NiN’s Donation Model Doesn’t Work for Most Artists
Written by Ernesto on October 25, 2008This year, several established bands have decided to give away their music for free, while giving fans the option to donate whatever they seem fit. For Radiohead and Nine Inch Nails it was a great success since they made more money from the donation model than they would have otherwise. However, it seems that this doesn’t hold for less established artists.
After hearing the success stories of Radiohead and NiN, several people opined that this should be the future business model of the music industry. Give your music away for free, and fans will line up in the donation queue. This should work, right? NiN made $1.6 million in the first week their album was available for download, and Radiohead said it made more money online than with all of their other albums combined.
The big advantage NiN and Radiohead have, of course, is that they already have a huge fanbase. From a standing start it would be difficult for relatively unknown bands to give their music away, and it would be much harder to get people to donate. To see if this would indeed be the case, and to get an impression of how much revenue an artist can generate from the donation model, we decided to crunch the numbers from Jamendo.
Jamendo is one of the largest music sharing sites where users have the option to donate to artists they would like to support. Since the site launched in June 2005, close to half a million users have signed up. In three years, the site has turned into one of the largest music sharing communities. However, it seems like the donate buttons are gathering dust.
Before we go into detail, we want to make it clear that Jamendo is one of the best free music services on the Internet, as it brings together artists and fans. This post is not an attempt to write about how Jamendo failed, because the site is much more than a ‘download and donate’ platform. What we want to show, however, is that donation based music models are not money magnets for the average artist.
We decided to examine the total number of donations up until October 25, 2008, and the results are quite revealing. Of the 423968 users, 1650 have donated something, little under 0.5%. In total, these users were good for 2712 donations adding up to just over $36,000. This translates into an average of little over $10 per donation. The largest donation on Jamendo thus far was 200 Euros ($250), impressive, but not as impressive as the $5000 NiN’s Trent Reznor donated when he downloaded his ‘free copy’ of Radiohead’s album.
The top grossing artist on Jamendo is Rob Costlow, with just over $1000 in donations over three years. On Jamendo, his two albums were downloaded more than 50,000 times, and over half a million people have streamed his music on the site. Jamendo currently has close to 10,000 artists (not all of them accept donations), and 648 of those received at least one donation. To some this all sounds quite disappointing, but does this mean that artists shouldn’t use donation based services such as Jamendo?
The answer to this question is simple. If their goal is to make thousands of dollars from it, probably not. However, that is not what most artists intend to do. They want their music to be heard, create an audience and pick up some fans here and there. The people who download their music for free, and like it, are potentially the people who visit their gigs, buy merchandising, and tell their friends about this great band they discovered. Lesser known artists will never be able to generate a decent income from donations, but making their music available for free sure is part of a viable business model.
Update: In the title of the article we used “NiN’s Donation Model”, this is not completely accurate. Radiohead had more of a donation model than NiN.
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56 Responses
First!
[I couldn't help myself]
just putting your music out there as an unknown band and waiting for the $$$ to roll in is not going to work, i think you gotto go out and perform live a lot and market your stuff… socialize and plugg your stuff…
THEN if your music does not blow/suck, people are going to pay for it.
On the other hand if it really sucks, try to get a record deal with the rest of the ‘artists’ whose music sucks.
The problem is, music takes so many hours to make for these artists. All those people who are downloading the music, what have they done in exchange? They are just a bunch of freeloaders really. Artists too have bills to pay, for equipment and their lives… so for most then music will need to be a hobby, and it will need to be something they give away for free and expect to make maybe $500 if they are any good.. and otherwise nothing.
I dunno, I wish people weren’t so greedy and just actually donated.. but that won’t happen.
NIN never used the donation model
@RunningRabbit
Keep running you toss pot.
Artists have bills to pay? WTF
If they need to pay bills then they should get a job. Cause making music is not about making money and if you think it is all about the money, then you need help.
Fekin tosser
>> Artists have bills to pay? WTF
Well, duh. It costs money to get the musicians together (whether you like it or not, session musicians CHARGE), cost of the recording studio or equipment to do it at home, cost of the engineer, and a lot more things you probably never thought of, retard.
That said, using an album to promote live performances is brand new and here to stay, and I for one welcome it.
That’s because people don’t donate to stores, they donate to bands.
If the songs were on the bands individual sites they would probably do infinitely better.
Who donates to a flea market? Apparently very few people.
This was a bad choice for outlet, not a bad choice for model.
“Radiohead said it made more money online than with all of their other albums combined.”
That says alot about how much of the CDs price actually goes to the artist….
From what I’ve heard from lesser known artist, they make minimal profit at best from selling CDs. The real money comes from live performances. So even if noone donates money for your free music, you can still make a profit from it if more people come to see you live.
5’s just showing us that he really can’t argu a point that well so instead he fills his comment with bad language; I agree with 3.
There will always be production costs how ever simple the album is and this is why playable needs to be finished.
Although they may not make money from this, they will certainly not generate a bigger fanbase through the alternative method.
Even if they want to make money eventually, they will never do so if they have no fanbase. And the alternative – to charge money for it – will certainly not create a greater fanbase.
So even if they make it for free or if they charge money for it, they will still not make much money either way. However, long-term, they will have a bigger fanbase if it is for free.
@9
If you have bills to pay, then I don’t see how a paltry sum made from music will help a single bit. Small artists aren’t going to make much money either way.
I’m sorry, but what exactly were these other bands expecting? Did they honestly believe that the reason for Radiohead’s and NIN’s success was their distribution model?
Your method of distribution is just that: your method of distribution. It is not a substitute for hard work, publicity and a fan base.
I’ve been giving my music (insert plug: 366songs.com) away for free for almost a year now and I’ve just started to get a pretty consistent set of listeners. I don’t think donation systems or giveaways guarantee you an audience anymore than having a record deal does.
That being said it doesn’t have to do with the quality of the recording. If you upload a torrent for Transformers 2 and let’s say Kieslowskis Bleu, the one with public approval and exposure is obviously going to get downloaded more, but that doesn’t make the lesser known one any worse.
@11
Well, in any case, a donation-based model sure isn’t a disadvantage. At least that can be established.
The model works fine, only you have to put more work out there to gain recognition for your creativity, thats if the creative work is liked by the consumers.
This is not a failed model, but highlights the need to establish yourself as an artist before going down the free to choose your payment route.
The good thing is more artist are realising that the old record label sign-up route is a falacy.
This self publishing model makes content real, if you do not get the returns you want as an artist, then there is your customer feedback, when you get revenues of scale then your content speaks louder than the label sign-up route.
I say good luck to Nine Inch Nails, they are forward thinking and are in tune with the need to change the old business model, if they plug away they will succeed eventually the music will be the deciding factor on revenues of scale.
Thats keeping it real to the game!
The old model of hype and marketing does not respect the art of creativity.
Big-up your chest Nine Inch Nails
;0?
It’s never been easy being a not-so-established band, but I think that for smaller bands in particular, the publicity advantages of piracy outweigh the lost album sales. Smaller act never made significant prophit from album sales anyway, most of the money is from gigs.
Yes, it’s interesting that both RadioHead and Reznor needed years and years of industry publicity money and literally millions of dollars in touring support so they could eventually abandon the industry that made them stars in the first place. Good luck with all that without the industry behind you.
Filesharers are thieves. First it was music. Now you are ruining whole careers.
I dont think it’s about filsharers ruining whole carrers.
I think it’s the new medium speaking with a loud voice,
“your content is King, people will pay if the content is bling”
“Filesharers are thieves. First it was music. Now you are ruining whole careers.”
First of all, the distribution model isn’t “file sharing” or piracy since it’s sanctioned by the copyright/content owners.
Who’s career has been ruined here? The “other bands” tried this distribution method and it didn’t work out as well as they expected.
That doesn’t mean their career is over or that their music is devalued, just that they didn’t get their expected returns. If you give up after one failure than it wasn’t that failure that ruined your career, it was your lack of perseverance.
I’m glad to see TorrentFreak posting an article that is for once not all smiley faces and kittens for alternative ways of music distribution. It makes me feel less narrow-minded for only reading torrentfreak for music distribution-related blogs. :p
Solution: stop selling files that take 2 seconds to copy. stop wasting money on distributing music when you can make millions of copies at the click of a button.
theres no work or labor involved to copy a music file, so why pay for it?
@15 That sure is a nice way to be hated… Posting anti-piracy mumbo-jumbo on a pro-piracy site.
I pity you, unreasoned mind.
xDD
Wops, it’s 17
Brilliant article. And I couldn’t agree more with what RunningRabit says.
Still it’s sad to see how something that is so much loved is not respected at all.
Those who want musicians to get a job, I wonder what kind job they have. Based on their arrogance it must be something really important for humanity.
It’s obvious the edge the record companies have over these free artists. They advertise.
If self-publishing bands don’t advertise beyond putting music on Jamendo, no wonder they don’t make much money.
If there are just under 500,000 users on the whole of the site, that rather limits the audience, especially as there are plenty of people (including me) who have a Jamendo account, but have never used it much.
The other reason so many artists aren’t making any money, is simply that there are SO MANY artists. If the money of all people who were willing to pay for music was split evenly between artists, I imagine they probably couldn’t live on it.
Obviously not all artists are equally good, but nonetheless the problem is that there is NO model which can support everyone who wants to make music.
Meh. Tried Jamendo a while back, browsed by genre tags and downloaded a few albums. Not a single one was something I’d listen to again, much less pay for. Now, I’m not saying that there isn’t good stuff there, I’d imagine there is, but having to wade through a lot of crap to find it isn’t terribly appealing. Simply putting your music up on Jamendo isn’t going to make it stand out enough to attract attention, make better use of the myriad of ways to promote yourself that the internet offers.
Jamendo héhéhé
Here is another “huuuuge” plateform, with :
- association model (not brussel company like jamendo)
- no ads
- no donate buttons (except to donate to the association so that they can pay the servers and else)
- truly free licenced music (artist signing up on jamendo have to break their NonCommercial clause for the site to make profit)
- a forum where people actually think and talk bright (not fake “I love the guitar in your disc”, “thanks for the ad”, “be my friend” shit)
enjoy : http://www.dogmazic.net
(it’s still a massive archive with good and bad that is uneasy to find your taste match, but like any messy record store after all)
Setting up donation is the least to do, I don’t think its a bizness model.
paying for music is stupid, they just need to do concerts (or go on tv) and they’ll make more than enough money
Unknown artist can’t sell their tracks by voluntary donation as in a p2p world the value of an MP3 is close to zero.
Customers will however pay for a service such as reliable streaming or selection. This is especially true if the payment is made by having their enjoyment interrupted by adverts.
However, there will always be a place of downloading files, especially safe fast downloading between music and adult entertainment lovers using anonymous p2p using services such as D_a_r_g_e_n_s ( http://tinyurl.com/anonymousp2p ).
Music is now a hobby, not a career. Remember the days of the “struggling artists” ? Its supposed to take work to make it to the top, not a pretty face and a powerful record label.
95% of music that comes out isn’t WORTH paying for.
THEREFORE, only pay for 5% of it.
this is a good site :)
I spend an average of 3-4 hours each day in front of the PC and I’ve never even heard of Jamendo before.
And they expect to make money from it?
Advertise better, duh.
YAY 32nd
When NIN and Radiohead made those moves to put their music out there, no one in my circle ever thought that this meant that unknown acts could just make thousands of dollars by doing the same thing.
One fact of internet commerce will always be: You Must Pay To Development A Worldwide Brand.
Once that brand is developed it can be harvested many, many, times over. This is what pisses-off so many major record companies- they finance the brand/market development of all of these acts, only to have the bands give them shit when all the money does not come back to the band. I have lots of gripes about large labels, but this is a legitimate issue.
In the end (and this is important), someone is going to have spend $250,000 to $500,000 to develop the worldwide brand of an act (record label, marketing firm, sponsor, etc.). And, if (that’s a BIG ‘IF’) that initial marketing campaign takes hold, then, and only then, will you have a branded market to harvest for years to come. Without that initial investment (and risk) no one will ever know you are there.
This is standard marketing stuff- no smoke and mirrors.
Make the investment to develop an international brand, and you can make millions on donation based revenues. The question is, what’s easier: Getting private backing for brand development, or getting a record label to take that risk?
Bill Wilkins, CEO
Melted Metal Web Radio
http://www.meltedmetal.com/
To the author of this article: get your facts straight! Nine Inch Nails did not use a donation model, at any point. They used a tiered system. Learn the difference, please.
It’s NIN, not NiN… NIN is not KoRn, thank God.
That’s “NIN” you retard!
Musicians profit from concerts and merchandising. Selling music is secondary:
Record Labels have never made money for artists, even if there is a lot of money INVOLVED. Artists pay labels to try and make them famous, and get their work out there, artists can then use that as evidence to convince venues to let them play, either being paid by the venue or money from selling tickets. Successful musicians have never just hit a point where they can sit around letting the money roll in. bit torrent and free music sites give away music and generate exposure in a superior and cheaper way than traditional record companies.
Prove to any venue that you were able to generate 1,000,000+ downloads of your album, and you are going to be able to book gigs for every night of the week.
The record industry has not been around for long at all. They were a blip of the 20th century. How do you think artists survived before?
It has always been tough and will continue to be. The record industry HAD its place in the sun for a while, but now they are just writhing, trying to do as much harm as possible before they die out.
maybe all the bands on that site suck ass
With these stupid artists and the stupid 4 letter agencies that govern them its ENVER enough no matter how you cut it. Pathetic.
JIff
http://www.anonymity.pro.tc
I used to be a homeless rodeo clown but now I am a world class magician !
The title is misleading.
The last paragraph is the important part.
It’s not about the money from the downloads.
It’s about getting people to listen to your music.
Just because the money isn’t being made in the downloads doesn’t mean the band isn’t making money.
Plus, the reason NIN and Radio Head make more money is because they are better known
and the reason they are better known is because they do really good work.
Just because you make an album doen’t make you a great band.
If the artist is really good, they get a following and the make more money.
It’s the same as OpenSource Software.
You may not become a millionaire writing Open Source
But, You can make a good living if you are good at it.
and if you look at most programmers they may make good money,
but they’re not billionaires, Open Source or Closed.
Most Musicians don’t make a lot of money,
They’re a re a lot of bands that work full time jobs other then music.
Most bands do.
They are better off giving they’re music away online.
It’s doesn’t coast anything, so it’s all or mostly profit.
and they, if they’re good, will get more paying jobs and sell more merchandise.
AIIDEF.net (actions speak louder than words)
Don’t start asking for donations until you’ve hit the big time. Thats why it works for Reznor and Radiohead – they have a large enough fan base with disposable income. That means there will be a few people who will donate the money out of generosity. With a smaller fan base, the chances of someone generous drops.
People do not naturally want to pay for a file. A file is information that can be copied at no cost. It is not an object you can touch. It’s only valuable as a peice of art – it is not a commodity.
If you want to make money, sell people something you can’t copy for free on the internet. Give them a live show – let them participate. Give them an experience. People will pay to see a good live band, and putting your music on p2p will certainly grow your audience.
But all said and done, a lot of artists will just have to come to terms with being poor. But remember: you signed up for that when you became a musician. We are starving artists.
@24: If you’re into instrumental prog rock, you might wanna try JT Bruce: http://www.jamendo.com/en/artist/jtbruce
First off, I have to tip my hat to TorrentFreak for running a story that shows the harsh realities of file-sharing as _well_ as the amazing opportunities.
And as my main comment, I’d like to say: file-sharing is an excellent way to get your demos into the hands of your fans, and there are at least tens of thousands of people that would pay for any given song (so long as its good, but that doesn’t mean you have to be Mozart);
the tragic flaw and the cold hard truth though, is online payment mechanisms suck.
Technology has taken file-sharing from its infancy into a near-fully advanced, fully-usable way to bring anything in the world to the fingertips of anyone in the world, and I say this is a good thing.
Online payment, however, is not so evolved. Every online transaction is riskier than an offline transaction, and usually more expensive. The development community has done an excellent job of giving us a way to share; but now we need a new, better way to (financially) show our appreciation, and pay for the goods we like enough to keep.
That’s the flaw. If I need a credit (not debit) card to make an online purchase; if I have to secretly question the trust-worthiness of every off-mainstream website; if I have to pay fees for the priviledge of paying the people whose work I admire; then the payment system is still in the 20th century, and we need a new one.
This is only going to work for the top artists in the world. Even if you are signed by one of the big four, there is still no chance a NIN approach will work!!
@Brownspank:
Thanks! Just listened to the first few songs off The Dreamer’s Paradox, and this is some really good stuff. _This_ is donation-worthy.
“the payment system is still in the 20th century, and we need a new one.”
Ha ha PAYING is so 20th century. get over it.
When I was young there was a lot of bands giving music away for free. You just sent them a blank tape and a self addressed envelope, then a week later you got the music.
I think the Instant Automatons were the first, but within a few months there was hundreds of them.
TechDirt apparently doesn’t agree.
http://techdirt.com/articles/20081026/1928532642.shtml
Trent Reznor couldn’t have donated $5000 because there was a £100 donation ‘cap’
I’ve been using jamendo for over a year and until now I didn’t even realize it had a donations button….
So at least part of the problem on jamendo might be visibility and the fact that it’s not oriented towards collecting donations considering that I didn’t even realize you could donate.
Making music should be a hobby not a business. How much of the money we pay for music gets invested to make more music? Don’t say they have to buy equipment because the equipment they buy does not expire and does not get eaten. It remains there to be used again. They have bills to pay for their hobby and so does everyone else. Does anyone expect his money back for the time wasted, electricity bills and the cost of a DVD that has a blairwitch 1 clone “missing tapes that were found” on it? No, because it’s a hobby.
“Artists” who make 1 k of albums a year invest in marketing not in making more music. I’ll not be surprised if they’ll start making albums in the “missing audio tapes that were found” style just to fix their album count to make more money. They should get a real job.
RIAA exists because we all accepted to pay too much for music.
vektor, you are an idiot. and because you keep bringing up the blair witch project for no reason, you are also very strange.
is it cold in your parents basement?
It was an example of something where “artists” cannot come with something original but they want to come with something anyway just to make more money. There are thousands of other examples of “business models” like this. As long as music will be seen as a business there will always be new businessmen who will come with anything just to make thousands of dollars.
Investments made in something like this should be investments in a hobby not in a business.
great article http://www.stripdanmark.dk/
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