Giving music wings

Airborne launched in late December 2011, and is an online music service that gives South African (and international) music audiences a chance to support their favourite artists directly, by “subscribing” to their playlist for a dollar a month, and by encouraging fans to share the music they love.

South Africans have often found themselves at a disadvantage when it comes to online music channels and legal download services. Services such as Spotify, which give audiences access to thousands of tracks and allow people to “try out” new artists, are not accessible from within South Africa.

As a result, it is difficult for South African artists to take financial advantage of the enormous potential audience that downloads music or streams it online.

In this context, Airborne offers an alternative to the huge amount of illegally shared music that fills the digital music libraries of many South Africans. The M&G spoke to the founder of the service, Justin Melville.

What made you decide to tackle an online music service?
I think what made me jump in with both feet (financially, professionally, creatively and emotionally) was the presence of a tremendous opportunity (a failing industry, ripe for disruption) and having the right idea at the right time to address it. Music is big, it’s universal and will always be a part of everyone’s lives. It also doesn’t hurt that music is a very cool and exciting industry in which to make your mark, in the spirit of rock ‘n roll.

Tell me a bit about Airborne music, how it works and how people access it, and the rules around its use.
Instead of buying music, you can now support the artists directly by becoming their “carrier” for $1 a month (per artist). In return, the artist sends you everything they make, just minutes after release and it’s yours to download, stream, share with anyone, anywhere.

The $1-a-month subscription is an emotional pledge of support for an artist you love and want to see develop. It means, “Hey dude, I love what you’re doing — here, have a dollar on me, because you’re awesome.” For showing your love, the artist sends you all their latest work (new tracks, remixes, bootlegs, live sets, and so on) which is stored for you by Airborne forever, so that you can download and stream it whenever and wherever you want.

All the music that artists upload is automatically licensed under the Creative Commons (BY-NC-SA) licence which means they give you permission to share with others as long as you always link-back-to or credit them and don’t attempt to license it or use it for commercial purposes (without talking to them first).

The sharing gets more interesting because we track who does what with your sharing (if they download, stream, share or convert and become and carrier of the artist). The more people you get the music out to, and more importantly, the more new carriers you recruit, the more your score rises. The artist can see who’s sharing their music, and for the first time will be able to recognise their number one fans in cities throughout the world, and reward them with something special (like signed T-shirts, backstage tickets and so on).

Is it unique in South Africa? Where does it fit in alongside other online music services? For example, does it fill the gap for South Africans who cannot access Spotify?
Airborne is pretty unique on a worldwide level, largely because of where and how we drive value. Airborne works with artists to leverage their total brand appeal to form a direct line of predictable revenue, distribution and market intelligence with their most loyal fans. It’s not about buying or paying for access to music (iTunes and Spotify), it’s about showing support for artists and by showing support. You can enjoy a constant flow of new music into your life (and be incredibly proud of yourself, of course).

Has this model proved to be financially viable?
Early days, it’s uncertain how quickly Airborne will catch on but our predictive models for carrier numbers in five year’s time paint a rosy picture. It’s certainly viable for artists who currently don’t earn much from music sales anyway.

What about the artists? The subscription costs are so low. How can you ensure that artists are benefitting from their involvement?
There are very few options available to artists who want instant worldwide distribution and market access. Giving your music away for free is a good thing (arguably the best thing) but how do you support that? If an artist sells tracks on iTunes or makes their music available through Spotify they’d need 12 000 track sales and four million streams per month, respectively, to earn what 1 658 carriers will generate.

Airborne artists get a clean 70% of every dollar from their carriers, (Airborne works on a 30% commission) which means that those just starting out will have a trickle of regular income to support their habit, and a worldwide distribution network to get the fruits of their labour into the ears of potential new fans (and carriers), everywhere.

For more established artists capable of attracting more than 50 000 carriers, that’s $35 000 a month, which is not bad. Even Lady Gaga, who earned $50-million in 2010 from 15-million album sales, would do better on Airborne — assuming 15-million carriers, she would have netted $125-million and some change.

Carriers are the source of the artists revenue and the agents of their distribution. They spread the virus. Artists upload music to Airborne, we then distribute directly to their carriers who then share it with it others, which we track and relay to the artist. Knowing who and where their carriers are, artists can better plan touring and use the information to reward their most active and passionate fans. It’s all about relationship building, a well-tested and successful strategy.

Have you learnt from the mistakes of other similar services? What was wrong with the Nokia music store, for example?
Most music startups succumb to injuries inflicted by copyright and licensing. If you want the popular music, you need to deal with the majors and licensing is an expensive (really expensive) business that requires high volumes. The numbers are very hard to make work. Even recent “successes” such as Pandora and Spotify require large (very large) capital backing to reach the scale required to generate only a modest profit.

On the other hand, you have companies like Napster (the first one), Pirate Bay and Grooveshark (now being sued for $15-billion-plus by all four majors). Their problem is that they distribute the content (read licensed property) of large media corporations (enabled by some frightening legislature), they get sued and they fold. With Airborne, we knew the music needed to come directly from the artist who, in our opinion, is the one who should decide when and how they want to make and distribute their music. We employ the (highly regarded and widely accepted) Creative Commons (BY-NC-SA) licence to protect the attribution and commercial rights of the original artist, but allow their carriers to share and enjoy the music freely without fear or guilt of consuming “pirated” music.

The issue with Ovi, in my opinion, lies mainly in the fact that they were essentially trying to copy the iTunes model of using music to ship hardware. Unfortunately, Nokia happens to be a company that has seen a sharp decline in relevance (and indeed revenue) over the past five years which has seen the rise of iPhone and Android. Nokia’s “Comes with music” was a pretty visionary idea but unfortunately even Nokia (a multibillion dollar company) couldn’t sustain the licensing costs of the service. It should be noted however that they did find some degree of success in important developing markets which I find very interesting and we are certainly eyeing countries like Brazil, India and the African continent as important markets often un(der)served by major players.

How do you get artists on board, both locally and internationally?
We are pretty well connected in the South African scene and we’re talking to every artist both fledgling and accomplished. Locally we have artists like aKing, iScreamStix, Ard Matthews and Van Coke Kartel with some incredible up-and-comers like Tasha Baxter, Holiday Murray and Veranda Panda.

Internationally most of our artists have come to us, applying through our website, and we’re bringing them on individually. We also have agents working in key music cities around the world, meeting and working with artists at a local level. In just under three months we already have artists that span the globe, east to west and top to bottom, and more are signing up every day.

Airborne is a non-exclusive agreement. The only thing required by an artist wanting to get Airborne is the rights to distribute their music but we’re already working with a few labels and management teams to facilitate agreements for artists with restrictive contracts.

What are some of the challenges involved with copyright issues. How do other services get around this or is it universal?
Airborne, as near as I can tell, is one of the first companies to build its business model on the Creative Commons. This strategic foundation allows us to facilitate worldwide distribution under one universal license. I believe that the way Airborne addresses the licensing issue is a key factor in making Airborne a strong contender for the future of the music industry.

Other challenges faced included the very anaemic fund-raising environment (everywhere outside the US). Finding investment for a truly disruptive music venture is challenging because music is widely held to be a “toxic” industry by venture capitalists because of the high failure rate (see the collapse of Beyond Oblivion for a recent and costly example).

Since you launched, what kind of interest has been generated in terms of artist and audience interest? What is the international potential? Is there room for this internationally?
The artists are all really excited about Airborne and I think the same of the public as well. We have got a lot of feedback on our first version (launched on December 2011), which admittedly needs a fair amount of tweaking and refinement, but it’s all very constructive and thoughtful stuff and you’ll begin seeing the fruits of the feedback as we continue developing the platform.

Airborne has always been internationally focused, from the first minute. Music is a universal thing. Artists in South Africa need to be able to connect with fans in Canada and Canadian artists want to connect with fans in South Africa. We’re opening up a market of over two billion people, and we’ve deployed the infrastructure to start serving it (hopefully not all at once, though).

The quality of South African artists today (artistically and in terms of commercial appeal) is up there with the best of them. What they need, and what they’ve missed is access to the world in way that can work for them and for them to work.

Has SA been slow to catch on to the idea of legal online music downloads? Why does it make sense in SA?
I don’t think so. We’re always a little behind but I think the problem with music (in particular online music) lies in the fact that even if you wanted to by music from iTunes you, as a South African, simply cannot thanks to international licensing agreements which deem South Africa to be too small a market. South Africa still has a lot of physical music shops but even they are struggling to make the economics of the current music industry work.

In terms of price points, the $1 subscription translates to roughly R8 a month or just R96 a year (quite a lot cheaper than your average CD). Our goal is to change the perception of paying for music. It’s harder to convince someone to spend $1 on one song than it is to say, “give an artist you love half a beer a month to keep him from flipping burgers for a living”.

One must also recognise that South Africa’s internet access is prohibitively expensive and lacklustre in performance. We need to get every man, woman and child on the Internet within the next 10 years. I can’t really understand why we aren’t making aggressive progress on this front but it is beginning to accelerate.

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