get paid astonishing amounts of money, but most artists cannot make a living from their art. All the major DSPs love throwing around the big numbers they pay out to ‘the industry.’ Yet, most artists cannot rely on them to put food on their plate. There are, however, many methods that allow musicians to step away from over-reliance on big tech companies or major labels. Most of them involve community, and more specifically community-building.

The big girls

So YouTube paid out $4 billion to music rights holders in 2020 and Spotify, by Music Ally’s calculations paid out more than $5 billion in the same period. In the US, in the first 6 months of 2020, the biggest streaming services together made up more than 85% of total revenues for recorded music. And during the recent DCMS hearings on the streaming economy in the UK, YouTube defended itself by stating that “record labels agree that it is possible we will become the music industry’s number one source of revenue by 2025.” That seems to be a good thing for YouTube more than anyone else as it probably means that even more than 2 billion people will be coming to the service “to experience music each month.”

A major argument that came out of those same DCMS hearings was to ‘simply’ grow the overall pie being paid out by the streaming services. BPI‘s Geoff Taylor, for example put forth that “[t]he total amount coming into the industry should be substantially higher and that would benefit everybody in the chain.” During the hearings, a counterargument surfaced, through BMG, that “the status quo gives the impression it was designed for the convenience of industry players, rather than with a view to the perceptions of artists and fans.” BMG used this point to set up their defence of user-centric payment systems. However, it also paves the way for another argument altogether, something BMG hinted at too in further evidence they presented: the importance of monetizing the artist-fan relationship more directly. And that should be done by building a community.

Focus on community

We’re not new to the idea of community as an important element in artists building out a living for themselves. Just last Tuesday Bas argued that “the one strategy that I feel almost any artist can apply is that of building a community of fans that can sustain you.” This related to DAOs and in my own article about why fans should want to buy NFTs one of the key arguments was that these tokens represent an opportunity for two-way communication between artist and fan. But there’s more to community-building than future-forward web3 technologies. What first of all needs to happen is a shift in mindset. One of the things that struck me in a recent podcast recording for The Daily Indie[in Dutch] is that so few artists actually experimented with building community during the pandemic.

Of course, Patreon, OnlyFans and their like saw fast growth during the pandemic. All the musicians who set up a subscription model or turned to monetize their livestreaming efforts did an amazing job. But for each one of those, there’s plenty others who still rely on their single-single-album release strategy. Why not flip it around? Take Dutch artist POSTIE who is social media first and recorded music second. He posts a video every Sunday and then after a while releases those songs as an album. Another way of putting this is that he doesn’t use social media to drive streams, but streaming services to drive followers.

Image by Alina Grubnyak via Unsplash

The community builders

Let me highlight two people who give some excellent advice on community building. First up is Anna Grigoryan, who writes a newsletter called Community Weekly in which she presents and explains tools to build community. My favorite advice of hers is to find your community mission. That’s where it starts. With the question of who you’re doing what you’re doing for. And then following that question with how you add value for those people. I would also add, that quickly after that, you should ask how your fans, your community, can add value for you. Anna is also very open about her own struggles in building a community around her newsletter. I find this very helpful when thinking about the communities I’m involved with for example.

This is where my next community builder comes in: Jen Lee. I came across her as the community manager from the Means of Creation fans Discord. First thing that happened when I joined the group was that I got a personal note welcoming me and encouraging me to post in a channel. She’s just been interviewed by Peter Yang and that message to me is pure strategy. In the interview Jen puts forward the following idea:

Like building a product, an online community needs to:

1. Exceed user expectations by personally welcoming new members.

2. Overcome the cold start problem by seeding the community with great content.

3. Deliver great UX by focusing the conversation on a few channels.

From these two community builders you have the starting gear to step into the studio. Whether you’ll focus on one of the subcriptions services (Patreon, OnlyFans, etc.), one of the social media (IG TikTok, etc.), the community platforms (Discord, Geneva, etc.), or turn your hand to web3 protocols (DAOs, NFTs, etc.) the basics are the same.

The Call-to-action

It’s as simple and easy as can be:

  • If you’re an artist start experimenting with community building. Do it now and be open with and towards your fans for feedback and interaction.
  • If you’re not an artist yourself, you’ll know them. Help them out by giving them these building blocks.

Together, we can make sure that the focus of the music industry starts to inch away from the shouting big numbers and boasting massive usage stats. Instead, we’ll focus on creating communities where artists and fans exchange value.