The music landscape just changed. What will that mean for musicians in Australia?
By Kathy Wilson
Bandcamp, for many musicians and fans, is a name that has long meant musician-centric music distribution and a slightly offbeat spirit of generosity. In a Silicon Valley ecosystem devoted to an ethos of “winner takes all”, Bandcamp has been an outlier for almost fifteen years. While platforms like Spotify have spent the last decade dramatically and enthusiastically losing money building a streaming model that shrinks the returns for artists, Bandcamp has slowly generated profit working with artists, using a simple revenue share model. Where Spotify limits the number of distributors who can access their services, Bandcamp allows access to anyone. And while Spotify pays royalties using complex formulas, Bandcamp lets artists set their own prices.
So, when, on Wednesday, March 2, Bandcamp announced on its website that it had been bought by Fortnite creators Epic Games, red flags went up all over the music industry. Some (including Bandcamp itself) saw the sale as a positive development for creators, offering deeper pockets to help musicians create and share their music. Others saw the development as yet another corporate takeover that would result in decisions in which profits were the only factor. Another David squished by Goliath.
Who’s right? What will the sale of Bandcamp mean for musicians?
What does the future hold for musicians and their once beloved Bandcamp? And are there any new champions on the horizon?
While, in truth, no one knows what this will mean for the future of independent music, this article will look at the story so far. We will dig into Bandcamp’s backstory, investigate Epic and then hear some opinions on what might happen from here.
Who is Bandcamp?
Bandcamp’s website distils its mission neatly. According to its About page, “Bandcamp is an online record store and music community where passionate fans discover, connect with, and directly support the artists they love.”
The indie business, created in 2008 by Ethan Diamond, was straightforward in concept. The vision was an easy-to-use website that would handle payments, analytics and music formats for a flat fee, leaving bands and fans free to interact with each other. The musicians could sell their music and their merch, and the fans could discover and support artists.
In the early years, it was a site beloved by outsiders and subcultures who found a home in Bandcamp and each other. Because of these roots, you can still find nearly any genre of music on Bandcamp, from steampunk to pirate metal. In addition to musical downloads, Bandcamp makes revenue off physical sales, including vinyl, CDs and T-shirts. Although not independently verified, the site claims to have paid artists more than $200 million in 2021. This included 15 million on digital albums, over 7 million tracks and more than 2 million vinyl records. Bandcamp offers artists and labels an 80-85% split, and the site claims to pay quickly – typically in 24 – 48 hours.
Can artists make money streaming?
These metrics are in direct contrast to how streaming services like Spotify operate. Although it is difficult to work out the exact payment metrics, Apple Music pays around $0.005 per stream, and Spotify pays between $0.005 and 0.008 per stream.
To help put this in context, an artist would need roughly 400,000 streams to earn an amount comparable to the average monthly minimum wage.
Spotify has grown by 150% over the last five years and has yet to report a profit. According to its earnings report, in 2021, it recorded net losses of $38.8 million on $11 billion in revenue. Bandcamp, meanwhile, has been more profitable each year. “For 11 years, it’s been a line like this,” said Diamond in an interview with The Guardian holding his hand out at a gentle incline.
In a world of shrinking returns from streaming, Bandcamp stood firm, offering fair returns for artists. However, the event which embedded Bandcamp into the hearts and minds of many artists was the arrival of Covid. In the early, dark hours of the pandemic, Bandcamp announced that on March 20, 2020, it would waive its share of revenue to help get money directly into the pockets of artists and labels whose income had been decimated by lockdowns. On that one day alone, more than 800,000 people spent $4.3 million on music and merchandise on the site. This was more than 15 x the sales on a typical Friday.
Since then, the first Friday of each month (with some breaks in between) has become “Bandcamp Fridays”, with all revenue going directly to artists. For many musicians whose live gigs and tours had been disrupted by the epidemic, this goodwill gesture was a light in the darkness.
It wasn’t just musicians who appreciated the gesture. Fans enjoyed it as well. As Sam Machivetch said in his article, “Bandcamp Fridays drove me to the service as a way to pay my favourite artists when I can’t see them in concert.”
According to Ethan Diamond, Bandcamp didn’t know how people would react to Bandcamp Fridays. “Many of the independent labels waived their fees as well,” he said. Those independent labels aren’t big, mega-funded corporations; they’re small businesses, which was amazing to see.”
An article in the Los Angeles Times profile called Bandcamp “anti-Spotify”, saying some indie musicians call him their “last hope.” “The world of right-minded musicians is depending on you. No pressure.”
And then came the sale to Epic Games for an undisclosed sum.
So, who is Epic Games?
While Epic Games is older than Bandcamp (founded in 1991), it had similarly organic beginnings. Originally called (rather unglamourously) Potomac Computer Systems, it was founded by Tim Sweeney in his parent’s house in Potomac, Maryland and was originally planned as a computer consulting business.
That idea didn’t work out, and instead, he created a game called ZZT, which became unexpectedly popular. Sweeney fulfilled the orders himself from his parent’s basement, mailing them directly to customers.
As the company grew, Sweeney found himself facing off against bigger companies. He renamed the company Epic MegaGames Inc in an attempt to sound more serious, even though he was still the only employee.
And then, in 2011, along came Fortnite, a game that would eventually become one of the world’s most popular online games accumulating billions of hours of game time, attracting Marvel tie-ins and garnering big-time celebrity endorsements such as Drake.
“Imagine a world where you explore, you scavenge, you build and ultimately you survive,” said lead designer Cliff Bleszinski when they launched the first trailer of the game.
Observing that the video game industry was changing and wanting to become its own publisher, Epic made an agreement with Chinese owned Tencent, which already had several games. In return, Tencent acquired around 40% of Epic. Tencent is best known for the social networking app called WeChat and has interests in Sony, Universal Music, and Spotify.
In 2020, Epic raised more than $1.78 billion in capital investment bringing the company’s value to more than $17 billion.
So why did Epic buy Bandcamp?
There are many guesses as to why Epic bought Bandcamp – some more conspiracy theory-esque than others.
One theory about the acquisition is around a concept called a metaverse – an idea brought into the public spotlight when Facebook changed its name to Meta.
According to inc.com, this change wasn’t just a name but signalled a significant shift in direction and flagging a new race amongst tech companies, one which it seems Epic wants to join.
The article said:
“People have been dreaming of something like the metaverse for years. Just think of all the science fiction films and TV over the years, where holograms and virtual reality were used to provide people with escape. (Ready Player One, anyone?).”
This, it seems, is the new finish line, with the gold medal (and apparently world domination) going to the company that owns the most “stuff” in this new reality, and it seems most of the big tech companies have joined this race.
There is a lot we don’t know here, but we know that Epic has acquired several companies that fit this pattern over the last few years. These include; ArtStation, a professional artists’ marketplace and Harmonix, a music game developer.
Epic Games founder and CEO Tim Sweeney has said, “it’s no secret that Epic is invested in building the metaverse….” “As Epic works to build this virtual future, we need great creative talent who know how to build powerful games, content and experiences.”
Another theory explaining the purchase is more simple – data. This theory can be summed up pretty well by this tweet from Mountain Goats, David.
“I mean, Epic games already had my data, but those of you who do buy music on Bandcamp and don’t play, e.g. Arena on a Mac, I’d guess a whooooole lotta data was a big part of the appeal for Epic.”
So, where does all that leave music creators?
On balance, it’s hard to argue that musicians are going to be the winners of this transaction.
History tells us that acquisitions of this kind often compromise the integrity of the acquired company.
This article in Vox sums it up pretty well;
“The mantra isn’t so much “move fast and break things.” It’s “grow as fast and as big as you can so that you can then act as a gatekeeper and make others bend to your will.”
Bandcamp, it seems, may just be the latest victim in this brave new world.
“I legit don’t know what to make of the epic buying Bandcamp deal, but any corporation getting involved in an independent market is never a good sign. I’ll stay cautious and hope that Bandcamp remains the only good marketplace out.”