[Editor's Note] Milos Bezanov is a second year student currently studying International Politics at King’s College London.
You wake up in the middle of the night. Dripping water reverberating, almost melodically, because of an unfastened tap. Grudgingly, you get out of bed, close the tap and continue with your slumber. You could say that Sam Valenti and Miguel Senquiz experienced the business version of this when they came up with Drip.fm, a subscription service allowing fans to pay once for material over a set period of time. Sam's childhood in Detroit is what drew him towards music, a passion shared by Miguel which brought them together to create their label, Ghostly International in 1999. Ten years later, the two noticed that there was no easy, convenient way to access label content, with fans clamouring for a solution.
Today the concept stretches beyond Ghostly, with labels such as Stones Throw, Mad Decent, Dirtybird and most recently Plant E all joining the fray, since starting out in May 2011. Just like the dripping tap getting you up at night, Valenti and Senquiz were forced to find a solution for a nagging and persistent problem. In doing so, they may have stumbled onto something much bigger.
Drip.fm is easy enough to understand; for $10 or $15 a month users can access all the music, promotional material, new releases and other exclusives. It's convenient, no need to individually purchase different songs or look for the other material that you may want separately. As with the subscription you get access to either downloads or streams which you own, it's your property, a nice personal touch in what can often be an impersonal, virtual world. But unlike many subscription services, they pay attention to the little things important to their fans; all music is available in DJ quality, and new users who sign up are given the three previous tracks of that label. All this is just a small part of Sam's vision “ Perspective is what labels offer...it's more than just the music...it's the attitudes and information they share that Drip.fm is built on”. In fact, no subscription service has this type of versatility. Clearly it's working, with the transfer rate (which other than revenue rates is the best indicator) of fans from Ghostly to Drip.fm has been over 70%, meaning that they've kept in touch with their original base.
This only tells half the story however. Revenue for Drip.fm is a percentage of what the label sells, which is why Drip.fm make it easy for to get involved (there are no sign up costs, and creating an account is easy). They also keep it flexible, labels control the prices they set on their products, not Drip.fm, can provide content when they want, and control what's in it (some labels may put more music in their subscriptions than others). This appeals to many labels, such as Hip Hop label Stones Throw digital manager Jeffrey Janks “ This is a rare service that is custom built for our niche...so far 500 customers have pledged $10” and this is because they are able to create a platform that is easy to use, responsive to the needs of both fans and labels, and ensures that both get what they're asking for.
For observant readers, if you calculate 500 times 10, it comes to $5000 dollars a month, with almost 50K in a year. It may not seem like a lot for a record label, but bear in mind that Drip is merely an alternative option alongside the labels' revenue source. Given it's fanclub system, it's a source of revenue that can be counted on, even if it can't, of it's own, easily support a record label.
This platform type model isn't universally appreciated. Larger labels with larger selling artists will probably see little incentive sharing their income with Drip.fm. What they offer is probably what smaller artists lack when compared with the big names...a fanclub. Artists don't need Drip to provide them with a fanclub because they already have one, it's the indie record labels who need to find a way to tap into their following. Drip's growing presence means more and more followers, enticing more and more and more labels.
In short, whilst it's still more like the optional revenue model, that can be used alongside, it has massive potential for growth. If Sam and Miguel can pull it off, this may be just what the music industry is looking for. An easy, adaptable system that makes it easier to compete in an already highly competitive industry dominated by the big names. What's in it for Sam Valenti and Miguel Senquiz? A mere bit, or drip from what the labels make.