Arena: Can A Free Streaming Music Service With A Unique Business Model Succeed?
When I read the short version of Arena's proposition, to give artists and rightsholders an outlandish amount of money for streaming free music with no advertising, it seemed a bit difficult to take seriously. When I looked more closely at their business plan, I recognized that the big play is to become the premier location for streaming and artist storefronts by overperforming on all fronts. And then I found the part about album set-up fees and it all came into focus. Well, sort of, it's a bit complex but well worth a closer look.
The Basic Concept of Arena
Based on reading the press release and sections of the business plan, here's the basic concept.
Arena is a free streaming music service with a Listen To Own component which gifts downloads to those who listen to a track a certain number of times.
The service uses playlist and presumably has a noninteractive web radio licensing approach.
Arena does have a full range of music and does pay royalties for that but the extra benefits for musicians being announced are based on a set up fee.
An example of benefits for participating artists from the announcement:
"Once a listener plays any participating single song 5 times, Arena gives the listener the MP3 file to download and own while paying the artist $0.85, in addition to the $0.21 for the 5 streams, as if the listener had purchased the song to own directly."
"By combining traditional download revenue with premium stream payouts, artists are able to earn a potential $1.90 per track per listener – roughly twice what the iTunes download store could pay for the same purchase."
Set up fees from the business plan may not be currently accurate in terms of what they're doing with the service but gives you a clear picture with three tiers at $49.95, $199.95 and $499.95.
This info, along with the wide range of features beyond simple streaming and downloads, can be found on page 14 of the biz plan.
Artists are also required to sell merchandise through the platform to participate.
So 101 Distribution and Arena are counting on a certain level of artist fees, some of which will be waived to encourage desirable artists and build involvement, as well as a certain amount of sales.
But This Will Require Huge Buy-in From Artists and Fans
Lots of details in the report but here's what they say about becoming the central entity of their kind (pg. 35 of biz plan):
"The Company will also underscore Arena’s position as a convenient and fair destination for every level of artist seeking to stream their works and sell merchandise, digital downloads and physical albums. Through this effort, Arena will leverage its unmatched artist offering by encouraging artists and labels to promote their profiles (and the Arena brand) as the preferred destination for purchases and streaming."
"Artists can now decide if they want to position Arena as their exclusive storefront or allow inferior services to sell their works for a lesser return per transaction."
For Arena to succeed, beyond the math working out, will require buy-in from a lot of artists and interest from a huge number of fans. It looks like an enormous challenge and an interesting initiative to watch.