Streaming's model is broken

PLUS: How to stand out, Vulfpeck's Sleepify campaign & the 1st major music AI partnership

Author

Rob Abelow
May 26, 2023

Welcome, artists & builders.

Each week, I cover new tools & strategies to form better connected audiences. Today we get into streaming’s payout model & how to stand out.

Also, I’m adding a segment called ‘Good Advice’, where someone I respect drops helpful knowledge. LMK if I should keep it coming.

Inside Edition #10

  • 💡 Context: Streaming’s model is broken

  • 🗒️ Good Advice: How to stand out from the noise

  • 🦁 In the Wild: How Vulfpeck gamed the system with Sleepify

  • 🗞️ What You Missed: UMG x Endel AI, Web3 news & more

Streaming’s Payout Model Is Broken

Pro-rata is done. It's over.

Too many songs. Too much fraud. Too little truth between where fans think their money goes & reality.

  • 100m songs

  • 120k added per day

  • $9.99/month all-you-can-eat

  • 30 seconds minimum to earn a royalty

And these numbers are about to look tiny. Hell, 14m tracks were created by Boomy users in just the last 2 years. We all know what’s coming.

But the big stat?

10% of streams are frauds. Ten percent! That’s $1.75 billion per year going to stream farmers rather than artists. Unacceptable.

We all know AI only makes this harder. How do we counter that? More AI, of course.

AI to create songs
AI to stream them
AI to detect the fraud

Or - and hear me out here - just change the payout model to stop these bad incentives (fraud) & encourage good incentives (fandom).

Fan Powered Royalties

Often called User Centric. Here’s the difference:

Pro-rata: (Aggregate revenue from all listeners) ÷ (total number of streams) = $ per stream. All streams go into a global pool.

Fan Powered: (Revenue from individual listener) x (% of time spent listening to particular songs) = $ towards songs. Artists get a share of payments from users that listen to them.

The model removes the incentive for fraud AND it gives artists more purpose to super-serve core audiences. Incentives matter.

  1. Remove Fraud Incentive: The math won’t work. If the maximum your streams pay out is 70% of your subscription fee (the non-Spotify share), you can’t recover it by streaming your owned tracks.

  2. Add Fandom Incentive: If a small number of people stream you a high share of their total, you’ll earn real money. Scale isn’t the only dominant measure. Depth enters the equation.

Streaming could become less discovery-only for artists with knock-on effects in how artists connect & create (less virality chasing).

This isn’t the only model, but it’s one that current leaders can most easily implement. And it sets a foundation of fan → artist payments that can be built upon.

It also just feels fair. We can at least make the default business model for artists feel decent.

The Streaming Fix

5 steps to enlightenment.

  1. Raise Prices: Come on

  2. Change Model: Fan Powered

  3. Increase Royalty by Listen Time: In subscriptions the depletable resource is time

  4. Add Fandom Upgrades: Subscribe to Artists, NFTs

  5. Complimentary Layers: Social, Gamification, Immersion, Ownership

— Rob

So, how can an artist break through all this noise? See below.

🗒️ GOOD ADVICE

How do you stand out?

New segment. 1 question with 1 wise music pro.

Who: Jamie Coletta. Incredible music PR & manager.

The Question: How do you stand out?

The Answer:

There is no replacement for being wholly, authentically yourself. That starts in the studio and arguably long before that, too. There is such a level of vulnerability that has to happen here and it’s gotta start with the music.

From there, it’s all about utilizing visual and social storytelling to your advantage; you don’t have to be an influencer but you do need to think about the bigger universe you’re creating with every single thing you put out. The more uniquely identifiable AND relatable you are to your fans, the easier it is to stand out from the jump.

I share these sentiments. And they show up in our next section.

🦁 IN THE WILD

Gaming the System

Almost 10 years ago, Vulfpeck exposed Spotify’s payout system in a genius move that grew their fandom & lore.

Here’s how Sleepify worked:

  • Silent Album: Vulpeck released an album of 10 silent, 30 second tracks. Just long enough to earn a royalty.

  • Fan Involvement: If you listen all night on repeat, you generate $4.

  • Free Tour: They would fund a free tour routed to where it streamed the most.

How did it work out? It received 5.5 million streams & $20,000 in royalties in the first 7 weeks before Spotify removed it. But these numbers can’t quantify the impact.

  1. Tons of press for a new funk outfit: Rolling Stone, The Atlantic, Billboard, Time, Techcrunch, NPR, BBC, Forbes & more.

  2. Word-of-mouth was off the charts. Spotify’s takedown only helped. “Did you hear about this band that released a silent album?”

  3. It further cemented their brand & personality. This was in line with who they were as a band. Funny. Cheeky. Smart, but irreverent. Fans were in on the joke. They were creating a club.

They then put on a free tour in 250 cap rooms in 6 major US markets. They even played Sleepify in full during each show.

9 years later: Vulfpeck is selling out Madison Square Garden as an independent funk band, but our streaming payout model hasn’t changed one bit.

🧠 Your marketing can be a natural extension of your art if you cultivate a genuine identity.

Watch Vulfpeck’s MSG concert video shot on 2 iPhones on-stage by band members, a continuation of their well-crafted DIY aesthetic that began with rehearsal videos.

🗞️ What You Missed  

Universal partners with AI sound wellness company Endel to release functional soundscapes (sleep, relax, focus) based on stems from their artists.

This is the 1st major generative AI partnership. Here’s why:

→ It’s safe & artist driven.
→ Gives extra life to releases.
→ Taps the growing functional music market.
→ Leverages artist branding without risk of too closely mimicking the artist.

🤝 Web3

  • Spores lets you remix your favorite song without any experience.

  • Release launches 1st method to release full albums on-chain as bundled singles. Decentralized Bandcamp.

  • DNS & Kane Mayfield collab for 1st drop on the Tezos platform with sold-out AI video NFT.

🤖 Music x AI

  • Tencent is launching AI tools to help reduce the barrier to music creation.

  • 1st song by an AI singer to be streamed over 100m times

  • Spotify may use AI to make host-read podcast ads.

  • Pnau, Bebe Rexha & Ozuna drop AI-based music video.

  • OpenAI CEO Sam Altman discusses music during congress hearing…and wasn’t aware of Soundexchange

⚒️ Artist Tools

  • Spotify shows the benefits of collabs

  • CDBaby stops CD & vinyl distro

  • Bandlab raises at $425m valuation. In this economy? Creator tools 🚀

  • Anti Social Camp is a week-long celebration of the art of collaboration. It’s like SXSW for songwriters. June 12-17 in NYC.

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Talk next week.

- Rob