Bandcamp Fridays payouts surpass $84 milllion
In a December 2 blog post, Bandcamp CEO Ethan Diamond notes that the digital music retailer has paid out more that $84 million dollars through its monthly “Bandcamp Fridays” promotion since March 2020. Originally announced as a one-time effort, Bandcamp has now waived its share of the revenue from sales of digital and physical music a total of 24 times.
There’s no question that this initiative has been successful beyond anyone’s initial expectations. Certainly it’s been good business for Bandcamp; as we've long argued, services can distinguish themselves in the marketplace by competing to better serve musicians with artist-friendly policies. Bandcamp’s not shy about using its artist-friendly reputation as a key selling-point, and it’s helped drive adoption of the service.
With a little rough back-of-the-envelope math, you can figure that this waived rev-share works out to an effective donation of something in the neighborhood of $10 million. It's also likely that the initiative helped motivate a lot of music-buying that wouldn't have happened otherwise. And in the context of a pandemic which has shut down and slowed many revenue streams, that money can make a big difference.
It’s worth taking a moment to reflect on some of the structural factors that make it possible for Bandcamp to take this positive step.
How Bandcamp is different
Most of the big digital services were designed with mass markets in mind, while Bandcamp is more niche-oriented, and that's reflected in the service design & business model, including its approach to growth. t’s never tried to offer listeners the full catalog of recorded music, and that’s allowed for a flexibility in service offerings. It’s also consistently taken a cut of 15% or less of digital revenues—less than half of what most major digital retailers take.
There's no surveillance or advertising component to Bandcamp that drives the company to prioritize growing the user base over sustainable revenue generation. Neither is there any attempt to use platform power to drive rates of compensation downward. Bandcamp’s hybrid streaming/download model was profitable while many of the big streaming services were not.
Crucially, Bandcamp did just one round of VC funding in 2010 and stayed relatively small. Rather than providing massive returns to investors or altering the core business model to better attract the attention of private equity, the company stayed focused on serving artists and indie labels and listeners. We’ve talked to artists and labels alike who report “Bandcamp is the only digital service who’s ever asked us what they could do to be better partners, or what features we’d like to see added.”
While other digital services prioritize algorithmic discovery (and then leverage their algorithmic control to lower artist payouts), Bandcamp has invested in humans doing actual music journalism, including writing about work that isn't intended to scale: music that most listeners probably aren't going to like, but that resonates with a specific community.
This is why the acquisition of Bandcamp by Epic Games in March of this year raised so many concerns. At that time, we told the Los Angeles Times, “We want companies to do well by doing right by musicians, and if Bandcamp under the new ownership is able to stick to the principles that have led it to the success that it enjoys now — and scales the size of the audience — that would be a net win for a lot of musicians.” But mergers and acquisitions can often result in changes to core aspects of business operations and priorities.
The good news is that thus far, we haven’t seen this happen with Bandcamp. The only changes in the terms of service we’ve seen so far have been relatively minor and entirely transparent. Naturally we’ll continue to watch closely, but 9 months into the new ownership, Bandcamp basically hasn’t changed.
The fear that it could, though, raises important questions about how business models are developed, and who has agency in shaping those processes. Bandcamp in some ways embodies an earlier, more idealistic conception of what the internet could be for culture--rejecting one-size fits all economic approaches, facilitating diverse expression. So why is it such an outlier? Why don’t more companies seem interested in Bandcamp’s artist-centered approach?
What’s preventing digital music services from being more artist-friendly?
There are smart, idealistic music-loving people working at nearly every music company we've ever talked to. But their ability to make decisions that are driven by what really best serves audiences and artists can be limited by a few factors:
1) incuriosity: some digital music startups begin with an idea of what artists need, imagine that they have the solution, and then spend years and piles of money trying to convince artists how great the service is. They’re often staffed by “true believers,” and too often, they tend to view critical feedback as misinformed or reflective of outmoded thinking. Bandcamp, in contrast, has maintained a commitment to iteratively asking artists what they need as they develop and launch new features, and has been responsive.
2) Relatedly, investment models that assume a goal of mass-scale growth with multiple VC rounds are the dominant mode for technology investment right now, but these models drive incentives not well-suited for cultural markets and cultural diversity. Bandcamp, in contrast was profitable much earlier than many other digital music services, and achieved this with a smaller user-base.
3) Ownership consolidation in every part of the music industry and every adjacent industry has made it harder for smaller businesses with niche-oriented approaches to gain a foothold in the market. This is a regulatory issue; the Federal Trade Commission and Department of Justice have allowed too few companies to have too much power. The good news is that new leadership and forthcoming revised merger guidelines may result in this trend starting to reverse.
4) YouTube. There's no polite or diplomatic way to say this: It's hard for niche music services to get off the ground when so much of the music is available on YouTube for free, either unlicensed, or with below-market terms that Google extracts with its massive market power. While there have been some recent improvements, YouTube has spent years denying small-scale rightsholders access to tools that would prevent unwanted uploads of their music, or they condition access to those tools on acceptance of YT’s licensing terms (which aren’t capable of generating meaningful revenue for music that doesn’t generate lots of repeat listens). That's a big reason why we don't have more services like Bandcamp.
This is all a good example of why antitrust and anti-monopoly work are so crucial to music policy in 2023. We need healthy markets that serve workers and consumers, systems that work well for small and medium-size businesses. The conservative antitrust establishment might argue that Bandcamp's success proves that there's no real problem with market entry--everything's fine, after all gross industry revenues are up! But there’s a growing movement to center the voices of workers and communities in antitrust analysis, and that compels us to ask: what are music creators and other workers saying?
Competing services can and must do more
Even with the constraints of their business models, the big digital services could be doing much more to be good partners to artists, especially as the impact of the pandemic is still ongoing. As we told Rolling Stone early in the pandemic, “Responding to this moment can’t just be about getting back to a pre-virus status quo, which was unsustainable for a whole lot of music-industry workers.”
Spotify, for example, donated $10 million to various COVID/music related relief efforts. This is admirable, but if the much smaller Bandcamp can effectively donate a roughly equivalent amount via waiving its’ revenue share, $10M (or roughly .1% of Spotify's annual revenue) doesn't seem that impressive, especially since they haven’t made any additional donations since 2020. (Moreover, Spotify’s direct funding of harmful Covid disinformation on Joe Rogan’s podcast—to the reported tune of $200 million—stands in disturbing contrast to the relatively small donation.)
Spotify and other large digital services do deserve credit for supporting covid relief legislative efforts and actively working alongside the music community in DC for their passage. But the goodwill generated by this work may be undercut by ongoing efforts to pay musicians and songwriters less, as with their new “Discovery Mode” feature which reduces pay rates in exchange for algorithmic boosts.
Small is beautiful—and impactful
Even with its new corporate parent and with ongoing growth, Bandcamp offers a truly important lesson: small companies with business models that aren't focused on mass-audience approaches can still be profoundly impactful for a significant population of artists. The key is having a close enough relationship with artists themselves to know how to be a helpful partner.
So much of music industry discourse focuses on the actions and positions of the biggest artists, biggest labels, biggest services. By focusing our attention on the experiences of diverse individual artists operating at community scale, we can get a more richly textured view of what's happening. In fact, that's true of the full array of public policy, business, and technology topics that impact musicians.