#6. Music Monetisation

In a world without touring, how can music artists make money?

In the beginning of April, I posted a few quick ideas around how Instagram Live could help artists monetise their audiences in a world without touring:

It unexpectedly ended up getting the attention of the Head of Instagram (Adam Mosseri), the VP of Product at Instagram (Vishal Shah), Taylor Lorenz (NYT reporter) and some of you reading this!

In the last few weeks, Instagram have actually introduced some monetisation features for creators, namely:

  • Paying for Badges during Live Streams: fans who pay for the badge will appear differently to others in a live stream, and creators in turn generate income

  • IGTV Ad Revenue Share: when a user taps on an IGTV video, they'll see an ad and the creator will receive 55% of the ad-income

When I put out these ideas and wireframes for Instagram, I admittedly hadn't thought too much about music monetisation. But I did know that a world without touring was going to disrupt the status-quo for making money from music. In today's world of music streaming, music is a loss-leader: the amount of revenue generated from streams is minimal, but touring is where serious money is made. If touring is no longer a source of revenue, suddenly we'll have a lot of big artists scrambling to find new revenue sources.

And scrambling we've seen. For example, after building a concurrent audiences of 300,000 people for his 'Quarantine Radio' Instagram Live Stream, Tory Lanez ended up striking a partnership with OnlyFans to host the series for a $30 monthly subscription (since dropped to $15 per month). A back of the envelope calculation suggests this could be making at least $5k-$10k in monthly subscriptions for Tory Lanez. Not world changing but nevertheless interesting.

Since my Instagram tweet, I've had a chance to meet some amazing entrepreneurs and VCs thinking about this problem more actively:

How do we enable music artists to make more money in a world without touring?

I want to share a framework I've been using to think about this problem as a result of all these conversations. As always, I don't want to pretend this is exhaustive, but I'm hoping it might inspire a new way of thinking about the problem, and inspire new opportunities for technologists and musicians alike.

Music & Monetisation

If we were to unbundle a music artist, what are the different assets that they're offering?

  • Music Produced = the music that an artist has recorded and released

  • Creative Talent = the raw talent that a musician has in creating music, performing live and marketing themselves

  • Community & Connection = the sense of connection a fan feels towards a specific artist

  • Cultural Identity = the outward manifestation of your sense of connection with an artist (i.e. how you tell the outside world that you're a fan of Travis Scott)

Taking each of these assets, we can look at what the current monetisation strategies are and imagine future monetisation opportunities.

1. Music Produced

At present, the main methods for how recorded music generates money is:

  • Music Streams: e.g. Spotify paying out subscription revenue based on aggregate play counts, or YouTube sharing advertising revenue with artists

  • Licensing to 3rd Parties: when a song is used in an advertisement, used in a Netflix show, or even played on the radio, the artist receives some money (as does their record label)

  • D2C Purchases: when a fan pays artists for their music directly. This tends to happen on Bandcamp with smaller, niche artists, or Patreon / SuperPhone memberships where die-hard fans pay to get exclusive songs

If we were to think about ways in which recorded music could be monetised differently in the future, here are some interesting ideas:

Equitable Streaming Revenue Distributions:
At present, Spotify calculates the revenue generated for musicians by pooling total subscription revenue (minus its ~30% cut) and then distributing it by aggregate play counts across the platform. This allocation mechanism ends up rewarding artists that are huge, whose songs are easily repeatable (and short), and end up in massively-consumed playlists. There are calls for the platform to change its payout mechanism to one that is based on the artists that an individual listens to. In theory, this would help niche artists who have a loyal fanbase. Read more about this here.

Licensing Marketplaces:
Right now, if you're a brand running ads and you want to use a specific song from an artist, there is a long, cumbersome process to come to a licensing agreement with the artist and the label. One interesting way to create monetisation opportunities around recorded songs is enabling advertisers to use songs in the ad-creator process on Facebook / Instagram / Snap / TikTok. This way, brands could pay artists for using their song on a 'per-impression' basis.

The biggest risk for artists is that their songs are used by advertisers they don't want to be associated with. But in a world where TikTok enables individual creators to be able to create videos around any song, I think we've reached a point of consumer maturity where we can disassociate music artists from endorsing third-party content where their music is used. We already live in a remix-culture with consumers - is it time to take this to brands and advertising?

Unbundling Songs:
Each song can be deconstructed to its vocals and its instrumentals. The instrumentals can then be further deconstructed into its drums, synths, specific instruments etc. These are called 'stems'. To get access to the stems of a song for the purpose of a remix, you generally need to need to have access to the artist or the label. In a world where music creation is easier than ever (and becomes even easier in the future), I can imagine more people wanting to pay to be able to 'remix' or synthetically collaborate with their favourite artists. Creating a marketplace around this will make each produced song a scalable digital asset that can continually generate value from aspiring artists.

AI deepfake audio personalisations:
This is more of a wacky idea, but I've been thinking a lot about how musicians create more scalable digital assets that can be spun out to create potentially infinite value. As artists generate data around their vocals, audio deepfakes could eventually be used to personalise specific songs. For instance, maybe someone would want to pay to get Drake to change a lyric to mention the name of their ex. Or perhaps Coca-Cola would pay to get Drake to shout out their soft-drink instead of some expensive champagne.

2. Creative Talent

Music artists generally monetise their creative talents across the following:

  • Songwriting / Production: For example, Beyonce, Drake and Kanye West employ camps of writers to help write songs on an album. These writers get a songwriters credit and some of the royalties, but not much in terms of mainstream exposure as an artist in their own right.

  • Commissions for Live Events: I want to differentiate this from 'touring'. I'm considering commissions for live events as paying for an artist's ability to perform, versus fans paying to be in the same physical space as an artist. These commissions include things like paying to have someone perform at your wedding, or companies paying for a musician at an off-site.

  • Side Hustles: to keep the lights on, music artists might give music lessons to children, aspiring musicians, or teach at music schools.

How could creative talents be monetised in the future?

Monetise Expertise:
In the same way we've seen creator tools enable more people to monetise their talents in the passion economy, I imagine we'll see similar tools arrive in the knowledge sector.

In the music space, I can imagine established songwriters charging aspiring songwriters for review sessions. Or established producers charging aspiring producers for beat critiques. For early entrants into a space, a lot of people would pay to get access to talent, especially if they don't have the relevant networks to get in front of that talent. This is especially relevant as a space becomes democratised and more people become entrants.

Cameo for music-making:
Right now, you can pay to get someone on Cameo to shout out a message. What about if you could easily commission artists to make songs for you? It could be a cover song, it could be a song specific to your life, or maybe a birthday gift for a partner. At present, Cameo has created a marketplace that gives people access to fame, but not to a person's core talent. I think that's why a lot of the celebrities (and musicians) on Cameo tend to be ‘has-beens’: to be on Cameo is to give a negative signal about your earning capacity and the state of your career.

I did some analysis on the musicians on Cameo and the estimated revenue they generate here, in case you're interested.

Marketplaces for Collaborations:
At present, the process for collaborating with an artist is cumbersome and messy - you need to find the email address of a manager, reach out, negotiate a fee, and then actually make the song. There would probably be something interesting in creating a specific marketplace around this behaviour. Brett Goldstein kind of did this using Fiverr. I can imagine people paying for collaborations for two reasons: 1) to pay for musical talent on a song; 2) to pay for access to a music artist's community and get noticed.

Artist Curation:
We've seen Apple Music pay for influencers and artists to curate their own shows and playlists. On the other end of the spectrum, paid newsletters like https://flowstate.substack.com/ have become popular by curating interesting music finds. I wonder if there's more to come in this space with consumers paying for creative talent to curate interesting music around specific niches - whether it's going deep on a genre, or finding new undiscovered talent.

3. Cultural Identity

Last week, I put out a twitter thread about niche communities and potential product offerings:

One element of that was 'Identity' and people paying for one of the following:

  • expressing your outer-identity inside the niche-world

  • expressing your niche-identity to the outside-world

  • status boosters within the niche-world

In the context of music, when I talk about 'Cultural Identity', I'm focusing mostly on expressing your niche-identity to the outside-world.

The most obvious manifestation of this is artist merchandise. For artists like Travis Scott, Chance The Rapper and Kanye West, merchandise has become a huge value creator. In fact, Chance the Rapper can remain an independent rapper purely because of the success of his merchandise and touring.

At present, that merchandise has existed in the physical world - buying t-shirts, hoodies, trainers, which you then wear to signal to people your cultural identity. The merchandise drops tend to have limited supply, so there's even an element of status-boosting within the world of Chance The Rapper fans.

However, as we've seen with the Travis Scott x Fortnite collaboration, people could pay to unlock a Travis Scott digital skin:

Similarly, in Animal Crossing, Yaeji revealed the digital equivalents of her physical merch.

As we spend more time in digital worlds and we look to express our cultural identity in those spaces, the opportunity for digital merchandise from musicians opens up.

4. Community & Connection

The present forms of monetising this asset:

  • Distribution Network: both brands and artists may pay a big artist to essentially tap into their audience and their sub-niche. In 2019, Tory Lanez was reported to charge $75,000 for just a feature. Equally, a post from an influencer with 1+ million followers on Instagram can set a brand back at least $10,000.

  • Physical Touring: in the pre-covid world, touring was the big revenue driver for the world’s biggest artists. For instance, in 2016, Beyonce made 88% of her revenue from touring - $62m from touring, vs $1.9m from streaming revenue. On the secondary market, ticket prices for her Formation Tour were reaching over $400. What are people paying for in that experience? They’re paying to be in the same physical presence as the artist - they’re paying for that deeper sense of connection that goes beyond just listening to recordings on your iPhone.

In a world without physical touring (or in reality, maybe a world where concerts are smaller and discouraged for a while), an interesting question to ask is if there are other ways for artists to monetise that sense of connection and community?

Here are some ideas:

Digital Live Concerts:
While under quarantine, we saw James Blake performing for fans on Instagram Live, and Diplo DJ for people in Fortnite. Right now, these experiences weren’t monetised, but they could be.

The most obvious ways this could happen:
- private live sessions where you have to pay to get access
- public sessions where fans can send tips to an artist

Virtual Experiences:
As mentioned earlier, Travis Scott created a whole virtual experience for fans in Fortnite that culminated in the release of a new song. Elements of this virtual experience were monetised in the form of skins for your avatar.

Just today, a startup called Wave announced a $30m dollar fundraise to create virtual concerts with digital avatars of musicians. The key difference between virtual experiences and digital concerts is that while digital ‘live’ concerts is a digital parallel of a real-world behaviour (just with a screen in between), virtual experiences are an experience that is scalable and can be divorced from the artist themselves.

For instance, it might be possible to create virtual concerts of Travis Scott’s new album without Travis Scott ever needing to be involved in the process. His avatar becomes an offshoot of his physical body and becomes a digital asset that can be moulded, manoeuvred and designed in any way that a designer wants: this album, next album and albums beyond.

Similarly to digital live concerts, virtual experiences could be monetised either with tickets, or with ancilliary items (like in-game skins).

Deeper Connection:
We’re seeing glimpses of people paying for deeper, exclusive connections to music artists. On Patreon, die hard fans are paying to sustain an artist and get access to certain privileges. On Ryan Leslie’s Superphone, he’s helping setup deeper connections between fans and artists, and creating monetisation opportunities around that connection.

I think there’s potential for this to be further modularised: Li Jin talks about this in the need for an ‘Influencer Stack’ in the West. We could see all touch-points on social media platforms become monetisable between a fan and an artist. For example, imagine paying your favourite music artist to comment on your photo, follow you on Instagram, do a duet with you on TikTok, shout you out on Live, do a 5 minute video call with you etc. There’s a long tail of influencers and music artists who have a base of die-hard fans that might be willing to part cash for a deeper interaction - the only thing they need is an efficient platform to do so.


It’s worth thinking about the monetisation opportunities for music artists relative to their scale:

For instance, Cultural Identity is currently only a monetisable asset for artists with a lot of fans. Although there are now services that exist for making selling physical merch much easier, there’s still a lot of potential for enabling artist to monetise the cultural identity of a fan base when it’s much smaller.

Or when it comes to music produced, streaming revenue is currently lop-sided towards the biggest artists, and even then, they’re not making huge sums of money - e.g. Beyonce made an estimated $1.9m in streaming following her 2016 album release. This is one of the world’s biggest artists. There seems to be a big opportunity in helping artists generate make more revenue from the music they produce. This may require working within the mental-model constraints of streaming being here to stay, and the average consumer seeing music more as a commodity.

When it comes to community and connection, how do we enable the long-tail of musicians to be able to start monetising a fan’s desire to connect? Patreon is a positive-step, but there are also issues with a subscription-model creating pressure on artists to create exclusive content for these subscribers. I think there’s a lot of potential for one-off interactions that can be monetised to a wider base of fans.

And finally, artists tend to monetise their creative talent when they are at the early stages of their career, purely because there may be no other monetisation opportunities available. There could be new markets being formed around enabling musicians to sell their creative talent to a wider base of people, or to make the process of doing so more efficient than it currently is.

What I’m hoping is that with this framework, we can begin to laser-focus on what a musician is selling at present, what they could sell in the future, and build technology to bridge the gap.

Personal Notes

  1. I know some great entrepreneurs working in this space so if you want an intro, hit reply to this email

  2. If any of this sparks any thoughts (agreements or disagreements), I’d love to talk with you. I come at these topics with a lot of ignorance and try to think through these things from first principles. I’m also curious about how this looks to people actively working in this space.

  3. If you’re wondering what I’m doing after HaikuJAM, I’m currently advising on product for quite a few companies, learning from people working in different spaces, and thinking out loud on Twitter. I’d say I’m in ‘thesis-building’ mode and I’m actively seeking rabbit-holes to jump down. I’m not sure where this is leading, but it feels like something interesting will come out of this exploration!