Dollars on a plate

Are donations becoming a viable part of artists’ business models?

With the rise of live streaming and new media models, donations deserve another consideration.

 

Napster, the early file sharing service, not only introduced many to piracy. The platform also exposed two competing world views. One believed that information should be free and the other believed in combating such ideas. They were both wrong.

As a teenager, and still today, my personal sympathy went out to those who saw a better world and wanted to accomplish that by facing down large corporations. Their envisioned world was never satisfactory enough for me, though. It seemed oversimplified. One of the most common tropes you’d hear would be:

“Artists should just release their work for free and let people donate. I’d love to be able to donate to my favourite artists.”

Donation request from a band
An example of a common donation request.

At that time, there were only about half a billion connected devices. Most of the world’s population wasn’t online yet. Those that were, and thought this way, were a minority projecting their own behaviour onto others. It’s common: most music startup founders do the same thing — overestimating how much people care about music. Simply put: the donation model could not scale.

The model didn’t take into consideration the complexity of the way music is made. Let’s say artists were able to make a living off of donations — this benefits the most visible artists; the singers, but not the songwriters. How should money from donations then be distributed so that it’s fair? Does the intention behind the donation matter? Questions like these are the reason why there’s so much legislation around creative work.

An elemental overview of merely the royalty distribution part of the music business.
An elemental overview of merely the royalty distribution part of the music business. Via Bemuso.

Time passed and two trends have developed. Firstly, there has been an explosion of artists who do everything by themselves. Households in many countries now no longer have just 1 family PC, and music production software is easy to attain. This has led to a rise of ‘bedroom producers’, many of which are world famous and make a good living off of music.

The second trend is that the internet has become more real-time. Ten years ago you wouldn’t consider sharing memories online that would only be visible for 24 hours. Now, two of the world’s most popular apps, Instagram and Snapchat, not only encourage, but thrive because of that behaviour.

Fast wireless connections and increasingly powerful devices have enabled livestreaming. Anyone who’s ever ‘gone live’ on Facebook or Periscope knows that it changes the creative process of making a video. Live video streams are not just a new way to broadcast, they’re a creative format.

Facebook Live creation tool

Trends mix and influence each other. If you want to understand where things are going, you have to understand how trends converge and diverge. In this case, the two highlighted trends have culminated into a particular reality: donations are becoming a viable part of artists’ business models.

Understanding how donations are becoming viable is easiest by looking outside of music. Donations are already an important part of the economy on Twitch, a platform for broadcasting gameplay, which also encourages creatives to start streaming.

Gamers use donation apps to display tip notes in the live video stream. Some apps actually automatically read out the tip notes on-stream. Tipping is done for various reasons: to actually show appreciation, to encourage the chat to discuss a certain topic (or more likely: to emote-spam), to request a song, to ask for expert feedback, to get their name or joke into a YouTube highlight reel, etc.

Twitch tip scare
And sometimes they use tips to scare streamers shitless.

For popular streamers, it’s hard to interact with the chat, because there’s just too much to read it all — and they also need to focus on their game. Tip notes provide a way for viewers or fans to rise above the noise and get the streamer’s attention.

The takeaway here is that donations do not seem to occur for altruistic reasons in most cases. The exact ratio would make for an interesting study. Much of the donation behaviour happens due to the desire to interact, stand out or to get a request fulfilled. It’s a behaviour enabled by the immediacy brought on by the rise of high quality live streaming.

DJ live streaming on Twitch
Some streamers highlight their top donators by keeping their names visible (in bottom).

Musicians that want to incorporate donations into their business model will need a clear strategy. Firstly, it’s unlikely that donations on their own are viable if the goal is to make a living off of creative work. Although if you do it all yourself, like many artists these days, you get to keep the whole cut.

Secondly, the reason why donations are becoming viable is because of live streaming. This means the artist needs to be able to consistently generate audiences and that takes time to build. One-offs are a recipe for failure, especially if they don’t sit within a broader strategy.

Live streams being a creative format of their own means that there needs to be an intrinsic motivation to work in this way. Else one won’t be able to muster the consistency and grit necessary to succeed. The question for the artist is: “is this medium compelling enough for you to spend a significant amount of your time on it?”

Whatever the answer, the trend is clear. As artists are embracing the live format, with younger ones even coming into maturity with it, we’ll see donations make a comeback. This time, not as charity, but as a well-planned part of artists’ business models.

An example of donations on Chew.tv, a live video streaming platform for music.
An example of donations on Chew.tv, a live video streaming platform for music.

Interview: Wil Benton (Chew.tv) about building a livestreaming platform for DJs

Can Chew be to music what Twitch is to gaming? Find out what it takes to build the world’s largest video platform for DJs.

Chew team

Wil Benton is one of the founders of Chew, a service that lets performers create a livestream of their DJ or studio sessions. They were launched in January 2015 and signed up tens of thousands of creators, broadcasting over fifty thousand performances.

Not only does Chew provide a platform where you can interact with DJs while they’re playing — it also functions as a massive archive of DJ sets, easily rivaling those of Boiler Room, and providing a more visual alternative to Mixcloud.

This is the first edition of a series of interviews with music startup founders and professionals. With the series, I want to shine a light on what goes on in music startups, how they work and what their challenges are. So, first up: Wil about building Chew.

Chew.tv logo

How has the journey been since graduating from the Ignite startup accelerator?

It may sound cliched, but we really wouldn’t be here today without the support and guidance we had on the Ignite accelerator. The team were the first to believe in Ben Bowler and I as founders, investing in us as a team (our idea pre-programme wasn’t quite as strong as it is today!) and giving us the focus and headspace to start building what became Chew at the start of last year. 

Our continuing success is testament to the Ignite team and all that they do — so can’t really say more than that!

Some people argue that investors are wary of investing in music startups due to uncertainties with rights and monetization. Have you encountered this?

In a word, no. Not yet anyway!

I think, had we not been demonstrating ‘interesting’ metrics and engagement on both sides of our creator & consumer marketplace, we would’ve found it harder to raise the two rounds of seed funding we’ve raised to date — but, on the whole, raising investment’s been a pleasure so far!

We’re gearing up to our first institutional round towards the end of this year; and conversations there have been promising too; again possibly thanks to the numbers we’ve got. That and the large amount of time we spend talking to our investors (both currently and looking to invest).

Chew presentation

You ran a crowdfunding campaign letting users invest & get equity. What made you choose this?

We looked at crowdfunding as a way to fill part of the seed round we did at the start of this year. We’re building a community-based business, so it made sense to look at crowdfunding as a way of allowing our EU-based users to invest.

What better way to demonstrate we’re building something of value than our users actually investing in what we’re building?

We ended up having 122 individuals investing in the campaign; many Chew users but also supporters who saw value in what we’re doing. Seedrs, the platform we used, operate a nominee structure where their legal entity represents all 122 investors’ interest — but we have a great relationship with both parties and keep them in the loop with news on the business every fortnight.

Crowdfunding as a route to accessing capital isn’t the easiest thing to do — but as a way of generating interest in our community, product, and offering, it was unparalleled.

How did the idea of Chew come about?

Ben and I met the summer before we launched Chew — introduced by a mutual friend because we shared a love for music and tech. The predecessor to Chew was called EatBass (sticking with the culinary theme here!) and we spent a few months on that before I left my job at an advertising agency at the end of 2013.

Ben had spent a lot of time working with live streaming at his job with AEI and was being asked back to stream club nights and other events after having left. That’s originally where the idea for a live streaming platform for music came about. I started working full-time on Chew in that guise at the start of 2014, in a marketing and biz dev role. Meanwhile Ben covered the tech side by working evenings and weekends until joining me full time in August 2014.

Wil Ben Chew

It wasn’t until our time on the Ignite accelerator in October that we focused the idea being a platform and community for DJs and the electronic music community, though.

How did you assemble your team?

We raised an SEIS investment round in April 2015 after we’d finished Ignite, which gave us the capital to hire our CTO, Sam. We spent ages trying to hire for the full-stack role we wanted to fill; and Sam ended up finding our listing on the AngelList profile. He joined us the week after graduating with a Computer Science degree.

We’re still a team of three today; Sam as CTO, Ben as CSO/CVO and me as CEO. This year, we’ve been lucky enough to welcome a few ‘grownups’, who bring extensive industry experience to the team on a consultancy basis as we continue building out the business.

What are you happiest about regarding Chew? What pains you?

Our continuing success — and hearing about the value we’re adding to our users’ lives and careers on a daily basis!

Pain points are, thankfully, few and far between at the moment. Finances, given we’re working on a limited runway, and resource, being a team of three, have their downsides — but I wouldn’t have us operating in any other way!

Chew office setup

What are you happiest about regarding Chew’s current feature set? And what bugs you?

We’ve achieved a huge amount in our short history — especially given we’ve only one (truly awesome) developer!

Our ability to plan, build and execute features to a reliable schedule — on top of bug fixes, community support etc — never ceases to amaze me.

In terms of personal bugs, it’s more of a resource issue than a problem with our features. We’ve got so much more to do, but our team is at capacity — so we need to expand to be able to improve what we have. So not necessarily a bug of mine; just conscious awareness that there’s only so much we can do as the lean team we are today!

You have over 25,000 DJs and producers on the service… How did they find out about Chew?

We had just under 30k users sign up in our first 18 months. We spent four or so months last year testing low level spend on Facebook ads (less than £5k) and, having just looked at the data, our numbers (in terms of engagement and platform usage) are actually better if we ignore the data from the duration of the Facebook spend.

Otherwise, our growth has been purely word of mouth. We turned Facebook ads off in August last year and haven’t looked back! We’re pretty active on the socials and in terms of community support, and we find that keeps our DJs and creators happy.

The happier [the DJs] are, the more content they produce on Chew and the larger the audiences they bring.

We’ve also just acquired our largest competitor, Mixify. The users we’re transitioning onto Chew is more than ten times our registered user number — so seeing how that impacts our numbers will be a fun journey!

How do you think DJs can benefit from live broadcasting?

Live streaming is an open, democratic process that allows anyone, anywhere in the world to share what they’re doing in realtime. It’s the realtime aspect that connects us as consumers, the ‘spontaneous togetherness’ we get from sharing this experience. Josh Elman, one of the VCs who invested in Meerkat, wrote a great blogpost about this.

For DJs, music producers, and personalities, it levels the playing field and enables anyone at any stage of their career to build an audience, drive that engagement that defines success as a musician and ultimately monetise their activities. That’s what we’re seeing with Chew — bedroom DJs building a global fanbase, established artists communicating with an engaged audience from their bedrooms or studios and record labels sharing new content from their artist rosters.

You mentioned spontaneous togetherness. How have you tried to foster that?

We are as hands off, from a platform point of view, as our creators want us to be.

Everything that happens on Chew is user-driven; our contribution to that is making sure the tech and platform makes things as easy as possible for our creators and consumers to engage with each other.

Do you think live streamed shows should be an essential part of any performing DJs digital strategy?

Yes — but potentially more than just shows. We see the best consumer engagement when our creators break away from the ‘let’s stream a show’ mentality.

It’s more about creating a consistent flow of content than sticking a webcam behind you in the club.

Live video is probably the most powerful thing, second to only live events, in a DJ, producer, or personality’s digital strategy for a number of reasons. Frequency and consistency are key, though. Without them, we don’t see as good an engagement from the audience side.

Wil Benton of Chew.tv DJing

You mention frequency and consistency being key. Does that in any way contrast with ‘spontaneous togetherness’?

Great point — I hadn’t thought of it like that! Being consistently spontaneous kind of defeats the point doesn’t it 😉

I think, like I said earlier, allowing every creation and consumption decision to be user-driven helps drive this togetherness — but it’s the regularity of spontaneity that drives the behavioural change from a consumption side of things, which allows creators to maximise their audience’s engagement.

Are you going to be launching Twitch-style monetization options like donations and subscriptions?

We’re working on a number of new features — watch this space!

Do you have any words of advice for people with a genius music startup idea and other founders?

I’ll let Betaworks/ Startup Vitamins answer this for me.

One of the things we learned on Ignite:

You can never have a product in users’ hands too quickly.

Build, launch and iterate as fast as you can.

Follow Wil & Chew on their journey: