Not long ago, I talked to an experienced music business executive. I asked her why any artist these days would sign a 360 deal. She
told me that the artists who do often feel they lack options, and see such deals as the only way to get distribution on the radio and
cable TV channels that promote music. This may still be true; these distribution channels are still a big lever for traditional labels.
But the trends are pretty clear. Once upon a time, radio play sold records. These days, music sales are not the main revenue source
for most artists. Artists make some money from streaming services such as Spotify, but generally not much. Instead, most of their
revenue comes from ticket sales, merchandise and advertising - notably ads on YouTube videos. All of these avenues rely on the
artist's personal popularity with fans. While labels do have the resources to help increase this popularity through exposure, exposure
alone is not enough.
Popularity these days is often built on direct personal engagement. Taylor Swift had a record deal early in her career, but she would
never have become the phenomenon she is without her personal stream of tweets, posts and likes. This summer, Swift made waves
by sending heartfelt responses to fans tagging her on Instagram. Through this engagement, her fans have come to love her as a
person as much as an artist. No label could have done that for her. An artist coming up today, hoping to be the next Taylor Swift,
would have less incentive to spend time and energy on this sort of goodwill-building with a 360 deal in place.
But much more than for the Taylor Swifts of the world, Patreon and similar funding mechanisms are for talents who have not already
broken into the wider cultural conversation. Patreon may allow lesser-known talents, who may have only cultivated a niche audience,
to assemble that audience on a large enough scale to support themselves and their work.
Of course the fact that they can be self-sustaining in theory doesn't mean that every artist will be in reality. Convincing enough of
their fans to become paying patrons will probably be a struggle for newer and smaller artists. A quick browse through Patreon users
shows that for every project generating thousands of dollars per video, many others are making more like $40 or $50. While this is
still more than many artists make on YouTube ad revenue alone, it's not enough for most artists to quit their day jobs. Patreon's
repeating subscriptions can also be set up on a per month or a per creation basis. If a YouTuber is set up on the latter model and the
rent is coming due, there's a temptation to push out subpar content in a hurry. The penalty is built in, however: Do this regularly, and
you'll lose your subscribers.
At the end of the day, what separates the Davids of Patreon from the Goliaths of the record labels is what their business models
produce. The Goliaths, who can always find another star-in-the-making to promote, make their money from content that, in many
cases, would have been created anyway. The Davids, with the help of their patrons, are adding appreciably to our pool of cultural
wealth.
Sources:
1) Calling All Creators, "21 - Nataly Dawn"
2) Billboard, "Two Years In, Patreon's Update of the Crowdfunding Model Seems to Be Working"
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