An infographic published last year by DiMA, the lobbying body for digital music services, suggested that the average DSP keeps $3.10 of every $10 it collects in subscriptions. With that in mind, the sight of a brand new streaming service promising to pay musicians $4 per subscriber, per month, is guaranteed to raise eyebrows.
How will those economics work? Loyalty Tunes is the startup, and it’s using an affiliate / referral marketing model. So, if a musician (or, indeed, a listener) refers someone to the service who then starts paying for a subscription, they’ll get $4 of that subscriber’s monthly payment.
How the remaining $6 of that subscription is divided between Loyalty Tunes and musicians has not yet been made public – the company’s press release sets out an ambition to launch the service next spring via a crowdfunding campaign.
There is also talk of benefits for listeners including discounts off holidays, shopping and eating, which would be another revenue stream. The big challenge will be this: an affiliate system based on subscriptions needs people subscribing to work.
Getting people to subscribe requires a catalogue of music worth subscribing too. And getting that catalogue will require artists and rightsholders to buy in to the business model.
Tools: platforms to help you reach new audiences
Tools :: Wyng
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