What The Music Industry Can Learn From The Gaming Industry

Here Bas Grasmayer explores the unprecedented growth of gamer personalities, the business models they use, and what the music industry can do to learn and directly benefit from the gaming industry and it's marketing tactics.

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Guest Post by Bas Grasmayer on Synchblog

The gaming industry counts as many differences from the music business as it counts similarities. It makes it a perfect teacher when we find the right way to translate their reality to ours. Both industries were in large part dependent on sales of copies in the '90s, and have walked diverging paths as they’ve had to innovate new distribution models and revenue streams. This article investigates the rise of gamer personalities and the business models they employ to monetize their fan relations, the value of game mechanics, and how musicians have directly benefited from the Twitch-streamers and YouTubers using their music.

Gaming’s new personalities

In recent years, gaming has seen a new phenomenon appear with some gamers achieving worldwide fame. Some rise to fame through skill and taking home big prizes in eSports competitions, but others amass their own followings on YouTube or Twitch, a live streaming platform for games, simply through the personalities they project. Without any legacy to shape expectations, these personalities have had to invent their own revenue streams and have shown that direct subscriptions, sponsorships and even donations are all viable business models.

Many gamers stream 8 hours a day – some more. Streamers, like musicians, are competing for attention, so it’s hard work to build up a following. One of the key components of many streams is the interactivity the gamer has with their ‘stream’, meaning their audience. Twitch streams have chats: public ones, but also subscriber-only versions. Often when streams get big, with thousands of people tuning in at the same time, streamers will only read subscriber-chat, or may give subscribers special options like the ability to request songs. This directly monetizes their audience on a monthly recurring basis.

Streaming also opens up the possibility for sponsorships, partnerships and one-off ads. A great example of the latter is Hearthstone streamer Trump’s on-stream promotion of Snickers. In terms of partnerships one could look at PewDiePie’s Tuber Simulator game, and for sponsorships some companies even offer special programs for streamers, like Razer.

Screenshot from Hafu’s stream

Perhaps most interesting is the way streamers employ donations as a revenue source. Donations have long been held up as a suggested online revenue stream for musicians, but it was always hard to make it viable, and still is. Now, with live streaming, gamers seem to have found a way to make donations work. Viewers can append a short message to donations, which are often read out loud on the stream by either the streamer or an automated voice. These are often used by viewers to grab the attention of the personality they’re trying to reach, eg. to ask for advice on gameplay, to make a joke, to criticize, or to request a song be played. Of course there’s also some trolling.

In recent years, we’ve seen other live streaming platforms emerge, from Meerkat and Periscope, to Facebook and YouTube live, and more recently Instagram. Earlier this year, YouTube enabled something called Super Chat which allows people to pay to have their live comments pinned for a certain amount of time. Last year, live streaming platform for DJs, Chew.tv, already enabled a donation model called ‘gifts’ (screenshot below).

Service design

The lessons we can learn from gaming go further. A lot of the business models we have at our disposal today are determined by the business and design choices of music companies. Yet there are certain concepts that have yet to penetrate the digital music landscape in a significant way. These are:

Vanity items: video games often offer virtual goods. These usually come in the form of special skins for your character that can only be unlocked through payment. Or perhaps it could be unlocked through some near-impossible achievement, but also by paying. In 2015, League of Legends, one of the highest earning games, made $1.6 billion through such purchases, although that number also includes more practical items. Right now there’s no popular, large-scale platform which really emphasizes people’s identity through their music taste. We had them, not long ago, in the shape of MySpace and Last.fm. If showing off your fandom is ever to become a commercially viable model in the form of virtual vanity goods, we’ll need a platform to take a chance on the social side of music again.
Rival goods: virtual goods of which only a limited number exist. These trigger social competition inside virtual environments. It could be as simple as the top spot in a leaderboard, but can be more advanced, like unlocking exclusive access to live streams and being part of the limited number of fans who can access that in any given week.
Daily quests: a great way to keep people coming back to your game daily and get them to develop a habit. Could be employed by artists to keep people more closely connected and stay top-of-mind.
The season pass: nowadays games often release additional content after the official release of the game. Buying a season pass not only gets you access to the game, but also gets you the ‘downloadable content’ (DLC) at a discount. Consider Kanye West announcing that he’ll be updating his album after already making it available online. Perhaps the future of albums could look more like DLC and season passes.

Gaming and music

There is one music company in particular which deserves a special spotlight. They've managed to tap into gamers as a subculture and give a soundtrack to millions of people online, heavily influencing the sound of EDM in the process. That company is NoCopyrightSounds (NCS), now part of AEI Media. They curated and released a type of electronic music that wasn’t quite mainstream, yet really connected with the type of sound gamers love to hear. They made it free to use non-commercially, as long as you credit the creator in a specified way. As a result, you can hear music from NCS on YouTube videos which reach tens millions of people every week. One of the artists they debuted, the Norwegian Alan Walker, now has close to a billion plays for his 5 most popular tracks on Spotify alone, and has 4.5 million subscribers on YouTube.

Gaming is an enormous and underrated opportunity for the music business.

Whether it’s the lessons to be learned in terms of business models for future generations of musicians, or direct collaborations with streamers or eSports teams, there is a whole new domain opening up and it’s just getting started.

Our Projecting Trends series is created by digital strategist Bas Grasmayer, who runs the MUSIC x TECH x FUTURE digital strategy agency and newsletter.

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