People say that the album sale is dead, but that isn’t true – it continues to be the largest source of income for artists because it has the highest profit margins. Pay per stream royalty revenue models have tiny profit margins because they rely on advertising dollars as their source of revenue and largely cut off the consumer from directly supporting the artists.Revenues from pay per stream royalties are peanuts compared to those from album sales. On streaming services like Pandora and Spotify artists are paid from the limited cash pool of the streaming service’s ad sales and subscription revenue. When selling to a consumer, there is an infinite cash pool to draw from.
People say that album sales are dead and that artists need to find new revenue streams The reason albums aren’t selling well isn’t because people don’t want to buy them, it’s because they aren’t being sold effectively.iTunes is like a Sam Goody. There’s lots of music, but what you’re exposed to is all what the big labels are pushing. There’s no good way to browse and discover cool new stuff. There’s no reason to stick around and explore, because it’s a lousy experience.People use these stores when they already have something specific they want to buy. They go in, find the album, purchase it and leave.Prices are high, so people only go there if cheaper options aren’t available.
We want the Busker listener experience to be like walking into a local record store, where the staff have encyclopedic knowledge of all kinds of music and are happy to recommend and play albums all day long. While they are doing this you are free BROWSE - dig through crates of music, check out album art and liner notes, and put on whatever seems good to you too.Variety of prices – much like finding an awesome used record for $2 that sounds like new, Busker will offer music at a variety of prices – as decided by the artists themselves.
In October 2007, Radiohead self-released their new album In Rainbows as a digital download on their website.Customers could download and pay whatever price they saw fit.Pre-release sales alone were higher than total sales on their previous album, Hail to the Thief
Promote – create a streaming service that any artist can enter their music into, with all the modern tools that consumers enjoy on sites like Pandora and Spotify. By creating a streaming service that is attractive to listeners, Busker will create a venue for artists to showcase their music without having to give it away for free.Give every artist the entire Buskeruserbase as their potential customers. You won’t have to be Radiohead anymore to sell albums directly to consumersSellIn order to compete with the option of a free download, music must be sold as cheaply and conveniently as possible.To make music as cheap as possible we allow artists to sell directly to listeners at zero cost. That means that only only will Busker not take a cut of sales revenue, it will also assume the costs of hosting and transfering data. This will remove all middlemen from the equation and let artists and labels set their own prices at the lowest possible point. This service will have value for labels as well – they may have to set prices a bit higher than independent artists to cover their own costs, but they will still be able to sell for cheaper than on iTunes or Bandcamp.In order to make the buyin experience as convenient as possible for the customer, Busker will integrate the ability to purchase music right into their listening and discover experience – creating one simple system for online music consumption.
28 million artists on iTunes - how to gain attention?Balance # of free tracks with album price – find optimum sales strategy
artist ROI is at the crux of the argument between Busker and Pandora/ Spotify.Spotifyroyalty payments are in the range of $0.0013 - $0.002 (http://www.gizmag.com/spotify-royalties-artists/20609/). It's true that play to sales conversion rates on Busker might be wind up being different than 1/100, but I think the fundamental truth is that profit margins on album sales (funded directly by consumer dollars) are much higher than pay-per-stream royalties (funded bya percentage of a site's advertising/ subscription revenue).
Pandora is massive – with over 100MM registered users. Busker will obviously generate less revenue at first, but with the same revenue model and only 40% of the costs, it can become profitable very quickly.Busker will have the first truly scalable streaming service business model by eliminating the flat per-user cost of content acquisition.
Busker will create valuable ad space by putting their units at central hubs of the site. Bandcamp began as an ad supported 0% revenue share business, but had to revert to revenue share because the ad space they had on artist microsites was low value. Plus they weren’t collecting any data on their users in order to target themBusker will have three types of ad unitsDemographically and Geographically Targeted – collect listener behavioral data and specific station types to target demographics. EX: someone listening to a Party and Rap station might be someone that Absolut vodka wants to target.Premium Content Cobranding – Advertisers will be able to bid on the ad space around specific tracks in order to cobrand with specific artists. EX: if Kanye West uses the site to sell his new album and makes a song available in the player, Absolut Vodka might want to have their ad appear every time that song is played. Artists will receive a percentage of these profits. The percentage they receive will be a factor of how high the advertiser bid was. This will incentivize high level artists to use the product, as it’s a new way to monetize themselves as a brand – an increasingly lucrative business for them.Interactive – by putting the ad unit in the player, Busker will leverage the listeners’ desire for uninterupted playback to encourage them to interact with ads. The goal of Busker is always to provide an unobtrusive ad experience, so these inteactive ads will reward the user by letting them skip the whole standard ad experience in return for answering a question.
There are users who will want ability to use the service with no ads so we should monetize that. However, Busker needs to continue to establish itself as a major advertising platform, so this will come at an extra cost
Profitable even in early stages. Once high value artists join, revenue will explode because of all the possible advertising possibilities.
I have lots of contacts with artists and labels. With shop around beta product to begin artist adoption
Our goal is to create the best listener experience on the web.Get all the tools that you would on other streaming sites (plus some new ones). Building your own library of music - Paying to rent a library like on Spotify or Pandora limits you to whatever they have, doesn’t help the artist much, and is gone as soon as you end the servicesupporting artists feels great.By making purchasing albums fun again, Busker will allow artists to make money doing what they do best – make great music.
Founding PrinciplesWe want to build something much more culturally important thanjust a music store. We aspire to have artists and listeners think ofBusker as an innovative force driving the next generation of music.Great music is everywhere – from sold out arenas to bedroomrecording studios. We will sell every kind right next to each other,and treat them as all equally important.Discovering a new band is a beautiful thing. We want to make ithappen more often by giving artists tools to reach people.
Case Study: RadioheadIn Rainbows, released in October2007, was sold direct-to-consumer as a digital downloadon Radiohead’swebsite.Customers were allowed to nametheir own price, including zero.In Rainbows generated morerevenue in pre-sales alone thanits predecessor, Hail to the Thief,had since 2003.Selling direct to fans is great ifyou’re Radiohead, but what ifyour band doesn’t already havemillions of fans?
Distributing Music the Right Way Busker will a be platform that lets ANY musician do what Radioheaddid. Promote Sell Effectively Make Busker’s entire user base Incorporate purchasing into the their market. listening experienceStream music to gain fans without Sell albums direct-to-consumer devaluing the product. at the lowest price point Gain publicity fast with unique crowd-sourced Ratings System. 0% revenue share vendor model
Music DiscoveryBusker’s Ratings System – A New Discovery Tool.Song Rating = (Total User +’s) – (Total User –’s)Total PlaysThe higher the rating, the more the rotation (and vice-versa) –allow the best music to rise to the top.First form of democratic music promotion.Any artist can quickly get attention and then convert that intoalbum sales.
Case Study: PandoraDuring its 2011 fiscal year,Pandora reported $138 million inrevenue with a $1.8 million netloss.Revenue - 88% Ad Sales, 12%Subscriptions.Royalties accounted for %60 ofoperating costs.Busker will use a similar revenuemodel, but operate at 40% cost.
Revenue Model - Advertising High Value Ad Units – One in the Player and one on Artist Music Manager pages. Targeted Premium Content InteractiveCollect User Behavior data Advertisers can bid on ad Busker’s ads will always be to target demographics space around individual unobtrusive tracks to co-brand with Sell packages around artists Leverage users desire for specific Genres and Tags uninterrupted playback Artists will receive a Ex: Absolut Vodka may percentage of this revenue Users skip standard video want to serve ads to unit by interacting withsomeone listening to ‘Club The higher the bid price, pre-ad unit R&B’ genre or ‘Party’ tag the higher the share percentage
Revenue Model - Subscriptions Two tiers of caching and no adsTier 1 Caching Tier 2 Caching No AdsCache 1000 tracks Cache 5000 tracks Price: 1.5 month’s for offline access ad revenue Price: Cost of cachingIncrease Busker’s +$1value to listeners Price: cost of caching
Marketing and User Adoption Major bootstrapping cost Beta Launch Growth Maturity Artists as a Salesforce– Buy links drive traffic to Busker Social Media - Artist, Listener and Industry Engagement Media Outreach -We have a good story to tell, they are looking for news NYC Artist Concerts – Branded launch day concert and ongoing Outreach – series promoting Artist Usersleverage contacts