Monetized streaming is the future

Monetized streaming is the future

Streaming is huge. Bigger than ever. And growing.

Everyone’s on Soundcloud, YouTube, Spotify, or some other source where listening to tracks is just the click of a button away.

This surge has drastically impacted the music industry, by making content easily accessible (often for free), facilitating interaction between creators and consumers, and by giving creators the freedom to share and collaborate. Yet the impact of streaming is not nearly at it’s peak.

The next level is about how to successfully monetize it. Something that if done right, will truly change lives.

This realization hit home when I was rounding off our label’s second quarter royalty payments a few weeks back. It’s the time when we look at all the revenues we generated by selling or streaming music, via sources like iTunes, Beatport, Spotify, Bandcamp and others.

To make this a clearer story, I’ll elaborate on our distribution strategy first;

Heroic Recordings pushes mostly electronic music. We believe that that music should be accessible, everywhere, for everyone. We’re actively engaged in the music blogosphere and are very fond of free downloads. Especially when in exchange for social currency, such as Facebook likes and Twitter followers. However, we also believe in the intrinsic value of music – as our artists and us have to pay the bills. So we also sell – distributing to all major online music stores; iTunes, Beatport, Spotify and so on.

Yet we have to make an active choice on where we lead our customers. On whether in a new release’s marketing efforts, we direct them to Beatport, iTunes, a free download or elsewhere.

The trade-off we have to make here is between the quick growth of social-currency via free downloads, versus extra revenue via distribution sales and streams. In a perfect world, we’d go for free downloads all the way – as growth is the quickest way to move up in the game as a starting indie. However we can’t give it all out for free – as the income, even if still relatively minor, covers costs and investments. The big hurdle to pushing our fans to buy via online stores though, are the absurd prices they charge. Beatport asks a whopping $2 for an MP3 and even more for a WAV, iTunes $1 for a single. Now don’t get me wrong, music has value, and artists and labels put in hours which make a tune, even if an MP3, valuable, but those prices simply do not reflect reality anymore. Five years ago charging $1 would have been reasonable, but with a target demographic of EDM lovers aged 15-25, mostly students, and the accessibility and variety of music via streaming (Soundcloud, YouTube, Spotify) and piracy (torrents, file aggregators), we don’t believe $1 is market value.

The solution we’ve found is to make all of our content available via Bandcamp, charging fans just $0,50 for a track – but allowing them to pay more if they want. And we get to keep their email addresses. It’s where we direct all our traffic, and is a platform which fans experience to be closer to the ‘source’ than when shopping from an intermediary like Beatport or iTunes. Still, we’re also distributing to all the online stores, as it’s all about being easily accessible. There is just little reason for us to send traffic there, as besides being overpriced, they’re all about chart positioning – and competing against the majors and bigger indies, whom  can much better facilitate high rankings (via big existing fanbases, marketing budgets and sometimes even illegal chart-pushing activities) is time not spent best.

To come back to the point, when rounding off our latest quarter’s royalty statements, we found the following; 42% of income came in via Bandcamp, 29% via iTunes, 14% via Beatport and 13% via Spotify. With no efforts to direct traffic to anywhere else than Bandcamp, they all generated revenue. But the most interesting here is Spotify, which made as much as Beatport did for us – while we’re a label focused on electronic music, and Beatport is the primary marketplace for DJs and electronic styles.

We ran the numbers; 170 streams on Spotify lead to a $1 net royalty, meaning $0,006 a play. Not bad at all. After a 10% administration deduction, 50% of that goes to the artist. In other words, just about 380.000 plays on a track brings in $1000 in net royalties for an artist of ours. How cool is that. And the best thing is – this requires little effort nor expense on the user’s end. Because both subscribed and free Spotify users contribute to this revenue. While not huge, these figures will become much more significant when you include YouTube and soon Soundcloud revenues. Our label’s hooked up with a YouTube partner network, and via them, 800 plays on our channel leads to a $1 net royalty. And with Soundcloud just launching their advertising model and partner programme, on which we’re soon joining in, monetized streaming promises to become very significant.

I see the bigger picture being this; digital overtook physical, with MP3s and downloading replacing the necessities for CDs. Soon, streaming will overtake downloading. Soundcloud’s the perfect example – reporting 175 million unique users per month. Sure, there will still be people that buy CDs, vinyl or files (particularly DJs), but it’s definitely where things are headed on the grand scale. The rate will be determined by the accessibility of good internet, smartphones, how soon the music industry determines a true balance point between charging for these services and paying for use of music, and the extent to which copyright law will move to support all this.

This outlook put a big smile on our faces here. We fit perfectly in our own 15-25 year old EDM loving target demographic, and frankly, we stream all day. Soundcloud is our label’s primary medium, and we’re all running Spotify accounts – streaming from a huge catalog at 320kbps. None of us really download, perhaps incidentally for DJ sets, but that’s it. So to expect our fans to do so is absurd.

That is why those Spotify numbers are so exhilarating. With YouTube income catching up, and soon Soundcloud joining the mix, it is only a matter of time before monetized streaming becomes a real core income stream for our artists and us. Without screwing anybody in the process, or charging unreasonable prices. Bring on the future.

Guest on the Artrepreneur Podcast show

Guest on the Artrepreneur Podcast show

Heath from The Artrepreneur Now invited me to be a guest on his Artrepreneur podcast show.

He is all about spreading positive creative influence, via his podcast where he interviews artsy entrepreneurs, and through the The Artsy Now foundation, which is focused on providing children the opportunity to discover their purpose in life through music and art. A honorable cause if you ask me.

We talk about my journey in the creative field, about The Soundcloud Bible, running a label and everything in between.

Tune in to the show here:
iTunes
Soundcloud

New video tutorial: How to set up like gates

Free downloads.

We all love them, but have a hard time converting them into something valuable.

That’s where like gates come in. A method for exchanging your free content for a FB like, email address, tweet or Soundcloud follower.

As you all know, I’m a big proponent of this strategy. After all, who would prefer a few hundred dollars in sales, as opposed to thousands of downloads and email addresses? The latter is bound to get your music more exposure.

I have teamed up with Andrew Apanov of DottedMusic and WeSpin.com, and we’ve created a video tutorial this topic. A step-by-step explanation on how to set these up, and you can watch me do so whilst I run you through the process.

Check out the video here, and learn how to get more out of your existing freebies.

New video tutorial: How to set up like gates

Soundcloud is adapting… are you?

This post was written for and originally published at DigitalMusicNews. Read it here.

Anyone that’s serious about marketing music has noticed that Soundcloud has changed.

Just over a year ago they introduced their brand new user interface to the public, still largely in beta mode. It introduced a few new features whilst adapting or removing older ones. At first everybody panicked and complained; it looked too cartoony, not all old functionality was there and there were a lot of infancy bugs. Over time though, they’ve done a great job refining the platform to its current state – and most fans have grown accustomed to it.

They are upping their game; shifting course from being originally intended as a means for musicians to collaborate, to a mass-scale music platform. A mandatory change if we believe the numbers… October 2013 reports claim over 45 million registered users and over 250 million monthly listeners. They are the most shared music platform on Twitter and valued at over 700 million, with recent rumors even talking about a takeover by Twitter (recent sources already state this deal hasn’t gone through). It’s often said that they took the online space that Myspace had once occupied, and with that comes the realization that they need to continuously adapt, or face the cliff.

On May 12th they announced the official shut down of the old Soundcloud, removing the option to switch back to the older style if you so preferred. That makes the new Soundcloud, or Next Soundcloud as they call it, here to stay. And we as users, artists, industry professionals and fans, better learn how to use it properly.

Over the past few months I’ve received many emails of people asking how to cope with the new changes. The focus of the promotion within the platform has shifted, and many of the older tricks aren’t useable anymore. As many were using those with a lot of success, understandably they are upset… and want a solution.

In this article we’ll discuss the most important changes, how that has changed the game and what you can do to adapt to it. How to turn it around and make it work in your favor. Adapt, leverage, grow.

So long, private sharing trick

The issue I’ve heard most about is the removal of the ‘private sharing trick’; a great method for sending out privately uploaded tunes directly to your followers and people you followed. You could include a 140 character message, and recipients would receive a notification and often also an email. The latter was enabled on default in new accounts. One could then switch the upload to ‘public’ while retaining all the traffic. With the cap on people followed being 2000 and the email notification, it was an incredibly effective way to give new uploads an initial boost.

Besides that, they have improved the algorithms that detect spamming in comments and messages. Accounts are now automatically flagged if they place too many similar comments within the same time frame, with the punishment being a mute-period. The more you get flagged, the longer the mute period – until you get banned.

In return, the inter-user messaging system has been improved, including a new method for private content sharing, allowing you to include content that has been uploaded on your profile to private messages to other users. This also works for privately uploaded content.

Changes in content curation

Another less obvious but crucial change is made in the way content is curated to user’s streams, the personalized music discovery tab. Before, it would display content uploaded and liked by those you followed. Now, with the introduction of reposts, it shows solely their uploads and reposts (reposting allows users to post other people’s uploads to their own profile, attracting traffic from their own fans, but directing it back to the original source – the profile of the uploader).

Soundcloud did this because with the older system, streams had become terribly chaotic and crowded, to the extent that people rarely used it to discover new music. As it included content both uploaded and liked by those you’re a fan of, people that followed many active users quickly received too much content to be able to digest. Their streams got flooded and as a result they looked elsewhere for music discovery… blogs, Hype Machine and promotional channels.

With the new changes, the stream has become a much more filtered source; showing less but higher quality content. As a result they hope to make it a better resource for music discovery, which to me, is a very welcome change.

How do we adapt?

When looking at the bigger picture, you should realize that Soundcloud has forced a shift in user’s focus for promotion within the platform.

Marketing to other users has become less rewarding, with the removal of the private sharing trick and increased anti-spamming rules, whereas marketing to tastemakers and content curators has become much more interesting, with the introduction of reposting and the new content curation system. Instead of focusing on promoting to other users, you are now much better off getting through to the right DJs, labels and music promoters, whom are easier to reach and can publish your content to their audiences.

In terms of practical strategies, the above can be translated into a few strategies which allow you to work with the current set of Soundcloud features;

Email marketing

To cope with the loss of the private sharing trick, which could drive a surge of traffic to new uploads, there’s the alternative of direct email marketing. Hopefully, you were already doing this simultaneously to using the private sharing trick, but if not, this is absolutely the right time to do it. I’m actually convinced that email marketing, and building a solid email list, is the strongest form of online marketing… think about it – when posting to your fans on Facebook and Twitter, only a selection of them sees the post, and it’s also competing with the posts of others, whereas with email you pop up straight into someone’s inbox. And everyone reads their mail everywhere nowadays.

You can easily collect email addresses by offering your fans free downloads in exchange for their email address, using tools such as ‘content lockers’ or ‘pay what you want’ download systems. You often see these for likes, where people can access downloadable content by clicking ‘like’ on a Facebook page. An easy to use email gate system is offered by Bandcamp, and I explain how to set it up in this article. Also collect via adding a ‘sign up’ tab on your Facebook page and website.

Soundcloud is adapting... are you?

Good newsletter services, where you can store your email lists and send out campaigns from are Mailchimp and Aweber. Using these, you can build an audience and send them your latest releases directly. The key here is to develop a relationship and to prime them for your content. That way you’re going to see much better interaction rates. Send them content regularly, but not too often, and whenever you have a big release coming up, give them a heads up before dropping it on their laps. Good design goes a long way too, and this is where Mailchimp is the definitive king.

Reach the tastemakers

With the introduction of the reposting and new private messaging features, Soundcloud has empowered tastemakers; whether labels, DJs, music promoters and blogs. That can be to your advantage, if you know how to get through to them.

Reposts allow them to curate content on their own profiles, providing exposure to other accounts, and encourage interaction between associated accounts. You now see many labels reposting releases of their artists, whom in turn repost uploads of the label, and then lastly there’s blogs who then repost a lot of that content as well. It’s an interesting dynamic – one you can use to your benefit.
Soundcloud is adapting... are you?
Firstly, you need to cultivate this interaction within your crew. Get your label, associated artists, remixers and any blogs you’re close with to repost your stuff, and then repost their uploads in return. Everyone benefits.

Secondly, this is all the more reason to develop strong relationships with blogs and music promoters. There are many with Soundcloud accounts with huge followers, each focused on a different subset of music. Think about house.NET, dubstep.NET or Mr. Suicide Sheep. You should build a list of blogs that are applicable to your sound, trace the founders, cultivate relationships and start updating them on your music. Support that by sending out newsletter mailers to larger selections of blogs, using services as discussed before. Find an extensive guide on how to reach these bloggers here. When you get blogs or promoters interested, ask them to repost or upload your content. In the latter case, repost it yourself.

Then there’s the new messaging system, which allows you to include audio to direct messages to direct messages to other accounts. This also works for private uploads. In my experience, this is a very solid way to get through to DJs, labels and tastemakers – as many have large Soundcloud accounts which they maintain themselves. Also the barrier to checking messages is low and with the audio being embedded, I find that response rates are surprisingly good. Use this as a way to get DJ promo, to get your demo through to labels or to get support of those blogs.