MBW Views is a sequence of unique op/eds from eminent music business folks… with one thing to say. The next comes from Matt Jones, CEO of Medallion and former CEO of Songkick.
Jones has spent over 15 years constructing direct-to-fan platforms and has facilitated a whole bunch of tens of millions in artist income by way of varied fan engagement fashions.
Substack simply raised $100 million by proving how nicely direct commerce works for its creators. A scalable direct-to-fan mannequin may revolutionize music, however Substack’s subscription mannequin gained’t work for artists, says Jones…
Final week, Substack introduced a $100 million Sequence C funding spherical, including extra gasoline to a platform that’s already transferring a whole bunch of tens of millions of {dollars} straight from audiences to creators.
This funding spherical reinforces the truth that direct commerce within the creator financial system is right here to remain. It’s additionally a wake-up name for the music business. Not as a result of Substack is about to take over music (extra on that beneath) however as a result of Substack’s “magic mud” – the ideas of its enterprise mannequin – so clearly resonate with musicians.
In any case, Substack’s core prospects (writers, journalists, podcasters, and so forth.) and musicians have traditionally confronted related challenges. They’ve struggled to monetize their work, their audiences are unfold throughout a number of platforms, they usually’ve been pressured to take part in an ecosystem the place intermediaries seize a lot of the worth.
Whereas the music business has been debating (with out finish) streaming economics and artist compensation, Substack has quietly constructed a direct-to-fan platform that’s economically sustainable and grounded in three sensible ideas:
- Management: Unfiltered by algorithms, Substack creators have direct entry to their subscribers.
- Monetization: Relatively than counting on giant platforms that mixture demand and dictate financial phrases, creators earn straight from their audiences and thus preserve the next share of revenues.
- Incentives: Substack solely makes cash when its creators become profitable – it takes a ten% minimize of paid subscriptions. This alignment means the platform’s success relies on creator success, not on maximizing advert impressions or conserving customers scrolling.
I’ve labored with artists – from small membership acts to stadium artists – for practically 20 years, and it’s exhausting for me to consider one which wouldn’t be excited by these three ideas on the core of Substack’s enterprise mannequin.
So…why aren’t all musicians flocking to Substack?
After years of seeing artists making an attempt to deliver to life ‘paid subscriptions’, I feel it’s due to Substack’s ‘1:1’ (i.e., creator-level) subscriptions.
Why Substack’s subscription mannequin breaks down for music
After facilitating a whole bunch of tens of millions of {dollars} in direct-to-fan commerce on behalf of artists and watching dozens of ‘paid fan membership’ experiments throughout each artist tier, I’ve seen some patterns that reinforce why music is completely different from Substack’s core creator industries:
- Whereas writers publish frequently on predictable schedules, musicians have pure artistic cycles – intervals of writing, recording, touring, and crucially, resting – that don’t align with an ‘all the time on’ publishing schedule.
- Musical artists face a dense thicket of stakeholders (and contractual preparations) that may have super affect on how the artist can in the end monetize their IP or gate entry to make a paid tier engaging for followers.
- Musical artists have a singular (and extremely variable) monetizable IP ‘floor.’ Musicians can monetize every little thing from grasp recordings to music movies, ticket pre-sales, unreleased music and behind-the-scenes content material. Accordingly, a direct commerce platform for music would wish to deal with a wide range of completely different fan UXs throughout stay, digital music and commerce. Options like ticket gross sales and merch product drops appeal to a lot of fan demand, and require a very completely different consumption expertise than simply distributing content material.
- Particular person musical style is broad and complicated. On Substack, folks would possibly pay for a handful of their favourite newsletters. However our ardour for music works otherwise. We don’t simply love just a few artists. We love completely different artists for various feelings, completely different recollections, completely different events. Music is biographical, and we wish entry to our full musical selves – ideally in a single place.
The chance in music: networks over silos
Our business’s subsequent breakthrough gained’t come from incrementally bettering streaming payouts or preventing over playlist placement. It should come from constructing programs that give artists what Substack provides writers: artistic management, direct financial relationships with followers, and a platform that’s incentive-aligned with the creators it helps.
Music calls for a singular platform, a singular product expertise, and a singular financial mannequin. As an alternative of Substack’s 1:1 creator-level subscriptions, we should always discover fashions that create worth by way of community results, which is when a platform grows in utility as extra folks be part of.
Networks can create worth by way of entry and timing quite than siloed content material gating. For followers, a networked expertise can ship a hub for participating with the entire artists they love, together with different followers. For artists, a networked expertise can respect artistic cycles and cut back the fixed stress for content material manufacturing.
This, in flip, may produce collaborative dynamics between musicians. Due to ‘community results’, artists would change into one another’s distribution channels. If we make it simple for followers to entry all of their favourite artists, then total engagement goes up and all artists profit.
I constructed my profession on the assumption that artists deserve a a lot bigger ‘share of pockets’ from each fan they’ve than what they’ve been getting. I nonetheless imagine that. However after watching numerous paid fan membership choices on a wide range of platforms launch with pleasure and quietly fizzle out, I’ve needed to confront an uncomfortable fact: aside from a really distinctive sort of artist, an artist-level paid subscription is a terminally damaged monetization mechanic.
For 99.99% of musicians it doesn’t work and can by no means work at scale.
In my expertise, artists don’t wish to really feel like they’re profiting from their followers. And so they don’t need content material creation to really feel like subscription justification. They need genuine relationships that occur to generate income, not income streams that require manufactured authenticity.
The factor that can revolutionize music for artists and followers gained’t be precisely like Substack. However the blueprint exists (and hats off to Substack for main the cost). The expertise works and followers are prepared.Music Enterprise Worldwide
