At SongTools, as your one-stop shop in digital marketing automation, we are always coming for the latest developments in music distribution and streaming analytics. There have been loads of recent articles and debates around the most equitable models around streaming. This is a very simple primer for you to navigate upcoming shifts in how you get paid.  

Introduction to Royalty Models: Old vs. New

The music industry is experiencing a significant shift in how artists are compensated, especially with Universal Music Group's move towards an 'artist-centric' royalty model. Understanding the difference between the traditional and the new model is crucial for indie artists.

Traditional Royalty Model ("Pro-Rata")

  • Stream Count Centric: Payment is based on the total share of streams an artist gets out of all streams on the platform.
  • Popular Artist Bias: Heavily favors artists with massive numbers of streams, often mainstream acts.
  • Revenue Sharing: All revenue goes into a common pool, which is then distributed based on artists' overall streaming percentages.

Artist-Centric Royalty Model

  • Direct Payment: Artists are paid based on individual subscriber listening habits. If a subscriber listens to your song, a portion of their subscription fee goes directly to you.
  • Fairer to Niche Artists: Benefits artists with smaller, dedicated fanbases, as their streams are more valuable on a per-listener basis.
  • Encourages Diversity: Supports a wider range of artists, not just those dominating the charts.

What This Means for Indie Artists: Immediate Next Steps

  1. Do the Math
  • Where do you make more? The first step is to figure out which royalty configuration works best for you, at your current stage. 
  • Once these new royalty models roll out, you can quickly calculate which streaming platforms are generating the best returns for you. 
  1. Acquire and Cultivate a Dedicated Fanbase: 
  • Quality Over Quantity: Instead of chasing millions of streams, focus on cultivating a loyal fanbase. A smaller group of dedicated fans can now provide more substantial support through their streaming habits. 
  • Ads > Playlist Pitching: For these kinds of fans, Ads are more effective than Playlist Pitching as a strategy. Read more here about the funnel approach

3. Engage, engage, engage

  • Interact with Your Audience: Engage directly with your fans through social media, email newsletters, and live shows. Personal interactions can translate into more streams from dedicated listeners.
  • Drive them to the best DSPs: The closer your connection to your fans, the easier it is to encourage them to listen to your music on the platforms that pay you the best. 

4. Release Music Strategically

  • Release Scheduling: Plan your releases strategically. Consistent, high-quality releases can keep your audience engaged and maintain a steady stream of income.

Leveraging Superfan Experiences and Products

1. Creating Exclusive Experiences

  • Unique Offerings: Develop special content like exclusive tracks, personalized merchandise, or VIP experiences for your most engaged fans.

2. Direct-to-Fan Marketing

  • Own Your Distribution: Utilize platforms that allow you to sell music directly to fans. Websites, Bandcamp, and Patreon are excellent channels for this.

3. Community Building

  • Create a Sense of Belonging: Foster a community around your music. Host fan events, online forums, or fan clubs to deepen connections.

Embracing Technology and Global Reach

1. Utilizing AI Tools

  • Production and Marketing: Use AI for creative processes, like songwriting assistance or targeted marketing strategies.

2. Global Audience

  • Online Presence: Establish a strong online presence to reach international audiences. Collaborate with artists or influencers across different regions.

Conclusion: The Indie Artist's Path Forward

The shift to an artist-centric model heralds a more equitable era for indie musicians. It emphasizes the importance of a loyal, engaged fanbase over sheer streaming numbers. Indie artists should focus on quality content, direct fan engagement, and leveraging new technologies to thrive in this evolving landscape.

Remember, in this new music economy, your relationship with each listener has greater significance than ever before. Embrace these changes, innovate your approach, and watch your music career grow in depth and reach.

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