From today onwards, we'll be starting an Arctic15 exclusive to release eight unseen videos of Derek Sivers, the founder and CEO of CDBaby, on how he built the company and sold it onwards. CD Baby was one of the first real record stores online selling CDs. Sivers sold the company in 2008, 11 years after founding it. But how does all this relate to Arctic15 you may ask? We actually invited him to the conference to share his advice, but unfortunately he was unable to make it due to other arrangements. However, he told us he really liked the conference idea and decided to allow us to broadcast this very rare video series of him sharing his advice to our community. Derek Sivers has roots in Sweden, so we'll try and get the man to Arctic15 next year!
This week Spotify found itself under attack from indie labels, resulting in at least one of them (Century Media) taking their content off the music-streaming service. Their biggest criticism: Spotify pays next to nothing to independent labels. The owner of a New York-based independent label Mode Records, Brian Brandt, also shared that for 11,335 streams through Spotify they earned a meagre $36.98 (which still needs to be divided between composers and artists). In comparison, physical sales (which, according to Brian, still make up most of their sales) bring in $3-4 per sold CD. Thus, indendent label owners say in chorus, Spotify is destructive for their business. As Brian puts it: 'While the major labels and pop music may be able to reap a real income stream from Spotify simply due to the sheer volume of streams, the Spotify model is not financially sustainable for any indie niche label'.
Spotify announced today that they will limit the Spotify Free account from May 1st in a few different ways. The reason behind all this is naturally to further monetise and convert those using Spotify Free to the premium accounts. At the end of March, the company also announced, as part of its move to further monetise the user base, to give all new premium subscribers a free 7-day test of the service before billing anything.
gogoyoko is a startup building a new social music marketplace, founded by a group of artists, who after years of selling music got tired of middlemen eating most of the sales revenues. The company is based in Reykjavik, Iceland. gogoyoko's music service was launched in closed Alpha on November 15, and is said to be launched in March 2009.
gogoyoko offers a platform for artists and audience to interact around music. Most importantly, naturally, it is possible to buy music from the service. gogoyoko creates a direct channel between the end users and artists, letting artists price their own music and keep 100 % of the sales revenues (after transaction costs). The music files will be DRM free.
An interesting feature is that via gogoyoko's custom web player, users will be able to stream tracks and albums for free, which is apparently supported by ads (sounding similar to Spotify). gogoyoko states they pay artists and right holders 40% of the advertisement revenue made from the streaming of their music. Also, each artist can get an own customized store and music player, which can be embedded to the artist's own blog and homepage, or any other site.
There is more than just a music store, however. Each artist can create a personal site, and allow the users to view latest news, blog entries, newsletters, discography, pictures, and videos while visiting the store. Artists will also be able to enter gigs, which will be placed on the service's map. gogoyoko plans to provide also mobile access to the map in the future. The visitors and fans can also contribute to the community by rating and reviewing songs, blogging, and even getting their articles published in gogoyoko's own online Music Magazine. gogoyoko will publish the Music Magazine announcing for example new releases, exclusive interviews, reviews, and special offers.
Similarly to Equal Dreams covered earlier, with gogoyoko an artist can also choose to automatically donate 10 % or more of their revenues to specific charity organizations, while the consumers can also choose to donate a sum of their choice. gogoyoko promises to donate 10% of its advertisement income to their partner international charity and environmental organizations.
gogoyoko boasts it offers artists the control of the sales, promotion and distribution of their music at single location without middlemen. This setup is becoming more and more used in different content services (online games, iPhone apps, etc. etc.), and of course offers the artists maximum the revenue, but on the other hand, it also hands them over all the work. Especially if you are not a professional artist and make music on your free time, the question is whether you're able to devote enough time to market yourself to generate sales. Probably some lucky ones will get lots of fans by almost by accident, but the majority will probably would have to spend considerable amount of time marketing themselves to generate fan base and revenue. And that's time away from creating new music, so the question is what will be the best trade-off these kinds of direct-to-consumer services can offer?
Equal Dreams is a Finnish startup offering a fair music market. The firm states to "bring back the power" in music to audience and the artists. The company's service includes several tools for artists and music lovers to better find and cooperate with each other. Equal Dreams has divided their service into different parts: the Equal Dreams music market, Equal Share, and Equal Aid.
The music market allows artists to sell their music pricing songs and albums as they like. The artists keep the copyrights, and get up to 88% of the sales revenue (depending if the artist is part of any Composers' Copyright Society; Finnish Teosto takes 8 %). All music is offered DRM-free as MP3 or FLAC. At the moment there are around 200 artists, with over 2000 songs uploaded. Most, if not all, of the bands seem to be from Finland still.
Equal Share part of the service allows audience to invest in music and artists, quite similarly to SellAband. Differently to SellAband, though, the artists can themselves decide the amount of funding they seek, both singles and albums are valid projects. The artist also decides the percentage of profit they want to share from the sales of the final record. The audience is then free take the offer if they will, and to buy as many shares as they wish.
There are not that many bands active yet in Equal Share, apparently only five. Their specified need of funding ranges from EUR 500 to EUR 6000, and the highest profit share offering is 50 %. The closest band to their target has so far reached only 16 %. There has been an artist releasing their album as a result of the Equal Share service, though, in November 2008 (The Fogo Posto with funding of 1000 EUR).
Equal Aid feature is targeted to artists for supporting charities by donating a part of the sales profit to them. Artists can add Equal Aid deals to any songs simply by selecting the organization to support, and the donation percentage. The donations will then be made automatically per each song sale.
It is unsure yet how exactly Equal Dreams is going to go international, and how they will be able to compete the other similar services in gathering the critical user mass, but the motivation to do so is clear. The service now includes English, Finnish, German, and Swedish localization, and payment options cover credit card and Pay Pal, along with Finnish online bank payments.
MoiPal, a Finland based social gaming virtual world by Ironstar Helsinki, has introduced widgets for music artists to sell MoiPal virtual goods to the virtual world users. MoiPal is not a localized virtual world like Habbo, which has started their community building from scratch in each new country. Instead MoiPal aims to create a common space where all nationalities mix and thus make the world seem more lively. MoiPal is also mainly intented to be played via mobile phones. According to MoiPal CEO, Joakim Achrén, focusing on mobile phones instead of the browser creates stickiness and users tend to come back much more often.
MoiPal has been working on virtual goods partnership all along 2008. These have mainly been with record labels and Finnish music artists, including Lovex, Hanoi Rocks and Lordi. What this means in practice is that the partnering artists have seen a MoiPal character creation widget appear on their website. If a MoiPal charater has been created through one of these websites, the character that has been created have been able to get virtual clothes and a look that resembles the one of the artist who's website is in question.
Through the partnership the artists get visibility in MoiPal virtual world when characters walk around in t-shirts and clothes that carry the artist logo and name. Artists can also perform a virtual concerts in MoiPal City, which is the center of the MoiPal virtual world. Currently Lordi, a Finnish heavy artist, is actively present in MoiPal and interacting with the users.
The latest development is selling virtual goods via a widget that sits on an artist website. MoiPal has confirmed its first deal that was done with EMI and EMI's up-and-coming new artist, Haloo Helsinki. With a Premium SMS message the users can buy their character a full blown Haloo Helsinki costume set. In addition to the 50/50 revenue share the record label can get visibility to their new acts.
MoiPal is currently in talks with all the major record labels for similar kind of deals. The virtual goods store -widget can also be placed on an artist MySpace profile page via OpenSocial that MySpace has implemented. This has also been experimented with two Finnish bands, namely Stigg Dogg and Notkea Rotta.
MoiPal has currently over 100,000 users. The service was launched in October 2007 and aim to hit over one million user mark by the end of 2009. The two biggest methods in building the virtual world for MoiPal are Facebook apps, of which they already have all together three, and getting visibility in artists' websites. Currently most of the new users come from South-East Asia. The service grows with approximately 600 new users a day.
If you feel a sudden urge to try out the service (here), by writing moilei or snoukka in the promotional code field ArcticStartup readers will get a free virtual t-shirt for their MoiPal character. Go play!