TuneCore invites US-based artists to get into streaming with upfront cash. How? Read on.
TuneCore is a digital music distributor, and they’re seeing things shifting rapidly towards streaming. Which of course means a lot more revenue from streaming, and a lot less revenue from downloads. Now, the company is pushing ahead with a new idea: automated advances on upcoming streaming volumes.
TuneCore launched their Direct Advance service today in collaboration with Lyric Financial. Simply stated, Direct Advance lets clients access automated advances on their future earnings. Basically, handing artists upfront cash based on anticipated earnings ahead.
We’re just learning about this offering, so we can’t comment on it either way. There just isn’t any feedback from users and artists. We’ve actually spoken with Lyric Financial before, but this is the first we’ve heard of this partnership.
Here’s the description that Tunecore emailed DMN this morning. It’s sort of ‘sales-ey,’ but gives you the general idea.
“With many independent artists and labels operating as small to medium-sized businesses with sometimes minimal resources, TuneCore Direct Advance is a valuable new offering that allows them to take advances on future earnings to help fund new projects and further their careers. From recording new material to purchasing new equipment to funding a tour, TuneCore Direct Advance provides a simple way for artists to access advances.”
So, how can you become part of the new service?
According to the company, Direct Advance is available for Tunecore artists that meet certain eligibility requirements. This includes sales history and earning thresholds. You also need to be US-based.
Customers who qualify for the service can request a cash advance from their Balance Page. For a one-time fee, they’ll “quickly and easily” receive money through PayPal or Automated Clearing House (ACH).
Artists who request an advance will directly repay it from future sales. The digital distribution company will also automatically deduct the advance from streaming and download earnings.
We’re not sure of the exact requirements for qualifying. But safe to say you’ll need some proven sales history, and probably a minimum sales amount.
One word of caution: before signing up, be sure to calculate all fees and percentages related to this advance. Then, calculate the percentage you’re paying for this privilege. It might make sense to simply receive the revenues when they arrive, especially if you can afford to wait. And remember: this isn’t the only source of advanced funds, so keep all your options open (and go with the best one).
Now, for those making more advanced calculations: also consider the opportunity costs involved with waiting for money. Remember, a dollar-in-hand right now is more valuable than a dollar received next week, though these calculations become more meaningful with larger revenue streams.
Also, it’s better to wait to get some feedback from other artists, especially as the companies iron out any kinks. On that point, the companies did test the idea with at least one artist. And longtime Tunecore artist Lito MC Cassidy is definitely vouching for the offering.
“As an artist for more than 20 years, I know firsthand the need for a money advance to cover anything from production to personal expenses. For the first time in my career, I not only feel in full control of my money but also relieved to know that by simply choosing the amount of money I need, I can receive an advance in seconds.”
The publishing admin developed Direct Advance in partnership with Lyric Financial founder and Chief Executive Eli Ball. “These basic tools will be invaluable to any music industry professional in budgeting and managing the ups and downs of their cash flow,” Ball said.
Tunecore distributes across the range of digital music platforms. That includes iTunes, Spotify, Amazon Music, Google Play, Apple Music, and others. The company claims that its distributed artists have earned $836 million from over 57.3 billion downloads and streams using its platform.
I’d be curious to know what sort of earnings threshold they have in mind in order to qualify, and what percentage of its users would actually benefit from this. But it does sound interesting.
This sounds very similar to Paypal’s “Working Capital” loan, and it probably is. First, without a minimum sales history, you’re not getting a loan. With “Working Capital” you need at least $15,000 in yearly sales for which you’ll qualify for 20% of that amount. The loan fee is based upon how quickly you want to pay it back. The higher amount you’re willing to pay back per sale, the lower the loan fee will be. For example, let’s say you agree to 30% of every sale transaction. The loan fee would be 7% of the loan. If you instead want to pay back 20% of every sale, then you’ll be looking at a higher loan fee, around 10%. So some of you may be asking what happens if you don’t have any sales in a couple of months? Well there’s still a minimum amount you have to pay every 90 days. The major plus of this type of loan is that it’s not based on your credit history, so you can have horrible credit and still get a loan as long as you have a good sales history. Bottom line…it still comes out to an expensive loan – you’re paying for the flexibility. If you have good credit, there are better options out there.
Sounds like a sales gimmick to me. Is TuneCore getting this desperate to get new customers? I assume that any artist that meets the “requirement” can easily wait to receive the royalties as normal without TuneCore putting their hands in the mix. Revenue and new user growth must be slowing down…
this is pretty clever on their part. i run a smaller distributor and we know the amount each artist will be getting 30-90 days in advance once we invoice the stores. so we know we are getting the money. now tunecore can make a few more bucks those who want the money NOW rather than waiting 30-90 days.
I agree — this is clever. Kevin — what smaller distributor do you run?
i prefer not to say.
why not?