On the heels of the rumors of Spotify’s monetization threshold, many artists are turning to direct-to-fan as an alternative. Here, we dive into the challenges of direct-to-fan and the business of digital distribution.
We did a poll on the Payusnomind Youtube channel where we asked viewers why they want their music on Spotify with most responding with Discovery as the core reason. I found this interesting because, music stores and streaming platforms are best suited to supply existing demand. They’re not really discovery platforms. Spotify and Apple Music don’t start fires, they fan flames.
The fire, gets started on Youtube and social media platforms like Facebook, Instagram, and TikTok – all of which have larger audiences than Spotify.
For artists, the point of digital distribution to Spotify and other platforms isn’t discovery, it’s monetization. Youtube has a monetization threshold for artists of 500 subscribers and 3k hours watched in the past 12 months. Facebook has a monetization threshold of 5k followers and 60K views in the past 60 days. TikTok pretty much said “don’t call us, we’ll call you” with a creator fund where they got to choose who they wanted to pay.
Artists can’t upload music to social media and jump into monetization. Digital distribution offers artists the opportunity to immediately monetize. Fans can go from discovery to taking revenue generating actions like purchasing a download or streaming. But, just because people can, doesn’t mean they will.
When it comes to direct-to-fan there’s a lot of benefit. Artists gain full control over the process, the money comes directly to them with no middleman, they get customer contact information and data, there’s a ton of value in it. Again, just because people can, doesn’t mean they will. An artist can provide the option of purchasing direct-to-fan but fans have to accept the offer.
Direct-to-Fan gives the artist full control but also responsibility. The artist is responsible for designing a website consumers feel comfortable buying from, creating a checkout process that converts, and building consumer trust. A sale, isn’t just about whether someone likes a song or not. It’s about the website, it’s about the checkout, and most importantly, it’s about trust!
People buy from iTunes because they trust iTunes. They buy from Amazon because they trust Amazon. These stores already have their name, address, email, and credit card information. Purchases are made without even thinking. You press a button, and your product is purchased. The same can’t be said about Direct-to-Fan which requires establishing a relationship where iTunes and Amazon already have one.
On top of the trust issues are the cost. Artists can get digital distribution starting at $15 – $60 annually for unlimited. Let’s compare that to the cost of e-commerce platforms. Wix which charges $16 a month, that’s about $192 annually plus the cost of a domain. Square space charges you $25 a month, that is $276 annually, plus the cost of a domain name. Shopify charges $39 a month, that is $468 annually, plus the cost of a domain name. Without demand, there’s far more risk with Direct-to-Fan than digital distribution.