How to earn money with virtual concerts

Non-Fungible Tokens, short NFT, seem to be all anyone ever talks about at the moment – from the art scene to the music industry. iGroove Magazine has closely monitored this trend, but wanted to observe its development first instead of jumping on the bandwagon right away. Since the hype seems to persist, we show you in this posts what NFTs mean to musicians. We will start off by explaining the basics. But if you already have a good grasp on the subject, you can just skip the first part and continue reading below.

NFT: forgery-proof and unique

An NFT is essentially a unique, non-interchangeable key. So, in contrast to bitcoin or a bank bill, an NFT is one of a kind. If I gave you a 50 Dollar bill and you gave me one, we wouldn’t have the same bills anymore, but we would each still have 50 Dollars. This is not possible when you have an NFT, because it is unique.

NFTs make it possible for people to both collect and sell digital goods, which are stored on a forgery-proof (at least in most cases) blockchain.

We’re already familiar with this concept when it comes to physical creations: An artwork by Picasso could hang in a museum or in some rich collector’s home. At the same time anyone can buy a copy of a Picasso almost anywhere. But there is only one original and whoever owns it has a certificate of authenticity for it. Thanks to NFTs, this is now also possible for digital creations – no matter if it’s a JPG, GIF, MP3, meme, or anything else.

Digital files can be copied an infinite number of times, but thanks to an NFT, everyone now knows who owns the original. So, it’s not the digital work that is rare, but the token. Let’s assume someone bought a song as an NFT. That doesn’t mean that the buyer now owns the song. What they do own is the certificate, meaning the proof that they are in possession of the original. They can re-sell the NFT, but they don’t have the right to just do whatever they want with the song – unless this was specifically stated in the Smart Contract.

Earning money on resale

A Smart Contract sets all the details, e.g., who will get how much money from the sale of an NFT. For instance, it could say that 50% goes to the artist, 30% to the producer, and 20% to the graphic designer. Additionally, it sets how much money goes to the creator of the NFT in the case of a resale. For example: You’re selling an NFT for $ 10,000 and stipulate that you make 20% of any resale. The buyer then resells the NFT for $ 20,000, after which it changes hands for a whopping 100k. In total, you have now made 34k.

No NFTs without cryptocurrency

In order to set up or buy an NFT, you have to have a crypto wallet – meaning a place to save your cryptocurrency. After that you will need to buy some Ether (the second biggest cryptocurrency after Bitcoin) and put it in your wallet. A large number of NFTs are sold in Ethers and stored on the corresponding Ethereum blockchain. Finally, you will have to register at one of the market places for NFTs (Nifty Gateway, SuperRare, Opean Sea, Rarible etc.) and connect it with your wallet.

You need NFTs not only as a buyer but also as a seller, since you have to pay a so-called gas fee to mint an NFT.

NFTs: direct connection between artist and fan

When reading about NFTs, you will generally come across two different camps. One is euphoric and believes that NFTs are the future of the music industry and will replace labels and copyright collectives. The other thinks it’s not much more than a bubble in which crypto hipsters with too much money on their hands like to speculate. We want to present both viewpoints to you, as well as the current, and more importantly, future prospects, but also some of the stumbling blocks.

One of the biggest advantages of NFTs is the direct connection between artist and fan. The money flows from the fan straight to the artist, everything is stored transparently on the blockchain, and it can be reviewed by anyone. Other than the NFT platform, there are no more middlemen, and the artists get their revenues faster, as well. Additionally, as we have explained above, as an artist, you also earn money when the NFT is resold.

The fan has the option to support their favourite artist directly, and in return, they receive something that is one of a kind. Many hope that NFTs can bring back the value to music that it has lost through streaming. Nowadays, it’s not all that easy for someone to support their favourite artist financially. Out of their monthly streaming subscription only a small amount with lots of zeros behind the decimal point goes to the individual artist. And albums, merchandise, and concert tickets are not exactly things you buy every month either.

In addition to platforms like Patreon, NFTs thus provide a way to support an artist with a significantly higher figure.

At the same time, the artists have a way to offer their die-hard fans something truly special. Next to digital goods – from songs to videos to artworks – NFTs can also be offered for physical products like concert tickets, vinyl, or backstage passes. When it comes to NFts, we’re still very much at the beginning of the developments and are utilizing only a fraction of the opportunities available.

Share the success with the fans

Another area in which many see big potential is the sale of parts of the master and/or publishing rights. The musician here has the advantage of being able to receive a portion their future revenues at once. The fan can invest in the musician and even make some money off the success of their favourite artist, as well. NFTs could also become a type of fanclub, in which a fan could resell their membership and make money off it themselves.

But this is all still a long way off: the system is simply not ready for it yet. While the buyer does have the right to a portion of the royalties, they also have to know how to collect these. In most cases this is not possible to do over the blockchain, which is why copyright collectives, distributors, and labels still come into play.

The only time it’s possible is when the music is brand new and all the rights are owned by the artist themselves. Older releases usually have multiple parties involved, which makes things extremely complicated.

Thus, we’ve arrived at the stumbling blocks, because wherever new opportunities arise, there are always risks involved, as well.

High barriers for buyers and artists

Hardly a day goes by without news of million-dollar sales or superstars launching their own NFTs. But is art really what’s on the forefront here or is it all just about the collector’s value and thus also the speculation? Are NFTs truly valuable or does their value only come from people thinking they’re valuable, at least at the moment? What’s growing here – a bubble that will soon burst or a genuine, sustainable source of income for musicians?

Let’s first get to the main stumbling blocks: For anyone who hasn’t been dealing with cryptocurrencies for a long time, it’s not that easy to set up and sell NFTs. So, there’s a risk that artists are getting into some technology that they don’t completely understand. Even more problematic, however, are the challenges for the buyers. Few people have Ether in their crypto wallet and are hanging out in NFT marketplaces. Do you know someone who owns NFTs? Exactly. It will take years before they can truly establish themselves within the greater population.

Losses instead of high profits

Many also forget that it’s not exactly cheap to set up an NFT. As mentioned before, there is a so-called gas fee to pay, so you will quickly rack up a $200 bill before you even get started. If you then sell your NFT for a five- or six-figure price, then this is obviously not a problem. But with the media only reporting on all the successful, million-dollar sales, people often forget that many NFTs don’t find any buyers at all.

Chances are high that in the future, things will look similar to the pattern on Spotify and YouTube, where a very small number of people rake in millions of streams/views and the majority has less than 1,000. It’s very probable that only a small number of people will be able to make big bucks with NFTs, while the large majority will earn little to nothing.

Another risk that should not be underestimated are the marketplaces that the NFTs are tied to. If one of them goes bankrupt, the NFT that was bought will vanish into thin air, as well.

So far, only around 150 musicians have sold NFTs (although this number is obviously increasing rapidly). Most of them are extremely well-established and have a strong fanbase. Their NFTs are often sold for astronomical prices that a normal fan could never afford. At the moment, NFTs are therefore primarily a playground for superstars on the one side and crypto nerds and other people with a well-lined purse (or rather, a full crypto wallet) on the other.

NFTs are still a long way from entering the mainstream

While this hobby of the crypto and finance buffs is making its way into the mainstream, it hasn’t quite gotten there yet. It still remains to be seen whether NFTs are more than just an object of speculation. So far, instead of more democratization in the music industry, they have only given rise to a few winning parties. When Grimes sells NFTs for 6 million dollars, it benefits neither the starving artists nor the music industry as a whole. In order for independent artists to truly be able to make a profit, a mass market needs to emerge and prices need to settle at a reasonable level.

But in this whole discussion, we haven’t even mentioned the most significant drawback: Since NFTs are based on blockchain-technology, they are incredibly energy-intensive. So, anyone who cares even a little bit about climate change should keep their hands off them until the industry has found another way.

But in the other aspects, too, we’d say: without a huge and more importantly, well-heeled fanbase, you should focus more on other monetization options rather than NFTs. However, you should also still keep an eye on their development.

More and more artists are celebrating major successes without major labels, and many are now seen leaving big record companies. We’ll show you what advantages come with being an independent artist.

Major labels are still a big force, no question about it. Last year, the music industry made a profit of 23.1 billion dollars worldwide, 65.5% percent of which went to major labels. However, this share has been steadily declining; back in 2019, it was 66.5%. A similar situation can be observed at Spotify, where the portion of stream revenues that went to major labels dropped from 70.3% to 68.9% between 2019 and 2020. And yet, major labels continue to enjoy an abundance of power and, above all, financial resources.

Indie instead of major

Nevertheless, more and more artists are either staying on the independent route or leaving the major labels. We’re not just talking about smaller artists either, but also an increasing number of those that any major label would jump at the opportunity to sign. What drives established artists to leave the cemented structures and financial resources of major labels to work with a distributor instead?

• Rights to the music: When working with a major label, you have to give up the rights to your music for a certain (or even undetermined) period of time. However, when you’re with a distributor, you maintain those rights in your own hands.
• Flexibility: You’re usually tied to a major label over multiple years or releases. But when you make a release via an independent distributor, you can switch anytime.
• Cuts: Depending on the distributor, you only have to hand over a small percentage of your revenues or pay a fixed amount per release.
• Of course, you won’t get the same services as you would from a major label. But you can decide for yourself how much, for instance, you want to spend on promotion, marketing, etc. As an artist, you can put together the types of services yourself and don’t have to resort to the full package that the major labels offer.
• Transparency: With most distributors, you have a detailed inside look into the numbers and trends. This way, you gain a better overview of your finances and can plan more confidently.
• Regular payments: While some major labels only pay their artists every couple of months, independent distributors normally credit the amount in question to your account every month.
• Last but not least, you have full artistic freedom. Unlike with a major label, nobody will be butting into your creative process when you’re working with a distributor.

At iGroove, you have the additional benefit of being able to request an advance payment, just like you can at a major label – but again, without being forced to make a long-term commitment.

Additionally, you can request advances for older releases, for which major labels often apply a flatrate that is much too low a compensation. Furthermore, at iGroove you can get a reliable projection of your future revenues. This gives you the ability to plan your next steps and make better business decisions as an artist.

Conclusion

Many young musicians dream of a major deal. But more and more established artists who are already surrounded by a good team have realized that without a major label, they will not only become more independent but can also increase their revenues. There seems to be no better time than now to remain independent. If you have an offer on the table from a major company, you should definitely check first whether you can’t get a better deal elsewhere.

It is commonly known that there are a multitude of untrustworthy offers circulating in the music market. So why do so many artists still fall for them anyway? It’s a mixture between a lack of knowledge, the belief in shortcuts, and scammers’ slick exploitation of the artist’s pressure points.

The streaming era has ushered in entirely new possibilities for fraud. In many other posts we have already reported on why fake streams are damaging more than anything and how you can spot suspicious offers and playlists. But why do artists, whether unknowingly or on purpose, still make use of these music promotion offers?

Know your business

A musician’s budget is already small enough as it is, so you shouldn’t invest it in fraudulent offers. Nonetheless, many people still do, and there are many reasons why. For one, a lot of musicians don’t do enough research into the workings of the music industry. Additionally, many believe in shortcuts and in buying your way to success. Last, but certainly not least, scammers know exactly what worries and concerns artists have and exploit them mercilessly.

Nowadays, it is very easy to release music and thus have some sort of music career. But it takes more than that, namely a certain level of knowledge about what goes on in the music business (spreading this knowledge is the goal of our magazine). If you aren’t interested in acquiring this information yourself, invite someone into your team who is either willing to do it or is already bringing sufficient knowledge with them.

Shortcuts lead to a dead end

As an artist, you want as big of a reach as possible and a solid fanbase – preferably now. But a music career is a marathon, not a sprint. There are hardly any artists who became stars completely out of nowhere. Just because you’ve never heard of an artist before, that doesn’t mean that they haven’t worked for years to get to this point. Patience is not only a virtue but a must. There are so few shortcuts in the music industry that don’t lead you down a dead-end road.

Scammers know your pressure points

At the beginning, many musicians simply don’t have that many streams and listeners. The scammers know this and claim to have the end-all solution to the problem, all the while keeping only their own profit in mind. It’s how they get musicians to accept offers that they should know from the beginning not to be legitimate. Most of the time, these scammers unfortunately only do genuine marketing for their own business.

Conclusion

All things considered, it is clear that you should never buy a fixed number of streams or followers. It is equally impossible to buy your way into the official playlists of streaming providers – whoever says it is, is a scammer. Likewise, you should be careful when it comes to playlist placements, promotion offers on social media, or paid placements in blogs.

If you see an offer that seems almost too good to be true or extremely cheap, it should set alarm bells ringing. Before booking anything, you should take time for some thorough research. Additionally, ask the company critical questions when you see something suspicious or don’t understand the process entirely. Using some precautions, you can avoid falling for fraudulent tricks that are not sustainable and will only harm your career.

Spotify continuously absorbs criticism from the community, which is certainly in part related to the fact that the streaming pay-outs are not always transparent. The iGroove Magazine constantly tries to look behind the scenes and provide artists with a deeper insight into their streaming revenue. Loud & Clear represents Spotify’s step in this direction, an attempt to provide more transparency.

This is how Spotify distributes revenue

For the first time Spotify breaks down their revenue streams (subscription and advertising) and how they distribute these. An estimated 1/3 stays with Spotify. The remaining 2/3 are then put into a separate pool. From this pool, 75% – 80% is returned to the rights holders (via distribution / label to the artist) and 20-25% to the songwriters (via collecting society / publisher to the artist). This is something we will cover in more detail in another article.

Why is the PPS lower at Spotify?

Spotify also commented on why the PPS (Pay per Stream) is lower than that of the competition. On the one hand, they have the opinion that their reach opens additional sources of income for artists. On the other hand, Spotify continues to grow in popularity in many markets with low prices. While this lowers the PPS, it enables revenues to be generated from markets where piracy used to dominate. As before, an additional reason is tied to their ad-based model. Most users who use Spotify for free would not pay for it, which results in lower revenues.

In addition, they tend to speak out against raising prices, as otherwise more people would again consume music illegally.

What is Spotify’s position on the user-centric model?

They also addressed the topic of User Centricity referring to the same study which iGroove already reported on. In their eyes the advantage for the artist would be minimal. They however explain that if musicians, songwriters and rights holders (e.g. labels) so wish, they would be willing to change the system. However, this is only possible if the entire industry wants this switch.

Podcast investments: Musicians should also profit

They also made a statement on why they were investing millions in podcasts rather than music. According to Spotify, musicians also benefit from these investments. Podcasts attract new subscribers who listen to music as well as podcasts. The subscription costs of these new subscribers results in direct benefits for the musicians. Podcasters are not paid per stream like musicians, but via advertising that they place in their podcasts.

Only 184,000 artists earn more than $1,000

Loud & Clear also offers a few gimmicks. You can find out how many artists have generated more than, for example, a million dollars. We recently analyzed these numbers for the iGroove magazine. An interesting fact, (e.g.), is that only 184,000 of the approx. 8 million artists on Spotify generated more than $ 1,000 last year and that with both payments combined.

There is also a tool where you can enter the streams of a song or your monthly listeners and you are then able to see where you are within the ranking list. For example, if you have 100,000 monthly listeners you are in the top 44,000. If your track has a million streams, it is one of 551,000 songs that reached this milestone.

Is this clever self-promotion? Yes. Is it informative? Likewise. Have a look at loudandclear.byspotify.com.

As a musician, music is often the only thing on your mind. Consequently, the focus of your social media posts will be your music also – especially since you’re using those platforms to reach more potential listeners. But precisely for this reason that we utilize social media as a marketing tool, it might be good to follow some marketing principles, as well. One of them is not to fixate on just one topic.

Define topics and strategy

This means that you must have a clear definition of your brand, which is who you are as an artist. In many areas, social media requires a strategy and a clear position. The fans should be able to identify themselves with you and this usually happens beyond the scope of just music. That’s why you should consider how you want to present yourself as an artist to the public and think about some topics that could be of interest to both you and your fans 

If you’re only ever talking about your music and are thus essentially always trying to sell your product, it gives off a very one-dimensional and self-centered impression. People aren’t just interested in your music but also in the person behind it and why you are making this music. But, of course, you also shouldn’t just ramble on about a bunch of random topics. If you’re talking about music one day, and the next day you’re discussing the military coup in Myanmar, and the day after that the subject is cars, it will seem like you don’t have a concept.

3-5 topics for your strategy

Experts recommend choosing 3-5 topics. The obvious one is music-related themes, such as new releases, music videos, and behind-the-scenes material, as well as the promotion of merch, concerts or livestreams. On top of that, you should consider 2 or 3 additional topics that you are knowledgeable in, that you have passion for, and that you want to speak about in public.

One person might be comfortable sharing their private life, the other is involved in local politics, and the third loves to talk about soccer or their pet. Of course, this doesn’t mean that you have to keep discussing the same topics year after year. On the contrary, every once in a while, you should re-evaluate whether these are still the right ones for you. After all, everybody’s interests will always evolve, so you should keep re-inventing your content accordingly.

The focus changes continuously

Likewise, you’ll need to constantly reorganize your prioritization. When there’s a new release coming up, you’ll naturally post more about the music. When there isn’t, other topics can come to the fore. If possible, you might also want to slightly shift the thematic focus depending on the platform.

Knowing the core topics also helps you develop concrete marketing strategies for an upcoming release and identify which resources you’ll need to promote it.

Videos are one of the most important tools for marketing music, be it on TikTok, Instagram, or Triller. But the top dog of video platforms is still, by far, YouTube, with its 2 billion users logging on every month (not even counting those without a Google account).

In another one of our posts, we explained why you shouldn’t put all your eggs in YouTube’s basket. Nevertheless, a strong presence on the world’s biggest video platform is absolutely indispensable.

Clean up your YouTube channel

To start off, you might want to do some spring cleaning: As an artist you should set up an Official Artist Channel so that all your content is in one spot. We already discussed this feature in another post. Once you have your OAC, you should optimize your profile. That’s your calling card, which should leave a good impression on any visitor, so that they’ll want to linger on.

Make the following customizations:

• Pick a name for your channel
• Upload your profile picture and banner
• Fill out the basic info
• Put in the links to your website, social media accounts, etc.
• Add the links to the channels/accounts for your other projects, your label, etc.
• Sort your videos into different sections, to which you can add videos, playlists, or videos from other users, too
• Adjust the URL of your channel

When uploading a video, there are a few things to consider, as well:

• Pick a nice thumbnail
• Write a good description, so that it’s easier for people to find the video, and include all the important information and links
• Add cards which take viewers to another video or to your channel
• Add your channel logo as a watermark so viewers can go to your channel and subscribe to it
• Add an intro which you can use as a personal trademark on multiple videos
• Add an end card with a call to action (this can be used for multiple videos, as well)
• Upload the video in HD (720p or 1080p) for a professional look
• Don’t forget to use tags and list the right keywords
• Put your video in a playlist so that viewers can immediately be directed to other videos

Am I a youtuber?

First, we must differentiate between artists who use YouTube and upload their videos there and youtubers. The latter upload not just once every 1-2 months, but often multiple times a week. How frequently you want to post is, of course, completely up to you. What’s certain is that YouTube’s algorithm favors channels with lots of uploads when it comes to recommendations as well as monetization. But how can I manage to regularly upload content?

You can use YouTube as a storage medium for your videos, or you can view it as a social media platform, which means that you regularly upload new content. But what should that content be when you can’t exactly produce a new music video every week? We’ve come up with a few options:

• Videos from live concerts (past recordings, for the time being)
• Lyric videos (popular and definitely cheaper than a music video)
• Vlogs: Use them to give a glimpse behind the scenes
• Q&A: Go live and answer questions from fans
• Virtual concerts: An obvious way to use YouTube
• Cover songs
• Advertisements: Present your new merch and tell people about your upcoming album, deluxe edition, or box set
• Tutorials: A great opportunity, especially for producers, to show people the newest available tools
• UGC: Put up videos made by your fans (user generated content) on your channel, as well

For some of these videos, other platforms might arguably be more suitable – it mainly depends on where you have the biggest community of fans.

How does YouTube’s algorithm work?

Obviously, a behind-the-scenes video won’t generate as many clicks as an elaborate music video. But do videos with fewer views have a negative impact on the algorithm? According to YouTube, that is not the case, since every video is assessed individually. The goal is to recommend videos that users want to see. Otherwise, it wouldn’t be possible for a video to go viral when the previous clips from the channel only had a few views.

The algorithm pays attention to how users react to a video. The more people interact positively with a video, the more that video will be recommended to others. Frequent uploads are rewarded, although you should keep in mind that subscribers only get a maximum of three notifications from the same channel per day. So, it’s not recommended to post more than three times daily. It also has a positive influence on the algorithm when users are taken to YouTube from other platforms. But what’s most important is the user engagement on YouTube itself.

Like any other social media platform, it’s well worth studying YouTube’s Analytics, as well, and learn more about user behaviour. That way, you can find out how users come across your videos and get information on the age and gender of your viewers.

You shouldn’t just measure success based on views. What’s also important is how many people watched the video until the end. A sustainable channel is marked primarily through a steady growth of subscribers.

Monetize your videos

Thanks to the Content ID, you can monetize not only your own videos but all videos that use your music. Many distributors, including iGroove, offer monetization via Content ID.

Another source of revenue are Art Tracks, which are available on YouTube when you submit your music to YouTube Music.

Want to increase your views? iGroove offers efficient pre-roll ads for your videos.