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The former Pandora chief tells IQ how his new livestreaming service is using learnings from the gaming world in order to generate substantial income for artists
By IQ on 04 May 2021
Ex-Pandora founder and CEO Tim Westergren has unfinished business. Despite co-founding the US’s largest music streaming provider – and changing the face of radio and streaming in the process – with his new venture, Westergren is hoping to achieve what Pandora couldn’t: a business model that generates meaningful income for artists.
Powered by that motivating factor, Westergren, along with serial game entrepreneur Gordon Su, launched Sessions Live in April 2020.
The livestreaming service utilises aspects of the gaming business model in order to shift the entire economic equation for the average working musicians – and it seems to be paying off.
Below, Westergren tells IQ how Sessions Live is learning from Pandora’s mistakes, why he’s injecting $75,000,000 into a marketing fund for musicians and what he believes the competition is doing wrong.
IQ: What is the modus operandi of Sessions Live?
TW: I spent a lot of time in digital music and there’s still this unsolved problem in the industry of how to bring compensation to musicians. There are a lot of successful services that generate a fair bit of money but there hasn’t been a platform – including my alma mater, Pandora – that is actually generating significant income for the average working musician.
It seems like it’s always feast or famine and the spoils of the industry go to a very select few – to the companies and the shareholders of those companies. We tried [to avoid that] at Pandora but, like most other companies, the business just wasn’t structured to generate meaningful income for musicians. Solving that problem has been the motivating factor for me.
I met my co-founders a couple of years ago, who come from the gaming side, where they really figured out how to generate income for lots of people. After a long discussion and a lot of brainstorming, we realised that if we took a lot of the learnings in gaming and brought them into music, in the context of live streaming, we could create a platform that would generate significant engineering revenue for a large population of artists – and it’s proving to be true.
“What gaming has really mastered is turning engagement into money”
What exactly are those learnings from gaming and how do they manifest in Sessions Live?
What gaming has really mastered is turning engagement into money. Music has been notably bad at that. People spend a lot of time listening to music but don’t pay a lot of money to the creators. The genius of gaming is how you turn engagement into a game and make paying part of that game.
There are lots of different ways that gaming companies have managed to translate time spent into a sort of ongoing patronage. It’s really about understanding those dynamics. It’s an art to turn an audience of 200 people into a kind of social gaming experience where value is trading hands. That’s really what my co-founders understand; how you set up the environment, how you create payment mechanisms, how you create competition, and how you create a sort of status and various things that people will pay for, in addition to communication. And that’s what really makes Sessions Live hum.
“It’s an art to turn an audience of 200 people into a kind of social gaming experience where value is trading hands”
How does Sessions Live turn engagement into money for artists?
We call it ‘giving love’. You spend money to have a basket of love that you can give in the form of emojis – whether it’s sending a bouquet of flowers or a trophy or applause. The mechanism itself is a form of gaming. There’s engagement too so when people are watching they can request songs or that can be something that somebody pays for. If you’ve got a very active audience that is chatting and communicating a lot, you can auction the ability to chat.
We’ve seen some amazing results when you have an artist whose fanbase just really wants to talk to them. We had an artist who had 4,500 paid chats in one hour – people wanting to spend small amounts of money to have their chat show up so the artist would see. We have competitions where the artists perform and it’s about who generates the most love during their performance but it’s not just the Battle of the Bands but a battle of the fans.
“We had one band make $350,000 in an hour”
What are the primary sources of revenue for Sessions Live?
Sessions Live usually takes a 25–30% commission of all revenue. There are two primary forms of revenue: digital ticketing which is kind of a commodity which a lot of people are doing and then there’s giving ‘love’. We generate more money from the latter.
How much has the platform grown since you launched in April 2020?
We now get about 3,000 artists performing a week and that number is growing very rapidly. We’re adding around 600 artists a week at the moment and their earnings are going up too. Right now, the average musician across that entire population earns a lot more than an Uber driver earns in a year. That’s kind of poetic because one of the things people used to say is ‘something’s wrong when a musician can make more money as an Uber driver than as a performer’ – which has been true for a long time. We’re seeing artists making anywhere from $50, $100 an hour to literally hundreds of 1,000s of dollars in a single hour. We had one band make $350,000 in an hour.
The other really exciting part of this platform it’s global. We’re in more than 200 countries and our musicians come from everywhere. I think only 20% of the artists are in the US. So there are artists living in rural India and Sub-Saharan Africa and are earning US dollars, which, in the local economy is worth way more and so the actual financial impact of that is tenfold what it would be for someone in a developed country.
“There are a lot of livestreaming tools around… but that doesn’t matter if people aren’t watching”
The livestreaming market has become rife with competition since the pandemic hit. What sets Sessions apart?
I think that what artists have learned the hard way over the last 10–13 years is that there are a lot of livestreaming tools around – Facebook Live, Instagram, Twitch, Veeps, etc – that offer all the capabilities to stream. But that doesn’t matter if people aren’t watching. And if you don’t have an audience, you’re just a tree falling in the forest.
The question every musician should be asking any site that contacts them about live streaming is: ‘What are you going to do to market the show?’. And if they’re not going to market it you have to be very sober with yourself and ask: ‘Are we capable of doing that ourselves?’. I think the answer for most bands is they can’t afford to do it. They could bring people but they’d spend more bringing them they would then they would make on the event. And so, there are bands for whom the formula works but I think that this space has been much more characterised by streams that just don’t pay for themselves. Facebook Live and Twitch have gargantuan volumes of people playing and no one’s there.
“We’re actually spending money to market every show”
Is this an issue you’re hoping to address with the $75,000,000 marketing fund for musicians Sessions recently launched?
Yes. There has been a wave of streaming in the last year with Covid in particular but I think, for most musicians, livestreaming has been an unsuccessful experience. I think that’s largely because people don’t show up and the artists don’t make money from it. So, there are a lot of artists who stream once and don’t do it again. We’re actually spending money to market every show. Underneath this whole system is a growth engine – a software that was built 15 years ago and has been optimising and learning for a long time that enables us to find fans really efficiently for artists. That’s how artists start making money because you can’t make money if no one’s there. We’ve also committed to driving one billion-plus impressions to the platform within six months.
“Livestreaming doesn’t involve jumping in a van and driving 1,500 miles or spending six hours setting up and breaking down”
What kind of value will Sessions Live provide to artists once touring has restarted?
I think artists who have really healthy touring careers will go back to that and hopefully, a portion of them will understand that touring and livestreaming can coexist. But for the thousands of artists that we are currently hosting who don’t have the opportunity to play in clubs, it’ll be no different so I’m not concerned at all about that.
I do think we’ll hear more artists say ‘we made this much money last weekend when we streamed from our trailer or ‘we were rehearsing and then we just did a live stream after in the rehearsal’. It’s a really easy, lucrative thing to do and it doesn’t involve jumping in a van and driving 1,500 miles or spending six hours setting up and breaking down at a club. Furthermore – maybe more importantly – it’s a great marketing vehicle because there are so many things you can do with a live stream that help your career writ large. It’s not just about the live stream itself, it’s a way to introduce new material and connect directly to fans.
The other thing about performing live is that it’s geographically constrained obviously so if you play a club in Atlanta, you have to fill the club with people who live in Atlanta. And that means that you have to have a lot of fans in Atlanta. And it takes a long time for bands to build up audiences that are large enough to fill a local venue. The great benefit of a virtual venue is you can fill it with 300 people from all over the world so you don’t need to have that kind of fan density. It’s not an easy jump from online to the physical world but I think people will be able to build healthy sustainable careers just virtually performing.
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