Why Subscriptions Matter To Musicians [Jack Udell]

1As subscription based services begin to occupy an increasingly large section of the market, artists are wondering how they can better get in on the action. Here we look at why a subscriber base would be so valuable to artists, and some of the challenges in creating an artist-specific subscription base.


By music manager Jake Udell from his blog Art of Manager

Subscriptions are increasingly becoming more important to business in our society, from Amazon Prime to Spotify to Netflix to… Cars.

Even non-tech companies are getting in on the action. But why are subscriptions so important? And will artists ever get in on the action?

1/Subscriptions enable predictable cash flow projections – Spotify, Apple Music, and Amazon Prime all know how many months I have been subscribed to them – They also know the likelihood I (any individual user) may cancel his or her subscription after being a paying subscriber for that duration of time.

If you know how many subscribers you have, how many new ones sign-up each month, and what your churn rate (% of people who cancel the subscription in a given period) is, you can consistently calculate growth and invest accordingly.

32/Therefore, subscriptions support growth – Many subscriptions have a “pay the year in advance” option. Predictable cash flows and annual subscriptions support companies needing to grow quickly. Since the annual payment option provides the cash for an entire year’s worth of services today, the company can allocate those funds back into marketing, an increased user experience, or other forms of expansion.

3/Subscriptions begot loyalty – Once someone is a part of a club or service, they are less likely to consume from competitors. If they choose to do so, they will almost always weigh the opportunity cost first.

For example, I am less likely to take a yoga class with a friend at a new studio if I have an unlimited monthly membership at CorePower Yoga (I actually just moved to a class plan to have more flexibility in where I practice).

Similarly, once I became a monthly member of Pressed Juicery (which only requires I pay $10 a month and get two juices for it + $5 for each juice after), I began automatically associating the purchasing of green juice (very LA, I know) with Pressed, even though the opportunity cost of buying elsewhere was only $1-2. At the beginning, my purchases from the store went up significantly.

As a member, I was paying less $5 instead of $6-8 per juice, but in exchange, Pressed knows I will buy at least two juices per month and gets my loyalty as the program triggers me to buy juice from the company as opposed to their competition.

However, in the case of Pressed, it’s worth mentioning being a part of their program is not necessarily convenient.

To add more money to my account, I need to log-in on a website, add the money, then use a QR code to purchase. The aforementioned process is more challenging than if I were to just use my credit card in the store.

Subscriptions should make it easier to buy, not more difficult. So for certain periods, I’ve actually purchased less juices than I would have originally solely to avoid the two minute hassle of “adding funds” to my account.

A person who has purchased a product is more likely to purchase it again than purchase one they haven’t – the same way they’re more likely to listen to an artist they have listened to in the past than one they haven’t heard before. This is why retention is so critical when it comes to building fans.

Assuming you can deliver a subscription effectively and conveniently, it has many advantages. We will continue to see even more opportunities to commit our money through subscriptions in 2019.

How can artists benefit from the subscriptions craze isn’t quite clear yet The most valuable offering in their arsenal is exclusive content, but both artistic specific attempts – As of this week, Taylor Swift’s The Swift Life app is shutting down – and general platforms created by industry moguls – BCKSTG with multiple tier 1 celebrities and Backplane (co-founded by Gaga) before it – have completely failed.

There are several challenges to artist specific subscriptions –

1/It’s more than enough work for artists and their teams to create enough quality content for public platforms, especially with the level of consistency required to maintain relevance today.

2/Many top tier artists do not want to charge their fans for “digital access”.

3/The aforementioned platforms have forced fans to travel to a different place (new app) than the ones they already frequent in order to get the benefits of the offering

As subscriptions become more and more mainstream, there will likely be an artist or platform who figures out how to overcome these challenges and get subscriptions right.

I predict this will happen in the next two years. When it happens, the subscription paradigm will open to artists creating another revenue model artists can own.

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