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Monday, October 22, 2012

Streaming Service Will Pay Musicians Directly

Rdio, the music-streaming service representing a good challenger to Spotify, decided to adopt an innovative business model. The portal has announced that it would offer payments to artists based on each fan on the site.

Rdio called this project the “Artist Program” and offered the musicians $10 for every new fan who subscribes to streaming music service through a social media channel. This innovative approach will definitely appeal to musicians and may put the portal ahead of its largest competitors, because the others are currently using one single way of offering music – trying to make a deal with record labels over the royalties to musicians. In the meantime, everyone knows that artists get only a tiny share of the label’s profits.

At the moment, the premium members of the service can pay $10 monthly in exchange for the possibility to access Rdio’s music catalog. When the new approach is enforced, it will actually make a unique payment of $10 per new fan to musicians. This has a really promising future.

The “Artist Program” was mostly inspired by the musicians themselves – in particular, those artists who are extremely popular on the largest social networks like Facebook and Twitter. The streaming service recognized the potential of turning their followers into its own subscribers, while the musicians would also be benefiting from actually being paid by their fans. Everyone wins.

This business model was approved by many artists, including Snoop Dogg, The Scissor Sisters and The Raconteurs, who have already joined this movement. This trend may be a reason for worry for the record labels, as they can get for the first time a token of their mortality. Rdio’s representatives explained in the interview that in fact, there can’t be art without artists. The entertainment industry should realize that if a business fails to reward its most important contributors, then it definitely needs changes.

It will be interesting to see how this approach will work out for both the streaming portal and the musicians. It is also unclear how music fans will receive this suggestion, but the industry observers believe that they will readily embrace this business model. At least they will know that they are helping the artists they love, not record labels that they have no idea of.

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