A rare find: nailing it in the music business
Bandcamp is rocking the way music aficionados interact with emerging artists. The platform connects unsigned bands with music enthusiasts via free streaming and pay-what-you-want album purchases. And its making lots of money, in an industry for decades has struggled to come up with a sustainable business model. And this time, finally, artists get to make money too.
Since inception in 2008, Bandcamp has paid $270m to independent artists. Canadian musician Zoe Keating earned $40,000 in 2014 from Bandcamp. Lo-fi rockers King Gizzard & The Lizard Wizard sold more than 1,500 copies of their new album in less than two hours via the platform. (2) A myriad of other success stories by indie artists on Bandcamp can be found online.
What makes this quirky alternative streaming and download platform different to music behemoths Spotify and Apple Music?
Video killed the radio star, then digital killed MTV
Long gone are the days of vinyl records, cassette players and CDs. Roughly two decades ago, Napster opened a pandora box that lead to the digitalization of the music industry and ultimately to the dominance streaming as the main music reproduction format. Hello Spotify.
Despite making music more accessible to listeners, Spotify’s business model and has been heavily questioned by the market. Its long waited direct-listing IPO did not achieve full share subscription and its share price has continued to drop since. (3) Are artists happy with Spotify at least? Hell no. Most of them claim that large streaming platforms keep most of the revenue, leaving thin royalty commissions to songwriters.
It gets worse if we think of independent artists. “Shelf space” within Spotify’s browsing catalog is sold to the highest bidder, namely the large labels and their artists. Without a label deal or contacts with influential playlist makers, an indie band is left to the mercy of AI algorithms for their tracks to be discovered by listeners in the vast, obscure universe of digital music. (4)
A platform centered around artists and their albums
While Spotify puts the listeners first, Bandcamp succeeds because it puts the artists first.
“Bandcamp’s model is based on a revenue share. It’s 15% on digital, 10% on physical, and in that way our success is tied to the success of the artist. So we only make money if the artist makes a whole lot more money.” (5) With the mission ‘to become an important part of how an artist develops a sustainable career’, Bandcamp’s founder and CEO Ethan Diamond claims to be fighting for artists against oppressing big record labels and streaming services. (6)
“Standalone music streaming companies continued to lose money in 2017, and industry-wide record sales continued to decline. They can afford to lose money on music because it attracts customers to the parts of their businesses that are profitable (i.e. Apple/Google selling phones and embedded services).” (7) In contrast, Bandcamp seems to be reaping dividends on its unique business model. In 2017, digital album sales rose by 16%, track sales by 33% and merchandise sales by 36%. Vinyl sales grew by 54%, cassettes sales by 41% and CD sales by 18%. (8)
But it’s not all about how the money is split. The platform gave artists a home to host and showcase their art the way it was meant to: in full-length albums. Users can stream for free before purchasing albums and merchandise on a pay-what-you-want basis. There’s no ability to create playlists of random song selections — The way to play music in Bandcamp is to go to your collection, pick an album/single, then play it. Just like how you do it in the old days, with a CD & vinyl collection. (9)
New music discovery is an important component driving Bandcamp’s community. Listeners can browse albums and artists filtering by tags (genre, geography, etc), flicking through their friend’s collections or following Bandcamp’s human-curated, not AI-driven daily recommendations. By cutting out playlists completely, Bandcamp allowed newborn artists and their just-released albums to be discovered without having to fight algorithms and big labels for “shelf space”. And it works. Bandcamp (actually, the artists) sells an album every 5 seconds! (10)
Back to the roots: making vinyl for everyone
Bandcamp understands its audience: People who like to buy music are also the type to purchase the physical copy and also tend to enjoy the technology of the past. (11) So why not enable bands to sell their music in the most beloved physical format ever made: vinyl records? Through a newly launched service, Bandcamp now aims to streamline the “financing, production, and fulfillment of vinyl records.” (12) Have they gone too far? Only time will tell…
(1) The Bandcamp 2017 Year In Review, Bandcamp.com. https://daily.bandcamp.com/2018/02/12/the-bandcamp-2017-year-in-review/
(2) Bandcamp Has Paid Out $150m To Artists In The Last 8 Years, Tone Deaf. https://tonedeaf.thebrag.com/bandcamp-has-paid-out-150m-to-artists-in-the-last-8-years/
(3) Spotify tried to reinvent the IPO. But two quarters later, things look … normal? Vox.com https://www.vox.com/2018/7/26/17615094/spotify-ipo-earnings-direct-listing
(4) The Secret Lives Of Playlists, WATT. https://watt.cashmusic.org/writing/thesecretlivesofplaylists
(5) Bandcamp CEO Says He Sees Music As An Art Not A Commodity, Marketplace.org. https://www.marketplace.org/2016/12/21/bandcamp-ceo-says-he-sees-music-art-not-commodity/
(6) Bandcamp, Underglass.io. https://www.underglass.io/read/Bandcamp
(7) The Bandcamp 2017 Year In Review, Bandcamp.com. https://daily.bandcamp.com/2018/02/12/the-bandcamp-2017-year-in-review/
(8) Bandcamp Paid Musicians Over $70m Last Year, NME. https://www.nme.com/news/music/bandcamp-2017-sales-2241777
(9) Bandcamp, Underglass.io. https://www.underglass.io/read/Bandcamp
(10) Is Bandcamp the Holy Grail of Online Record Stores? https://www.nytimes.com/2016/08/20/arts/music/bandcamp-shopping-for-music.html
(11) Bandcamp, Underglass.io. https://www.underglass.io/read/Bandcamp
(12) Bandcamp Announces New Vinyl Pressing Service, Pitchfork. https://pitchfork.com/news/bandcamp-announces-new-vinyl-pressing-service/