How music livestreaming is increasingly embracing virtual tipping and direct payments to artists

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The economics of livestreaming was quickly made obvious to the Australian live music industry when COVID-19 stopped physical gigs on March 13, 2020.

The Delivered Live virtual festival, bankrolled by the Victorian government and launched in April, reported that the second season had 100,000 views with 2,000 opting to donate to the cause by buying tickets from $20 upwards.

29 musicians and comedians performed, 21 venues got paid, nine booking agencies were used, and revenue paid out to the live music economy was over $500,000.

Producers The Handshake Agency opted to cancel one episode to use the funding for it to pay all Victorian artists and their crews.

The Melbourne Digital Concert Hall platform quickly raised $600,000 for 300 musicians in 140 recitals from Melbourne’s Athenaeum and satellite venues in Perth, Sydney and Brisbane.

By end of 2020, the figure raised was $1 million and this year plans are for 300 concert broadcasts which support at least 500 artists.

In the first weeks of 2021 the game has undergone a major shift.

SoundCloud is to announce a new payment system that would allow fans to pay artists directly. This would make the German-based platform the first major music streaming service to embrace such a model.

SoundCloud, like other major music streaming services, uses a “pro rata” model – all monies go into a pool, and are then divided according to those who brought in the most streams. The on-demand streaming service SoundCloud Go+ charges $10 a month but the fans have no direct say in whether the funds go to the artists they listen to, or want to virtually tip.

Direct payment has been used for years by Asian streamers like China’s Tencent Music and subs platforms as Patreon and OnlyFans.

Tencent Music, with three streaming services and the WeSing karaoke app, makes around 70% of its revenue from “social entertainment services,” which includes tipping and other forms of “virtual gifts.”

These range from a single rose to a space rocket. In the first three months of 2020, 30% or 12.8 million of its 42.7 million paying users used these services.

Chinese internet company Kuaishou Technology, which takes a cut from virtual tipping, made its two founders over US$5.5 billion each within ten years.

BANDSINTOWN GETS A PLUS

The SoundCloud move comes weeks after Bandsintown launched a first-of-its-kind $10 a month live music streaming service subscription service called Bandsintown PLUS. Initially for the US, subscribers get an ‘All Access Pass’ to more than 25 exclusive gigs every month major and emerging names.

Fabrice Sergent, its managing partner, said: “Touring artists have been economically ravaged by Covid-19’s restrictions. Bandsintown PLUS is a chance to help innovate the industry, creating new sources of revenue for artists, while deepening connections with their fans.”

Bandsintown PLUS

From March 2020, the more finance-savvy cash-strapped Australian musicians quickly learned to expand their social media accounts to accept donations, and not to shy away from requesting tips repeatedly or flashing their credit card accounts during their livestreams.

A number of Western platforms introduced tipping features but didn’t take a cut of the donations unlike the Asian ones. These included Spotify (which had 50,000 artists using its Artist Fundraising Pick within its first month), Spotify’s Direct Support Link and Songtradr.

Virtual tipping was initially slow to take off in Australia. Last year Joe Ward, founder of Adelaide’s NEXTGIGS explained that the service had a full e-commerce set up for artists including links to sales of merchandise and physical-format records.

“NETGIGS does not have a tip option as we have not seen a large uptake in the tipping model if a fan is already paying for a pay-per-view ticket,” he explained.

How much musicians get in virtual tipping also depends on the level of enthusiasm that gamers have with their heroes. Some players can make thousands of dollars in one game.

Explaining the hysteria that exists in the sector, Ali Moiz, CEO of UK tipping software company Streamlabs told the BBC, “They want streamers to shout, to scream, to thank them.

“I’ve seen girls cry. We’ve seen people fall out of their chairs. We’ve seen people do push-ups when they make 100 bucks.”

Streamlabs has processed US$257 million in tips since 2014. Moiz says donors are less about supporting the favourite players and more about getting recognised.

“They want recognition from their favourite streamer, like ‘I am not anonymous, I am not a nobody, I exist’.

“That’s why some people give insanely large donations. Some spend $100,000 a year.”

As virtual tipping becomes the norm in the music space, it will be interesting to see how high the level of tipping reaches. It could reflect that as more livestreams boast a superior production, more consumers are willing to pay for the privilege of watching.

Link to the sourcs article

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