What can the Creator Economy learn from the Music Business?

With TikTok, creators and artists are more & more alike. What can the creator economy learn from the music biz?

Every week we're hosting a founder, a creator, or an investor to chat about what they’re building in the creator economy. Listen to the previous episodes on Spotify or Apple Podcast and write us a review if you like it! 🙏

Where do you get your music? If you're under 50, chances are it's a streaming site.

Spotify, Apple Music, Tidal, LiveXLive (to name a few) put millions of songs through your earbuds whenever you want them.

It's been a decade since an Internet tsunami wave took the music industry, and everything began to change.

Now the old record labels may cling to tradition, but in 2021, there's an independent revolution happening in the industry. Artists are abandoning the traditional route to success and taking their music straight to the people.

Today emerging musicians can showcase their music on TikTok or YouTube and build a following. But, unless you're a global superstar, it's hard to earn a living via the traditional record labels.

Why? Because they lock artists into lengthy contracts. And those contracts give the company creative control and ownership of the music. Sure there's financing and support — but at what cost?

That's where Indify steps in.

Indify co-founders Shav Garg, Connor Lawrence, and Matt Pavia believe that artists should control their own destinies. They're part of a new breed of founders creating tools for the music industry of the future.

You could say they see today's artists as creators and entrepreneurs.

So, they developed Indify, a tool that opens a world of possibilities for artists, managers, and investors alike.

What is Indify?

In 2021 Indify operates as a marketplace where artists and selected investors can connect. Already investors have funded multiple hit songs, with artists keeping the rights. That's one of the significant differences between Indify and the traditional record labels.

To understand how radical that is, we need to know what a conventional record deal looks like.

When a new artist signs with a record label, they're usually offered an advance, which seems huge. $100,000 — $200,000, maybe even half a million. It's exhilarating! So, they sign the 60-page contract and think they've got it made.

But a typical industry contract locks the artist into a five-album deal, and the label retains 85% ownership and 85% of the profits. So, the artist gets 15% and doesn't see another cent until they've earned their advance. Add in the fact that the labels often pay six-monthly, and you can see that the deal's not as sweet as it first appears.  

Indify throws that arrangement out the window.

When an investor and artist agree on an offer on Indify, there are four simple terms.

  1. The amount invested
  2. The content (usually one song or an EP)
  3. The percentages — an artist receives at least 50%, generally more.
  4. The duration of the deal — typically three to five years.

Indify’s journey: #1 predicting the next big stars.

The company’s first iteration was very different from the Indify of today.

In 2014 Connor, Shav and Matt saw that streaming sites were the way of the future. It wasn't just that people could get their favorite music online. Or that new artists were gaining millions of downloads and rising to the top.

Streaming sites also held a wealth of information about fan resonance and audience building for individual artists. But the music labels were still getting their artist information from radio data and music blogs.

So the three men set out to build a platform with an algorithm that took data from YouTube, SoundCloud, Twitter, Instagram, Facebook, Spotify etc., to predict the next big music stars.

Soon most of the major labels were on board.

"One of the most important products that we had was actually our daily newsletter, which took data from our product and flagged one artist a day that was doing well on Twitter, Facebook, Instagram, YouTube, Spotify, saveable, whatever platform they were doing. We would take one artist a day and write about and talk about their story."

That newsletter alerted the companies to up-and-coming artists and soon created bidding wars as artists negotiated the best deals. The trouble was those deals stayed in the traditional framework. Sure, the advances might be better, but the percentages weren't.

Indify may have been democratizing discovery, but it wasn't equalizing opportunity. Artists were still losing ownership of their work, and the gatekeepers were still shutting most musicians out in the cold.

Indify iteration #2 - serving artists first

So Shav, Connor, and Matt shut Indify down.

Then they took the core technology and built an entirely new platform to serve artists and investors.

Right now, it's limited to selected investors who weigh in with their expertise as well as funds. But the potential is enormous and the future unlimited. In time, Indify could open up to genuine fans wanting to invest in and promote their favorite new artists. Managers and whole teams could connect.

Musicians could look beyond their own bubbles for managers, lawyers, technicians — even other artists. Or an artist could build a team for a specific project and disband it afterward.

The music industry is riding the wave of change right now — and the creator economy is following suit.

Indify's founders bypass the gatekeepers and open the way for more artists to make a living from their music. They're encouraging musicians to think like entrepreneurs rather than talents. To build a business and think long-term instead of from album to album.

Creator economy sidesteps traditional sentinels

Creators are also looking for new ways to grow — and there’s a support network springing up to service these entrepreneurs.

Pietra bypasses the conventional road to product development by directly connecting creators and manufacturers.

Animal Capital encourages creator investments.

Companies like Creative Juice, Stir & Karat aim to provide an RBF underwriting model by building a financial service platform for creators.

Jellysmack is building a three-month accelerator program — similar to startup incubators — to empower early-stage video creators.  

And there are countless companies busily building products, platforms and more to service and grow the creator economy.

So, what can creators learn from the music industry's journey?

To make a sustainable, flexible living from their work, musicians and creators need to realize that they are founders as well as artists.

If they want to avoid the traditional route, they need to think like entrepreneurs. That means looking long term, growing their audiences and building a brand.  

"The Creator Economy is really just a lot of small businesses and big businesses growing and joining. And I think music is definitely a part of it, and people need to see it as such."

In 2021 any artist can upload their music to platforms and make an income without signing to an institution. They don't even need a studio — the tools are right there on their phones.

Similarly, creators upload to YouTube and TikTok from their bedrooms. They send podcasts into the world from homemade soundproof closets and post on Instagram from beaches and mountain tops.

It seems that the creative industry has changed more in the last ten years, maybe than ever before.

And what you're going to see, I think, in the next five years is, like Connor said, fewer megastars and a lot of more meaningful, independent, high earning artists that I think are going to be building businesses from their bedrooms all over the world. — Shav Garg

The creator economy is poised on the brink of its own tsunami. Who will join the wave?