New Business Models and Artist Payments

By Chris Hansen, Co-Founder and CEO of

The horror stories are now so entrenched in the media psyche that they’ve become a cliché: endless reams of gloomy reports about how musicians and bands are struggling to make money in this digital era. Piracy is the big bad wolf at the door—a beast so fierce his claws have begun to splinter the wood. If people can download music free and illegally—and let’s face it, they’re often tempted to—how are artists ever going to receive any payment for their work?

This is ignoring a few key notes. Firstly, live gigs and merchandise sales are still capable of reeling in big bucks. Secondly, the music industry was never exactly a socialist utopia in the first place—throw a rock in the air in any music-orientated location and you’ll find someone all too willing to share their story of being screwed over (financially and artistically) by men in suits. Thirdly, it always tends to be superstar acts like Metallica who are the most opposed to having their material spread online (the ones who, to put it bluntly, won’t be missing out on the mortgage payments if someone cheekily rips a free copy of ‘Ride The Lightning’) —ask most rising acts and they’ll state they’re simply glad for the publicity.

Still, there has to be some sort of payment system for artists in place. What’s needed, however, is a total re-evaluation of the attitude towards this. For instance, approaches the current music industry climate as an opportunity to test a new kind of business model that provides global distribution of custom-made HD music video content that does not rely on major label licensing and splits net profits 50/50 with the artist.

As with all other aspects of the emerging ‘new’ music economy, there is no straightforward, set-in-stone way of best practice (as there was in the old, simple days of the large record companies). Smaller companies must figure out their own, personally-tailored ways of getting payments to artists. These will differ, depending on the role of the company and the personal choices made by the artist to engage or not.

In’s case, we looked at the global market for distributing and monetizing HD music video content on a growing array of smartphones, tablets, and connected TVs as a huge opportunity. And there are other innovative approaches out there too. Take Kickstarter, a method of crowd-sourced fundraising that bands routinely use to harness fan enthusiasm to a musical project, such as recording an album, and provides incentives that make everyone a winner. There’s also Muve Music, which gathers revenue via bundling a streaming service with a wireless carrier package. And let’s not forget Lyricfind—the licensed embedding of lyrics which is then used to collect publishing royalties.

These are tough times in the creative industries, there’s no doubt about that. It will take a while for the dust to settle around a new, multi-stranded set of methods for artist payment – and companies will have to think outside the box to get there. What’s certain, though, is that once we do get ‘there’, artists will find there is more personal financial reward for their success than ever before.