Streaming music lies at the basis of Arena Music’s business operations, but its success comes from taking that technology and giving it an innovative twist in the business plan. In fact, “It’s more about doing everything opposite,” says founder Damon Evans, referring to the major subscription-based music streaming platforms.
“Arena is an on-demand merchandise storefront that leverages a free streaming service to help artists monetize their content in a music industry where consumers no longer buy music to own,” says Evans, who recognized that what younger consumers will buy is merchandise.
When a band contracts with Arena, the company sets up a profile page and radio channels. The band gives Arena exclusive merchandise designs that Arena packages into campaigns. “Consumers buy an exclusive shirt from their favorite band, and get the music for free,” Evans explains.
The band gets its music inserted into listeners’ playlists, which may be at the request of the artist to promote himself or of Arena staff to promote the Arena brand. Thus, Arena can promote a band to new listeners. This gives the artist’s music a higher profile and, says Evans, “keeps listeners happy — they use Arena Music as a music discovery system.”
On the consumer side, Arena Music offers listeners a free subscription to advertisement-free streaming music, starting out by asking for the names of ten or more of their favorite bands and immediately generating playlists to their preferences. “It’s like Pandora, mimicking traditional radio,” Evans says. With that format, listeners cannot replay a song but they can skip or fast forward. “Our goal is for the listener to not skip.” Arena uses a sophisticated algorithm that mixes established acts with unknown independent acts, including sub-genre filters for deep album cuts, and its platform allows it to insert any song into a playlist even while it’s being played, in real time.
The Arena site is designed to be fully automated. So, where Spotify, for instance, has a team of more than 150 programmers, Arena can operate with a team of about six, Evans explains. “We can adjust automatically based on data that comes in, such as a specific playlist that’s getting a lot of attention.”
Orders for the licensed merchandise are processed and printed on demand, and can be shipped same day, through Arena Merchandising, a sister company to Arena Music. Evans explains his business started in 1998 as a physical music distributor, began doing screen printing for many local clients that include charities and sports teams plus contract sewing for the military, and transitioned about seven years ago to doing screen printing and custom apparel for bands.
“Revenue from Arena Merchandising is reinvested into Arena Music to be able to pay artists premium rates for the streams,” Evans says, noting that the major streaming platforms pay artists three to six thousandths of a penny per play. Observing, “That makes it a challenge for artists to have a viable career; they can’t afford a [recording] studio or even strings [for their guitar],” Evans says, “We support alternative revenue streams for the artists. … We’re finding the artists are creating more per transaction through these bundled offerings than they would have generated in downloads through iTunes.”
Evans says he created the business model as a solution that addresses artists’ needs and concerns, leading him to proclaim in the company’s tagline, “Arena, Arizona, is the independent music capital of the world.”
