As most people familiar with the
music industry know, iTunes and the rest of the “digital revolution” have
pushed major labels and other gate keepers toward an increasing hit-centric
business model. Due to declining revenue
from physical sales, a vast majority of the industry’s resources are spent
promoting a small number of singles from a limited number of artists as the
business can no longer take on the risk of supporting unproven acts. At the same time however, the actual
demand for music has never been greater
– digital media has made artists and music more accessible than ever -
the average fan is familiar with a larger number of bands and listens to more
music than they had been in the past. To
me, the unsettling part is that despite the increased demand and broader
listening habits of music consumers, most bands aren’t reaping the benefits –
the Top 40 hit-makers are still pretty much the only ones making real
money.
NoiseTrade
is among several startups attempting to tackle this problem by enabling users
to directly “tip” artists has they listen to their music – a bit like
crowdsourcing firms such as PledgeMusic
or Kickstarter, but instead of
funding a record before its made, fans pay as they listen. Of course NoiseTrade takes its cut, 20%, but
the other 80% of fan tips tends to add up to more than would be made through
other outlets.
The effectiveness of this business
model for artists is reinforced by a number
of studies which have shown that when fans are given the option of choosing
how much to pay for music they like as opposed to being told what they should
pay (think iTunes’ $0.99 policy) those fans actually have a tendency to pay
more than the typical retail price. Thus,
instead of just giving music away as a way of marketing themselves, musicians
can offer fans free music while also allowing them to compensate artists for
that experience.
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