Another Company Helping Musicians Finance Their Albums
from the enabling-the-business-model dept
Whenever we talk about business models involving scarce and infinite goods, a few folks show up repeatedly in the comments claiming that the only scarce goods musicians can sell are t-shirts or concert tickets — and then go on to complain that this will never work for musicians who don’t want to tour. Of course, that’s incorrect. Even before we had explained the whole economics behind scarce and infinite goods, we had pointed out another important scarce good from musicians: the ability to create new music. There’s no reason why musicians can’t focus on getting people to fund the creation of a new album.
In fact, we’ve pointed to plenty of musicians doing exactly that, from Marrillion to Jill Sobule to Maria Schneider (who won a Grammy with her album produced this way) — these musicians have all had fans pay for the creation of a new album, often giving them certain extras for helping to fund the album. This way, the musicians make the money they need (they set the “goal” and once it’s raised, they go and record the album). Unlike sitting around and hoping for royalties that never seem to show up, they get plenty of money, and the fans get the music. While not all the artists then adopt this second part of the model, if they then give away that music for free, it helps attract more new fans to create the next album — which, if there are enough new fans, can be done at a higher cumulative price.
This is a perfect example of business model that involves paying for scarcity, with the scarcity being the musician’s time and creative efforts. And the good news is that more companies are showing up to help musicians use such a business model. We’d already covered ArtistShare, which has been around for a while, and which helped Maria Schneider producer her album via this method, and now there’s apparently a new entrant called BandStocks that seems to offer a similar model.
Of course, BandStocks doesn’t seem to really embrace the second part of the model. The benefits to those who prepay are that they get a share of the profits from the later sale of the album — meaning that there’s still a focus on trying to sell the album. It will be interesting to watch, but models that still ultimately rely on selling the music by itself are going to come under increasing business model pressure, especially as others embrace models that don’t focus so much on selling the music, but on using it to sell other scarce goods.
Filed Under: albums, business models, economics, music industry, pre-finance
Companies: artistshare, bandstock
Comments on “Another Company Helping Musicians Finance Their Albums”
So what . . .
“and then go on to complain that this will never work for musicians who don’t want to tour . . . “
So what, if a musician doesnt want to play music, then why is he deserving of “alternate” compensation? If a carpenter didnt want to use a hammer, would we be wringing our hands trying to figure out another business model where he could excel financially without actually doing anything? If all the talentless boy band and hype-centric rappers have trouble erning a living from performance (which I have no doubt they would), then I say good riddence. The market will truly seperate the wheat from the chaffe.
Re: So what . . .
This isn’t just about playing music. There are many types of musicians, and many types of business models that work better or worse for each type. Not every musician is in a “band” and ready to go “on tour.” Writers, studio musicians, classical musicians, etc, etc
Re: Re: So what . . .
“This isn’t just about playing music. There are many types of musicians, and many types of business models that work better or worse for each type. Not every musician is in a “band” and ready to go “on tour.” Writers, studio musicians, classical musicians, etc, etc”
Well there are many different “types” of musicians, but the thing they all have in common is the “playing of music” (this is after all the definition of a musician). I fail to see how a musician that doesn’t want to “play music” to earn money is somehow a market a problem (he is fact then, NOT a musician)? If a chef doesn’t want to cook, is society obliged to create some economic model that suits him better? Why does an IT server administrator have to go into work and fix servers everyday? Why can’t he just be paid for the one he fixed yesterday over and over?
The truth is I don’t believe you will find many, if any, musicians who are not perfectly happy “playing for their supper” (frankly the vast majority would be overjoyed to be able to support themselves through performance). Musicians love to play music, that’s why they become musicians (believe it or not there is very little money in it for 99% of them). This idea that they need to also be compensated when not playing music, is a totally record company created fallacy in my opinion and really makes no sense.
Re: Re: Re: So what . . .
You missed my point. I was simply noting the reason that “touring and merchandising” doesn’t work for all types of musicians … it’s not a one-size-fits all solution. (And yes, I know that TechDirt never claimed that, but it’s often overlooked/forgotten, particularly in the comments).
Re: Re: Re:2 So what . . .
“You missed my point. I was simply noting the reason that “touring and merchandising” doesn’t work for all types of musicians … it’s not a one-size-fits all solution. (And yes, I know that TechDirt never claimed that, but it’s often overlooked/forgotten, particularly in the comments).”
No, I think you have missed my point, which is . . . so what? Why is it a problem if a musician that doesnt want to play music, cant make a living from music? I fail to see how that is a problem that the market needs to address?
Re: Re: Re:3 So what . . .
I know of at least one musician who would like to play concerts, but hasn’t figured out how yet: Enya. On many of her albums, she does all the vocals and instruments, so a live performance would be her singing along to a recording, or… something else that I can’t think of (and apparently neither can she). I could be out of date though, maybe she’s figured something out by now.
My point is, some would like to tour but it’s not as easy as deciding to.
Re: Re: Re:4 So what . . .
“I know of at least one musician who would like to play concerts, but hasn’t figured out how yet: Enya. On many of her albums, she does all the vocals and instruments, so a live performance would be her singing along to a recording, or… something else that I can’t think of (and apparently neither can she). I could be out of date though, maybe she’s figured something out by now.”
Im not familiar with her work, but she could easily perform live in a number of ways. Hiring musicians to play the other parts is certainly one. She could do as she the recording, simply perform one track live over pre-recorded tracks of the other parts. My guess she is being a little funny if she claims she just “hasnt figured out” how to tour.
This of course leaves aside the fact that playing music for a living, is NOT necessarily the same as touring. It is possible to do both, but they are not mutually exclusive.
Re: Re: Re:4 So what . . .
How do Daft Punk manage then?
So she sings live, backed either by her own previously recorded music or by getting a few professional musicians to play the music live. I don’t see any problem with that.
Re: Re: Re:3 So what . . .
The point is, if Mozart or Beethoven never played a note of their own music, they would still be regarded as important to the history of music. Melody writers, lyricists, composers, etc. always get left out of these conversations as inconsequential. Take a look around at how many musicians write their own music, then tell me we don’t need to be concerned about the musicians who don’t want to go on tour.
Of course, if we want to get rid of copyright protection on the PERFORMANCE of music, but maintain the copyright of the musical composition itself so you need to pay royalties in order to perform it for profit, that might work… But I’m sure I’m missing some aspect that someone will no doubt point out.
Re: Re: Re:4 So what . . .
“The point is, if Mozart or Beethoven never played a note of their own music, they would still be regarded as important to the history of music. Melody writers, lyricists, composers, etc. always get left out of these conversations as inconsequential. Take a look around at how many musicians write their own music, then tell me we don’t need to be concerned about the musicians who don’t want to go on tour.
Of course, if we want to get rid of copyright protection on the PERFORMANCE of music, but maintain the copyright of the musical composition itself so you need to pay royalties in order to perform it for profit, that might work… But I’m sure I’m missing some aspect that someone will no doubt point out.”
People who can create wonderful music, will contiue to thrive, because they will be sought after. Thier value lies in an ability to do something no one else can, express themselves through an artistic medium (only I can express me). Musicians who can not compose will need composers and composers who are not musicians, would need musicians to realize thier work (no different then today). If you are refering to composers in terms of guys who write commercial jingles or sound tracks for corporate training videos . . . well not sure they would survive.
Sellaband
You could also have mentioned Sellaband for completeness, which has been around for a while already and functions pretty much like BandStocks.
I agree with #1.
If you’re selling something I don’t want to buy, too bad for you. I don’t owe you to make your business model work.
But if under your business model once they create the music and record the music it is infinite then how is the ability to create scarce?
The scarcity lies in the ability of the musician to create unique compositions, not in the amount of copies which can be made of them.
What’s also scarce is the actual presence of the musician and certain abilities which can only be demonstrated live, like jamming. If I understand the people at TechDirt correctly, the idea is that the musician uses the music to gather fans, to whom certain parafernalia (special editions, live shows, t-shirts, etcetera) can then be sold. It’s well known that musicians make their money off of live concerts.
Re: Re:
That touring bands/groups make their money from live concerts, yes. But again, that’s only one type of “musician.”
not even close
This is even more preposterous than most the arrangements that you endorse on this blog.
You have been consistently arguing that consumers that don’t want to pay for recorded music. Now you propose that they pay for recorded music that doesn’t yet exist?
Re: not even close
No. And your deliberate mis-read will not fool much of the readership here. What Mike said, very precisely, in the article, is that people are willing to pay for the creation of MORE MUSIC by an artist they like. They are not paying for the CD up front. They are paying to have the opportunity to hear new music from an artist they enjoy, in whatever form it takes. And, in the case of BandStocks, they are paying to be a co-producer of the album.
They do embrace it, but add a little more
“Of course, BandStocks doesn’t seem to really embrace the second part of the model. The benefits to those who prepay are that they get a share of the profits from the later sale of the album — meaning that there’s still a focus on trying to sell the album.”
But they do. The “investors” are still providing money primarily for the purpose of getting the album produced. They still get that. But, as an ADDITIONAL incentive, they also get to be a partner. I think that’s brilliant. The artist now has a small army of financially-vested promoters spreading their music through word-of-mouth. The investors make money by helping the artist make money. It’s like having truly passionate, driven marketers that you don’t have to pay until they perform.
Really, there is NOTHING WRONG with trying to sell an album. I still buy them, though nothing distributed by an RIAA label. Many others still do, too. Maybe it is not the market it once was, but there will always be SOME market for it. Selling scarce goods should definitely be part of the model, which, in the case of BandStocks, it is. They are, as you said, selling a piece of their creative ability. And who is to say that the bands won’t go on to sell other scarce goods? Just because they have an album available for sale does not necessarily mean they have their head in the sand.
I am writing a novel. I think it has a good chance of being published. When it is, I intend to sell a book. Do I understand that the book market may be threatened by ebooks and declining readership? Absolutely. Do I intend to use the book as a promotional tool for scarce goods, such as speaking engagements, book signings (people still love to buy autographed stuff), etc? Absolutely. Does that mean I will refuse to sell the book itself? No. That would be silly.
Re: They do embrace it, but add a little more
No, there is nothing wrong with trying to sell an album. But if your business model depends heavily on getting high profits from the sale of zero-cost items, then you are in for a heap of trouble/a world of hurt/one hell of a fight/whatever.
Re: Re: They do embrace it, but add a little more
Um, I believe that this is exactly what I said. Scarce goods must be a part of the business model.
What I don’t understand is why Mike assumes that because BandStocks puts the album up for sale, they automatically “don’t embrace” the scarce goods side. The album is PART of their business model, and it exists as a chance for the investors to earn their money back. I don’t think any (or a significant number, anyway) of the investors on the site give to an artist expecting to get rich. They give to the artist to get the album made. The partnership exists as an incentive for them to promote the artist after the album is produced, as it gives them the opportunity to earn some or all of their investment back.
I really don’t see how the album sales on BandStocks preclude the artists from embracing the scarce goods model. The fact is, a CD has a very low production cost and a high profit margin. While it should not be their only or even their primary market, it is a profitable for which there is some demand. They would be stupid not to sell it.
Re: Re: Re: They do embrace it, but add a little more
Embracing the scarce model isn’t the issue. It is not embracing the free/infinite model that Mike is pointing out. I haven’t checked myself, but does BandStocks support/encourage free distribution of mp3s?
Re: Re: Re:2 They do embrace it, but add a little more
I don’t know the answer to that one. Guess I misunderstood what Mike was referring to as the “second part” of the business model. The article was a bit vague, but after you pointed it out, I guess “giving the music away” is the second part.
That said, I STILL don’t see the problem. Again, providing the album for sale does not preclude the band from giving it away. NIN and Trent Reznor have proven this. They have the The Slip available for free in lossless format on their site, yet they sold out of special editions, the are selling regular CDs of it, and people even pay $5 for it on Amazon Unbox. Like I said, having the album for sale does not mean the artists have their head in the sand, as long as it is only PART of the business model. Whether BandStocks supports free music, I don’t know, but it would make sense for them to.
another kick at this scarce goods thing...
This argument about scarce and infinite goods sounds good on paper, but things are only as scarce as the regulations allow – and that’s why we have rules.
Take engineers for example – to be an engineer in most countries you have to be accepted into the engineering society of that country (or state or province in some cases). Through this method, Engineers…well, engineer their own scarcity and thereby drive up their wages. Now certainly there is a certain safety and public protection aspect built into this, but if you think it’s not about scarcity then you’re kidding yourself.
One of the reason’s musicians record their music is so that they can manufacture a scarce good (physical recording) that they can sell.
Isn’t saying that mp3’s and free distribution methods have eliminated the artist’s right to produce a scarce good akin to telling engineers that they can no longer regulate who calls themself an engineer? (or doctor or lawyer for that matter)
I realize the safety aspect is a more dire consequence than lost profits for musicians, but tell me where the fundamentals are different?
btw..this is coming from a musician who often allows for free downloads of my music and have signed no-money deals to have free tracks included on mp3 players for exposure…just putting the argument out there.
Re: another kick at this scarce goods thing...
“Isn’t saying that mp3’s and free distribution methods have eliminated the artist’s right to produce a scarce good akin to telling engineers that they can no longer regulate who calls themself an engineer? (or doctor or lawyer for that matter)”
No. It is not even close to the same thing. You are mixing purpose with product.
What type of Engineer are you talking about? Let us assume it is an Electrical Engineer. Aside from the professions having literally nothing in common in legal obligations, practices, purpose, or product, you CANT say who is and isn’t a musician.
The Naked Cowboy in NYC is a musician. He plays naked (in his underwear) pretty much every day for change. He’s as much a musician as Britney Spears, more so I’d say since he can actually play and sing without a computer doing all the work.
A lot of people here seem to be missing something fairly important here:
Musicians do not sell albums.
They create music. Creating music is hard, it is difficult to do well. Original music is even more difficult. It is scarce.
Record labels sell albums.
That is the entire point to the recording industry, which is separate from the musicians.
Albums used to be a scarce good. Not nearly as scarce as the creation of music though. After all, you could have millions of copies sold for one bout of effort.
Now we have digital technology. Recordings are no longer scarce.
This is only bad for the recording industry.
This is good for the musician.
This is good because it gives the musician more control and opportunity.
This is only bad for the recording industry, which is why they are going sue happy over the musician’s customers and saying they represent the musician’s interests.
Re: Re: another kick at this scarce goods thing...
He’s as much a musician as Britney Spears
Now that’s not saying much. He’s as much of a Bavarian brewmeister as Britney Spears.
Re: Re: another kick at this scarce goods thing...
Actually, I’m not mixing purpose with product. An engineer’s product is their service – so if I say that there can only be so many engineers in a particular territory then I reduce the number of person hours that are available in that territory from engineers, supply and demand states that the value of those hours becomes greater.
What is cool about your naked cowboy is that he has carved out a niche for himself and along with his clothes being scarce…his performance is a scarce good. You can only see the naked cowboy on a street corner in New York. His performance is akin to the engineer’s precious billable time. (although I imagine the engineer still makes more money)
It’s interesting that you’re promoting a new idea by insisting on an old business model. You state that musicians don’t sell albums and that “the recording industry” sells records. I think it’s pretty easy to make this whole situation seem like a good guy bad guy scenario by demonizing “the recording industry” so that you can say…hey, I’m only ripping off the recording industry…not the artists. Make sure you do your research when you start sticking it to the man by downloading though, because recording contracts expire, and some artists aren’t represented by “the recording industry”
You mention that original music is scarce – true…but it only attains commercial value if the music becomes a product (live performance or commercially available recording for instance) – so unless people start sending cheques to musicians when they scribble something on a piece of paper, musicians need to sell something to make a buck.
And the reality is that musicians do sell albums, lots of them do. I would suggest there are probably more musicians selling their own albums than there are musicians who are represented by an actual record company…probably exponentially more.
For example, I’m a musician and I sell albums. I wrote the material, I paid for the studio time, I paid to have the cd’s manufactured and now they are in boxes in my basement and now I sell them. And if you think I’m only one crazy guy that does this…think again.
I can still sell my cd’s and there are people that will buy them, but it used to be that you could only get my music through that medium. Now you could probably find several ways to get my music for free, or at the very least share it with a bunch of people. there are promotional benefits to sharing, and free copies and so on, but the fact that my cd (or digital files that I create) are no longer the scarce product that they used to be affects my ability to recoup the cost of the recording.
So if the rules are set up in a model that means those cd’s in my basement are more or less valueless, then I’ve got to consider whether I bother recording music at all.
Now the truth is, that I will continue to sink money into recording (maybe because I’m a sucker for punishment) but just realize that there are lots of people like me out there.
Re: Re: Re: One compounding factor
If you go to see live music, some time ask the band how much they made at the gig.
Our band has played lots of gigs that look like this:
50 people pay cover @ $10 = $500
less door person (club supplied) $75
Less sound guy (club supplied) $100
Less opening act pay $150
= $175 (split 5 ways in the band…)
If we worked 6 days a week at this rate, we’d all make almost $11,000 a year. SWEET!
Re: Re: Re:2 One compounding factor
It is completely valid for a band starting out to have to struggle. As the band’s talent grows and endears itself to new fans, income will grow.
However, if the band’s talent and repertoire does not endear itself, then the band’s ability to bring in money fades. This isn’t a failure of the business model…it is a failure of the band. This is no different than ANY OTHER product failing in the marketplace.
Don’t use one (unsubstantiated) anecdote to try to convince us that bands cannot survive by playing live gigs. Many of history’s big acts started off playing small gigs for a few bucks (and free drinks) a night.
Re: Re: Re:3 One compounding factor
I completely agree – I just think people romanticize the life of a musician. Even big acts touring with a headliner will probably only make whatever they can sell in merchandise.
In most small clubs, you keep the door (less the typical expenses I’ve listed above, and sometimes you have to pay security)
Re: Re: Re:3 One compounding factor
they got free drinks? lucky bastards.
Re: Re: Re:3 One compounding factor
20 years ago a band had to subsist on “hand sandwich” while
cutting it’s first album. Today it can fill a 40K+ stadium.
The bands that are worthwhile generally are willing to put
up with that crap while they are young and undiscovered. It’s
why they all didn’t just go to grad school and get day jobs.
Re: another kick at this scarce goods thing...
“One of the reason’s musicians record their music is so that they can manufacture a scarce good (physical recording) that they can sell. “
Many musicians (as I am sure you know) record music precisely to make distribution of it easier, hoping of course that more people hearing it, will lead to more people taking an interest in thier music, which will lead to increased ticket sales, which will lead to larger venues, etc etc etc
There was a time when being a musician was about playing music (as opposed to marketing objects). I for one would be very happy to see a return to that time.
Re: another kick at this scarce goods thing...
This argument about scarce and infinite goods sounds good on paper, but things are only as scarce as the regulations allow – and that’s why we have rules.
No, not quite. The point is that even if you set up rules to create artificial scarcity, it’s only a matter of time until others figure out how to use the abundance to their advantage, and then those relying on artificial scarcity will be in trouble.
Take the extreme case to illustrate the point: assume that everyone in the world gives away their music for free and is able to make money through other parts of the business model.
Then you come along and try to rely on artificial scarcity to sell music via copyright. How successful do you think you can be?
Isn’t saying that mp3’s and free distribution methods have eliminated the artist’s right to produce a scarce good akin to telling engineers that they can no longer regulate who calls themself an engineer? (or doctor or lawyer for that matter)
First of all, no one has said that this has “eliminated the artist’s right to produce a scarce good.” We’re just saying that it’s no longer a reasonable business model to focus on selling artificially scarce content. They have every right to produce scarce goods. In fact, we encourage it.
And, as for the question of artificially limiting who can call themselves an engineer/doctor/lawyer, I’d suggest reading up on Milton Friedman’s take on that:
http://www.techdirt.com/articles/20070523/080542.shtml
Funding versus compensating
I’ve pointed this out in response to prior posts on this same subject, but I’m going to try and be even more clear: this post demonstrates some extremely muddled thinking about a critical distinction — between funding, on the one hand, and compensating on the other. All of these new models are nothing more than ways to generate the capital necessary to create new albums. Irrespective of whether that includes the writing of the music, or just production costs, one thing that none of these models include is actual compensation for the artist. None. Nada.
Thus, to say that the “musicians make the money they need” is a gross distortion. The musicians raise the capital necessary to finance the project, but they are earning zero on that project. There is no compensation for the artist built into any of these models, except to the extent that a model is based on a pre-order concept, in which event the musician might be able to realize some profit if the pre-orders exceed the project budget’s break-even point. But that’s just selling CDs, which is still the old model.
I am not trying to criticize any of these innovations, all of which are absolutely necessary. But I don’t think it serves the artists well at all to exaggerate what these models accomplish. Perhaps the next step will be for the plan for a project to expressly include some form of actual compensation to the artist — e.g., out of every $10 you send me, I will put $9 into the project and take $1 for myself.
But so far, that’s not happening.
Re: Funding versus compensating
All of these new models are nothing more than ways to generate the capital necessary to create new albums. Irrespective of whether that includes the writing of the music, or just production costs, one thing that none of these models include is actual compensation for the artist. None. Nada.
That has nothing to do with the model, only the price set. If the musician sets the needed funding at the level of their costs, and produces the album with only that level of funding, whose fault is that? If they want profit, they need to set the required level of funding to costs plus profit. Same model, different number.
Re: Funding versus compensating
In addition to what Nasch said, I still wonder why it is that artists (and their fans) continue to think in terms of “albums”. Why not simply “works”, where sometimes it is a single track of 4 minutes, other times collections of partial tracks (pre-production cuts), other times full-fledge “performances”, etc…
The model outlined in this thread is about raising funds to cut an album. But why not offer a “subscription system”, giving a constant stream of funding to the artist and a constant reward stream to the subscriber?
Re: Funding versus compensating
I’ve pointed this out in response to prior posts on this same subject, but I’m going to try and be even more clear: this post demonstrates some extremely muddled thinking about a critical distinction — between funding, on the one hand, and compensating on the other. All of these new models are nothing more than ways to generate the capital necessary to create new albums. Irrespective of whether that includes the writing of the music, or just production costs, one thing that none of these models include is actual compensation for the artist. None. Nada.
I’m sorry, but that’s simply untrue. The point of this model is to roll BOTH funding and compensation into one. So you set the level needed to cut the album at the price where you’ve received both enough to cover the cost of the album AND enough to cover your “salary”.
The rest of your comment simply assumes that they only receive funding, not compensation, and that’s incorrect.
Isn’t this what the record labels do?
They get a contract with a new group that pays the new group to produce music. And in return they a (large) cut of the revenue generated from that music?
Now I know..
Now I know why I quit coming to this site. Mike always wants to ramble on about his right of passage, being able to steal music. I’m gone again… I’m so sick of his theory on how the world deserves FREE.
Get a fu*king job. Does this one pay? Adds?
This is Bullshit.
Re: Now I know..
Mike always wants to ramble on about his right of passage, being able to steal music.
Huh? Then you might want to read what I write a little more carefully. I do not download or share music, because I believe it’s against the law, and it’s up to the musician to decide what they want to do.
I am writing from the perspective of the musician and how they can be better off by adopting a more reasonable business model based on fundamental economics.
I’m so sick of his theory on how the world deserves FREE.
No, the world doesn’t “deserve” anything. I’m saying that the business models that embrace fundamental economics, including using free where appropriate, tend to be better off for everyone, including the content creator.
Get a fu*king job. Does this one pay? Adds?
Thanks for being so kind. Yes, I have a job, and yes, it pays just fine, and no it’s not “adds”. I’m not even sure what “adds” are.
Look, if you dislike what I have to say and don’t want to read, that’s up to you. I’m not going to change your mind on that. But when you freak out over stuff I didn’t even say, I’m not sure what to do in response.
Of all the reasons you gave for not wanting to read this site, I never said a single one.
Yes… because being able to support artists directly
without supporting corporations that abuse everyone
is equivalent to “stealing music”.
Killing the RIAA would do everyone else involved a world of good.
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