In the past six months, you guys have used Bandcamp to sell over $1 million USD in music and merch directly to your fans. The pace of those sales is increasing rapidly, and last week we even saw an artist make it to the Billboard charts on the strength of her Bandcamp sales alone. It’s been awesome to witness, and we’re amped to carry right on, full steam ahead, building out new features, honing existing ones, strengthening our infrastructure, and generally making things better and better. Perhaps most importantly though, we want to do so in a way that’s sustainable long-term, and ensures that we’re here supporting musicians far into the future.
So, as long promised over in our FAQ, we’ll soon begin doing a revenue share on Bandcamp sales. Here’s how it will work:
Bandcamp’s share will be 15% of each transaction, dropping to 10% as soon as your all-time sales exceed $5,000 USD.
The revenue share won’t go into effect until early August. Until then, Bandcamp’s share remains zero. We’ve based the percentages on what works for the business and what many of you have already told us feels fair, but there’s still plenty of time for more feedback, so bring it (preferably in the comments below).
The revenue share rate for existing accounts will be based on all your sales to date. That is, we’ll look at your all-time sales and base your rate on that total. This means many of you will start at the 10% rate from day one. Note that we’ve just launched all-time stats, so you can easily see where you stand.
Your rate will be based on sales to your PayPal email address, not your Bandcamp account. In other words, if you’re a label and have five artists all using the same PayPal account, your rate will be calculated by looking at the combined sales of all five of those artists.
The basic service will remain free. Bandcamp only makes money when you make money. We considered building the business around advertising, but…well, OK, we never really considered that. We did consider building it around subscriptions, but under the subscription model, given the option of either developing a feature to increase your sales by 20%, or dinking around with service tiers to try to boost our subscriptions by 20%, we’d have to choose the latter. By building the business on a revenue share, our interests are perfectly aligned with yours: we only succeed when you succeed.
How will the revenue share work? We’re still hashing out the exact mechanism, but the money will continue to flow directly from your fans to you. Loads of you have told us how much you like that aspect of the service, so we’re planning to leave it that way. We’ll of course provide an interface for easily viewing all your transactions and the associated share split, and we’ll provide details of how the share will work by the time it goes into effect.
Do these rates include PayPal transaction fees? No, processing fees are separate. Those rates are here, including details of what you can do to minimize them.
How do your rates compare to the alternatives? We aim to give you a clear financial incentive to direct your fans to your Bandcamp-powered site first, so we’ve made our rates far lower than iTunes’, and very competitive with other music distribution sites. We won’t subject you to one of those competitive matrices that’s out of date the moment it’s published, but we certainly encourage you to do some research and compare (but pack your magnifying glass, fine print abounds in the music biz).
I am angry. What should I do? Leave a comment, we’d be happy to consider your feedback. If you are angrier than that, head over to your profile page and click the link that says “permanently delete this account.”
I am happy. What should I do? We’d love to hear from you as well, so please leave your thoughts below.
I desire an inspirational conclusion. What should I do? Read on, because we want to thank you all again for using Bandcamp. We’re honored to have been entrusted with such an important aspect of your career, and we couldn’t be more excited to keep cranking away on Bandcamp for a long time to come!
Update July 21st, 2010
Lots of great feedback in the comments, thanks everybody! A few thoughts, tweaks and clarifications in response:
Several of you suggested that new accounts should get their first $x in sales rev-share-free. We’re looking at the business impact of doing so, but also mulling over the fact that the cost of trying out the system is already $0 (no setup or listing fees, no charges for streaming or storage, every account comes with free download codes, etc.).
Some felt that the lower rev-share for high volume sellers was unfair to the little guy. We see your point, and may offer a Pro service option to high volume sellers instead. If you think you might fall into that category, please get in touch — we’d love your help defining what that option could look like.
For physical items, the revenue share will apply to the base price of the item only. It will not apply to shipping or tax.
While we’re still in the rev share’s early days, the rate on physical items will be discounted to 10%. It will eventually be the same 15% share as digital, but we want to get a few more of our e-commerce features done first. A few people wondered why there would be a revenue share on physical at all. The short answer is that Bandcamp is a music retailer. We believe that listening to music is critical to selling music, and the infrastructure to support that (web servers, bandwidth, actual customer care, etc.) is factored into our costs. Furthermore, we’ve already invested in a boatload of features to help you sell your music, features like download formats, sharing tools, stats, chart reporting, mobile goodness, download and discount codes, pricing flexibility, merch management…the list goes on. We of course plan to keep on developing the product in response to your feedback, and the cost of all that development doesn’t vary between physical and digital. If you don’t care about any of those features, if all you’re looking for is a place to host an image and a link to PayPal, there are definitely other services out there that would be a better fit. For the rest of you, keep telling us how you’d like to see the service improve, and we’ll keep improving it.
One or two people wondered whether they’d still be able to use the site to give away music for free. Yep, absolutely. Preliminary details on that are here.
There were also some questions about replacing PayPal. We intend to expand our payment options in the future, but we’re still a small (now seven person) company and that feature is getting prioritized along with every other mega-important to-do. In the meantime, our payment success rate (the percentage of people who enter the payment flow and then complete their purchase) already hovers near 70% (and hit 75% yesterday), which is excellent for any e-commerce site.
We’ll undoubtedly be fine-tuning the business model more as we go, so please take it all in the iterative spirit in which it’s presented. Thanks again!