The “waterfall” strategy for monetizing music livestreams: An updated guide for emerging artists

Due to the COVID-19 pandemic, the music industry as a whole is more invested in livestreaming than ever. And yet, it remains far behind other entertainment industries, including film and gaming, in how it maximizes the value of those livestreams long-term.

The following three case studies are the exception, not the rule:

• In June 2020, Nick Cave filmed an intimate, one-man acoustic set named Idiot Prayer at Alexandra Palace in London. One month later, in partnership with Dice, Cave hosted a ticketed livestream premiere of the set for fans around the world, charging £16 apop. While the stream experienced some technical issues, it would go on to live a much longer life — from a limited theatrical run in Europe throughout fall 2020, to an eponymous live album that landed an exclusive broadcast premiere on BBC Radio 6 Music.
• In August 2020, The Weeknd partnered with TikTok and Wave to create The Weeknd Experience, the first cross-reality, interactive concert ever hosted on TikTok’s app. Taking place over four nights, the event made headlines across the media landscape, drawing more than two million total viewers and raising $350,000 for the Equal Justice Initiative. Just a few days later, two of the songs performed during The Weeknd Experience — “Blinding Lights” and “Save Your Tears” — were also cut into their own, full-length music videos, which have collectively garnered over 20 million YouTube views to date.
• In November 2020, Dua Lipa partnered with American Express’ Unstaged series to stage Studio 2054, a paid livestream series that sold over 200,000 tickets and was watched by over five million fans around the world. Not only was the show made available to purchase and watch on-demand after the fact; a behind-the-scenes short titled The Story of Dua Lipa Studio 2054 was also released on March 12, 2021 across several streaming and ticketing platforms, including LIVENow ($20 bundle with the original concert footage), Ticketmaster/Universe (also a $20 bundle) and select international SVOD platforms like Brazil’s Globoplay.

To date, Nick Cave, The Weeknd and Dua Lipa remain three of the only major musicians who have adopted a clear, post-event content strategy for their concert livestreams.

At Water & Music, we previously called this a “waterfall” strategy — whereby a rights holder sequentially releases different versions of the same livestream footage across multiple different channels over an extended period of time, for the purpose of maximizing revenues, audience reach and cultural impact.

A long-term, waterfall approach to content distribution is already par for the course in other entertainment sectors. As we discussed in the previous piece, film studios would be remiss not to pursue long-term windowing and waterfall deals with SVOD platforms like Netflix and HBO Max. In gaming, popular Twitch livestreamers regularly have even larger, more diversified audiences on YouTube, where they post on-demand, post-produced versions of their streams after the fact (e.g. PointCrow has over 200,000 Twitch followers but over 530,000 YouTube subscribers; Disguised Toast has nearly 2 million Twitch followers but nearly 3.5 million YouTube subscribers).

Because major artists’ business models are so historically reliant on in-person touring, many of these artists’ livestreams in the past year haven’t traveled much further beyond one-off events, or even not doing any livestream at all and just “waiting it out.” That said, growing investment in on-demand music documentaries could pave the way for more music celebrities to embrace a waterfall model for livestreams in a similar way that Nick Cave, The Weeknd and Dua Lipa did: Host a premium livestream concert, then edit the footage after the fact in a way that’s optimized for on-demand consumption elsewhere (and maybe get a fat check from Netflix or Apple in the process).

More importantly, though, the waterfall approach to music livestreaming doesn’t just have to be limited to artists with millions of followers or million-dollar production budgets. Any artist at any career stage can start thinking early on about how to increase the longevity of the art they create and distribute online.

We already take this for granted with music recordings, where audio streaming gives songs almost infinite shelf life and the industry has entire departments dedicated to elongating the life cycles of back catalog. So why shouldn’t it be the same for video — especially for emerging artists where every dollar earned counts?

But first: Back to the basics — or, WHY do you livestream?

There are obviously financial reasons to invest in livestreaming, especially without in-person shows. And increasing consolidation in the livestreaming industry, such as Live Nation taking a majority stake in Veeps and Sofar Sounds buying Seated, shows a growing, industry-wide belief in a hybrid online/offline model for live shows moving forward.

But even before thinking about the money (let alone about the rollout strategy) for livestreams, we have to ask an even more important question from the artist’s perspective: On an emotional level, why even do it in the first place?

Livestreaming done well is not just flashy, high-quality or profitable; it’s also a highly personal experience, both for the performer and the viewer. Intimacy fosters a sense of connection, and connection is what loyal fans will pay for. In fact, performing a livestreamed concert can feel even more intimate than playing a live show in a venue: Instead of feeding off the energy of the crowd, the artist has to craft an experience that feels like they’re playing for an audience of one.

As actor and singer/songwriter Jeff Daniels explained in an interview with Talkhouse:

“[A good concert livestream is] like shooting a medium close-up when you’re film acting. And if you’ve got a floating camera like we do — our third camera kind of moves in and out — that’s bringing the audience in. You’re showing them where to focus. It’s like the difference between movies and theater. Theater you sit in the audience and you’ve gotta be the editor. You have to look over there, or cut to him. You’re the one turning your head. In movies, we do that for you. We cut to her, or to the car.”

Put another way, creating a high-quality livestream that offers something genuinely different than an in-person show means taking cinematography seriously, and utilizing the unique capabilities of video as a format. This raises questions not only about how to film a concert livestream, but also about where and how ultimately to distribute it.

Going down the waterfall: A more complete picture for emerging artists

We’ve updated our initial diagram illustrating the waterfall strategy for music livestreams to include more options for emerging and independent artists, such as self-serve distribution ideas on social-media platforms and DSPs:

As illustrated above, the vast majority of artists seem to focus only on staging the livestream itself, with little follow-up engagement or activity after the fact.

In order to map out the rest of the waterfall effectively, though, we have to start even earlier at the waterfall’s crest — i.e. figuring out who even wants to watch a given artist livestream in the first place.

The crest: Where’s your audience?

In practice, digital advertising for upcoming livestream events is not that dissimilar to that for any other kind of musical asset or experience like a music video, new album or paid Patreon membership. As far as audience targeting is concerned, emerging artists can draw from many of the same public data sources that analysts at top booking agencies use — geographic data on Spotify for Artists, cross-DSP consumption data on Chartmetric and Soundcharts, demographic data on social platforms, etc. — to figure out who might be interested in tuning in to a given livestream based on their current listening habits.

Mirjam Sieben plays in the band The Dirty Denims and works at the marketing agency Onlightning. She recommends building what she calls a “warm group” of potential, ideal fans through digital ad spend, before moving on to stronger calls to action such as signing up for a mailing list or buying a free or paid ticket to a livestream.

Sieben adheres to a strict ad budget, and focuses mainly on Facebook, but her principles hold across social media:

• $1 per day for the discovery phase of building this warm group. In this step, video works best, and there’s no need for high-quality production work — in fact, a more DIY feel to the video often helps in its shareability. Targeting should focus on one country and on those who like similar music.
• All other ads should then retarget the warm audience, which is smaller but more specific and more likely to spend.
• When you have a livestream, see if it’s possible to create a Facebook event for it to promote. Then, depending on the size of your warm group, set a period of around two weeks where you run an ad for the event at $2 per day. This frequency is important, and should be checked against the frequency of the views of the video against which you’re putting your ad spend.
• Finally, run ads for tickets in the final week before the livestream. Think about the cost per acquisition. For example when a ticket is $10, raise your ad spend to a maximum of $5 a day because it costs more for the ‘action’ of buying. Keep track of how many tickets you sell versus how much you spend to keep the balance right.

There are two important things to keep in mind with this approach:

• This process of building up a warm audience can take several weeks, if not at least a few months — a stark contrast to the spur-of-the-moment, day-of marketing that we often see with more informal music livestreams. Especially for a waterfall strategy where you are planning for engagement long after the event is over, doing this prep work is necessary to understand the scope of who exactly will engage.
• If you are staging the livestream in partnership with a promoter, venue and/or brand that already has its own Facebook page (or general digital ad strategy), there may be ample opportunities to coordinate ad spend and cross-promotion such that you’re not building a warm audience completely from scratch.

Sieben quotes a well-known parable to illustrate the impact of these tactics: You can be the “lighthouse” attracting people organically from a distance, instead of merely a “tugboat” working actively to pull people forward.

Production and distribution

Once you know more about your audience, the next step is to decide where to host your livestream.

As MIDEM covered in a recent whitepaper, there are over 40 different options available for artists to stage their livestreams today, many of which are open to (if not entirely focused on) working with independent and emerging artists. While there are many ways to segment the livestreaming market, there are two distinct categories that each provide a different pathway to a waterfall strategy:

DIY/UGC/self-serve platforms like Twitch, Bandcamp Live and Sessions. These options are optimal for artists who want quicker setups for recording at home, sometimes even using just a phone as their camera. In terms of a waterfall strategy, the most impactful campaigns stemming from these DIY streams focus on quicker edits distributed on social media or free streaming platforms. For example, with The Dirty Denims, Sieben played a livestream for the Twitch channel 44NextDoor, and spliced the set after the fact into a playlist of separate songs on YouTube.

Here, the benefit of making free clips available after the fact is not so much to maximize revenue, but rather to make livestreams just one part of a wider suite of audiovisual assets for marketing music and building audiences, alongside music videos, behind-the-scenes studio clips and more. In fact, livestreaming clips can be incorporated into trailers that showcase artists’ work live, which can be used for EPKs that artists send to bookers.

That said, to revisit the earlier example of Twitch streamers, other industries have proven that waterfall strategies can tangibly diversify the amount of income from a single video — e.g. direct tips and subscriptions through Twitch, followed by ad revenues after the fact on YouTube — which can help build a solid financial foundation for an emerging artist.

More curated, closed platforms that offer hands-on production and ticketing support, like DICE, StageIt, Dreamstage and Bandsintown Plus. These options normally prioritize higher production value, with artists using several cameras to record premium videos in (often empty) venues for live distribution after the fact. Platforms like DICE and Bandsintown that maintain larger catalogs of live performances can also provide more personalized experiences to fans through email and mobile/push notifications.

The waterfall strategy for these kinds of livestreams can look something like this:

1. Premiere ticketed livestream on a streaming/event platform
2. Live or post-live broadcast of the video at a local venue
3. Exclusive audio broadcast on a local radio station
4. Live audio released on DSPs
5. Rebroadcast of the livestream on other platforms

This approach works best when it is highly localized to where your audience lives around the world — hence the importance of building a “warm group” beforehand.

As an example: Nigerian-American artist Tobe Nwigwe hosted a successful livestream on DICE in the summer of 2020 called The Pandemic Experience, selling around 10,000 tickets starting at $21 each. The hype created around this event was such that the artist, his management and DICE decided to rebroadcast the livestream on the same platform a week later. This led to an additional 5,000 tickets sold, with a free “entry” for those who had already bought a ticket from the premiere. The live audio from the stream is also now available on-demand across DSPs, and even in limited-edition vinyl and CD form (pictured below).

The production value for both of these livestreams was on the more premium side; in an interview, DICE President Russ Tannen emphasizes the importance of filming ticketed livestreams with TV quality and, echoing Jeff Daniels, clearly showing the audience where to look.

Sounds expensive? It doesn’t need to be! While a lot of the major livestreamed events, such as Dua Lipa’s Studio 2054 or BTS’ Bang Bang Con: The Live, have had big production budgets, a lot can be achieved with much smaller budgets too. Good camera gear and post-production software are now available at very reasonable prices; a decent 4K camera nowadays starts from $1,500 to $5,000 for a more professional set-up, while Adobe licenses are available from around $600.

Post-production editing work, on the other hand, can cost as high as $6,000 depending on how long it takes to edit a given piece of footage. But this is already far below the budgets normally required for broadcast TV performances and productions, while (ideally) giving the artist more ownership over the underlying IP and offering value that works especially well in a long-term strategy.

In fact, emerging artists can actually have an advantage over established artists when it comes to making the most of waterfall livestream distribution, because their business models early on are more nimble and flexible. Investing properly in the pre- and post-event rollout around a livestream doesn’t just offer a diversification of income; it can also significantly boost the marketing strategies for artists of all career stages, and equip them with even more integrated tools for long-term, sustainable growth.