Online streaming music provider Rdio plans to pay musicians who refer fans to its subscription service. According to a recent Billboard report, the business aims to share profits with recording artists in hopes of raising public awareness, growing its audience and creating more income for bands. Beyond attracting more customers and fueling hardier competition with larger rivals Spotify and Rhapsody, the strategy would also potentially offset increasing industry concerns over the revenue losses that free and unlimited streaming services allegedly prompt.
"They’re basically offering a bounty for everybody you bring them," says an anonymous source who spoke with Billboard, citing $10 per subscriber as the current payout being considered. Such a straightforward, universal deal could prove advantageous for all sides involved, making accounting and royalty management easier and more transparent. Under the scenario, recording labels, publishers, and distributors would continue to receive payments, and supporting deals remain the same, structurally. However, royalties could also be paid directly to artists for services that go beyond simply how often their music is played, which are tightly regulated by publishers, and many times scantly lucrative from musicians’ perspective. Total payouts may also be larger in size, helping allay fears that the ability to stream massive amounts of music for free or at little cost online is chipping away at digital or physical sales of singles and albums.
The arrangement could also provide cost-effective marketing for Rdio, by turning bands into promotional mouthpieces, to whom bonuses would be paid out upon user signup, and create a more positive and direct relationship with recording artists. Such arrangements could additionally affect the way fans consume music online, by leading to exclusive deals, under which artists withhold songs from rivals’ catalogues in perpetuity, or for a set period of time. As a result, potential ramifications for everyday listeners, should Rdio or other services choose to adopt this or similar business models, could be considerable. However, to work, the model will likely require indie artists to possess an established fan following, or demand high-profile endorsements by musicians with a large fan base.
Scissoring out middlemen, offering added revenue channels and providing artists who own their own masters with more money, the new scheme could also create the perception of Rdio as a more artist-friendly streaming solution. Adopting this scheme would likely force competitive streaming services to follow suit, leading to a healthier financial environment for musicians, albeit one where the stakes become considerably higher for fans and service providers themselves.