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Lessons Learned: Record Label Subscription Model

Noah recently posted an interesting commentary on a FT article covering Vivendi’s reliance on subscriptions throughout their business. Towards the end he mentioned this side-note:

“Why I can’t subscribe to all my favorite label’s releases for the year?”

That’s an excellent question! Why not? I decided to explore this question further, rather than waiting around for others to develop their model. Noah and I got together for coffee and brainstormed about what a model like this ideally would look for a customer. Lets start by describing the two main advantages to the label subscription model that are currently not being sufficiently exploited by record labels.

  1. Convenience – It shouldn’t be the customer’s job to find out when their favorite label is releasing another album. “But,” I hear you ask, “We have a nice mailing list to keep everyone up to date of new releases!” That’s still not convenient enough! E-mails go unread and purchasing music is still many clicks away. GQ doesn’t send me an e-mail every month to let me know a new issue came out that I can buy. They give me the option to pay up front and commit to the next 12 or 24 issues right now, and they will mail them to me! How’s that for convenient and easy?
  2. Financial Benefits - Customers receive a discount for their upfront financial investment and commitment. Labels receive money up front that they can invest in marketing and producing upcoming releases. Win-win!

Keeping this in mind, our brainstorm explored different angles and I distilled our thoughts into the simplest possible model, as described below. Note that this is a digital-only model.

  • The Term Of A Subscription (Time Period vs. Number of Releases) – Instead of offering a time-based subscription, for say one year, it seems to make more sense to base it on the number of releases. This would help labels avoid having to release records simply to fulfill their subscription requirements for the year, and focus instead on releasing quality music only.

    Subscription 1: 6 Albums
    Subscription 2: 12 Albums

    Question: Would you feel comfortable with a model based on a number of releases, not knowing exactly what the timing of the schedule would be?

  • The Price Of A Subscription – Consumers opting for a subscription are giving labels money up-front and should receive a discount for their vote of confidence. Single purchases of an album go for $10. A 6 album subscription would be discounted by almost 18% from $60 to $50, and a 12 album one by 20% from $120 to $100.

    Subscription 1: 6 Albums ($50)
    Subscription 2: 12 Albums ($100)

    Question: Would a discount stimulate you to choose a subscription over single purchases for your favorite label?

  • What About EPs and Singles? – Bands increasingly release singles and EPs, rather than full length albums (LPs). This complicates the subscription model a bit, as the pricing relates to LPs. To solve this each EP (5 songs) will count as half of an album, and each Single (2 songs) as 1/5th of an album. Consumers that pick the 6 Album Subscription will receive at least 60 songs, whether it would be 6 LPs, or an combination of LPs, EPs and Singles.

    Question: To further simplify the model, should we remove any mention of releases/lps/eps/singles, and merely offer 60 and 120 song subscriptions?

  • Method Of Delivery- Subscribers will receive an e-mail with a download link that is valid for 7 days. The link will allow them to download a zip file containing the full album as individual 192kbs MP3s, artwork and a PDF booklet. As an extra courtesy this e-mail will be sent two full weeks before the release goes live on iTunes.

Note: Naturally this model only makes sense for a label that has a strong and consistent brand that is identifiable across releases. Secretly Canadian would be an excellent example, as would Matador, Arts & Crafts,  Roc-A-Fella or Motown in their heyday, releases from the Wu-Tang Clan and their members. It wouldn’t make a lot of sense for say Epic Records or Universal Republic. They simply do not have a focused musical brand, and consequentially no one cares enough about those brands to take out a subscription.

That’s it! Simple, and easy. I would love to hear your thoughts on this model. Any improvements, thoughts, and questions would be appreciated. I am looking to learn from you, and try to launch a crowd-sourced version by CMJ in late October for Family Records.

7 Comments | tags: , | category: Music Business · Technology

  • http://www.pauljcantor.com paul cantor

    an interesting post, and I think it’s laid out well.

    First thing that came to mind was this, let’s say someone takes out the 12 album subscription for $100 dollars. Well, how does that make any sense in the grand scheme of things, when a spotify, napster or even a Zune subscription will yield you infinitely more music, for roughly the same price. I can get those same 12 albums, and a bazillion others, with those subscriptions (provided they’re available on the service, that is).

    Granted, I could be a big fan of this one label, and want to throw my support behind them by subscribing just to them. I was thinking Def Jux, or in their heyday, a Rawkus, might have worked for that model. Does the consumer have that much discretionary cash right now for music subscriptions, when they’re limited to just that one label, that is the question. That also puts a lot of strain on the label itself. I mean, 12 lps a year. Geez, I don’t know that many labels on an indie level that drop that many albums a year. Maybe something like Asylum, ya’know, an incubator label for smaller independents. But if you were to really look at what they’re distributing, say a Rap-A-Lot, for example, Rap-A-Lot’s not dropping 12 albums in a year.

    So there are definitely some holes in this idea.

    That said, I think the labels are just fucked. They’re beholden to the device and the distribution of the content. They can’t get around the consumer having unlimited access to, well, everything for free already.

  • http://wesleyverhoeve.com wesleyverhoeve

    Paul: Sorry if I didn’t make this clear in the post, but it wouldn’t be 12 albums in a year. It would just be 6 or 12 albums in general, in whatever the period would be that it would take to release those. So there’s definitely some trust involved. That being said I think it would only be a model relevant to true fans on a label. A pretty small group.

    Your point on ownership vs streaming is definitely valid and in that light perhaps it would be good to offer a physical component. Again, true fans would want to own it, but likely only if it was tangible. What does still apply though, even in that case, is the convenience issue. An e-mail list with a link to a new album to stream on your streaming service of choice would be a good solution perhaps?

  • http://TheYoungandHungry seth

    To be completely honest, I don’t trust the brand of too many labels. Yet what I do trust , is a band. I’d almost rather find a way to invest in my favorite artists… say, an established act such as Wilco.. or a newer young band that I truly love (The Avett Brothers, for example)… Maybe give them $100 up front, for the next 3 albums + special EPs + 3 sets of concert tickets, etc.

  • http://wesleyverhoeve.com Wesley Verhoeve

    Good idea Seth. We did play around with the artist subscription as well. Will explore it more!

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  • http://twitter.com/echelon_effect The Echelon Effect

    Ive been thinking about this for a while! Although on a single band level. EG $1 a month for a year guarantees you and album and an exclusive ep or something. Surely theres a need for a platform to be developed for smaller bands to do this?
    Dave

  • Tmgilchrist

    All designed to maintain the label. That's where it all falls down. think about it.