App Revenue: How Artists Can Profit From Video Gaming's Recent Lessons
Do musicians need to sign to a major label to make it in 2015? Do they need Facebook, Twitter and Instagram to promote themselves, their music and that super exclusive behind-the-scenes selfie with their dog? Increasingly not, and a wave of new apps look set to make it even easier to sustain a direct-to-fan eco-system.
Both launched in June, UK based app development company Disciple Media and US firm Freeform license their technology to labels and artists (here's an example from the iTunes Store), who then use the platform to distribute music, videos, lyrics and merchandise, generating income through monthly subscription fees (around $5 a month) and/or converting free users into paid with upgrades.
It’s a model that’s worked for US producer Ryan Leslie, who says he made $2 million by texting an invite to fans who hadn’t yet bought his album through his Disruptive Multimedia interface, a mobile-based direct distribution/communication model he developed. The dollars were generated through a combination of selling about 13,000 albums through a variety of platforms, asking for a contribution to go into the studio with him while recording (making between $2,500 - $4,000 for each session), live gigs and invites to a no-expenses-spared New Year’s Eve Party.
Leslie has moved his fanbase away from social platforms to improve his reach and to avoid losing that fan data to whatever the "next cool place to be" is. When he first gave his number out, around 36,000 of his 560,000 Twitter followers called or texted, another 32,500 took the next step to introduce themselves, and one in every two bought something from him. Disciple and Freeform do the same, by allowing artists to push whatever they might be offering via one channel, and to keep hold of the fan data they generate.
The difference between what has gone before and what Disciple and Freeform are offering is interactivity, a two-way channel between artist and fan through instant messaging features, as well as new ways of earning money through advertising and brand sponsorships. Freeform boss Tim Quirk (formerly of Google Play and Rhapsody, who co-founded the company with former SoundExchange exec Brian Calhoun) recommends that artists give away the app, as well as some content within it but also set some parameters, like being able to listen to an album or track for free once a day and then having to take further action to carry on listening. That could be clicking a buy button, or accepting partner offers like free trials of Rhapsody or Spotify.
The gaming industry's freemium model is Freeform's central inspiration. While sitting in quarterly business reviews with content partners at Google Play, "It became clear really quickly that the game developers are lightyears beyond every other entertainment sector when it comes to taking advantage of digital entertainment distribution," says Quirk. When he joined Google in 2010, the top games in the Android market were all paid for, when he left in 2014, 97 percent of the games in the charts were free. "I watched them make gobs more money as a result," he explains.
Candy Crush Saga is a prime example, given away for free, it has around 350 million average users per month. Around 97 percent of those never part with a penny, and 70 percent play the game to the last level. What happened when the majority of music listeners started downloading music for free? The music industry had a heart attack, tried to sue everyone and lobbied the government for legislation. The games industry on the other hand, doesn’t really bother with that 97 percent, instead focusing on the 3 percent of spenders, and the 30 percent of the most engaged users who might pay in future.
Musicians can follow a similar strategy. Release a track, get the highest possible number of people to hear it through radio play, YouTube, Spotify, Apple Music and the rest. The next step is to get the highest possible sub set of those listeners to give a little bit of money, like buying an album, and turn the highest possible sub set of those into super fans who’ll give a lot of money for merchandise, back catalog, and any priceless experience they wish to offer.
Adds Quirk: "Universal Music CEO Lucian Grainge has been rallying against free tiers and freemium. His diagnosis is right, but his prescription is wrong. Yes, perhaps with Pandora or Spotify the content owners are not getting the return they need from the free tiers of those services based on what they are giving up, but that doesn’t mean freemium as a concept is flawed. It means relying on third parties to convert your free customers to paying customers is flawed. Games have absolutely proven that you can make orders of magnitude more money with this model, and we want to bring that model to the music business."
This isn’t the first time the music industry has experimented with apps, though the development has come a long way. In 2013, Bjork wanted to create an Android app for her album Biophilia and launched a crowdfunding campaign asking fans for £375,000 -- the idea was scuppered 10 days later after reaching just £15,370. That same year, a million copies of Jay Z’s twelfth album, Magna Carta Holy Grail, were given away to Samsung Galaxy users via a mobile app. Mobile Roadie is a self-service mobile app platform that’s been used by Taylor Swift, Adele and Linkin Park.
Dwindling "organic reach" -- the measure of who saw a particular post without the source having to pay for their attention -- on social media gave Disciple Media founder and electronic musician Benji Vaughan, who releases music under the moniker Prometheus and is also a partner in indie label Twisted Records, the impetus to create an alternative. He says: "A turning point for me was when Twisted Records built up a big presence on social media and then found out we were having to pay to reach a certain audience. Having your client base controlled very heavily by a third party is a major risk for any business. So I was looking for a product that could engage my fanbase, and couldn’t find it in the marketplace. I had two options at that point; either give up or build it myself."
There are three ways of creating revenue through Disciple’s app, together with subscription fees, fans can buy one-off items through in-app purchases and artists can team up with brands for a lifetime sponsorship. Where Freeform directs fans to other websites to listen to music, Disciple secures licensing deals with labels, publishers or artists to stream from within their own dedicated player. Other facets to the app include a live-stream feature, enabling artists to send video content from their mobile phones or laptops by notifying their subscriber base.
Luke Bryan, London dance outfit Rudimental and Real Madrid footballer Marcelo Vieira are the names Disciple has officially launched with (it plans to branch out further into fields beyond music in future hence the sports personality). Freeform has launched with, amongst others, Matchbox 20 frontman Rob Thomas and Matthew Friedberger, whose facetious predictions for the future of music distribution include "passenger pigeon and pony express, that sort of thing… " He could be right -- who knows -- but for now, it’s all about mobile. And anything that sets out to strengthen the relationship between the two essential components of the music economy, the artist and the fan, is a step in the right direction.