In the first part of this series, we looked at the business of online music in the Middle East. In this part, we will focus on the struggle artists face to turn their creations into a profit, the new digital avenues open to them, and what the region can learn from their overseas counterparts.

In March 2017, Canadian singer Drake’s new album ‘More Life’ broke streaming records. Combining its plays on both Spotify and Apple Music, the album soared past 250 million streams just one day following its release. Estimates vary, but the project seems to have grossed over $3 million, during that time just in online streaming revenues.

While music superstars have always topped the charts of the wealthiest celebrities, digital music platforms have recently opened the door to global success and financial stability to lesser known artist.

Why musicians are entrepreneurs

In today's landscape, musicians are not only creatives motivated by passion. They are rather driven by the necessity to act more like entrepreneurs than ever. Founders of their own creative projects, they have to find a way of financing themselves despite high risks. Often, they have to perform more logistics tasks, such as becoming their own sound engineers and learning how to use recording professional equipment in their own bedrooms.

They are their own PR agents, posting on social media to attract follower, and their own promoters calling venues and organizing shows. Bottom line: to make it, they must multitask and take increasing individual responsibilities. All of this, and much more for a show or album that may last just 30 minutes.

Though talent is a key ingredient, those musicians who are incapable of effective leadership, are rather relegated to weekend hobbyist.

Make a living beyond making music

As CD sales have plummeted in the past decade, international superstars have resorted to other means of driving profit. Many are performing for bigger audiences, others are resorting to branded merchandise such as perfumes, makeup and clothing. Some are becoming TV personas, such as X factor judges, or making appearances in big budget movie productions.

While that might work for well known celebrities, it is not an available option to artists that are just coming onto the scene.

Monetizing online content

Crowdfunding has emerged as a tool artists use to secure not only funding, but also to reach to a broader audience.

Different crowdfunding platforms are available: Patreon for example allows artists to offer exclusive releases for their paying subscribers and promises their fan base content-based rewards upon reaching a profit threshold.

Some regional artists have also started resorting to crowdfunding. Tania Saleh, a Lebanese singer, crowdfunded $51,000 for her fourth album ‘Shwayit Souwar’ (A Few Images) through Zoomaal. Mashrou' Leila, another Lebanese band, also crowdfunded $66,000 for the album ‘Raasuk: You’ve Been Choreographed’, through the same platform.

Newer platforms such as Tradiio and Tempotrader combine one’s love for music with that of trading in stocks. Subscribers ‘invest’ in a musical act by purchasing their stocks, which can be traded with other subscribers. They can lead either to small profit margins for listeners that predicted the success of an artist, or rewards such as vouchers and festival tickets.

Counting the pennies

Be it Spotify, Apple Play, or Deezer, the revenue generated per play is very small. Different online streaming platforms offer rates between $0.0004 and $0.0007 per play making the business profitable only if there are numerous listeners. Assuming an artist fully owns his/her music, his/her profit margins will still see a 15-30 percent of the generated cut by the streaming platform. The distributor that got the music onto the site in the first place will also get a fraction of the profit margins.

Independent artists have access to a wide range of distributors to make their content available online. For mid-tier content creators, that have management support and their own following, services such as Stem help them distribute their content, and oversee their revenues.

Smaller artists have access to digital aid such as CD Baby and Distrokid, the first of which uploads music for free to all selected platforms and takes around 10 percent of the earnings, while the second works on a flat fee basis of about $20 and guarantees artists 100 percent of their gains.

Anghami in the Arab region is ahead of the game when it comes to partnering with independent artists. Those that sign up exclusively on the platform benefit from a special in-app promotional support and live show opportunities. All the platform’s artists have access to a digital dashboard through which they can upload and manage their music directly. They have access to song analytics which break down listeners by age, gender, and location. Although undisclosed, independant artists’ revenues per play do not differ much from their competitors.

Worth mentioning that putting one’s music online always opens the artist up to the risk of piracy. Although it’s hard to find accurate numbers on the illegal downloads incurred losses, the MENA region seems to be particularly prone to piracy as listeners on average are less willing to spend money on recorded music.

Let’s talk numbers
 

Doing the math, artists who upload their music to an online streaming platform put around $5,000 in their pockets if they get one million streams. It is a similar total to that of playing live for 1,000 people at $5/person, in around 10 live bar shows with 100 people. While the numbers of listeners may stand in stark contrast, it can often take years for live performances to start generating a profit once all the expenses of putting together a live show are accounted for. Monetizing music digitally though allows the artist to continue benefitting from active listeners long after the content is finalized, and then can therefore be more profitable on the long term.  

From nowhere to everywhere

Building a successful career as a musician requires an entirely new skill set today, to juggle between the different online tools and platforms. The internet revolution has brought about exposure to artists that would have never been picked up by traditional labels. However, it has also created a large global market, where people can listen to millions of songs through their PCs at any given time.

Having a primarily online audience might not fill up a bar on a Friday night but it creates location independence and with time, financial stability, two things those in the music business have often struggled with.