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Digital
New streaming service playing with donations model
By CMU Editorial | Published on Wednesday 21 November 2012
Another Swedish-based streaming music venture is expanding its range of services while pursuing a novel business model, where consumers can pay what they like to access content.
Radical.fm launched last year as an online radio set-up, but has now added on-demand elements to its service, making it more of a direct competitor to the likes of Spotify. The platform is currently licensed by both majors and indies in its home territory, but non-Swedish users can also access some of the independent label content contained within the platform.
The big difference between Radical and other online streaming services is its business model. Everything is currently available for free, and without ads, but users are encouraged to donate money to help fund the operation. Founder Thomas McAlevey reckons that if every user donated about ten dollars a month – so Spotify’s premium rate – then he’d have a business with long-term viability. The hope, though, is that some people will donate more than that, allowing those unable to pay to also enjoy the benefits of the platform.
The pay-what-you-want/donate-what-you-can model has been used by some individual artists for stand-alone releases, of course, and has successfully sustained many online communities in the tech (and file-sharing) domain.
McAlevey isn’t the first to wonder whether a whole online music service, with its substantial liabilities to rights owners, could be funded this way, though he’s possibly the first to try it out in such a prolific way. Though Grooveshark is also dabbling in the space by encouraging users to donate cash to individual acts through Flattr buttons on artist profiles, Flattr being another Swedish start-up (led by Pirate Bay co-founder Peter Sunde) that is wholly based around the idea of web services being funded by voluntary payments.
Doubters say that the idea of operating anything more than informal online clubs and societies this way is too idealistic, and that while start-ups might generate OK revenues through donations, as the entity becomes more established and corporate, users will become less willing to hand over cash voluntarily, making it a short-term solution rather than a long-term business plan.
But McAlevey seems hopeful thatsomething longer term can be created with the donations system. He told Billboard: “Radical believes everyone is entitled to enjoy great music, even the young and unemployed, so we don’t force users to buy a subscription. Radical also believes radio is best experienced in an ad-free environment, and it is Radical’s goal to provide all services free of advertising. But Radical relies on [user] support to continue”.
