A Look at New Artist Revenue Model: The Social Radio – By the Numbers

For those that don’t yet know, Beat-Play will be introducing the first ever social radio to the web in a few short months. It will run off of Facebook and will be fueled by social recommendations. With this radio app, if you like a song, it will automatically get sent to your friend’s radios, if they are following you. If they like it then, they pass it on to their followers.

Not only is this an awesome (free) form of viral promotion and distribution, but it can also be a completely new revenue model for artists as well, and I believe it’s a model worth looking deeper into, and worth doing some comparisons with what else is out there right now.

In this new model, the music is free for the fans. The artists will get paid based on ad revenues generated from their popularity. The artists essentially get paid from their plays. The more average plays/day they get, the more an artist can charge for their ad space (artists set their own prices).

Let’s get right to the numbers. We’ll start with an artist having an average of 20,000 plays/day. This may sound like a lot, but you must remember the environment that this will be in. With this viral automated word-of-mouth system, a steady supply of great music will always be fed right to the users without them having to search, and being filtered through people they trust, so the chances of them liking the music are greater as well.

With this system, the playing field would finally be leveled: If the music isn’t good, it won’t spread very far; if it is good, it will spread like wildfire.

As long as the artists pump out a steady supply of great music themselves, with even the smallest pre-established fan base to start with, I think building up to an average of 20,000 plays/day can be pretty achievable in not such a long time, with the right amount of hard work being focused to where it should be: on the music.

An ad appears every time a song plays. The ads themselves are unobtrusive and not interruptive, although they could be quite interactive and engaging if clicked, instead of damaging to the user’s experience. So say an artist has an average of 20,000 plays per day for a whole year, and the average price for their ad space is $6/1000 plays. At this price, the artist, in that one year, would make approx. $43,800.00 before taxes. Of course that also doesn’t include any merchandise or tour money.

That’s not too bad at all! Let’s compare this model now to some other artist revenue models out there.

I’m sure you’ve seen the following chart at some point before. I will use their averages because I feel they’re still pretty accurate.

So in the new social radio model, to make $43,800.00/year, the artist would need 7.3 million plays in that year. (Think about artists that get millions of plays in a day)

For Last.fm, according to the chart, to earn just $13,920 in one year, which is the US minimum wage, an artist would have to have 18.5 million plays in that year. To earn $43,800 on Last.fm, they’d have to have almost 60 million plays in one year!

It’s hard to compare this model with CD Baby or Itunes, because these 2 models are based on sales, not plays, and there will always be more plays than sales, but let’s try to compare anyway:

For an artist to earn approx. $43,800.00 on Itunes, they would have to sell over 450,000 singles; On CDbaby, over 75,000 singles. That’s a lot of credit card transactions no matter which site you choose.

Think about this too, when you make your money off of downloads, your only getting paid to sell a copy. That copy will get listened to hundreds, or thousands of times after the sale, but you only get paid once. Now I hope you can see the potential in the opportunity to monetize the plays of songs, with a proper ad model, instead of just selling copies to fans who love to share.

With this new model, the artists may finally be able to make a decent living off of just making and circulating their music, without having to kill themselves to market and promote their music, without signing away their souls for a distribution deal, and without having to worry about piracy taking all of their money! Maybe, with this new system, artists will be able to make the kind of money they should be making when they factor in shows, merch, music licensing, and any other opportunities that a model like this could potentially present.

I urge all independent artists to consider supporting a model like this, and to think about the kind of effect this model could have on your career. I’m an indie artist myself. It’s about time we start using a model that works for us.

If you would like to help us test this model, right now we need artists and music to be submitted to our social radio so we can continue testing internally. We’re getting really close to our Facebook launch.

Written by: Dante Cullari – Founder & CEO Beat-Play, LLC

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2 responses to “A Look at New Artist Revenue Model: The Social Radio – By the Numbers

  1. I have submitted the 5 songs we have to this company for their testing. We get paid nothing for this at this time, but we are contributing to their research and developement. As it says in this post, the best bands (songs) will get the most play and the most pay. I think this is a great idea and very well could be the future of the Music Industry. For unknown, indepedent artist, at the very least. A way to be creative (original songs) and gain a fan base that supports our efforts, regardless of genre, age and all the other barriers that keep us from getting “signed”.

  2. That’s the goal! Thanks for the comment Dave! We appreciate the support so much. We’re moving forward now! I know we’ll get there.

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