Tag Archives: Business Model

Why You SHould Give Your Music Away For Free by JEREMY BELCHER / MTT

Digital music caught the record labels off guard and smashed their business to pieces, and from the rubble new economic realities are emerging. In this new reality, most independent artists, especially those who are just starting out, should give their music away for free. Sound crazy? Maybe, but hear me out. It boils down to 3 main concepts. Starting with…


The Rise of Spotify and the “All You Can Eat” Music Services

Shortly after the introduction of the MP3, legal music subscription services started popping up. Companies like Rhapsody and a then-newly legalized Napster offered “all you can eat” music services. You paid a monthly subscription fee and had access to the millions of tracks in their music libraries. The services gained modest traction here in the US, but it wasn’t until the UK based Spotify arrived on US shores in July of 2011 that the concept really took off. Users flocked to the new service, which connects to Facebook to enable easy music sharing. Their basic free service got many users hooked, and many of them upgraded to paid subscription services. Now, what does this have to do with artists? Well, for better or worse, many people aren’t going to buy albums anymore with a service like this available. Why would they, when they can pay a monthly fee (about the price of a single album) for a library of thousands of their favorite albums, which they can easily share with friends? On a personal note, I have not bought a thing on iTunes since the introduction of Spotify, and even as a self-professed Apple fanboy, I have barely even opened the iTunes application (in fact, I am listening to Spotify right now as I write this). As an independent artist, you can place your music on any of these services quite easily with most digital distributors, but the payout is only pennies each time a user listens to your album, far less than iTunes or Amazon. Now, this might sound like I am gushing about these services, but the truth is that from the perspective of the music fan, it’s a much better deal for us. I want to discover and listen to lots of music, easily and inexpensively. And these services are showing no signs of slowing down. That said, the fact that independent artists earn far less for a stream is a red herring. The cannibalization of recorded sales doesn’t really matter for most indie artists, because the truth is…


Indie Artists don’t sell that much anyway

This isn’t my personal theory, it’s a fact. I followed the sales data from our digital distributor, FoxyMelody, for 6 years. The majority of artists make less than $10 per month. The reason for this is simple; most people are unwilling to buy music from a band they don’t know. And our data is by no means unique. There was a recent, hotly discussed article published recently on Digital Music News about another digital distributor, Tunecore. The article looked at the data of over 600,000 artists over the period of a few years and found that a majority of the artists make less than minimum wage from their online music sales. At FoxyMelody, this was absolutely true. The average artist made less than one hour of minimum wage over the course of an entire month. If that’s the case, why bother even putting your music behind a paywall in the first place? Is it worth the $6.43 you might make? Unlikely. Therefore, let people hear it, which brings us to our next point…



Why are people unwilling to buy an album from a band they don’t know? I read this concept years ago from Music Strategist Andrew Dubber of New Music Strategies, and it has always resonated with me. The order in which a fan will interact with an artist is Hear-Like-Buy. Always. They need to hear your music before they can like it, and they need to like it before they will buy anything. You can’t skip a step here, and there are no shortcuts. Giving your music away for free allows potential new fans to get a chance to hear your music…the first step in the process.

Now you might be asking “But if I give it away for free, what can I sell them when they like it?” Fair question. For one, having fans come to your live shows is a big win, as well as buying merchandise like T-Shirts/Posters/Buttons etc. In addition, you can still offer your music for sale as well. Free music doesn’t always mean people won’t also pay. In September of this year, the most pirated artists on BitTorrent were Jay-Z & Kanye West, Lil Wayne, Adele, David Guetta and LMFAO. Most of these albums are still in the Top 20 on Billboard. That said, these are hugely successful artists, but the overarching point is that free does not necessarily cannibalize sales. It’s merely a question of quantity. Do you think OK Go would have been as successful as they are if they had charged people to watch their famous treadmill video? Hell No. Very few people would have paid for it, and they sure as hell wouldn’t be as big as they are now. The more fans you have, the more people there are who will buy what you are selling. That could be future releases, merchandise, live shows, or whatever else you can think of.

This concept is not new in the business world. It’s given names like freemium, content marketing, loss leaders, etc. In fact, I am putting my money where my mouth is with this very article, as I am writing it for free with the intention of you visiting our magazine, Think Like a Label. As an independent artist, you should remove any roadblocks that might prevent potential new fans from hearing your music. It is an ugly truth of the changing economics of the music business, but I’m afraid the writing is on the wall. So, just give it away. Set the music free.

Why You SHould Give Your Music Away For Free

How to Successfully Execute RTB & CWF

In a changing music business ecosystem thinking outside the box has never been more important than ever. Social media has made it easy for every and any artist to expose their music to the world all-the-while saturating the market. So how do you grow a fan base, how do you brand yourself and music, how do you separate yourself from everyone else? The answer is as simple as RTB & CWF.

RTB: Reason to Buy. Give your audience a reason to support you by purchasing your product, which is your music.

CWF: Connect With Fans. Sounds simple but in reality it can be difficult to individually connect with each and every fan. With a smart marketing plan you can accomplish this and generate many more fans through a grassroots approach.

Michael Masnich provides a vital insight on how Trent Reznor and the NIN have embraced RTB & CWF. Illustrated is how this business model has successfully paid off by putting the first, second and third as priority in order to keep loyal fans happy, gain new fans and inspire other potential would be fans to convert to the fan column. Also, its obvious that technology is evolving and changing the playing field drastically. Masnich’s case study clearly illustrates that instead of trying to police the Internet, evolving technologies and pressuring confidence-less and support-less fans into purchasing intangible product in form of downloads that marketing, promoting, branding should never stop but most importantly implementing it by giving the fans RTB and emphasizing CWF to inspire economic support.

Since completing his earlier major record label contract, musician Trent Reznor has been experimenting with a variety of new and unique business models for his band, Nine Inch Nails, to reach and connect with fans. This case study explores Reznor’s experiments, examining what has worked and what has not – and why.
Speaker: Michael Masnick (Editor/President & CEO, Techdirt Blog/Floor64)

Michael Masnick The Trent Reznor case study