After taking jabs at MySpace Music’s alleged subscription service business model last week, we predicted it was probably going to set the struggling site back even more, if not potentially be their death sentence. Whatever MySpace’s fate happens to be, many bands didn’t seem too concerned because of other sites such as Bandcamp offering similar services for no fee – until now. For those of you unfamiliar with Bandcamp, they are a publishing platform for bands, or a self-described “fifth, fully geeked-out Beatle — the one who keeps your very own website humming and lets you get back to making great music and building your fan base.” And since rumors began surfacing about MySpace’s future, this site seemed like one of the best alternatives out there.
The proposed business model is not quite what MySpace is rumored to have in the works, but it will still require artists to pay a percentage of whatever they make selling music and merchandise on the site. According to the Bandcamp’s press release, the new subscription-based business model will require artists to give the site 15% of every sale until they reach $5,000, whereupon it will be lowered to 10%. The site has never been shy about the possibility that the site would one day develop into a subscription-based site, and with over $1 million earned by bands in the first half of 2010, the decision to take a portion of bands’ profits in many ways comes as no surprise. According to the proposed business model:
Bandcamp’s share will be 15% of each transaction, dropping to 10% as soon as your all-time sales exceed $5,000 USD.
The revenue share won’t go into effect until early August. Until then, Bandcamp’s share remains zero. We’ve based the percentages on what works for the business and what many of you have already told us feels fair, but there’s still plenty of time for more feedback, so bring it (preferably in the comments below).
The revenue share rate for existing accounts will be based on all your sales to date. That is, we’ll look at your all-time sales and base your rate on that total. This means many of you will start at the 10% rate from day one. Note that we’ve just launched all-time stats, so you can easily see where you stand.
Your rate will be based on sales to your PayPal email address, not your Bandcamp account. In other words, if you’re a label and have five artists all using the same PayPal account, your rate will be calculated by looking at the combined sales of all five of those artists.
The basic service will remain free. Bandcamp only makes money when you make money. We considered building the business around advertising, but…well, OK, we never really considered that. We did consider building it around subscriptions, but under that model, given the option of either developing a feature to increase your sales by 20%, or dinking around with service tiers to try to boost our subscriptions by 20%, we’d have to choose the latter. By building the business on a revenue share, our interests are perfectly aligned with yours: we only succeed when you succeed.
The news isn’t all bad for artists because there are still plenty of sites out there that allow free promotion of materials, but we were surprised that less than a week after MySpace rumors one of their most promising competitors started to lean the same way. While the rates the site plans on charging artists could be worse, they’re still another expense tagged onto many bands who are struggling enough as it is. But at this point I ‘m starting to think my calling is in reporting bad news from the music industry, lately it’s just too easy.