Of the millions of musical artists out there across the world, the vast majority struggle to actually make a steady stream of revenue off their music.
In order to receive a decent income from royalties provided by streaming services, artists have to get hundreds of thousands of streams on their songs, which is quite a difficult task, especially for new, independent musicians and bands.
Streaming services like Spotify, for example, while not exactly offering royalty-free music for videos, are notorious for paying very low royalties to artists, and it’s hard for independent artists to build up a fanbase large enough to earn a living from streaming royalties.
Because of this, many artists try to sign with a record label that will promote their music for them and help fund them, but they then often end up in restrictive, unfavorable contracts that see record labels keeping the majority of the profits from their music.
But imagine if music consumers could invest directly in their favorite artists, removing middlemen like record labels.
Well, with the advent of a variety of new platforms that connect artists directly with consumers, fans actually can now invest in artists like never before, and artists have new options when it comes to growing their revenue streams.
How Consumers Can Invest Directly in Their Favorite Artists
Traditional revenue streams for bands and musicians include playing concerts, selling albums and merchandise, getting funded by a record label, and, in recent times, receiving royalties from online streaming services.
While these are all still important streams of revenue for musical artists, many of them require artists to give up some creative control over their music, and middlemen along the way keep a large cut of the profits.
But, within the last couple of years, artists and tech entrepreneurs have been experimenting with different apps and websites that allow musicians and bands to skip signing with record labels and sell their music directly to fans.
The Corite Business Model
Sweden-based Corite is a prime example of a new service that lets fans invest in an artist’s singles and share in their streaming revenues.
In Corite’s business model, independent artists launch a campaign to promote their music via the platform.
Artists must specify an amount of money they want to raise, as well as what percentage of streaming profits they’ll give to investors if songs are streamed over a certain number of times within the first year of their release.
When an artist launches a campaign, they upload 30-second snippets of any songs they want to promote on Corite, before the songs are released in full on streaming platforms.
People who listen to and like an artist’s music on Corite have the option to invest anywhere from a few dollars to thousands of dollars in their songs.
Once the initial launch campaign ends, Corite takes care of uploading artists’ music to streaming platforms, and the company also handles the distribution of revenue between artists and investors.
Typical return rates for listeners who invest in artists on Corite range from 1.4 to 1.7 times their initial investments, and, if songs exceed their first-year streaming goals, there are bonuses to be had.
The idea is that the more investors a musician gets, the more quickly their fan base grows organically, since investors have even more of an incentive to share their music with others.
This creates a shared ownership model for independent music, in which the artists and their fans both benefit from the success of songs by earning profits from streaming services.
Is this the Future of Music Revenue?
Corite isn’t the only company pioneering new ways forward when it comes to connecting music consumers and musical artists and generating new streams of music revenue.
Other companies developing similar crowdfunding business models include Austria-based Global Rockstar, U.S.-based BaseNote, and U.K.-based Songbook, to name a few.
What all these companies have in common is that their main goal is to reduce the need for artists to rely on traditional record labels for promotion and funding, allowing them to maintain more control over their music and earn more profits.
These companies also want to offer fans more incentives for supporting artists they like, in the form of shared revenue from streaming royalties.
For many fans, the option to invest a small sum of money in their favorite artists is a more accessible way to support them than buying merchandise or concert tickets, especially since they will (hopefully) see a return on their investment eventually.
Not only does this shared revenue business model incentivize listeners to promote music they like, it also has the secondary effect of forming a stronger psychological bond between musicians and bands and their fans — they’re in it together!
Since the companies leading the way in this new form of music investing are all in their early stages, it’s too soon to say just how big of an impact they will have on the traditional music industry.
That being said, these startups are already making waves in the industry, and are already gaining some traction with musical artists and fans who are fed up with the traditional way of doing things.
