According to the IFPI (International Federation of the Phonographic Industry) Digital Music Report 2013, the music industry’s global revenues increased by 0.3 percent in 2012. Though this may seem negligible, this was the first time that the industry’s global revenues increased since over a decade ago in 1999.
A major contributor to this growth is said to be the burgeoning popularity of subscription-based, music streaming services such as Spotify. Nevertheless, with the growing number of both free and premium users joining these platforms, many critics of this business model as well as rights owners of songs have condemned these services for paying out minimal royalties.
In the midst of these issues, Joey Flores, CEO of Earbits, has found an opportunity in which artists can generate more value for themselves with this new music consumption model. Earbits initially began as an Internet radio platform for SFGate Radio. Artists who were touring in and/or near San Francisco would actually pay the service in exchange for being exposed to fans located in the area. However, through some bouts of trial and error, Flores developed a new foundation for Earbits in which artists receive promotion and fan data in exchange for users being allowed to stream their songs.
Furthermore, there’s another layer to this model, whereby user streams are powered by a point system called “Groovies” (each song costs 10 Groovies to stream), which fans earn in a myriad of ways. These include creating an account on Earbits (500 Groovies), sharing music with friends on Facebook or Twitter (100 Groovies), and Liking an artist’s Facebook page or joining their email list (50 Groovies). Earbits is also planning to attribute points to attending live shows, buying merchandise, as well as joining Google Hangouts with artists. This type of system makes the foundation of payment a matter of social currency as opposed to a monetary one, which is the basis for other streaming services like Spotify, Rdio, and Deezer.
Though Earbits has moved toward the streaming model, it still has radio-style channels on the service that are curated by the team. Users can blend channels together to form their own, but like all Internet radio, it doesn’t allow for the freedom of interactive streaming. However, it costs no Groovies to listen to the channels, which makes it a viable option for those wanting to listen to music but not have to earn any points. It can also be a useful tool to discover music, and then earn/use Groovies to freely listen to the music that you discover and love.
With this innovative model, it appears that both artists and music listeners can benefit. Artists obtain more data on their music listeners as well as drive traffic to their social media outlets, which can lead to listeners spending money on their merchandise. Music listeners consume the music they want by simply engaging with the artist and the artist’s music via social media. Though only time will tell if this model is sustainable, Earbits offers a refreshing, new look on how artists and fans can obtain value from music consumption.