The music industry is constantly changing and in need of new business models. This is due to several factors including disruptive technology. For example, the format on which music has been delivered to the consumer over the last few decades we went from mixtapes, to CDs, to MP3s, and more recently music is also delivered in the form of streaming. Popular streaming services include Pandora, Spotify, and Beats. Beats has been bought by Apple and is expected to be re-released in summer 2015.
However, with the digitization of musical content and the internet, it has also become easier for consumers to get music without paying for it. For, example in the form of illegal album downloads and illegally copying and sharing such content. Hence, it has become increasingly difficult for new musicians to make a living based on record sales. Nowadays, as music is more often offered nearly for free, the majority of a musician’s income is from touring, endorsements, and merchandise.
Major record labels, such as Warner Music Group recognized this trend now requires all new artists to sign “360 Deals” contract. In such a contract, record labels receive a percentage of all earnings, and not just earnings from record sales. In return record labels will commit more managing every aspect of a musicians career. For example, record labels are now allowed to give away music for promotional purposes.
Over the years, many artists have voiced their opinion about the services through which they deliver their content. Rapper Nipsey Hussle believed that Apple’s iTunes did not give him a big enough cut for every download of his song and decided to sell his Mixtapes for $100 each. The 1000 copies that he printed sold out. Also, singer Taylor swift was not happy about how much she and artists earn for each song stream on Spotify. In 2014 she decided to remove her music content from Spotify which lead to a lot of media attention.
“The future is Tidal.” according to rapper Jay-Z. Tidal a streaming business bought by Jay-Z for $50 million and looks to redistribute the wealth among musicians. It promises to offer all artists on the streaming service a higher percentage of pay per stream than its competitors. The subscription fee for consumers is also higher than that of competitors, while the differentiation of the service, which is higher audio quality that requires special equipment to hear, is negligent to most users who listen to their music on their phone. It is still early to judge Tidal’s success, but the company is already valued $250 million since the artist bought the company.
Another way to support artists is through funding the artists on a crowdfunding platform, such as Patreon. Patreon lets fans become patrons of their favorite artists and content creators. It’s different from other crowdfunding platforms such as Kickstarter. Whereas, on Kickstarter you fund specific projects, on Patreon you fund artists.
Patreon seeks to empower content creators by allowing patrons to donate money to their artists. This could be in the form of a one time “tip” donation, or a monthly contribution, or an amount for every time the content creator releases new content, such as a new song, video or recipe. Content creators can set what patrons will get in return for the monetary support. For example, meeting monthly on google hangouts, production tutorials, pre-sale concert tickets, or any other way to show their gratitude.
Grooveshark, a platform where consumers could upload copyrighted content, recently shut down with the following statement: “If you love music and respect the artists, songwriters and everyone else ho makes great music possible, use a licensed service that compensates artists and other rights holders.”
Based on recent developments such as the shutdown of GrooveShark and the continuous deletion of copyrighted content that is uploaded on youtube, I expect that as time continues, the regulation on music increases. Hence, I expect that in the future, paying for music will be the norm again, just like it was before the era of illegally downloading mp3s.
But what will be the best way to support an artist? To subscribe to a streaming service, funding through Patreon, or somehow donating to the artists directly?
References:
https://consumervaluecreation.wordpress.com/2014/04/27/grooveshark-search-play-discover/
http://time.com/3554468/why-taylor-swift-spotify/
http://www.forbes.com/sites/natalierobehmed/2013/11/06/rapper-nipsey-hussle-and-the-100-mixtape/
http://musicians.about.com/od/ah/g/360deals.htm
Consumer Value Creation 
