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

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.

Why YouTube is the streaming service to watch

Spotify often gets contrasted with Bandcamp in order to explain the challenges of the music streaming landscape: low per-stream royalties versus much larger commissions on sales. The intensity of that discussion has moved all eyes from the actual one-to-watch, which is not Spotify, but YouTube – a service with a billion monthly active music listeners and 30 million subscribers.

Always has been

YouTube has of course long been on everyone’s radar due to the so-called ‘value gap’: the disparity between what YouTube was willing to pay for music & its perceived real market value. As the biggest music platform, YouTube was infamous for its low per-stream rates which, on average, are significantly lower than Spotify’s for music identified through its ContentID system (source). I chose to phrase things in past tense due to attention shifting to Spotify, but that does not mean rightsholders have found these issues to have been resolved.

Another concern is the power of YouTube and its mother companies Google and Alphabet, which is a common reason for complaints from music industry lobbyists about having imbalanced negotiations. Before I go into why I think YouTube is making all the right moves: the concentration of power towards tech monopolies is of big concern for me too (it’s why I deleted or deactivated my accounts on Facebook, Instagram, and WhatsApp). Keep this in mind when developing a strategy: always diversify, never put your eggs in one basket, and make sure you create ways to go direct-to-fan (e.g. collect phone numbers, email addresses, build communities).

YouTube’s evolution as a creator service

Google’s video service has long had something of great strategic value: not music. I mean that literally: it’s had content and creators that were not doing music. This has meant less complexities around licensing (but also poorer representation for creatives) and has allowed YouTube to experiment with new models.

The same is happening now with podcasts at Spotify and user-centric streaming payments at SoundCloud. Having ‘user-generated content’ from unsigned artists allowed SoundCloud to start trialing its ‘fan-powered royalty‘ model without every rightsholder having to opt-in through contract negotiations. Meanwhile Spotify is exploring new monetization models around podcasts, like paid podcast subscriptions. As a relatively new medium, podcasts don’t yet have the legal and political complexities associated with intellectual property in music.

YouTube & the next layer

Streaming is a base layer for music monetization. It’s shallow in that it leverages nothing but the relation between listener and catalogue. Monetization is driven by factors like accessibility (e.g. all devices, price), portability (e.g. offline) and convenience (e.g. catalogue size, search, recommendations). It’s absolutely basic: it’s not about the relation between fan and artist, it’s not about the quality of the art or music, it’s just about having the largest and most convenient store where you can access everything by paying from a magic wallet with your costs predictably capped at $10 per month. It’s a subscription business, not a music business – as Tim Westergren (founder of Pandora and now livestreaming service Sessions) also pointed out in my recent interview with him during Karajan Music Tech.

This base layer has advantages: it generates a huge amount of money for rightsholders and creates a foundational data layer which can be used to connect listeners to new artists and music or could be leveraged to learn more about existing fans and get new music to them. But streaming was never supposed to be the future of the music economy. It needs additional layers on top.

One of these layers is the Interaction Layer. This layer has been thriving during the pandemic thanks to a particular medium: livestreams. Livestreams encourage interactivity: fans can be exposed to each other in chats and the chat functionality can make fans feel like they’re seen by the artist(s) they care about so much. That means there’s value being created beyond simple music access. Value means opportunity to monetize and YouTube has seized that opportunity.

Image taken from my Water & Music piece about fan-centric streaming services (paywall).

Through its Super Sticker and Super Chat features, YouTube allows creators to monetize their livestreams. Super Stickers are big, fun and quirky custom emoji that appear in the chat in exchange for a small fee. Super Chat allows viewers to highlight and pin a message for a certain duration of time, depending on how much they pay. In the first months of the pandemic lockdowns, from March to June 2020, over 2 million new users spent money on these features.

The second feature that provides an additional layer is channel memberships. This allows creators to created limited edition content, similar to what they might offer on Patreon or a SFW OnlyFans. At smaller numbers, it even allows them to create semi-bespoke content.

Layer integration

These features allow creators to monetize and connect with fans where they already are: YouTube (as opposed to onboarding them to Patreon or OnlyFans). This is the important distinction. These monetization options are not novel in and of themselves – many of them have been around for years or even decades. The important development is that these experience and monetization layers are integrating. Moving fans around various platforms causes friction, which means you won’t be able to convert everyone down the funnel from the streaming layer. It also keeps the data in one place instead of fracturing it.

Graphic from Streaming is not the future of the music economy, from the second edition of the MUSIC x newsletter, February 2016.

Over the next years we’re going to see many examples of artists successfully building models on layers that sit on top of streaming. YouTube is going to play a significant role in that. The conversation will move from leveraging streaming (still essential for discovery & connection to wider audience) to interaction & bespoke options.

Another service to watch in this space is Amazon Music, which is slowly expanding their integration of livestreams from Twitch (another Amazon company, which also allows micropayments and memberships like YouTube).

Livestreams mean original content and a different set of rights than what you negotiate for on-demand streaming. This has given YouTube and Amazon the flexibility to experiment with these new layers. Spotify’s business strategy has introduced similar functionality to podcasts, but will they be able to do the same for music given the complexities of licensing and the various rightsholders that will want a piece of the pie?

The music streaming landscape is in flux and it’s not about Apple Music vs Spotify or Spotify vs Bandcamp anymore.

For a wider read diving further into this trend, read my article The rise of the fan-centric music streaming service at Water & Music (paywall).

A special thanks to Vickie Nauman for some of the inspiration for this piece and to c/o pop and Germany’s association for independent music (VUT) for having us on a panel last week.

Creatives as victims: are artists really screwed?

With the platformization of the web, creatives are set up to compete for attention while the platforms that host their content benefit from monetization at scale. It’s an important issue, but to say creatives have been screwed over by default helps nobody, mostly because it’s incorrect.

When reading Jon Westenberg‘s recent comments about creatives’ current challenges, I found myself disagreeing with the premise and much of what stemmed from it. I feel it’s important to walk through the presented thoughts and refute them or at least provide a different perspective. I normally don’t do these types of articles, but since it’s such a widely shared piece, I feel it’s important to do this, because it’s an unconstructive mindset to adopt.

Creatives, seeing yourself as a victim doesn’t help you. It disempowers you. It gives you an off-putting aura that communicates a sense of entitlement. That’s not to say that you’re not entitled to fair pay and treatment. Just compare it to the work floor: you’re entitled to salary, but if you give off a sense of entitlement it will annoy colleagues, superiors, and clients.

Jon starts off with his own experiences as a writer and speaker, explaining how requests come in:

…until you tell them you want them to pay for your expenses or even a fee. Then they disappear pretty damn fast.

Which is your own fault for violating the golden rule — bloggers and writers must never try to get paid.

I’ve encountered this. For a long time, this used to be my personal golden rule: I was afraid that paid writing would take the fun out of it, but instead paid writing makes me a lot more comfortable with spending big chunks of time on research and narrative. Now, I’m very strategic about when I write for free and when I don’t. Some sites help me reach new audiences that wouldn’t otherwise encounter my writing. Some don’t. Some benefit from the visibility I can give them, and for some that doesn’t matter. Sometimes I’m just really busy and can’t afford to spend my time on unpaid writing.

When writing’s unpaid, I try to make sure I convert the audience to my Twitter account and newsletter. When writing’s paid, I leave the question of credits up to the client.

When I first started charging for writing, I was nervous, but now I’m comfortable with it. I get occasional requests, and some I’ll answer with a cost estimate. Some requests then disappear, indeed, but that’s fine – it’s part of my strategy, and I don’t expect people to know beforehand that I expect payment. The free writing I do fits into a wider strategy: it helps me build my network through which I acquire clients for consultancy work.

I’ve never experienced any type of animosity when charging money. It’s about managing expectations, clearly explaining yourself, and simply getting comfortable with asking for something.

It’s also becoming increasingly difficult to look at publishing online or being an artist or recording music or starting a publication as a full time career.

I think we’ve gone through the hardest phase. People are used to mobile payments and subscriptions for digital content now. Many people are familiar with crowdfunding. Publications like The Correspondent are showing that membership models with fair payment for writers are viable. Blendle shows micropayments for articles are viable when properly designed and introduced to the end user.

If you’re an independent artist or writer, you could set up a Patreon, where fans of your work pledge to make a fixed contribution for every piece you publish (this is something I’m considering for my newsletter (EDIT: done!)).

It’s getting increasingly viable to look at creativity as a full time career.

The big problem is not the money. It’s the attention you have to compete for. We’re all creators of content – so what’s the role of creatives?

If you do want to get into creative work, you’re going to have to see it as a side hustle. Not your main gig. That’s just the way it is.

This is actually good advice. Take time to build up your audience. Take time to figure out your business models. The business models of earlier days are not set in stone anymore. You need to be innovative. Don’t rely on the old. Don’t do new things in an old way. Find new ways.

We’ve made it easier than ever to make stuff, and harder than ever to make enough money to live. And every day, there’s a new “disruptive” startup that does more damage.

What they “disrupt” is creator’s profits, most of the time. That’s what music streaming did.

Woah, woah, woah. Have we forgotten about piracy? Piracy disrupted creators’ profits. In part, because certain industries thought they could hold back certain developments and buy more time. They couldn’t. Piracy soared, and then… Music streaming disrupted piracy.

People don’t want to pay for content. They want to consume it for free, or monetise it for themselves.

Sure. People don’t want to pay for chocolate. Don’t want to pay for a new smartphone. Don’t want to pay for a Toastmaster 3000 in just five easy instalments. But all those companies have figured out ways to get people to pay. The ones that didn’t are dead. There’s nothing that stops creatives from finding business models, but they need to bear in mind two important points:

  1. Optimize your business model so that you can compete for attention;
  2. Don’t look at the past for how to monetize.

For example, I usually tell musical artists to look at YouTubers instead of the recording business. YouTubers and livestreamers make great use of crowdfunding, donations, subscriptions, and sponsorships. Make that which generates attention available for free, so it travels far and wide, then monetize the scarce and exclusive. It’s the same basic principle I’ve been repeating since 2011, when I published my thesis about marketing music through non-linear communication (networks).

If you tell people you’re an artist, they’ll tell you that’s not much of a career path and you should get a real job.

Was this ever not true? Westenberg’s next point is that people building tech startups for artists are celebrated. This may be true (though he’d be surprised how many obviously dead-on-arrival startups there are). I think startups being celebrated by default mostly stems from people not understanding tech startups. As the phenomenon of tech startups matures and becomes more mainstream, it’s drawing a lot more criticism. I hear people on radio comparing startups to “getting unemployment compensation paid for by investors.”

The article’s most interesting bit looks at the amount of followers Nicki Minaj has on Instagram (77 million) and compares it to the amount of albums sold (800k). He follows it up with the following question:

If a mega star like Nicki Minaj has a conversion rate that low for actual sales, what does that mean for indie creators?

Conversion rates are likely much higher. Artists like Minaj have a lot of followers who are not fans. Or a lot of people who like the music, but are not that into it. Artists at such scale are public figures – people follow them and know about them, not just for their music, but also for their personalities and fame. Indie artists are more likely to have more engaged fans, and if they devise a smart strategy they can monetize more than just 1% of them. They don’t have to depend on the type of ‘mass’ strategies employed for acts like Minaj, which inevitably lead to low conversion rates.

We’re giving money to tech platforms to become “Unicorns” off the backs of creatives, and driving creatives out of business.

This is a legitimate issue. Personally, I’m excited by the discussions in the blockchain-scene, where people are trying to figure out how to fairly distribute the value generated by platforms’ participants. Other than that, you have to strategize: know when and how to use a platform and know when to turn your back on a platform. Make sure you’re in direct touch with your audience, so you can bring them with you when you move away from a platform.

In a reply to a commenter, Westenberg added the following:

Also — it’s an awful lot harder for a writer or an artist to get paid for playing concerts. And even if they did, they’re still not being paid for their creative work, they’re being paid for their personal appearance and that’s not the same thing.

It’s competition. People are willing to do it for free: that makes it hard to charge money for the same thing. And the latter part of his statement is true, but it’s arguably not so different from before. Did people buy plastic discs with music on them in order to pay for the creative work, or did they just like how the music made them feel? Do people pay for music because of the pure creativity or also because of the personality behind it?

You need to be smart about these dynamics and not fall into the trap of feeling helpless. Develop a personal strategy that will help you to effectively build and monetize a fanbase.

Yes, there are real problems. The platformization of the web is an issue, and automation could kill a lot more jobs, so it may be important that in this late stage of capitalism we divorce income from work, at least partly through something like an unconditional basic income. But then we’ll have even more people creating content, more people competing for those same eyeballs, and that is where the root of the problem lies.

Read next: Why should artists be able to make a living off of music?

The “F*ck the long tail” manifesto

Don’t spend your time on something broken, when you can do something that works even better.

Unless you’re a huge business with a lot of legacy to deal with, the shape of the long tail doesn’t matter. It doesn’t matter whether music is getting increasingly “winner takes all”. This graph does NOT matter:

Long tail in music and movies
From: Mass entertainment in the digital age is still about blockbusters, not endless choice

Why it doesn’t matter

Going into music, you know that the economics are messed up. Everyone has told you so. Unless you haven’t told anyone you’re going into music. Even then — opening one music business blog will tell you the same thing. Constant bickering over the way money is distributed, who gets paid, how much, why not more, why not less, ticket scalping, streaming royalties, exclusives, royalty split disputes…

It’s not pretty.

So you know that you should not create a reality for yourself where you’ll be dependent on the outcome of the ugly side of the music business. Create one where it doesn’t matter.

As soon as you commit to that, the overall economic picture of the music industry won’t matter quite as much.

What matters most

You should be focusing on your music, and on your fans, and on people who make music just like you. Focus on positivity.

Money is not the problem. Your attitude is.

Be proactive. Tell people about your music constantly. Find out who the programmers are for the venues where you want to play. Who the authors are of blogs or YouTube channels that post similar music. Comment. Message them. Ask them for feedback. Be humble and positive.

One day they’ll give you a chance. But they have to SEE that you’re working hard at it, so document your progress. Post at least 5 things to social media every day. Maybe even 10. Snapchat and Instagram Stories make that SUPER easy.

If you’re a band: set everyone up with access. More content.

You need to stand out above all the noise and you need to sustain people’s attention, so they don’t forget about you, so they don’t move on, so you keep appearing in their Facebook timelines and their inbox.

People’s individual attention long tails are the only long tails that matter.

You have a camera on your phone. Get in front of it. Document. Share.

It doesn’t have to be perfect. It has to be genuine. If you work hard, it will get better over time. Then people will feel part of your narrative, part of your story… and that it was kinda shitty early on is actually great: people LOVE a good underdog story.

If you’re worried about being boring because you spend too much time in your studio — set up a livestream. Sure it could get boring, but there will be highlights.

https://www.youtube.com/watch?v=jgeWHnSmPKE

What about the money?

Then you’re going to make money on your own. Away from the rat race. Away from the long tail. Your fans are part of your story. Set up a Patreon. Use Kickstarter to launch new projects. Give them a way to commit.

If you work hard at it, people are going to take note. Including people with money. Influencer marketing is one of the hottest areas in marketing right now. Sponsors are going to show up. Reject all of them, except for the ones that really make sense. Don’t trade in your fans for money. Be you.

If you have a huge excited fanbase, they’ll be LOUD. People will hear you. So the deals will come. The shows will come. Their size will grow and so will the money you make from them.

Work hard.

Ask questions.

Stay humble & positive.

And communicate your passion. ❤️️

(Oh yeah, and follow my newsletter 📰 and listen to Quibus 🎶)