7 Ways Artists Can Get Funding
I breakdown music's new & future funding
Welcome, artists & builders.
In today’s issue, I’ll go over the new trends in artist funding, what’s next, and a deep dive on all the funding options available (while staying indie). Plus, what it takes for a Spotify stream to pay a penny.
Inside Issue #16
💡 Idea: The future of artist funding
🤿 Deep Dive: Artist funding options
📊 Numbers: Spotify’s price bump
🗞️ What You Missed: Is TikTok Music a Spotify killer & more
Disrupting Artist Funding
Artists have new ways to get funding - no labels attached.
They all rely on one thing → streaming activity.
It makes sense. Future streams are predictable. Banks & large catalogs see these songs as safe assets, patiently awaiting the steady cash flow.
Of course, artists need it now.
Enter new fintech platforms
If you have enough streaming activity (and own it), you can advance future earnings for a fee, or sell them outright.
This might appeal to some artists.
More options are good.
Options give power.
And these are fast & customizable, scaling to artists with as low as 10k monthly listeners.
But they only go so far.
What We Need Now
Artists need funding that:
Goes beyond streaming. Streaming is just 1 income source & it’s rarely the best signal of fandom. It’s simply the easiest to track & forecast.
Backs future releases. Encourage bigger ideas, experiments, and risks by supporting more than just the outcomes.
Bundles with non-financial resources. Money is just a piece of the puzzle. Marketing or operational support create a force-multiplier.
If this sounds like a (good) indie label deal, that’s because it mostly is.
How can we extend this support in a future with:
• more & more artists
• more & more niches
• more & more ways to be successful
We need funding that matches these realities.
If all financing is based on passive metrics, we’re left with the type of music that low-risk, data-driven projections give us: safe.
I’m happy artists have new options.
Let’s not stop there.
Don’t miss the funding deep dive below.
🤿 DEEP DIVE
Artist Funding Sources
In this deep dive, I’ll cover:
the indie options available today
tapping into fandom
No labels or publishing included. Fully indie.
1. STREAM LOANS (ADVANCES)
Get an advance on future royalties for a fee. Keep 100% ownership, but pay a tax to fast-forward your $0.004 per stream.
✅ Custom terms
✅ Flexible repayment
• beatBread is automated & customizable
• RoyFi short, flexible, competitive rates
• Lyric Financial can include label or pub $
• Sound Royalties is hands-on & adds live
• Hi-Fi CashFlow does bi-weekly paychecks
🧠 These rates better be low for these low risk loans. Read the fine print & do the math.
*Use beatBread’s chordCash service, ^Use Lyric Financial
2. CATALOG SALE PLATFORMS
No longer only for superstars. New platforms democratize the process to smaller artists, investors & fans. Sell partial chunks of your catalog for 7-10x annual stream earnings.
✅ Custom terms
✅ Give up ownership
🧠 Understand the permanence, your career stage & the upside you‘re ok to give away. Budget in the loss of recurring cash flow on the songs you sell.
3. DISTRO DEALS
Full-service distributors offer services for direct artist deals. These include may include marketing, project mgmt, promo, etc.
✅ Higher bar to get signed
✅ More premium service
✅ New release funds
🧠 Make sure you’re getting money & attention to justify the higher fee. Otherwise, Tunecore, etc exist.
Music lacks a dedicated crowdfund tool (after PledgeMusic’s demise). It’s ripe for innovation with renewed focus on superfandom & niches.
✅ Provable support & membership
✅ Shared upside / unlock access
✅ Capture full demand of high-net patrons
🧠 Something closer to the artist experience, integrated along release & community toolkits.
5. SEED ROUNDS
Can artists raise like startups? Holistic deals along all income streams, but for equity rather than profit splits - allowing all cash to flow to the artist until a certain level of profitability.
✅ Equity deals
✅ Flexibility to sign with a label
🧪 Coop Records allocated $1M to artist seed rounds. The 1st was Daniel Allen’s $1M round from 19 investors.
Collectives may be the future of labels. Artists are asked to do so much & ‘always be on’. Split overhead, open up new funding streams & foster scenes.
✅ Tap into subscription models
✅ Share risk & recycle earnings
✅ Fundraise as a company
🧪 LNRZ: Artists onboard in classes, voted by members. Core members provide music direction, production, visual art & operations.
🧠 While collectives have been successful in the past, more operationalized versions could become a repeatable solution.
Grants are only available in certain countries & come with red tape. Decentralized, community-led options could prove a vital source of ‘no strings attached’ funding.
📚️ My 3 Favorite Reads This Week
📊 IN NUMBERS
15 Stats on Spotify’s Price Raise
Spotify finally raised prices. Here’s 15 stats to put this price bump in perspective:
In 2011, Spotify launched in the US at $9.99/mo.
12 years later, they finally raised it by $1.
Spotify is the last major music streamer to raise prices, following Apple, Amazon, Tidal, Youtube Music & Deezer.
If Spotify had followed inflation, it would cost $13.55 today.
$10.99 today is only $8.10 in 2011 dollars (so, this represents a price cut from launch).
If Spotify followed Netflix price bumps, it would cost $19.38 today.
Netflix has grown price 9.4x more than Spotify.
Prime price grew 8.8x more
Hulu 7.6x more
Disney+ launched in Nov 2019 & has already raised price 5.7x more than Spotify has in 12 years.
When Spotify increased prices in Sweden in 2021, they saw their highest revenue growth in 8 years.
Spotify's 70% rev-share means this is a 10% raise on US premium streams for everyone.
So, ~$0.0004 more (that's 4% of a penny)
If Spotify doubled prices, a royalty would be ~$0.008
If they then gave 100% to rightsholders, it would be ~$0.011
That's what it takes to get to a penny.
We need higher prices, but we also need better business models.
🗞️ What You Missed
🧰 Oh, That’s Helpful
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