Like much in the music industry in the past several years, the way artists monetize their time and talent has changed. The COVID-19 pandemic and a changing industry drove artists to look for new ways to monetize their work outside the traditional revenue streams.
A chief driver in that shift: Artists saw that fans began to value them and not just their music. Monetizing artist value in new ways opened the floodgates to new revenue models.
As a result, artists are breaking free from traditional royalties and seeking new ways to drive revenue from their work. And from NFTs to exclusive experiences, they’re increasingly relying on tech platforms to do it.
Striking a Balance
For years, industry behemoths like YouTube have come under scrutiny from artists who claim they don’t have artists’ best interests in mind, don’t do enough to protect copyrighted material, and fail to guarantee compensation for their songs.
There is clearly tension between artists and platforms. But where do fans fit into the equation?
Fans usually enjoy the availability of free music, videos, and general content from their favorite artists on mainstream social media and streaming platforms. Fans see value in free (to them) content.
But for most artists, streaming platforms generate only tiny amounts of revenue: About 97% of artists whose music streams on Spotify, for example, earned less than $1,000 in royalties in 2020, according to one study.
This forces artists to face a difficult balancing act: They want to distribute their content as widely as possible but also need to find a way to make a living off their music. One of the ways they’re approaching that challenge is by exploring ways to not only deepen their relationships with their fans but also find creative ways to monetize their efforts.
Out With the Old…
Leading voices at the intersection of music and tech like Dan Fowler argue that the traditional role of music licensing and collecting royalties is not the future of music. He says, “The current financial mechanism behind royalty payments is archaic, and contributes to depressed development and innovation in our industry.”
The current financial mechanism behind royalty payments is archaic, and contributes to depressed development and innovation in our industry.
Fowler proposes a fundamentally new shift in music industry financing, including the possibility that artists should be creating their own financial systems for their fans. One way they could do just that? Blockchain technology.
…To Make Room for the New
There’s already movement on that front: Startups like Opulous are at the forefront of new ways for artists to monetize their work.
Opulous gives artists the chance to use the blockchain to split their copyright and sell percentages to their fans as a way to earn money while bypassing traditional banks.
Opulous and other startups using the blockchain to financially connect artists and fans are putting artists’ interests at the forefront. In the process, artists circumvent traditional money exchange systems that often take more than their fair share of value.
Fans of tech
Companies like Opulous aren’t alone in betting on blockchain for the future of the music industry, plenty of others are doing the same to support new ways for artists to monetize their work.
While it’s safe to say that the market is still experimenting with this approach, it’s given traditional music houses and financial institutions a serious run for their money.
Based on trends such as artist-inspired digital artwork, innovative financing methods, and establishing sophisticated online communities, it’s clear that musicians are getting serious about finding ways to make more money outside of the traditional record label system.
One of the cornerstone elements of that effort is elevating the fan experience as a key value driver to grow revenue outside of traditional methods. And they increasingly realize that part of what makes a fan experience so special is the idea of scarcity, even in a digital context.
For example, artists use exclusive events, privileged direct-to-fan relationships, and unique objects as ways to create unique fan experiences.
For artists, this means taking a new approach to the traditional fan relationship. No matter how cool the tech is or the innovative business model, none of it matters unless it delivers extraordinary value from the fans’ perspective. NFTs, limited art collections, and interactive fan experiences must support a well-defined fan-artist experience strategy.
Strike the Right Chord
As artists begin to adopt and even create their own digital platforms and pursue alternative financing methods, it becomes even more important to work with a digital partner—especially in early-stage development—to balance the complex needs of artists and fans.
Balancing the needs of specific users in a highly competitive industry requires a partner dedicated to putting in the upfront work to make a successful final product. That means everything from project management and product development to delivering a product to market. The wrong digital platform—or even the right one built the wrong way—can mean the difference between success and failure.
As musicians and other artists continue to explore tech platforms as an avenue to find new ways to monetize their work, the right partnerships will play an ever more important role in what’s already a competitive industry.
