In the Covid-19-era music industry, the old income dichotomy of recorded music and live performances is not dead so much as it is becoming fleshed out.
A variety of different fan experiences, earning money for artists on different platforms, is emerging as a common approach. Livestreaming is at the heart of many of them.
It seems intuitive: if you can’t play live in the physical world, then play live online. With a glut of livestreaming and virtual ticketing startups springing up alongside established platforms like Twitch, YouTube and Facebook/Instagram, there’s also a sense that livestreaming has not yet taken its final form.
What does it look like, how does that differ for each artist, and how should they be making money from it? We’re still very much in an experimental stage for those and other questions.
Meanwhile, that experimentation comes at a time when creator royalties from streaming services are once again in the spotlight, as many musicians realise that streaming payouts alone won’t pay the bills.
Enter Tim Westergren, the former founder and CEO of Pandora, who helped to build the current digital music landscape. Having left the company in 2017, frustrated by what he’s since described as Pandora getting “sucked into the music industrial complex vortex”, he recently launched a new startup called Sessions.
He says it will give musicians the tools to earn money, allied to a music-specific promotional strategy to help artists build their audiences. Music Ally spoke to Westergren about Sessions and his thoughts on the current state of streaming.
Part of his pitch is that Sessions will help artists to hold on to their direct connection with fans, and to make money from the audience that they own. One early case study: an artist on the platform recently generated $10k of revenue performing to only 300 viewers.
“When the web came along I was playing in bands, and every musician was like, ‘Holy fuck! We are now going to be available all over the world, break down the gates, and be able to participate [in an industry] in which we’d been marginalised like never before’,” he says.
“Digital music has been one colossal failure in changing the economy of musicians themselves. It looks a lot like it did 40 years ago, where the money goes to a few and the rest are fighting for crumbs. The web and the social network caused a rush of artists to invest time, effort and money to build fanbases in this world of followers, streams, and likes, with the idea that ‘now we have this audience, we can build our lives in this space.’
“And what has happened is that artists have given away their audience to someone else – and now they have to rent it back from them to be heard and to make money. There’s a big tollbooth between them and the fanbase. Artists have built up the value of every platform and now they’re on the outside looking in again. Music is not the core business of these platforms – for the most part they are advertising businesses, or subscription-based – but musicians are in danger. That, to me, is the macro-situation in this space.”
For Westergren, the solution is clear: “Artists need to recover their audience. The great challenge that musicians face is getting people to come to the things they have to offer,” he says. “There are tools galore in livestreaming but it doesn’t matter if there are not great direct monetisation tools for when fans do turn up.”
In a lot of ways, Sessions is like other livestreaming platforms. Artists can stream, host an audience, interact with them, and make money. Westergren says that the difference is partly that Sessions markets every show.
“We spend money to bring people to shows. So if you’re a young artist with a modest fanbase, or a more established artist, we can bring people to your shows,” he says. “And once you get there, we’re very good at monetising those experiences, so we can spend money to market, and still make money at the show, based on our ability to monetise fandom during the performance.”
The mechanics will be familiar to anyone who’s spent time on Twitch. Viewers can leave comments for artists in the Sessions text-chat stream, and they can also show support with virtual gifts in the form of ‘Love’ – emoji-like images that show up in the chat.
There are different levels, starting at images that cost one Love heart (‘Hot’ or ‘Mic Drop’) but going up to 25,000 (‘Bravo!’). Fans spend $4.99 to get 400 Love hearts to use on Sessions. The system is also designed to highlight superfans: top supporters are flagged at the top of the chat, and artists build ‘crews’ of fans, the size of which is shown on their profile.
Sessions isn’t just a tips economy: it also offers virtual ticketing. Often, a limited number of tickets can be snapped up for free, with the rest priced at the discretion of the artist – between $2 and $5 seems to be the sweet spot at the moment.
Westergren notes that while ticketing can be important: “We think the real win is monetising fan engagement in real time.”
If Sessions shares many features with Twitch, why should artists choose the startup over the much bigger, established (and Amazon-owned) platform?
“The design of the site itself, and the way that monetisation is structured, is a metaphor for live performance. The monetisation moments are aligned with what it’s like to perform and are friendly to a musician as they’re playing,” says Westergren.
“Rather than clapping at a performance you have ways to express yourself digitally. It’s not enough to have a livestream and have a tip jar – it doesn’t work.”
Browsing Sessions can feel a bit like being at a vast music-industry showcase event, with artists from across the world performing original materials and covers, in all styles of music, with varying degrees of talent.
Many chat with fans in between songs, shouting out to regulars and thanking them for their contributions. Westergren says that artists are increasingly un-shy about asking for money, while fans are responding by recognising their role in paying directly to support their favourites.
“I think it’s critical that we achieve a sense of a fan’s commitment to the artists – but they have to get something out of it too – it can’t just be charity,” he says.
“What’s being learned by artists in particular is that this is a different paradigm [of performance]. It’s not an obligation to support the artists – it’s connection and affection for the artist. And the artists can reciprocate that – therein lies the value exchange.”
Does this mean that if artists aren’t that comfortable chatting in between songs, they’re not going to suit this environment?
“Artists willing to make that investment will get a lot more out of it than those who don’t want to [chat]. Someone who doesn’t want to is making it more difficult for themselves,” says Westergren, although he suggests it’s not so different from the physical gigging world.
“Musicians who survive by playing the clubs regularly on a Thursday night do it by knowing the people that regularly come – it’s more akin to that,” he says.
“The long tail of artists have been left behind over and over again and this can be a genuine solution for them. We brought in about 150 artists in the beta phase – complete amateurs – and they’re making five, six, seven hundred dollars an hour now… I would have killed for that when I was in a band!”
“This is a paradigm change. We had an artist a couple of weeks ago who made $10k with 300 people in attendance. That artist could not fill out a coffeehouse anywhere in the real world because they don’t have the fan density. But they make that much money with the audience spread around the world.”
In Westergren’s gigging days, he says his band spend years building a fanbase in just four US states – “travelling hundreds of thousands of miles, so we could play once a month in each market, fill a club, and not get killed financially”.
He hopes that Sessions can be powerful in a different way for today’s emerging artists, but is also keen for it not to feel like an exhausting treadmill of a platform for them.
“The platform has to be structured so you don’t have to be on 30 hours a week. The way the audience participates, rewards you and is rewarded for supporting you has to be very carefully designed,” he says.
Comparisons between this new world of livestreaming and the world of [recordings] streaming that Westergren helped to build are inevitable.
“What I learned at Pandora was that we were generating a lot of revenue and giving 70% to rightsholders, but not making a dent in the pocketbook of the majority of most artists on the platform. Not because we weren’t monetising well – we were working hard to generate revenue and giving of it most away, and still not solving the problem,” he says.
“I look at Sessions [where] a person makes $10,000 in 45 mins – how long would that take on Spotify or Pandora or Youtube? That juxtaposition is what’s happening in digital for artists in general – where would $10k put that Sessions user in the [yearly earnings] pantheon of streaming artists?”
“There’s a lack of efficiency between a fan who wants to give something to an artist to explain their love for what they’re doing, and how the artists are receiving that. Right now, all these platforms are wildly inefficient ways for artists to make money: your music is available all the time and you don’t make any money. And that’s why Covid has been so devastating – live is the one place where you get paid directly.”
Westergren has more criticisms of the current streaming ecosystem, suggesting that the DSPs are driving fans’ behaviour, and their attitude towards artists.
“They are being trained how music should be consumed – to think of it as ad-supported radio or a $10-a-month-bundle – training people to think about how music is consumed, and artists don’t have much of a role in that. It’s training people away from seeing the artist,” he says. “The brand is the platform. That’s natural capitalism.”
Spotify CEO Daniel Ek’s recent interview with Music Ally, in which he suggested that success in streaming requires “continuous engagement… a continuous dialogue with your fans”, brought him some ferocious criticism from artists, who saw it as a vision of creativity as an everlasting treadmill.
Another interpretation might be that artists could continue to release recordings irregularly, and then to maintain a continuous engagement – and separate income stream – through live performances on a platform like Sessions.
When Sessions launched, one of Westergren’s interviews saw him putting the boot in to streaming services, including the one he founded.
“Subscription businesses,” he told Fast Company, “are destroying music, and they’re destroying musicians. And, unfortunately, Pandora has become part of this now.”
Knowing what he does now, when he looks back is there anything Westergren would like to have done differently, to set the industry on a path towards another model?
“Pandora’s core product was a noble and good thing – it offered exposure and massively diversified content to a large audience. In hindsight I would have invested far more heavily into translating that into value for artists,” he says.
“If 20k people have ‘thumbed up’ an artist’s music on a station, how do we take that and turn it into value? Not advertising on the stream – a separate layer. We started building these tools, but I would have made that into a non-negotiable mainstay for us – to turn a ‘thumb up’ into value for the artists in some way.”
“For instance, once you know who that fan is, how do you bottle it, and put them in a different place and support artists in a way that works? Taking that self-declared fan and transferring value in some way to the artist. It has to be associated with something else.”
This is part of Sessions’ model, he says. Once an artist has built up and knows their audience, they should be able to make money from that connection – both on the platform and elsewhere.
“Once an artist has a fanbase, and can affordably reach them at scale, they have something to work with: ‘I can get 20k people to see me for $100, so how do I turn that into a business?’ That’s a proposition they can work with,” he says.
It’s still early days for Sessions, but he’s confident that the startup can provide that new income stream and business model for musicians, while also (another challenge for traditional streaming services) supporting itself as a business.
“What’s missing is a large-scale, global platform, whose business model is directly aligned with that of an artist,” he says. “Sessions makes money on commission from what the artist makes. That’s alignment.”
Music Ally’s next Learn Live webinar will help you understand what’s required for artists to thrive in new international markets!
This is a very divisive topic, I think, very much down to both personal preferences and the actual app experience.
Some people definitely prefer a one-stop-shop approach, given the UX is good enough for both music and podcasts (and audiobooks even, to go further), a swiss knife instead of a toolbox.
Interestingly enough, I believe this is something independent from the usage of both functions – e.g. someone listening to podcasts only sporadically might either be very happy not needing another app for that purpose, or – just like you – being frustrated by ‘unneccessary’ bloat in his often-used music app and content to have a discrete, if rarely used, app for podcasts.
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