Bandcamp to take 15% cut from artist sales

Bandcamp, one of the best online distribution tools for musicians, has recently announced they plan on charging 15% of all sales from artists.

I wrote a pretty lengthy comment on their blog, but it never got past comment moderation for whatever reason. Reposting here.

Dear Bandcamp, my thoughts on your 15% cut:

1) TRANSPARENCY: Please detail exactly how you came up with this percentage, with a breakdown of your costs. Build trust & respect through transparency. People don't mind paying for things that have value, they just don't like feeling bamboozled.

2) CONSISTENCY: You are saying that above a certain total sales amount, you will drop your percentage cut from 15% to 10%. Confusing. Figure out how much you need to charge per sale and just stick to it...or detail how sales volume affects your bottom line and thus your percentage. See #1.

3) DON'T TAKE CUT OF PHYSICAL SALES: You allow artists to sell their own physical goods through your site. But unless you are involved in manufacturing or shipping these items, what costs are you incurring that entitle you to a 15% cut? See #1.

4) KEEP FREE, FREE: Below a certain sales threshold, keep the service free and uncrippled for a trial period. For instance, no percentage taken from first 25 transactions. After this initial trial period, it proves the service works and musicians will most likely stick with it.

5) DON'T TAKE A SALES CUT, BE AN ESSENTIAL SERVICE PROVIDER: By charging a percentage of sales, it makes you look like you are taking money away from artist sales. That's not very attractive to independent musicians. Leave artist's income untouched and instead charge them a monthly fee for your service based on bandwidth and traffic to their page, much like a cloud hosting provider. This creates a clear distinction of cost of services provided by Bandcamp and income generated by having the Bandcamp page. With good tracking tools, it will be easy for an artist to adjust the price that they charge for digital transactions to compensate for the cost of bandwidth, and they won't mind paying it because they see it as an essential cost to do business.

I love Bandcamp - but I hope they think a bit more about this business model, because it feels rushed and a step in the wrong direction. I know charging sales commission is a great way to make a lot of money, but it also is very reminiscent of record label contracts. In my humble opinion Bandcamp would do better to position themselves as a service provider and give musicians 100% of the sales. That way artists see Bandcamp as a service provider that is worth paying for instead of a middleman they need to get around.

drew (not verified) says:

man, this is frustrating. time to hire someone to make our own download store....

zirafa says:

Well, you've got to factor in the cost of hiring someone + dealing with bandwidth costs too. It may not be worth it to deal with the costs of building, managing, and maintaining your own download store. It may be cheaper to just take the 15% hit.

They are still providing a valuable service worth paying for, I just don't think their model positions them correctly long term.

zirafa says:

Reposting my comment from Facebook:

I received an email from one of the Bandcamp guys. He said it is not feasible for them to do bandwidth/storage tracking per user. Also because the bulk of their users are small artists, they don't have a cache of very popular artists to up for costs of the smaller artists . In other words, the sum of all the "smaller" users is actually costing them the most money, even when taking into account most popular artists (long tail).

From their response, I think they are just showing the limitations of having a centralized system. But I think they still could take steps to decentralize their software, do better tracking, and directly charge users for resources they are consuming. I believe musicians would pay, even if there was no "free" version, because it would provide them with tools they otherwise would have to pay a website developer to build for them.

A CD manufacturing company doesn't have a stake in sales of the CD. They charge what it costs to make the CD and that's the end of the business transaction. I see Bandcamp in that sort of position, but perhaps they have other plans?

I can certainly see how expanding out into music discovery, and providing more promotional tools, turns their role more into a mutually beneficial "agent" for a musician where they are actively working to promote and increase sales for artists because they are financially motivated since they'll get a cut of sales.

zirafa says:

As a followup, to clarify #3: They are only charging a percentage on physical goods sold because all physical goods sold on Bandcamp are *bundled* with digital download. So really there is no such thing as a physical sale without also bundling it with a digital download.

Again, I think they could avoid all this confusion with a pay-for-what-you-use model.