Have Donations Become A Viable Part Of Musicians’ Business Model?

As live streaming and other newer media models becoming increasingly commonplace in the new music economy, it may be time to revisit donations and see if they are perhaps a more legitimate component of artists' business model than previously thought.

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Guest post by Bas Grasmayer of Musc X Tech X FutureNapster, the early file sharing service, not only introduced many to piracy. The platform also exposed two competing world views. One believed that information should be free and the other believed in combating such ideas. They were both wrong.As a teenager, and still today, my personal sympathy went out to those who saw a better world and wanted to accomplish that by facing down large corporations. Their envisioned world was never satisfactory enough for me, though. It seemed oversimplified. One of the most common tropes you’d hear would be:“Artists should just release their work for free and let people donate. I’d love to be able to donate to my favourite artists.”

An example of a common donation request.At that time, there were only about half a billion connected devices. Most of the world’s population wasn’t online yet. Those that were, and thought this way, were a minority projecting their own behaviour onto others. It’s common: most music startup founders do the same thing — overestimating how much people care about music. Simply put: the donation model could not scale.The model didn’t take into consideration the complexity of the way music is made. Let’s say artists were able to make a living off of donations — this benefits the most visible artists; the singers, but not the songwriters. How should money from donations then be distributed so that it’s fair? Does the intention behind the donation matter? Questions like these are the reason why there’s so much legislation around creative work.

An elemental overview of merely the royalty distribution part of the music business. Via Bemuso.Time passed and two trends have developed. Firstly, there has been an explosion of artists who do everything by themselves. Households in many countries now no longer have just 1 family PC, and music production software is easy to attain. This has led to a rise of ‘bedroom producers’, many of which are world famous and make a good living off of music.The second trend is that the internet has become more real-time. Ten years ago you wouldn’t consider sharing memories online that would only be visible for 24 hours. Now, two of the world’s most popular apps, Instagram and Snapchat, not only encourage, but thrive because of that behaviour.Fast wireless connections and increasingly powerful devices have enabled livestreaming. Anyone who’s ever ‘gone live’ on Facebook or Periscope knows that it changes the creative process of making a video. Live video streams are not just a new way to broadcast, they’re a creative format.

Trends mix and influence each other. If you want to understand where things are going, you have to understand how trends converge and diverge. In this case, the two highlighted trends have culminated into a particular reality: donations are becoming a viable part of artists’ business models.Understanding how donations are becoming viable is easiest by looking outside of music. Donations are already an important part of the economy on Twitch, a platform for broadcasting gameplay, which also encourages creatives to start streaming.Gamers use donation apps to display tip notes in the live video stream. Some apps actually automatically read out the tip notes on-stream. Tipping is done for various reasons: to actually show appreciation, to encourage the chat to discuss a certain topic (or more likely: to emote-spam), to request a song, to ask for expert feedback, to get their name or joke into a YouTube highlight reel, etc

And sometimes they use tips to scare streamers shitless.For popular streamers, it’s hard to interact with the chat, because there’s just too much to read it all — and they also need to focus on their game. Tip notes provide a way for viewers or fans to rise above the noise and get the streamer’s attention.The takeaway here is that donations do not seem to occur for altruistic reasons in most cases. The exact ratio would make for an interesting study. Much of the donation behaviour happens due to the desire to interact, stand out or to get a request fulfilled. It’s a behaviour enabled by the immediacy brought on by the rise of high quality live streaming.

Some streamers highlight their top donators by keeping their names visible (in bottom).Musicians that want to incorporate donations into their business model will need a clear strategy. Firstly, it’s unlikely that donations on their own are viable if the goal is to make a living off of creative work. Although if you do it all yourself, like many artists these days, you get to keep the whole cut.Secondly, the reason why donations are becoming viable is because of live streaming. This means the artist needs to be able to consistently generate audiences and that takes time to build. One-offs are a recipe for failure, especially if they don’t sit within a broader strategy.Live streams being a creative format of their own means that there needs to be an intrinsic motivation to work in this way. Else one won’t be able to muster the consistency and grit necessary to succeed. The question for the artist is: “is this medium compelling enough for you to spend a significant amount of your time on it?”Whatever the answer, the trend is clear. As artists are embracing the live format, with younger ones even coming into maturity with it, we’ll see donations make a comeback. This time, not as charity, but as a well-planned part of artists’ business models.