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.

Decentraland

The Decentralized Autonomous “1,000 True Fan” Organisation

Posted on | by Bas Grasmayer | 1 Comment on The Decentralized Autonomous “1,000 True Fan” Organisation

Decentralized ownership registries helped enable digital art’s NFT boom of the past year. Next, blockchain, the distributed ledger technology, will underpin fanbases and the way artists build careers, teams, and engage with industry infrastructure.

Can you put a fanbase on the blockchain? Here’s what it could look like.

Decentralized Autonomous Organisations (DAOs)

If you spend some time in Web3 circles, you will encounter the term DAO. It refers to organisations that utilize blockchains’ distributed nature and (often) smart contract functionality in order to govern themselves.

These organisations are grassroots, meaning that there’s no central leadership and the members of the organisation decide what things they want to incentivize, and what rules they want to create. They allow people to pool funds, govern those funds and use them to coordinate or incentivize communal efforts and contributions. 

At this point there are way too many DAOs to give a comprehensive overview and they come in many forms. For example, Stake Capital’s StakeDAO allows its members to earn stakeholder revenue share for their participation, for instance by supporting the Discovery and Creator nodes Stake Capital runs for the Audius network, a decentralized music streaming platform. Another well-known DAO, with the stated aim to push culture forward, is Friends With Benefits ($FWB) which requires new members to invest into the DAO by buying membership tokens, so that the community is invested in itself (you can read more about how they govern these funds here and what types of things you might expect in the community here). MetaCartel is a community of people that funds “post-hackathon” projects through grants. Decentraland, pictured above, is a game akin to Roblox and Second Life, but is governed by a DAO.

The Mint Fund, which was founded to fund underrepresented creators’ NFT minting costs, aims to become an “artist-owned curation DAO”. Mat Dryhurst (@) suggested a decentralised structure for SoundCloud in 2017, when people feared the company was running out of time (and cash) as it let go a large chunk of its staff. Back then the concept was novel, but it’s quickly becoming mainstream.

There are even tools like Aragon, Colony, and DAOhaus that make it relatively easy to set up a DAO in which the community participates in the ownership and governance of what’s created through the sum of their work, contribution, and participation.

Image via aforementioned Aragon.

The Decentralized Autonomous Artist

Not everyone’s music will drive millions of streams, not everyone is able to tour constantly, not everyone will go viral… but the one strategy that I feel almost any artist can apply is that of building a community of fans that can sustain you (sometimes referred to as “1,000 true fans”). There’s benefits to thinking small.

How can a fan community contribute to an artist’s success? Well, it depends on the artist, but they can financially sustain the artist through various types of patronage, they can amplify what an artist is doing by increasing their reach and leveraging network effects, but there are also other types of contributions that may be framed as collaborations, fan art, or other. In fact, when the community includes the artist and ‘artist team’ (ie. the business roles surrounding an artist), you can disintegrate some of those roles and place the associated activities inside the community through incentive structures.

What if the BTS Army was a DAO allowing people to either purchase or earn $BTS tokens in order to unlock various types of experiences and opportunities that are completely fan-organised? BTS wouldn’t even have to play a role in the DAO, though if what the DAO is doing is sufficiently valuable (which it would be), it may decide to let people trade $BTS tokens for tickets to concerts, livestreams, merch, or NFT collectibles. BTS can then choose to sell those tokens for fiat money (e.g. dollars or won) and cash out or retain $BTS and take a more active role in the DAO (token holders are often rewarded with increased influence in the governance of the DAO, corresponding to the amount of tokens they hold).

Since it can all be logged to a blockchain, much of this experience becomes portable beyond any specific platform, allowing the fanbase to organise itself wherever it prefers. This way experiences can travel beyond the walled gardens of Facebook, Apple, or virtual platforms and into the so-called metaverse in which the DAO and its members own their data and collect the value from it. Work is also being done on making various blockchains more interoperable, so things will be less locked into blockchain ecosystems than they are now.

Instead of communicating with an audience as followers on a social media platform owned by others, you can involve them directly in the organisation of your fan experience in a transparent, open, grassroots way through DAOs. The bonus: community ownership. We’ve seen countless artists open up Discords and other types of communities next to their social media presence – what we’ll see next is the Web3 version of this: decentralized autonomous fan organisations.

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Livestream tech breaking down

Posted on | by Maarten Walraven-Freeling

We don’t hear about the livestreams that don’t go well so much. However, technology breaks down and breaks down quite often. This can happen to an artist playing a Twitch show for 50 people, but also to Glastonbury and Driift working on one of the biggest livestream events of the year.

Glastonbury’s Live at Worthy Farm event included lots of great artists and a special appearance by The Smile, the new band including Thom Yorke and Jonny Greenwood. Lots of people, who had bought tickets, couldn’t make it into the livestream. The problem was that lots of the unique ticket codes were flagged as invalid. After almost two hours the solution was to remove the paywall to the event. And since the event was live-to-tape instead of actually live, viewers were also able to rewind for example.

Even livestreaming events that received universal praise suffered their share of issues for individual viewers.

And while individual cases can be just that, an individual’s connection that is problematic, lag created by some error on a laptop or phone, etc. the technological problems are always below the surface.

It’s just too busy

The most common trope surrounding the failure of livestreaming is to do with traffic. Servers need to handle a lot of people entering a virtual door and getting their ticket verified. Two major examples come with Justin Bieber‘s New Year’s Eve livestream and Marc Anthony‘s ‘Una Noche’ livestream from 17 April. The former’s livestream overloaded because 1.2 million T-Mobile users showed up having mostly bought their tickets on the last day. The company hosting the livestream, VenewLive isn’t new to big number of visitors having been set up by a combination of HYBE, Universal, and Kiswe. But just like you have to wait at an arena sometimes, so servers can overload due to high demand. Similarly, with Una Noche, demand seemed to outstretch capacity. In a great article in Billboard, there are two stories: 1) again, lots of people bought tickets at the last moment causing server undercapacity; 2) too many people used the same codes causing the system to crash. Either way, it has led the livestream platform Maestro to change its policy and only host shows that run through their own ticketing platform.

The fix

There’s an easy answer to this problem: a cap on tickets sold. StageIt‘s Stephen White told me that they actively encourage artists and bands to put a maximum amount of tickets per show. This allows for good preparation in terms of what kind of server capacity will allow shows to run smoothly. Of course, it also creates a sense of scarcity. And, indeed, StageIt sees a more even tickets-sold ratio across the period that those tickets are on sale and less last-minute buying then reported for Bieber and Anthony.

Another option is to scale your server capacity, which means you probably have to work with one of the major cloud services such as AWS or Google Cloud. These companies have vast options available to scale server capacity. AWS has an auto-scaling functionality, while Google Cloud allows for automatic load balancing to allow for heavy, unexpected, traffic. The problem here, of course, is that this doesn’t come cheap. The more power and capacity you use, the more you pay. Whether the ticket prices will still cover this is something you want to know in advance and not be faced with last minute or even the day after.

A third option is to use an existing platform that knows how to deal with audiences at scale. Dedicated music livestreaming platforms like VenewLive, StageIt and Maestro – and their are dozens more – are great in terms of offering specific functionalities, such as integrated merch sales, and closed, ticketed, environments. Platforms like YouTube and Twitch already have so much traffic moving through them that any spike from even the largest livestreams won’t impact the overall computational capacity too significantly. They also have other advantages such as different direct payment options, suc as tipping and channel subscriptions. Of course, this is different than buying a ticket, but for artists who aren’t at the level of Marc Anthony or Billie Eilish it might make sense to drive users not to a ticket but to another method of payment. Going back to StageIt, they find that most artists get the highest return not with a set ticket price but with a pay-what-you-can model.

We won’t shake off these issues

I’m a strong believer that livestreaming is here to stay, especially if done well. By that, I mean that the experience of a livestream should be different from that of a gig in a venue. Instead of just pointing cameras at a stage, livestreams should offer viewers a unique experience that feels like it’s made just for them instead of for hundreds of people at once. To achieve this, it makes a lot of sense to use a different platform than YouTube or Twitch, to partner with a provider that makes it their business to create something bespoke. Take to Twitch for a quick and dirty livestream of you or your band in the studio, but make sure to create something with added value if you ask people to pay for a ticket.

The livestream-specific platforms may be more limited in terms of capacity and potentially have other technical limitations. However, these issues will remain as long as livestream. Best thing to do then, is to try and stay in control – as evidenced by Maestro’s reaction to the failed Marc Anthony livestream – and to prepare well. The latter probably means you want to cap your crowd so you know exactly how much server capacity you require. And, finally, let’s make sure we talk about the failures and learn from them. Not all news about livestreams has to be rosy, it’s also okay to tell the world something went wrong.

Does Apple’s lossless streaming move impair fairer subscription prices?

Posted on | by Bas Grasmayer

Apple just announced they’ll be launching spatial and lossless audio, at no extra cost, to all Apple Music subscribers starting in June. Seemingly in response, Amazon announced that they’ll be folding their lossless quality tier into the standard Amazon Music subscription tier. Lossless quality music is $9.99 now.

Amazon & Apple are not music companies

Neither Amazon nor Apple need to make money with their music businesses. They utilize these aspects for greater ecosystem tie-in and can afford to use music as a loss leader. Not even considering Apple’s iPhone, App Store or MacBook business… Apple’s revenue for their Airpods equals the revenue of Spotify, Twitter, Snap, and Shopify combined (2019).

AirPods make more money than Spotify, Twitter, Snap, and Shopify combined

Another analyst puts the 2019 revenue for Airpods at $7.5 billion, rather than $12 billion. Still enormous. Airpods are becoming a platform. With its iTunes Store it sought to get more people on the iPod, which created a consumer lock-in that extended to the iPhone and the App Store. Steve Jobs‘ deal terms for iTunes also had a profound effect on the economics of music – laying the foundation for many of today’s discussions.

Unit Sales Out of the Gate (Above Avalon)

Lossless as a loss leader

Unless Apple and Amazon signed some very unique deals with labels, lossless streaming comes at a higher price than standard quality. That means that for now, Apple and Amazon are deciding to eat the cost in order to tie more people into their ecosystems. Amazon was previously criticized for this in 2011, subsidizing Lady Gaga‘s album sales of Born This Way by discounting it to $0.99:

“The digital retailer used the album as a loss leader to promote their Cloud Drive storage service and paid Gaga’s label full wholesale price for each album sold.”

Apple has been taking aim at Spotify since the launch of Apple Music. That started with rhetoric around how human curation is better than algorithms. More recently it took the form of a letter to artists about Apple Music’s royalty rates. Spotify’s antitrust complaints in the EU about Apple’s App Store practices means Apple faces fines as high as $27 billion. Spotify announced they have a lossless tier coming up later this year. Most people assumed this would come at an extra cost. Apple’s decision to use their $200B war chest to eat the cost of lossless quality audio is very much a move against Spotify.

Growing the pie – undermined?

Spotify had the courage to move first and start increasing prices of its existing tiers. Streaming subscription prices have long been stuck at the same price, losing 26% of value due to inflation. The market has become mature enough to raise prices and that’s something that needs to be normalized in a way similar to Netflix’ price hikes.

Cover image for Here’s How Spotify Can Fix Its Songwriter Woes (Hint: It’s All About Pricing)

Apple & Amazon’s strategy puts that at risk. Two questions to ponder: is music currently sustainable with so many companies relying on revenues from streaming services that are making a loss and are subsidized by tech giants or investors? Can this digital music landscape be sustainable without asking consumers for a fairer price?

Music Ally‘s Stuart Dredge has an optimistic take:

“Perhaps hi-res music’s true value in streaming will be to enable the big DSPs to charge all their subscribers another dollar or two a month, rather than just to persuade a small fraction of them to pay five dollars more a month. If that strategy pays off, today’s news will have been a positive moment indeed.”

I’m less optimistic and think that if this was the strategy, they would have paired the news with a price hike. This is about ecosystem tie-in and hitting Spotify where it hurts in a way that’s likely to impair efforts to normalize fairer subscription pricing.

A mode of growth: NFTs, ownership, copyrights, blockchains

Posted on | by Maarten Walraven-Freeling | 2 Comments on A mode of growth: NFTs, ownership, copyrights, blockchains

Earlier this year, when music NFTs entered hype-stage, one of the promises was a fairer distribution of revenues to artists. The hype came from big sales with 3LAU, Grimes, and even Kings of Leon. However, none of those NFT auctions actually included ownership. The best known example of copyright exchanging hands as part of an NFT sale was with Jacques Greene, and he actually had to sidestep the NFT to make that happen. At that point, I became skeptical of the role NFTs could play in broadening the possibilities for artists to earn revenues or broaden their income streams. Of course, as part of a smart contract attached to the NFT a certain percentage of future sales can revert back to the original creator of the NFT (which isn’t even necessarily the artist). That’s great, and I can see the benefits in that. Every time an NFT gets resold, the original creator keeps getting a kickback. Assuming the asset appreciates in value over time, that’s a good deal. And yet, that’s just one small piece of the copyright puzzle. What can NFTs, and blockchains more generally, mean to different copyrights? We enter a world controlled by collective management organizations (CMOs), and those have their own set of important problems.

Simply put NFTs offer two roads, a two-pronged fork if you will, to advance discussions about copyright and improve the way artists benefit and earn revenue from their work:

  1. A world without copyright as we know it. No CMOs. Instead, everything is organized through blockchains. I’ll explain why this is a realistic possibility by drawing on the theories of economist Carlota Perez.
  2. A world where NFTs and blockchains get incorporated into the existing copyright structures. For this we need metadata and the first indicators are out there that this will be developed.

Blockchain-controlled copyright

Imagine a world that has done away with traditional financial systems and which has instead replaced those with decentralized financial systems based around blockchains. This is a world where, for example, the Ethereum blockchain has fulfilled its potential, where it has become a store upon which and through which people build applications and provide access to them. The revolution of the blockchain and the associated NFT has reached both maturity and mainstream. If we look at Carlota Perez’s theory of how technological revolutions happen we’re at an interesting juncture right now. Looking at blockchain through Perez’s wave of surges [also related to the Gartner Hype Cycle], there’s the explosive growth surge, which characterizes itself by opportunity, innovation and new modes of behavior. In this surge, there’s a need for new infrastructure and for shifts in paradigms. In this phase there’s a lot of speculation which in turn drives the economic growth of the new technology. In a sense, blockchain has been through this phase, while as a smaller-scale technology NFTs are right on top of this surge.

The second phase Perez describes is the golden age. This is where the boom becomes long-lasting and where we can speak of a mode of growth. Perez characterizes this as follows:

“each technological revolution brings with it, not only a full revamping of the productive structure but eventually also a transformation of the institutions of governance, of society and even of ideologies and culture.”

Carlota Perez, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages (2004), p.31

Interestingly, Perez published her book on this idea shortly after the ‘dot-com bubble’ burst. This bursting bubble and the subsequent long-lasting boom of internet culture, finance, and governance is part of a trend that occurs every 50 to 60 years according to Perez. If we see ‘blockchain’ as the next, or current, mode of growth, this cycle is quickening. And to understand the realistic nature of a near future regulated through blockchains we do need to see this revolution as a mode of growth. When it comes to copyright, though, we are at the very early stages of creating new infrastructure. In the intro I mentioned the Jacques Greene NFT which included the publishing rights to the underlying song. While Greene organized this transaction outside of the NFT, Bluebox is looking to incorporate various aspects of copyright into the NFT smart contract. The idea behind Bluebox is to create 100 NFTs per song, each representing 1% of the underlying copyrights. The artist can then decide how many of these NFTs and thus how much of their intellectual property they want to sell. In the same breadth, any fan, or investor, can decide to become owner of one to several percent of a song. Bluebox is built on the R3 Corda network and currently is a kind of walled garden. In other words, it has the ability to both sell the copyright and organize the flow of royalties, as per Lee Parsons, CEO of Ditto and co-founder of Bluebox, in MBW last month.

As the Corda network opens up to more public blockchains, such as Ethereum, it will be interesting to see if, and how, there can be a mix of NFTs from one blockchain-based marketplace to the next. It’s important, however, that there’s an example of what it means for copyrights to be organized through a decentralized database. It’s one step towards a better infrastructure, more inclusive governance and a more artist-driven royalty structure.

The need for Metadata

I get that a fully-fledged decentralized system for copyrights might seem far away, even if we see the current NFT hype as a small part of the boom of blockchain. So what would it mean for NFTs to be incorporated into current structures and systems? Most importantly, this would require metadata. And this recent announcement from OpenSea made me hopeful that this isn’t actually too far away from happening.

First and foremost, this new set of metadata allows NFT creators to make much more dynamic digital assets. However, the addition of more metadata fields within the code of the NFT also opens up a route for tokens to be matched with broader copyrights and licensing organizations. I recently wrote about how certain independent management entities (IMEs) are working with blockchains to prevent unallocated royalties. If we take this use of blockchains one step further we can envision a shared database of contracts that will allow songs to be tracked throughout its various usages: in-store, through DSPs, sync, remix, etc., etc. Somewhere there needs to be a piece of metadata that is shareable and verifiable each time a song is used.

Some IP lawyers have argued that to allow security in this chain of sharing and verification only the original copyright owner – they of the intellectual property (IP) – should be allowed to mint an NFT. So far, however, NFTs are closer to other collectibles and, for example, photos. Both of those allow someone who doesn’t own the IP to create a variation of it, like a card or a print, and earn revenues from this. This is one reason why music-related NFTs haven’t yet included transfers of copyright ownership. Music is already made available as a digital copy and has a set of complicated rights attached to it to make sure that rights owners get paid when one of those digital copies is used.

Which brings me back to the issue of the metadata. Tracking a digital copy is difficult, especially if not all elements where its used work on the blockchain. This is why Bluebox works so far, because it operates as a walled garden where it can control and track and verify. A next step could be to move music-related NFTs into a license such as the one attached to Cryptokitties. Dapper Labs introduced the NFT license which allows owners of to “commercialize your own merchandise, provided that you aren’t earning more than $100,000 in revenue each year from doing so.” While this sounds good, much of it rests on using other marketplaces that can “cryptographically verify that you are the owner.” And while this Dapper Labs NFT License allows some form of monetization through merchandise, when we look at YellowHeart’s, the marketplace known for the Kings of Leon and XXXtentacion NFT sales, terms of service simply do not allow for commercial use outside of reselling the NFT through a marketplace that allows for cryptographical verification.

If, then, the fully decentralized system for copyrights rests on the broader adoption of blockchains into the world of financial transactions, or even see it supplant those centralized world, it might be easier to find ways to track copyrights through metadata attached to smart contracts related to NFTs. If we look at Perez’s lifecycle of a technological revolution again, we can imagine further integration into the existing infrastructure for copyright management in the second phase.

Perez, Technological Revolutions, p. 30

Supplanting the current ecosystem of copyright management will not follow until the blockchain revolution is towards the end of phase three. At that point, the full spectrum of the market will have adopted the technology and that will allow tracking of IP and allocation of royalties wherever that IP is used. There is no walled garden, instead there is full interoperability. For now, though, we need to be happy that we can look at integrating metadata into any future NFT sale that will allow it to be tracked within the current system, which is organized by CMOs and challenged by IMEs. The latter will prove essential in the adoption and integration of the metadata. They will also help push innovations in the infrastructure necessary to help rights owners follow usage and chase revenues.

Some time after

By looking at blockchains as a technological revolution in the sense of economist Carlota Perez I was able to position NFTs as still an early new product as part of phase one. In itself, NFTs are seeing their own little boom-bust-plateau cycle. In the broader scheme of the revolution NFTs will allow – some time after – to first see an integration with existing copyright structures and then a completely new system: a world without copyright. The former will help artists and rights holders to better track and monetize their assets through the inclusion of metadata that is accepted and verifiable by an increasingly broader set of organizations. The latter currently seems like a blue-sky-idea but actually runs parallel to the future as a decentralized database where copyright might not exist anymore and instead a different type of royalty structure has emerged. This structure should be more artist-driven as it puts more power into the hands of the original owner of the IP owing to the fact that they can always maintain control of how much of their IP they sell off in the first place. Whole new markets will evolve from this, but looking at Perez’s cycle this is still a couple of decades away. In the meantime, it’s important to question the ownership structures related to NFTs as this goes through its own hype phase.

Why Twitter is better positioned for tipping musicians than streaming services like Spotify and SoundCloud

Posted on | by Bas Grasmayer

Twitter just launched a new tip jar feature with greater potential for musicians than those launched on popular streaming services such as Spotify and SoundCloud last year.

A new tip jar

Twitter started rolling out its new tip jar functionality last week. The functionality, which for now is only available to a limited group of creators, allows people to add Bandcamp, Cash App, Patreon, PayPal and Venmo to their profiles via a new button on their profiles. It’s a bit like a ‘link in bio’, but specifically for payments.

Why tip jars ‘failed’ on streaming services

Streaming platforms are not creator services. They focus on monetizing the catalogue-listener relation through ads and subscriptions rather than the artist-fan relation. That means the user experience on streaming services is geared towards what people expect in exchange for their payment: quick access to the music they know, new music, and being able to find ‘music for every moment’.

I’m not entirely sure how these services defined success for the donation feature, but especially Spotify needed a PR win over the past year, so I’m interpreting their silence over the feature as an indication that nothing significant is happening through there. As a matter of fact, it seems that in its newly designed desktop profiles, the feature has been quietly removed. For reference, compare Marshmello‘s profile on mobile and the new desktop UI.

Why Twitter is better positioned for tipping

Social media is where people connect to artists. You may listen to dozens of artists per month, even hundreds, but the commitment of a social media follow is something reserved for those you actually care about. Social media is primarily about what’s new and while you can scroll back into someone’s history, it’s a secondary use case when compared to seeing months or years-old ‘content’ appear on playlists.

Through social media, it’s easier than on streaming services to stay connected with people and introduce them to new ways to support you. By creating a Tip Jar that also includes things like Bandcamp and Patreon, Twitter is reducing the distance between a person being interested in something and actually purchasing it. Any friction in that journey causes drop-offs along the way, so any reduction of friction or journey length translates to real money for creators (see also: merch integrations in (live)streaming platforms).

Expect others to follow suit

The type of direct monetization offered through Twitter’s Tip Jar is part of a wider trend that can also be seen in livestreaming services, the surging popularity of Patreon and OnlyFans, Clubhouse‘s tipping feature, and even the donation buttons in music streaming services.

Twitter will not be the last service this year to roll out more monetization options.