5 Apps Changing How The Music Business Operates

Guest post by Eliot Van Buskirk of Evolver.fm.

In the early days of Web 1.0 beta (i.e. the ’90s), most of us who were paying attention thought music middlemen were on their way out.

Technology on the near horizon allow bands to sell tickets, merchandise, and recordings directly to fans, while promoting their music through early internet radio, where payola and corporate sway over the FM dial weren’t factors. Everything looked like it would operate outside the usual confines of labels, publishers, distributors, marketers, retailers, ticket sellers, promoters, and the rest of the middlemen that had built up over the past hundred years or so between artists and fans.

It didn’t happen, in part because music doesn’t take place in a vacuum. Musicians, like anyone else, need a support system in order to create a market. And so Ticketmaster still dominates ticketing, and in just about every other area (sales, radio, promotion, social networking), bands still go through intermediaries to reach fans — often at the expense of considerable friction, even if they run their own label. There’s that 30 cents they have to pay music retailers from every sale on Amazon or iTunes, not to mention hundreds of millions of dollars in cash and equity paid out by Spotify and other start-ups as artists complain of sub-penny royalty checks.

Maybe it’s the social media bubble, which recalls those heady days in ’90s San Francisco when your pet turtle could have secured funding for a catfood-to-dogs startup, but we’re sniffing a return of the “direct to fan” ecosystem. This time, some of it could stick:

Ticketing: Crowdsurge

Let’s start here, because people love to hate on Ticketmaster. The kneejerk haters are somewhat justified in their revulsion by a company that appears to charge music fans for doing extra work by replacing cashiers. But the haters are at least partially wrong because they tend not to acknowledge that “convenience fees” are typically shared between Ticketmaster, the promoter, the venue, management, the bands themselves, and possibly other parties. Yes, many of the bands you love as you hate Ticketmaster are snatching up some of those fees.

That’s one reason Ticketmaster isn’t going anywhere – especially now that it has merged with Live Nation. It’s just too entrenched, and pretty much everyone except music fans loves those fees. However, there’s a crack in Ticketmaster’s armor: the allotment of tickets given to bands themselves. As noted by the New York Times’ account of the jam band String Cheese Incident’s Ticketmaster fee circumvention, Ticketmaster’s standard practice is to give bands 8 percent of the tickets to a show, with which they can do whatever they want — sell them, give them to friends, family, and super-fans, sprinkle them on homeless people, or whatever.

Bands are monopolies. There’s only one of them. That gives them some negotiating power to ask for more than that 8 percent of the door. They can sell that, or 10 percent, 20, or even 30 percent of tickets, assuming they can pressure Ticketmaster and venues for more tickets, as one industry insider who wishes to remain nameless told Evolver.fm they will. Among the contenders for helping them offload that inventory, Crowdsurge holds particular promise. It’s a white-label service that charges nothing at a basic level — a thin middleman that lets bands (and venues and promoters) essentially run their own mini-Ticketmaster.

Music and Merchandise Store: Bandcamp

Most fans don’t go directly to Bandcamp when they want to buy a download, because it doesn’t have everything, the way iTunes and Amazon do. However, if they visit a place on the web that the band controls at least part of (the band’s website, Facebook, YouTube, Vimeo, Twitter, etc.), they might find themselves directed to Bandcamp to buy stuff or even download it for free.

Unlike the standard 30 percent charged by Amazon MP3 and iTunes, Bandcamp takes half that — 15 percent. In addition, it includes all sorts of options, such as free music giveaways and variable pricing, and other goodies missing from the bigger players, like the ability to sell T-shirts.

Funding: Kickstarter

As with Bandcamp, you’ve almost certainly heard of Kickstarter, which funds everything from post-urban cowboy movies to light-up guitar fretboards. Kickstarter has recently grabbed the spotlight as a source of funding for bands, following Amanda Palmer’s ridiculously successful campaign, which looks like it’s going to top $700K with 15 days still to go. As noted by Techdirt, Jordis Unga is also seeing some money flow in via Kickstarter.

In a traditional sense, record labels are banks. They loan bands money to make an album, and then get them to pay it back. Of course, bands can record most of an album themselves these days, and often just need to pay for mastering and maybe some studio time/production expertise. Kickstarter is perfectly positioned to hook them up with the money to do so, as these latest campaigns proved beyond any doubt.

Perhaps because it grabs headlines outside the music world, The generally-themed Kickstarter appears to be succeeding where music-focused fan-funding efforts foundered. Slicethepie, Sellaband, and other services that let fans fund bands enjoyed a brief heyday, in the press if not in the market, but Kickstarter seems to have cracked the code. Bands that can put together a compelling video and have a decent-sized fan base on the internet can use Kickstarter to rack up serious funding in weeks, all without answering to any sort of overlord. (See also: Indiegogo.)

Tour Funding: GigFunder

For funding tours specifically, GigFunder has a unique appeal in the crowdfunding space. It counts on fans who really, really want a band to show up in their city (or, more likely, their town or village) to help make it happen. To do that, fans pledge to pay money to see the band if they make it to that location — and if the band doesn’t raise enough to do that, nobody has to pay anything to anyone.

GigFunder charges 7 percent if the tour happens, which covers the 3 percent PayPal fee for the transactions. In addition to show tickets, fans who pledge money to a successful campaign can be rewarded with just about anything, just like on Kickstarter: T-shirts, signed merchandise, Playbuttons, and so on.

Subscription: Distro.fm

Hey people in bands: Do you think you could operate your own music subscription, like a little version of Spotify Premium that only includes your music — not only the stuff you release on albums, just after you’ve recorded it, but your live shows, rehearsal tapes, tour van observations, remixes, and everyone’s various side projects? Sounds complicated, right? Not anymore.

The recently-launched Distro.fm can handle all the technology stuff for you, so you can charge your fans 10 bucks a year (or so) for everything you want to send them. When that year is up, you can ask them to resubscribe. Your fans can stream all of that stuff, download it, or play it within Distro’s upcoming app, which will be able to cache the songs so they can play them without eating up their precious little data plans.

What’s not to like? Not much, from what we could tell. Bands from Atlas Sound to Phish are already using Distro.fm, even in these early days. If people are fans of more than one band on the service, they can subscribe to them all in that one place. All the bands have to do is upload the music and send people there.

We just have one request: Can Distro.fm please add a way to remove bands? We really didn’t mean to subscribe to Phish (see screenshot).

Radio: My App Idea That Nobody Has Built Yet (Honorable Mention)

When people listen to online radio, most of them choose stations based around a specific artist, and most of them do it on Pandora. My idea, which nobody has built yet so far as I can tell, is to make those “artist” stations into actual artist stations, delivered as standalone apps.

These would include music handpicked by the artist; played by those artists on their devices; and rated by the artist. If so many people listen to artist radio anyway, my thinking goes, why not do artist radio for real? The reason we include this idea here, aside from the fact that we really like it, is that an artist radio app could embed everything else listed on this page. That would offer artists a simple, sticky platform on which to promote their tours, Kickstarter campaigns, subscription options, ticket sales, and so on.

Did we miss anything? Let us know.