Indie Labels and the Digital Market Music from the Lab

Music from the lab
Music from the lab | Photo (detail): © s_l - Fotolia.com

The music market is changing very fast. Hardly anyone makes money anymore on CD sales, so indie labels and artists have over time hit upon new ways to make a living with music, as an example in Leipzig goes to show.

“We’re not musicians anymore,” it says on the white piece of paper. Underneath: “A manifesto”. That sounds like a declaration of war – and that’s sort of the idea behind what the Leipzig label Analogsoul have posted on their website since February 2014. Their project, called I am a Forest, is an attempt to rethink music makers and listeners as a unit that conjointly makes music possible: financially, through crowdfunding, but also ideally, since each listener can comment on the music and work on it themselves.

The project runs on one simple idea: everyone who contributes in one way or another to Analogsoul gets a virtual reward: if you subscribe to the newsletter, you get a virtual seed. Buy an Analogsoul song on iTunes and you get a leaf; buy the whole CD, five leaves. All these tree parts come together in the end to form a forest, to show that we’re all part of music. And on Iamaforest.com you can see how big the forest has grown so far.

Music industry on the move

Analogsoul’s idea is another attempt to come up with creative ways of coping with the crisis in the music industry. The conditions in which music is made and distributed have undergone a sea change over the past twenty years. If you want to listen to music nowadays, you download it from the web for a pittance or click your way through Youtube and Spotify free of charge. The result: sales of CDs and records, which used to be the mainstay of a musician’s livelihood, have plummeted. The digital music market, conversely, has been steadily growing: according to the German Music Industry Association, revenue from downloads increased by a little over twelve per cent in 2013, whilst revenue from streaming nearly doubled, up 91 per cent on 2012.

The only problem is: streaming leaves a lot less cash in the hands of bands and labels than sales of physical sound-carriers do. Spotify, the market leader in streaming services, keep their payout policy a secret, but musicians have in the past routinely disclosed their takings on Spotify. Cellist Zoë Keating, for example, earned €0.0034, i.e. 1/3 of 1 cent, each time a song of hers was streamed – which is peanuts compared to the cost of sound recordings, promotion, marketing and a musician’s living expenses. Over in the UK, moreover, The Guardian found out that Spotify pay big-name artists a better rate than small ones. These conditions are making it harder and harder for indie labels in particular to pay their musicians a decent wage.

Musicians below the povertyline

The Berlin indie label Sinnbus have noticed that. One of their bands, the electronic trio Bodi Bill, turned their wallets inside out for a radio station, and it’s a sobering sight: they have made a paltry €7,600 on CD sales, downloads and streaming of their latest album What. That’s nowhere near enough to live on, which is why other sources of revenue are becoming more crucial – merchandising, for example. Daniel Spindler, co-founder and head of Sinnbus, says: “Concertgoers are more likely to take home a T-Shirt than a CD. That’s why we advise our bands to invest in good merchandise.”

Despite everything, however, digitization does offer some opportunity: “Downloads are an important revenue stream for us”, says Daniel Spindler. “We now sell nearly half our music digitally.” Online distribution minimizes the risk for small-scale labels, since digital albums are cheaper to make than discs: the labels economize on all or at last part of the costs of pressing, printing and distribution. So Spindler is optimistic about digitization: “We’ve found ourselves a strong digital distributor and are using social networks as a promotional platform. But we’re not running a decidedly digital strategy here.”

The crowdfunding alternative

Fabian Schütze, who started up Analogsoul six years ago, is going even further with I am a Forest. Transparency is written large here: the idea is listeners can follow the production of a piece of music and feel they are a part of it – in both a financial and an ideational sense. Analogsoul fund part of their work through crowdfunding: fans and listeners make donations for a video shoot or a new record and receive a little thank-you in return. Analogsoul don’t always raise the sum they had in mind, but the donations usually suffice to fund projects of between €1,000 and €3,700.

Established artists, too, have long since discovered that fans can be investors. The Cologne based musician PeterLicht, for instance, has just been soliciting donations online for his new live album. His target was €19,000, he received close to €27,000 from more than 600 backers.

New brainwaves from abroad

Analogsoul won’t yet say how much financial impact I am a Forest has had because the campaign has only been up and running for a little while. However, the project is being further developed on an ongoing basis. The Leipzig label receive weekly feedback: fans want more details about how the project works, and they’re starting to remix the bands’ tracks. “The project is a lab in which we try out a lot of stuff”, says Schütze. “We learn something new every day.”

There is no sure-fire formula for music labels to react to the rapidly digitizing music market. I am a Forest is one of many alternatives. In other countries, musicians have long since given up trying to make money on CD sales and downloads. In China, for example, hardly anyone buys music anymore, and yet there are still musicians there making a good living: like athletes, they find sponsors or sell special subscription services through which their fans can get tickets to live gigs. No-one has tried that one yet in Germany.