You may not have heard of an electronic music artist named Alan Walker, but he has a significant fan base.
On YouTube, the video for one of his songs, Faded, has been played 3.5 billion times and has 42.9 million subscribers on the platform.
It’s a similar picture on Spotify, where the Anglo-Norwegian music producer and DJ has numerous songs that have been listened to hundreds of millions of times.
While bands and other music artists have long argued that streaming services aren’t paying them enough, Walker, who also makes money from live performances, has amassed a net worth estimated to be as high as $20m (£16m).
For the music industry, fans are usually just the consumers: they pay to listen to songs and albums, attend concerts, and purchase merchandise. But last year Walker decided that he would start allowing his fans to share in his financial success.
He did this by giving around 8,000 fans the opportunity to invest in four of his singles, sharing his streaming revenues with them. To facilitate this, Walker used a new Swedish website and app called Corite, which handles all financial details, including fundraising and trading.
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“I wanted to engage my fans as well as connect with them on stage and through my music,” Walker told the BBC. “We’ve raised just over $100,000 [from fans] in our projects so far, but this number is not what makes me tick.
“It is the thousands of supporters who have participated in my projects who will now share the success with me.”
Stockholm-based Corite is the brainchild of music industry veteran Mattias Tengblad, who previously served as commercial director for industry giant Universal Music Group.
The idea behind Corite is that emerging artists can avoid signing with record labels, which typically make more money from a successful artist, than the artist himself makes.
Under Corite’s model, artists secure financial backing from their hopefully growing fan base.
In return, fans can hope to earn more money than they have invested. Though it is important to note that they can lose money.
The way it works is that an artist announces a “campaign” through Corite, typically the upcoming release of a single song. They then detail how much money they’re trying to raise, from just $500 up to tens of thousands, and how much profit they’ll make to each investor if the song is streamed a certain number of times during the first year of its release.
Typically rates of return are between 1.4 and 1.7 times the amount invested by a person. So if you put £10 to 1.7 and the song hits its one-year listening target, you’ll get as little as $17.
And if the song far exceeds its streaming goal, investors will reap even more gains. However, it’s a gamble, as if the song fails and doesn’t reach its goal, then investors won’t get back all the money they put in. Instead they might get just a few pounds or even just a few cents back.
To help people decide if a song is worth investing in, they can listen to a 30-second snippet via the Corite site.
When the song is ready to be released in full, Corite uploads it to all streaming services and collects and distributes the proceeds to investor artists and fans.
“We are challenging the status quo in the music industry,” says Tengblad.
“Corite empowers music lovers to invest in the music they love and the artists they love, and get a share of the success when songs are streamed on Spotify and Apple.
“It can be a cheaper way for artists to finance their career than signing an expensive deal with a record label, which will require a much higher cut of their earnings. And even when a record company has all the best of intentions in the world, nowadays the world of social media has made promotion much more complicated.
“Record labels no longer know how to make things happen, and instead artists can use Corite to unleash the power of their fans, who with the money invested will become even more vocal cheerleaders. Yet in the end you still need a good song to be successful.”
But can artists really succeed without the backing of a record label?
Jeremy Lascelles has been a music industry executive for over 50 years. Today he is the co-founder and CEO of Blue Raincoat Music, which combines a record label, artist management and music publishing arm. He says record companies still have a very important role to play.
“The digital age has certainly taken power away from record labels, but they are still a very attractive proposition for artists. They still have access to pretty sizable capital and funding, have marketing muscle and have access to the media, radio, TV and similar.
“So when an artist releases a single or an album, you have an army of people at the record label there to help them succeed. Doing it all by yourself is much more difficult.”
One Alan Walker fan who has invested in one of his 2022 singles is student Effie Sampson, who is majoring in game design at the University of Central Lancashire in Preston.
He invested $35 and has fetched $19.13 so far. However, Ms Sampson says it’s not about the money. “I did it to support an artist I love,” she says. “And you feel more involved in the song when you hear it.”
It is this sense of closer involvement that business psychologist Stuart Duff, partner at UK firm Pearn Kandola, believes may be the key to Corite’s future success.
“While the financial transaction may be important, of much greater value is how the investment will strengthen the relationship between the artist and the fans,” he says. “Without even realizing it, the artist is forging a stronger psychological bond with the fans.”
Alan Walker says that for him, using Corite and allowing fans to join in his financial success, “gives me a way to give back to the ‘Walkers’ community and show my appreciation for what we’ve built together.”