The rapid rise of paid membership models for music

One reason why the current moment feels so overwhelming is that there are so many previously disparate narratives now converging on society and business at the same time.

Look at the music industry, for example. On one hand, you have tours and festivals being cancelled on an ongoing basis due to the COVID-19 pandemic (Coachella and Lollapalooza just said bye to 2020 for good), leaving artists and venues scrambling for more sustainable digital revenue sources beyond streaming alone. On the other hand, in the wake of the Black Lives Matter movement and #BlackoutTuesday, the industry is grappling with the systemic economic inequity that Black artists and executives have faced as long as the concept of a “music industry” has existed, from exploitative recording contracts to lack of opportunities on festival lineups and behind the scenes.

Somewhat unexpectedly, paid membership models have emerged at the confluence of these two narratives as one of the fastest-growing tenets of the new digital music economy.

The concept of a paid, crowdfunded membership for music is nothing new. Fan clubs for pop culture have been around since the early nineteenth century, and crowdfunding in particular is at the core of musical entrepreneurship in the Internet age. One of the world’s first crowdfunding sites, ArtistShare, was founded in 2001 specifically for musicians. Many of Kickstarter’s first successful projects also came from musicians and record labels. Patreon, one of the most popular membership platforms today, was co-founded in 2013 by independent musician Jack Conte (of Pomplamoose and Scary Pockets).

As researchers at the University of Calgary wrote in a recent paper for Artivate, crowdfunding is so powerful for artists because it “compresses the value chain, allowing [them] to take their offerings directly to market, when otherwise they would have to incur considerably higher costs in making payments … to players and intermediaries.” There’s also enormous value on the fan side, in that crowdfunding gives fans “access to innovations and artistic productions otherwise unavailable in the market, lower prices due to removed intermediaries, and new ways to co-create value” with artists.

One of the major pivots the music industry has made in response to the COVID-19 pandemic is a shift in focus from lean-back, aggregate streaming channels (e.g. Spotify, Apple Music) to direct-to-fan channels (e.g. Bandcamp, Shopify, Patreon) where the revenue impact is more immediate and transparent. Monthly membership revenue in particular is easier to project than streaming royalties, and opens up a direct, ad-free line of communication to one’s most loyal fans and supporters. It’s one of many potential blueprints for building a more sustainable career as an artist.

What tools are out there?

The most popular membership platform for musicians is also the most generalist. Patreon, co-founded in 2013 by Jack Conte and Sam Yam, currently hosts over 150,000 creators on its site, spanning podcasters, comic illustrators, vloggers, journalists and roughly 11,000 musicians. Notable examples of music-focused pages on the platform include those of Open Mike Eagle, Doomtree, Zola Jesus, Jacob Collier, Orla Gartland and M.I.A, as well as venues like Nowadays and DNA Lounge.

A Patreon rep tells me that between mid-March and late May 2020, the collective value that patrons were paying musicians on the platform increased by over 60%, while the total number of musician accounts on the platform increased by 200%.

Memberful, a generalist backend membership management tool that Patreon acquired in 2018, also powers several online music membership experiences, such as Mac DeMarco’s Disciple membership and producer ill Factor’s Beat Academy.

Beyond Patreon and Memberful, there are a handful of music-specific options on the market. Bandcamp allows subscriptions, but only a few labels like Topshelf Records and Tiny Engines have enabled the feature. Withfriends focuses on memberships for brick-and-mortar small businesses, and counts venues and promoters like Elsewhere and AdHoc as customers.

A handful of new music-focused options have launched in the past half year alone, including Currents FM and Ampled, both of which intentionally position themselves as more artist-friendly alternatives to Patreon — more on that later.

Who’s a good fit?

As with any business model, paid memberships favor some kinds of artists over others.

To me, the biggest determining factor is consistency. Is the artist able and willing to post new content and engage with paying members on a consistent basis — as much as once or several times a week, on top of what they’re already doing for free on social media — such that fans will continually get value out of their membership over time?

This model resembles the cadence of podcasters and vloggers more than that of traditional “recording artists,” who might release only one or two albums or EPs in a year. Indeed, many of the biggest and earliest musicians on Patreon, including Peter Hollens and CEO Conte himself, built their followings as cover artists on YouTube.

Artists and organizations that have a more consistent and recognizable aesthetic and visual identity can also benefit from a recurring membership structure. “It worked well for record labels that had a regular output, even if diverse, as long as it had consistency in aesthetics and vibe,” Miguel Senquiz, co-founder of now-shuttered record-label membership platform Drip and current senior product manager at SoundCloud, tells me. “It’s like seeing someone out wearing the same band or label T-shirt, and knowing you’re both part of something.”

The second big determining factor is transparency. Is the artist willing and able to be more open and vulnerable about themselves and their creative processes to paying members?

Not all artists are ready to lift the curtain on their behind-the-scenes lives in this way. But nearly all the successful music memberships I’ve seen go far beyond just sharing new records into fostering long-term relationships that aren’t tied to a given song, video or album.

“As musicians, we’re always seen immediately as products first; we’re our songs or our music videos first, not human beings,” Hollens, who has been active on Patreon since 2014 and is also an advisor to the company, tells me. “Making sure that the person on the other end watching through their screen knows who I am as a human being has been quintessential to my success and career. It’s about getting people to fall in love with you, not just your music.”

A third significant determining factor is the presence of clear values, causes and/or interests. Is there a certain set of values or a wider community-driven mission around which the artist can rally a like-minded community of fans and peers?

This factor is more akin to why a local newspaper or radio station would run a membership program — namely, to give loyal supporters the opportunity to contribute financially to an organization that in turn enhances the civic good. Music venues fall under this category, as do non-musical membership initiatives run by artists, such as rapper Noname’s eponymous book club for readers of color.

What can you do with a music membership?

The actual content of a music membership model varies widely from one artist or organization to the next. But one common theme is that the output of successful memberships is almost never just about music, or just about records. It often goes deeper and offers some combination of access, community, education or involvement in a creative process.

As Patreon’s own executives have explained in the past, the range of benefits musicians have offered on their platform are both tangible (e.g. merch discounts, exclusive demos or podcast episodes) and intangible (e.g. artist recognition, monthly video hangouts). A growing number of musicians also run member-only chat groups on Discord — an app that resembles Slack and has integrations with Patreon, Twitch, YouTube, Mixer and many other community platforms.

“When I first saw Discord, it reminded me of the old pre-Facebook music forums, where there were real communities of people who became friends online and showed up to concerts together,” rapper and activist B. Dolan, who first started posting regularly on his Patreon page in late March 2020, tells me. “I also have different ‘rooms’ in my Discord server for music, poker, watching movies and other stuff. It’s good for organizing fans across different interests, as well as for me to organize my activities more clearly among the people who care about them.”

Since the pandemic and associated tour cancellations kicked in, Dolan has established a regular schedule for himself across Patreon, Twitch and Discord to work towards keeping fans engaged and making up for lost revenues: Curating a new Spotify playlist for fans on Mondays, doing a Patreon-only livestream on Tuesdays, hosting a movie-watching party for patrons on Discord on Wednesdays, doing a public Twitch livestream on Thursdays.

“The whole first month was spent just figuring out the schedule and the tech,” says Dolan. “It was a pretty big learning curve, and I was really resistant at first — there’s always this tension between art and commerce. But in some ways, it’s inspiring, because you have this direct, constant contact with the people who are most enthusiastic about what you do and who will validate the shit out of you. You can be there for each other, digitally. I’ve gotten a lot more out of the fan interactions on Patreon than I expected.”

Doomtree, an independent hip-hop collective and label based in Minneapolis, Minnesota, had been considering launching their Patreon page for at least half a year, but were pushed over the edge in March when over 100 of their live shows (both as a collective and among members with solo careers) were cancelled due to the COVID-19 pandemic. “It was $350,000 to $450,000 worth of shows split among all of us,” Aaron Mader, a founding member of Doomtree who performs as Lazerbeak and co-runs the collective’s label, tells me. “That’s living money.”

The group launched their Patreon page in late March with just one, $10/month tier, and has since attracted over 1,300 patrons. “100 of them are actually giving us more than $10 a month, which goes to show how excited and grateful people have been to be a part of this,” says Mader. “I use that word ‘grateful,’ because we’ve been getting so many messages from patrons thanking us for giving them the opportunity to contribute and be a part of it. I wish we had started it earlier.”

Aside from access to old demos, Doomtree’s Patreon benefits include a monthly video update from each member of the collective, as well as a weekly Doomtree TV comedy show, much of which is filmed over Zoom. “It’s proven to me that we can be more than just a record label,” says Mader. “We’re thinking of ourselves almost like ‘Doomtree Media’ now, and are looking into podcasts, blogging and TV-like episodes, which gives us some ideas of what our second Patreon tier could look like.” (In light of recent events, the last two episodes of Doomtree TV have featured the group’s back catalog playing against a static backdrop image of George Floyd.)

Doomtree splits its Patreon earnings 50/50: One half goes to their label’s operations, and the other half is divided seven ways among all the artists in the collective. Not only is the membership helping the collective pay rent, but it’s also more operationally efficient from their label’s perspective than just running a series of one-off crowdfunding drives.

“If this was just a preorder or one-time crowdfunding campaign, it would have been over already, and we would have to brainstorm how to reignite these 1,300 fans six months from now when the next record comes out,” says Mader. Now, not only is there consistent communication with patrons month-to-month, “there’s a built-in second wave of marketing. The first 800 or so welcome packages are hitting people’s doorsteps, and they’re reposting the contents of the packages like custom patches on social media, encouraging other fans to join.”

What are alternative platforms beyond Patreon?

Now that Patreon has been around for seven years, many founders see the platform as an incumbent to be disrupted.

Several music-focused membership platforms that have launched in 2020 — particularly Currents FM and Ampled — are more critical of the model popularized by Patreon.

One area where Ampled has been especially vocal is around equitable financing and ownership. Yes, Patreon’s CEO is a musician, and the company as a whole has spoken out about how “the creative system is broken.” But the company has also raised tens of millions of dollars in venture capital — most recently a $60 million Series D round in July 2019. Multiple artists and founders I interviewed for this piece suggested that raising so much money over multiple rounds likely means the company is looking either to go public or to get acquired eventually, which could undermine their claims of reinventing a broken system in the first place.

“When Patreon talks about how ‘the system is broken,’ they’re talking specifically about advertising models on YouTube, Facebook and Instagram,” Austin Robey, co-founder of Ampled, tells me. “When we [Ampled] talk about a system being broken, it’s not just ad models — it’s the whole, underlying economic operating system on which startups are built. The incentives are also broken when you have platforms owned by investors who want a huge return. It goes so much deeper than just advertising versus direct support. It’s about ownership. To me, that’s the real systemic issue.”

Ampled is structured as a platform cooperative, whereby all artists, fans and company workers co-own the platform on a “one-person, one-share, one-vote basis.” The company’s relationship with investors is also structured as “revenue-based financing” — a model in which investors inject cash into a business in exchange for a small percentage of top-line revenue paid back up to a capped return, typically up to 4x the investment amount.

In terms of their interface, Ampled is opting for as much simplicity for artists as possible. “In our conversations from the past year, we heard a lot of resistance to the multi-tiered structure, which felt more transactional to some artists,” says Robey. “There was resistance and anxiety around needing to publish all these monthly deliverables. Patreon has done a good job of building a feature set to manage that, but we concluded that musicians don’t even want that structure to begin with, so we implemented a support-what-you-want model that is uniform across all artists and has no tiers. It’s more about the spirit of supporting artists directly, and giving artists the ability to launch a page without having to think through pricing. We had 120 artists sign up in the past month, and not one of them has requested tiers.”

The average support amount on Ampled is around $6.50. One of the biggest artist pages on the site is from independent artist Lizzie No, who has attracted over 100 supporters to date.

One other intriguing aspect of the conversation around paid memberships is that there’s a hyper-specific focus on artists as individual entrepreneurs. But in the wake of this pandemic, collective memberships feel equally if not more exciting, necessary and practical. After all, bringing the music industry back to a state of stability, let alone growth, will arguably need more collective rather than individualistic efforts, especially for independent artists and venues.

“Whether you look at YouTube, Twitter or even Patreon, you have this rampant individualism and extraction from communities,” Austin Hou, founder of Currents, tells me. “The messaging is often, ‘This is me, I’m an individual, subscribe to me and my content.’ But in most creative spaces, that individualism feels almost alien. We get inspiration from our peers and from everyone who came before us, and there’s a whole community of people we’ll pass the torch along to. Such a rich fabric is being reduced to, ‘I am the person you should be paying attention to, and everything is mine.’ That’s what we’re experimenting and fighting against.”

There are a few hundred artists on Currents, many of whom are members of wider labels and collectives like CHINABOT, female:pressure and SVBKVLT. Unlike most incumbent platforms like Patreon, Currents allows fans to support both individual artists and the labels or collectives they belong to (e.g. see below screenshots for subscribing to the collective CHINABOT versus just to one of its members, Jaeho Hwang).

Fans can also “tip” artists a one-time amount instead of subscribing to them monthly — and even the way tips are distributed on the platform emphasizes community and paying it forward. 50% of a fan’s tip goes directly to the artist, and the artist gets to choose whom to pass the remaining half of the money to; that second artist receives $1 and picks another artist to pass the remaining money to, and so on until the money runs out. Currents calls this a “tip-chain.”

Currents’ interface is also focused on music curation as the main membership benefit for fans, as opposed to other kinds of multimedia content like what is popular on Patreon. Moreover, unlike Patreon — which takes the stance that it is not a discovery platform — Currents is building discovery into the heart of its membership experience, with the ability for both artists and everyday fans to pull together playlists of tracks from multiple sources, including SoundCloud, Bandcamp and Apple. “Artists are sending their loyal fans to the people who have inspired them,” says Hou. “The main membership value they receive is social discovery of other artists.”

Membership = More work + higher margins + less scale

It’s worth noting that Currents is not the first attempt at a music membership platform for music organizations.

Drip, a membership platform for record labels founded in 2012 by Miguel Senquiz and Ghostly International founder/CEO Sam Valenti IV, helped independent labels including Ghostly, OWSLA, Mad Decent and Stones Throw run their own direct-to-fan membership experiences for several years. The startup was acquired by Kickstarter in 2016, then shut down in 2019 after a planned reboot was canned before launch.

The partnership between Kickstarter and Drip made sense in theory: Help artists and creators who built an audience from scratch through one-off crowdfunding projects continue to get funded through recurring support, which could make their operating models more stable.

In practice, co-founder Senquiz tells me that the challenges were partially in the interface itself — i.e. focusing too much on music such that it was difficult to adapt the platform to other kinds of creators — and partially in keeping the creators themselves motivated enough to stick around.

“We could not get artists to convert fans after finishing their projects,” says Senquiz. “They just opted to fund a new project from scratch for the eighth time. There was also an element of these creators feeling like they would be more on the hook with a recurring membership model, and fearful of letting their biggest fans down.”

As with most other business models in music, paid membership models and closed “fan clubs” require a lot of work to execute well. Even the highest level of celebrity status does not guarantee success: In 2019, Taylor Swift and the Kardashian sisters had to shut down their own social apps, largely due to neglect.

In general, the way fandom works today tends to lean more towards the unprecedented speed and scale of communication on streaming and social platforms, and towards the mobilization of decentralized “armies” to wield an unprecedented influence over pop culture as a whole, instead of sticking to closed, insular “clubs.” (For a contemporaneous example, just look at the the K-pop stan energy around Black Lives Matter protests.)

Membership isn’t mutually exclusive with this mass-scale way of operating, but it does thrive on a fundamentally different kind of value system. “In a world where artists and the music industry care about follower count, the best fan club is Instagram,” says Senquiz. “Launching a membership and then realizing you’re ‘worth’ only 22 paying members at first is a potential ego hit. It can mess with your head and your sense of value.”

As I’ve written about my own experience on Patreon, it’s difficult to grow a membership page from scratch without cultivating a larger, already-existing audience elsewhere. This makes the model especially difficult for a young or emerging artist who just put up their first EP on streaming services; in these cases, a less committal Kickstarter-type crowdfunding model might make more sense.

Hollens admits that if you “do a good job in verbalizing what Patreon is to your fans and put it in front of them in an unapologetic way,” the average conversion rate from fans to patrons is still around 1%, which might fall below some artists’ expectations. “If you go into it thinking that your value as a musician or creator is wrapped around the number of patrons you have, it’s going to be a frustrating mental uphill battle,” says Hollens. “The only thing that really matters is that you grow with your patrons.”

That growth can only be realized through consistent investment over time. While challenging, for many artists, the payoffs in the form of direct communication with fans and predictable revenue with friendlier margins far outweigh what they would spend many more months to try to achieve through the usual avenues like streaming and free social media.

“The question that we’ve had for so long — where the f*ck is the money going to come from? — is finally clearer,” says Mader. “Where we were seeing dwindling returns elsewhere, the dots are starting to connect here and I really see a future with it and a way to grow it.”