Bandcamp: Sustaining Hardcore Music Fans in the Streaming Age
Bandcamp is a privately-held music publishing platform that combines digital and physical sales of music and merchandise on its website, Bandcamp.com, and also through its mobile app. Ethan Diamond, who founded the company in 2007 and is its CEO, describes his target customers as those exhibiting “engaged fandom… the type of music consumer that wants not just the digital album but also the vinyl LP and maybe even a poster on their wall of their favorite band.” The Bandcamp user experience is about allowing the customer to focus in on the specific musicians and genres they are interested in, giving them tools to explore new music and also curate their own existing collection, and decide what they ultimately want to purchase. Through the site, digital versions (in a variety of file formats and compression qualities) and physical copies (vinyl records, CDs, tapes) of songs and albums are sold. Users can also stream music on a free and limited basis, with unlimited streaming becoming available after purchase.
In 2013, Bandcamp reported its catalogue included 8.4 million tracks comprising 1.1 million different albums from “hundreds of thousands” of artists. “Our #1 objective is to help artists succeed” writes the company blog. “Total control over music and pricing” is offered to artists, including the option to post music for free and let fans pay what they want. Whatever is sold, Bandcamp retains 15% of digital revenues and 10% of physical revenues for itself with the remainder going directly to the artist. “Our success is tied to the success of the artist… we only make money if the artist makes a whole lot more money,” claims Diamond. The company announced artist revenue eclipsed the $100 million mark in early 2015, and later that year total album sales eclipsed 6 million albums. The front page of the Bandcamp website features a live feed of which albums are selling right now, as well as an up to date revenue tracker proclaiming that, as of January 2017, “Fans have paid artists $194 million using Bandcamp, and $5.1 million in the last 30 days alone”. Edit: as of the publication of this blog entry in March 2018 this now reads “Fans have paid artists $278 million using Bandcamp, and $7.4 million in the last 30 days alone. This implies the website has paid artists $84 million in the last 14 months.
As a niche provider in the greater digital music distribution industry, Bandcamp faces strong competition from providers of the “unlimited subscription-based rental model”, more commonly known as streaming. In this model, providers such as Spotify (150 million monthly active users aka “MAUs”), iHeartRadio (100 million MAUs), Pandora (78 million MAUs), Deezer (12 million MAUs), and Tidal (5 million MAUs) pay artists somewhere between $0.0006 and $.0074 per play while listeners pay a monthly subscription premium or are subjected to advertisements for free access to each provider’s music catalog. In 2015 the combined revenue of all streaming services totaled $2.4 billion, which was 34.3 percent of total music industry revenue that year. These providers give customers unlimited listening to vast musical libraries with ease of access and variety far greater than they are able to yield from their own personal collections. Bandcamp’s challenge is to sustain the population of music consumers for whom the streaming model is not the right fit.
Bandcamp is a company whose continued existence is inextricably tied to the belief that there is a certain population of music fans who exhibit a high level of engagement with the music they listen to. The company has demonstrated financial success with its ability to continually satisfy this population in the digital age of music. It has built an online distribution platform that facilitates fan engagement while also meeting the needs of the often small, independent, underground, and thus under-resourced artists who use the platform to sell and market their music. In this sense, Bandcamp has addressed a specific type of demand while ensuring it has access to the very best supply needed to satisfy that demand. The result is a company that continues to grow while sustaining a healthy revenue stream in the face of increasing competition from other digital music distribution platforms, mainly streaming services.
Bandcamp’s business model is an innovative response to a specific segment of music consumers. Let’s investigate this further by looking at the tactics and strategies the company uses in an effort to sustain its niche of the digital music distribution market. We will take a look at the company’s enduring strengths and hope to gain some insight into its long-term sustainability in the face of strong competition.
In an interview with Bandcamp CEO Ethan Diamond, he identified two crucial assets to the company: loyal, unique artists who create music outside the mainstream demand, and a highly active and engaged customer base who consistently consume this music. The success of the Bandcamp business model is a demonstration of its understanding of the human and consumer behaviors of these two groups. The multifaceted platform Bandcamp has constructed to cater to these behaviors is further evidence.
Bandcamp proclaims that “music is art, not a commodity.” This is apparent in the aesthetic quality that is achieved by showcasing a unique look and design for each artist’s page on the site. Innovation expert Dr. Chris Brauer says “a great brand is a great story” and the visual components of the site help to tell that story for each artist, drawing in visitors as they explore what is essentially a highly immersive and fully customized online store. This “story” is developed further through the product mix in the store. Artists are given a page for each album they are selling. Individual tracks or the album as a whole can be purchased as digital downloads, and if the artist has the stock, as a CD, vinyl record, and even cassette tape. These options cater to a persistent segment of fans who seek outright ownership in the form of collecting a physical format of music. For these consumers, the story of the artist is experienced, in part, by the physical manifestations of their musical works. This in turn drives sales by building the brand of each individual artist.
To highlight the innovative quality of Bandcamp’s “music is art” approach, consider the contrast demonstrated in the online stores of its competitors Amazon Music and Apple iTunes. Artists whose music downloads are sold through these sites are placed into the specific visual template of the retailer, giving a mass-produced for mass-consumption feel. The user interface features large “purchase track” buttons with individual prices next to each song, giving a commerce-centric approach that deconstructs the concept of the full-length album. Bandcamp’s user interface eschews these large priced buttons and replaces them with simple, clean icons that complement the visual aesthetic of artist’s each page.
By getting out of fans’ way and giving them unobstructed access to the creative output of the artist, Bandcamp has given its artists the credit they deserve in contributing to the greater success of the business model. This conveys artistic authenticity and uniqueness while Bandcamp facilitates sales on the backend. This symbiosis achieved between the artist, customer, and Bandcamp itself is apparent: the unique needs of the fan are met, the artist builds their brand and earns resources needed to advance their craft, and Bandcamp banks revenue to cover operating costs and generate profit.
In a more tactical approach to driving demand, Bandcamp produces an hour-long weekly podcast in an effort to encourage listeners to explore the site and to do so often. “Bandcamp Weekly” is hosted by the company’s Chief Curator Andrew Jervis, a DJ who showcases music by artists who sell on the site. The podcast transcends any particular genre in favor of building a musical narrative to reflect a particular theme for the week. As Frank Broughton says in his legendary guide “How To DJ Right”, the best DJs are known for their ability to introduce new music to their listeners. Bandcamp Weekly achieves this and by placing a DJ at the helm its curation mouthpiece it further compliments the company’s artist-centric approach. It is a way to recommend and facilitate exploration of Bandcamp’s variety of artists that feels very community-oriented; this demonstrates how Bandcamp has utilized grassroots innovation by scaling up from a niche—in this case, hardcore dedicated music fans—ultimately creating a market-based model on a community foundation.
While Bandcamp has demonstrated considerable prowess and experienced success in serving its niche of engaged fans, it’s important to examine the business in the greater context of digital music distribution as a whole. Thus we observe Bandcamp’s biggest competitors: streaming music platforms. Most of these providers, like Apple Music, Google Play Music, Amazon Prime Music, and Facebook with its Spotify partnership, use this model as a point-of-entry into their greater network of online services, with the streaming service itself operating at a financial loss. This demonstrates the power of positioning as a prominent method of engaging new and existing customers and driving demand into complementary categories.
Using streaming service as “bait” has worked so far. Advancements in human analytics as well as machine learning have developed algorithms which are tremendously effective at selecting music to meet the taste of the individual subscriber. These listeners consume music in a way that is more passive and detached than the Bandcamp customer: they have a general idea of what they like and all they want to do is plug in a few keywords, occasionally tap thumbs up or thumbs down, and have the app do the rest of the work for them. This exemplifies a growing trend in a key factor for how people get their music: convenience. Bandcamp’s core competency is not convenience, so how much of a threat does this pose?
In his book “Addicted Customers” John Todor describes two types of businesses: one that seeks to outcompete its opponents by delivering the most competitive combination of price and convenience to its customers, and another which seeks to achieve gratification by facilitating a meaningful experience with its customers. He argues that the former is at greater risk, because by placing price and convenience at the forefront of its value proposition, that business hasn’t done anything to build loyalty with its customers. There won’t be anything to keep them from switching to the next company that offers the same service for less money. Meanwhile, the business that consistently engages with its customers by offering them an experience will do much better in the long term as its customers will develop a sense of loyalty and belonging with the company. So are there enough of these customers out there to sustain a business? Bandcamp seems to think so, and satisfying their desire for meaningful musical experiences is exactly what they aim to achieve.
Bandcamp’s success is proof of salience—it has emerged as the prominent and important source for the engaged fan whose needs aren’t met by the streaming providers. It is also proof that human influence, as properly conveyed through Bandcamp’s tactics and strategies for curating the music of its artists, is superior to the recommendations made purely by a computer algorithm. Indeed, as John R. Searle wrote in 1980: “no program by itself is sufficient for thinking… a computer program is never by itself a sufficient condition of intentionality.”
It’s important to note the circumstances around the innovation that has accompanied the digital age of music. In the book “The Innovator’s Solution” this is broken down into two main categories: “sustaining circumstances—competitive advantage gained by making a better product that merits a higher price—and “disruptive circumstances”—making a simpler product that sells for less and appeals to a new customer set. With the onset of digital music, the distribution model built on the limits of physical media formats was made obsolete when each independent consumer gained the ability to make unlimited digital copies of music. Confronted with the problem of how to maintain profits when supply could no longer be controlled, the streaming model seemed like the best solution in the face of these disruptive circumstances. Yet by moving so boldly into this space, a sizeable chunk of the market was left behind—those with the potential to be customers if the sustaining circumstances of their demand was satisfied.
Bandcamp leveraged the advantages of offering a digital marketplace over a brick and mortar model, and did so in a way that still channeled the unique, artist-centric feel of a traditional record store, thus innovating around the sustaining circumstances of selling music afforded by digital distribution. This allowed the company to capitalize on a segment of demand that was not being met, converting these engaged fans—who were being left behind—into loyal customers. Bandcamp’s continued growth is proof of its ability to satisfy both artists and customers, ensuring sustainability by simultaneously nurturing the demand of engaged fans while protecting and supporting the artists who supply the music they love.
This post is based on a paper I originally wrote in 2017 for an assignment in the Innovation Case Studies module of my MSc program at Goldsmiths University London. The original paper marked very well and I even sent it along to Bandcamp's staff who also enjoyed it and shared it around internally.
In 2013, Bandcamp reported its catalogue included 8.4 million tracks comprising 1.1 million different albums from “hundreds of thousands” of artists. “Our #1 objective is to help artists succeed” writes the company blog. “Total control over music and pricing” is offered to artists, including the option to post music for free and let fans pay what they want. Whatever is sold, Bandcamp retains 15% of digital revenues and 10% of physical revenues for itself with the remainder going directly to the artist. “Our success is tied to the success of the artist… we only make money if the artist makes a whole lot more money,” claims Diamond. The company announced artist revenue eclipsed the $100 million mark in early 2015, and later that year total album sales eclipsed 6 million albums. The front page of the Bandcamp website features a live feed of which albums are selling right now, as well as an up to date revenue tracker proclaiming that, as of January 2017, “Fans have paid artists $194 million using Bandcamp, and $5.1 million in the last 30 days alone”. Edit: as of the publication of this blog entry in March 2018 this now reads “Fans have paid artists $278 million using Bandcamp, and $7.4 million in the last 30 days alone. This implies the website has paid artists $84 million in the last 14 months.
As a niche provider in the greater digital music distribution industry, Bandcamp faces strong competition from providers of the “unlimited subscription-based rental model”, more commonly known as streaming. In this model, providers such as Spotify (150 million monthly active users aka “MAUs”), iHeartRadio (100 million MAUs), Pandora (78 million MAUs), Deezer (12 million MAUs), and Tidal (5 million MAUs) pay artists somewhere between $0.0006 and $.0074 per play while listeners pay a monthly subscription premium or are subjected to advertisements for free access to each provider’s music catalog. In 2015 the combined revenue of all streaming services totaled $2.4 billion, which was 34.3 percent of total music industry revenue that year. These providers give customers unlimited listening to vast musical libraries with ease of access and variety far greater than they are able to yield from their own personal collections. Bandcamp’s challenge is to sustain the population of music consumers for whom the streaming model is not the right fit.
Bandcamp is a company whose continued existence is inextricably tied to the belief that there is a certain population of music fans who exhibit a high level of engagement with the music they listen to. The company has demonstrated financial success with its ability to continually satisfy this population in the digital age of music. It has built an online distribution platform that facilitates fan engagement while also meeting the needs of the often small, independent, underground, and thus under-resourced artists who use the platform to sell and market their music. In this sense, Bandcamp has addressed a specific type of demand while ensuring it has access to the very best supply needed to satisfy that demand. The result is a company that continues to grow while sustaining a healthy revenue stream in the face of increasing competition from other digital music distribution platforms, mainly streaming services.
Bandcamp’s business model is an innovative response to a specific segment of music consumers. Let’s investigate this further by looking at the tactics and strategies the company uses in an effort to sustain its niche of the digital music distribution market. We will take a look at the company’s enduring strengths and hope to gain some insight into its long-term sustainability in the face of strong competition.
In an interview with Bandcamp CEO Ethan Diamond, he identified two crucial assets to the company: loyal, unique artists who create music outside the mainstream demand, and a highly active and engaged customer base who consistently consume this music. The success of the Bandcamp business model is a demonstration of its understanding of the human and consumer behaviors of these two groups. The multifaceted platform Bandcamp has constructed to cater to these behaviors is further evidence.
Bandcamp proclaims that “music is art, not a commodity.” This is apparent in the aesthetic quality that is achieved by showcasing a unique look and design for each artist’s page on the site. Innovation expert Dr. Chris Brauer says “a great brand is a great story” and the visual components of the site help to tell that story for each artist, drawing in visitors as they explore what is essentially a highly immersive and fully customized online store. This “story” is developed further through the product mix in the store. Artists are given a page for each album they are selling. Individual tracks or the album as a whole can be purchased as digital downloads, and if the artist has the stock, as a CD, vinyl record, and even cassette tape. These options cater to a persistent segment of fans who seek outright ownership in the form of collecting a physical format of music. For these consumers, the story of the artist is experienced, in part, by the physical manifestations of their musical works. This in turn drives sales by building the brand of each individual artist.
To highlight the innovative quality of Bandcamp’s “music is art” approach, consider the contrast demonstrated in the online stores of its competitors Amazon Music and Apple iTunes. Artists whose music downloads are sold through these sites are placed into the specific visual template of the retailer, giving a mass-produced for mass-consumption feel. The user interface features large “purchase track” buttons with individual prices next to each song, giving a commerce-centric approach that deconstructs the concept of the full-length album. Bandcamp’s user interface eschews these large priced buttons and replaces them with simple, clean icons that complement the visual aesthetic of artist’s each page.
By getting out of fans’ way and giving them unobstructed access to the creative output of the artist, Bandcamp has given its artists the credit they deserve in contributing to the greater success of the business model. This conveys artistic authenticity and uniqueness while Bandcamp facilitates sales on the backend. This symbiosis achieved between the artist, customer, and Bandcamp itself is apparent: the unique needs of the fan are met, the artist builds their brand and earns resources needed to advance their craft, and Bandcamp banks revenue to cover operating costs and generate profit.
In a more tactical approach to driving demand, Bandcamp produces an hour-long weekly podcast in an effort to encourage listeners to explore the site and to do so often. “Bandcamp Weekly” is hosted by the company’s Chief Curator Andrew Jervis, a DJ who showcases music by artists who sell on the site. The podcast transcends any particular genre in favor of building a musical narrative to reflect a particular theme for the week. As Frank Broughton says in his legendary guide “How To DJ Right”, the best DJs are known for their ability to introduce new music to their listeners. Bandcamp Weekly achieves this and by placing a DJ at the helm its curation mouthpiece it further compliments the company’s artist-centric approach. It is a way to recommend and facilitate exploration of Bandcamp’s variety of artists that feels very community-oriented; this demonstrates how Bandcamp has utilized grassroots innovation by scaling up from a niche—in this case, hardcore dedicated music fans—ultimately creating a market-based model on a community foundation.
While Bandcamp has demonstrated considerable prowess and experienced success in serving its niche of engaged fans, it’s important to examine the business in the greater context of digital music distribution as a whole. Thus we observe Bandcamp’s biggest competitors: streaming music platforms. Most of these providers, like Apple Music, Google Play Music, Amazon Prime Music, and Facebook with its Spotify partnership, use this model as a point-of-entry into their greater network of online services, with the streaming service itself operating at a financial loss. This demonstrates the power of positioning as a prominent method of engaging new and existing customers and driving demand into complementary categories.
Using streaming service as “bait” has worked so far. Advancements in human analytics as well as machine learning have developed algorithms which are tremendously effective at selecting music to meet the taste of the individual subscriber. These listeners consume music in a way that is more passive and detached than the Bandcamp customer: they have a general idea of what they like and all they want to do is plug in a few keywords, occasionally tap thumbs up or thumbs down, and have the app do the rest of the work for them. This exemplifies a growing trend in a key factor for how people get their music: convenience. Bandcamp’s core competency is not convenience, so how much of a threat does this pose?
In his book “Addicted Customers” John Todor describes two types of businesses: one that seeks to outcompete its opponents by delivering the most competitive combination of price and convenience to its customers, and another which seeks to achieve gratification by facilitating a meaningful experience with its customers. He argues that the former is at greater risk, because by placing price and convenience at the forefront of its value proposition, that business hasn’t done anything to build loyalty with its customers. There won’t be anything to keep them from switching to the next company that offers the same service for less money. Meanwhile, the business that consistently engages with its customers by offering them an experience will do much better in the long term as its customers will develop a sense of loyalty and belonging with the company. So are there enough of these customers out there to sustain a business? Bandcamp seems to think so, and satisfying their desire for meaningful musical experiences is exactly what they aim to achieve.
Bandcamp’s success is proof of salience—it has emerged as the prominent and important source for the engaged fan whose needs aren’t met by the streaming providers. It is also proof that human influence, as properly conveyed through Bandcamp’s tactics and strategies for curating the music of its artists, is superior to the recommendations made purely by a computer algorithm. Indeed, as John R. Searle wrote in 1980: “no program by itself is sufficient for thinking… a computer program is never by itself a sufficient condition of intentionality.”
It’s important to note the circumstances around the innovation that has accompanied the digital age of music. In the book “The Innovator’s Solution” this is broken down into two main categories: “sustaining circumstances—competitive advantage gained by making a better product that merits a higher price—and “disruptive circumstances”—making a simpler product that sells for less and appeals to a new customer set. With the onset of digital music, the distribution model built on the limits of physical media formats was made obsolete when each independent consumer gained the ability to make unlimited digital copies of music. Confronted with the problem of how to maintain profits when supply could no longer be controlled, the streaming model seemed like the best solution in the face of these disruptive circumstances. Yet by moving so boldly into this space, a sizeable chunk of the market was left behind—those with the potential to be customers if the sustaining circumstances of their demand was satisfied.
Bandcamp leveraged the advantages of offering a digital marketplace over a brick and mortar model, and did so in a way that still channeled the unique, artist-centric feel of a traditional record store, thus innovating around the sustaining circumstances of selling music afforded by digital distribution. This allowed the company to capitalize on a segment of demand that was not being met, converting these engaged fans—who were being left behind—into loyal customers. Bandcamp’s continued growth is proof of its ability to satisfy both artists and customers, ensuring sustainability by simultaneously nurturing the demand of engaged fans while protecting and supporting the artists who supply the music they love.
This post is based on a paper I originally wrote in 2017 for an assignment in the Innovation Case Studies module of my MSc program at Goldsmiths University London. The original paper marked very well and I even sent it along to Bandcamp's staff who also enjoyed it and shared it around internally.
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