Making a Living from Live Streaming? A Beginner’s Guide to Monetisation Features

An analysis of the biggest platforms’ monetisation features for the artists, managers and more, turning to live streaming for a new income stream.

This post was written by Henry Prince and Jeremie Joubert.

Eight months into the pandemic it feels somewhat trite to begin by stating the unprecedented ascendance of the live streaming format in music. Yet artists who relied massively on touring income are still struggling terribly, and many have already turned to live streaming or have felt pressured to do so, wondering how it could work for them. According to a Bandsintown data report, 70% of artists are hoping to increase the frequency of their live streams — but is this medium viable? What tools exist at the disposal of artists to earn money from live streaming? Show business is as much show as it is business, so how can the latter thrive via this new form of entertainment?

Overall we find that there are two facets to generating revenue through live streaming. Creators can utilise in-platform, native features among which memberships and paywalls present interesting prospects. We are more reserved on the advertising model, let alone the digital goods model. Alternatively, creators can leverage their traffic off-platform, that is by redirecting viewers to third-party websites to capture data, generate merchandise sales or music streams. The native, in-platform features are complex yet interesting and will make the primary focus of this article. We will however touch on the off-platform features towards the end of this piece.

This article provides artists with a beginner’s guide to the monetisation features available from live streaming platforms such as Twitch, YouTube, TikTok and Twitter. It aims to guide artists and their managers in unlocking revenue streams while engaging with their fans. The native features under review are advertising, digital goods, memberships, and ticketing. We will cover how artists can access the tiers (or “Programs”) which unlock these features, how they work, which platforms make them available and offer our view on the pros and cons along the way. Leveraging live stream traffic off-platform involves embedding links in-stream, in the video descriptions and in the creators’ profiles, which can be achieved with varying degrees of creativity and freedom.

Native, In-Platform Monetisation Features

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The table above summarises the availability of monetisation features offered by the main streaming platforms. Before we dive into each of those, it is worth noting that not all features are accessible to all creators. Most platforms have introduced streamer tiers, and let us first see who can unlock those.

As live streaming platforms foster direct relationships with their talent, they employ incentive schemes to encourage streamers to produce content. Consequently, features allowing streamers to earn money are always presented as a reward for creating quality content and growing an audience.

Let’s first look at Twitch to illustrate this. On Twitch, creators ascend through three levels: Streamer, Affiliate and Partner. To move up the levels, creators have to achieve certain thresholds of usage and audience building. You begin your journey as a Streamer. To become an Affiliate and unlock monetisation features, you need to broadcast for a minimum of 8 hours over at least 7 unique days in the last month, have at least 3 viewers per stream on average and gain 50+ followers. The thresholds increase to unlock Partner status (see Twitch 101).

Similarly, on Twitter, you must be onboarded to the Amplify Pre-Roll Program to unlock monetisation via ads. This requires your account to be verified and for you to publish around 5 videos per week in the last month. On YouTube, you must be a Partner to start monetising your content. To be eligible, you need to live in a qualifying country, have gained more than 4,000 watch hours in the last 12 months as well as 1000 subscribers and have a linked AdSense account (see this page for up to date eligibility criteria).

Ad-Breaks: Unlikely To Break The Bank.

This model was not particularly rewarding for creators pre-pandemic. In 2020, it has become even less so since advertisers have pulled their ads in droves reducing the demand for ad space and in turn impacting the payouts. On average, it was generally accepted that YouTube paid out somewhere in the region of $1,000 for 1 million streams, yet this estimate might get even lower with the impact of Covid-19 (for a more detailed breakdown see this article).

As we saw above, to activate this revenue stream you will need to access specific programs or streamer tiers such as the YouTube Partner Program. The cut of the money that YouTube pays out to the creator comes to 55% of the cost per thousand impressions (CPM) billed to the advertiser (yes, they retain 45%), which itself varies on a country-by-country basis. In other words, one million views in India will earn you less than one million views in the United States, since India-based advertisers typically pay less.

Twitch pays out the creator on a fixed CPM basis or up to 75% of net ad revenue, depending on the country in which the end-user views the ad (Source: Twitch Affiliate Agreement). And if you get access to Twitter’s Amplify Pre-Roll Program you keep 70% of the revenue from ads, except if Twitter helps drive traffic to your content, then the table turns, you only keep 30% and Twitter keeps 70%.

In our view, the ad-supported model is a good add-on to make some extra cash from live streaming but the earning potential will only reward those artists able to attract viewers in large, absolute numbers. For this reason, this does not feel like the most compelling way to earn money from live streaming and should certainly not be your main driver unless you are confident you can drive audiences in the tens of millions.

Digital Goods: An Innovative Model With Some Maturing To Do

To demonstrate how this model works, we will focus on YouTube and TikTok. Instagram does not have a digital goods model at the time of writing and only video-game streamers are eligible to earn “Stars” on Facebook.

YouTube digital items are “Super Stickers” and “Super Chat”. Super Chat is a service where a user pays for their comment or question to be pinned at the top of the chatbox, next to your stream. A common use case for this is an artist Q&A: if many questions are flooding the chatbox, viewers will be enticed to buy a Super Chat to highlight their question to the artist or streamer. YouTube’s Super Stickers inhabit the chat much like Facebook stickers in Messenger and are the cousins of emojis. They offer a way for fans to support their favourite streamers while getting a token gift in return. The viewer’s name and the amount spent appear next to the sticker so that you can give them a shout out. As a live streamer you earn revenue from your viewers spending these items: you keep 70% of the gross revenue, However, to access this scheme you also need to be in YouTube’s Partner Programme.

TikTok’s digital goods gifting model rests on what is essentially a digital currency, whereby viewers can purchase ‘coins’ to reward streamers. This model is not unique: Twitter and Reddit also have ‘coins’, Twitch has ‘Bits’, and Facebook has ‘Stars’.

Going back to TikTok, once a viewer has purchased Coins in their wallet, they can then purchase gifts or “virtual items” which can be bestowed upon their favourite live streamers or artists. As with YouTube’s Super Stickers, these gifts are a proxy for showing support and the gifter’s name, user ID and the amount of the gift appear for all to see in the stream so that the streamer can give the gifter a shout out. Once a gift lands in the streamer’s account it may be converted into Diamonds (“virtual credits”) and it is these diamonds alone that can be converted into hard cash and withdrawn using Paypal or other payment channels.

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So how much is a Diamond worth in US dollars? On their website, TikTok states “The applicable monetary compensation will be calculated by us based on various factors including the number of Diamonds a user has accrued”. In practice, a diamond is worth $0.005 but the vagueness of TikTok’s policy suggests this is subject to change at their discretion. As a streamer you must withdraw at least $50 at a time and since TikTok takes 50% of your earnings that means you must accrue $100 (ie 20,000 Diamonds) to cash out. How many gifts do you need to accrue 20k diamonds? The diamonds equal the coin value of the gift, for instance, if you receive 500 coin gifts, you earn 500 diamonds. A package of 500 coins currently retails at $6.49. So, for you to get your first whiff of cash ($50) from live streaming on TikTok, you need fans to collectively give you $270.

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Examples of TikTok virtual items or ‘gifts’ available in the store. Link to “Buy Coins” bottom right.

To receive money under this scheme you must be 16 or older and onboarded into the TikTok Live Stream Program. The eligibility criteria include your number of followers, engagement and frequency of posting. TikTok says you must be “selected by TikTok” which sounds like they are operating a tight curation, however, we understand it to be largely automated.

Elsewhere, Twitch streamers receive $0.01 per Bit gifted to them and Twitter pays out 70% of the cash value paid by fans for the Super Hearts (Twitter’s version of TikTok’s virtual gifts).

As a streamer, the amount you will receive will ultimately depend on the generosity of your audience, which will reward for good quality content and possibly a high level of interaction. Some streamers have also decided to openly prompt their viewers to tip them.

Our view is that this model should not be your primary focus as an artist. Each transaction generates very little net revenue and the model does not facilitate repeat payments. Digital Goods could be a nice add-on for those artists driving large audiences to their streams, but still: why should they bother?

Membership: A Promising And Flexible Model

On Twitch you must be an Affiliate to add a subscription button to your profile and the set 3-tier pricing structure which starts at £4.99/month for your fans can go up to £9.99/month and £24.99/month. The creator keeps 50% of the revenue from channel memberships or, in other words, Twitch keeps a lion share of 50%. Thess Fischer is a notable model and House DJ who has appeared for 3 years running in Top 100 Female DJ lists from DJane Mag and DJaneTop. She live streams DJ sets on Twitch three times a week. Thess has a very well crafted Twitch profile, with clear links to her social media channels, Discord server, donate button and more. She monetises her channel by offering three membership tiers. Tier 1 removes ads, gives you access to the chat in subscriber-only mode, as well as subscriber-only streams — it also unlocks a “Sub Badge”. Tiers 2 and 3 offer exclusive emotes on top. According to some speculative calculations, if 10% of her 11,432 Twitch followers subscribed to the first tier (£4.99), Thess would generate £5703 each month from her members and take home £2851 after Twitch’s cut.

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YouTube also offers “Channel Memberships”, which can be priced anywhere from £0.99/month up to £49.99/month (or equivalent in local currencies). Each tier can be set to unlock new perks such as ad-free viewing, loyalty badges, custom emojis, members-only chat and more. At the time of writing, YouTube offers a private live stream feature in beta mode, which could quickly become a smarter way to monetise your live appearances. For a YouTube channel to start offering memberships, YouTube does set a barrier to entry at 30,000 subscribers or more (eligibility detailed here) and will keep a 30% cut to manage the subscriptions and take payments on you behalf.

Patreon deserves an honourable mention here and it seems to us that it is the direct-to-fan subscription platform par excellence. Straight from inside the Patreon feed, patrons can engage with their audience and offer many different kinds of content such as posts, images, videos, audio files and even exclusive live streams via integrations with YouTube and Crowdcast.

In our opinion, the membership model is one of the most promising options. It is an excellent way to engage with your core fans and reward them. As a creator, it also forces you to become more focussed on your core audience. Fans are billed automatically, at regular intervals, so artists get regular income. The amounts per transaction are higher than with digital goods.

For a more detailed discussion on subscription and membership models see this article from one of the authors of this piece.

Paywalls Instead of Concert Halls? Ticketed Live Streaming Models

Before looking to address those questions we need to go through the basics. This monetisation model consists of selling tickets to live stream events, be it performances, film premieres, chats, Q&As etc.. There may also be secondary sources of revenue should you make the event available on-demand afterwards — think merchandising, or royalties, more pay-per-view access or royalties.

Currently, you can set up a paywalled event on Facebook from an artist or label Page but officially Facebook does not permit ticketed virtual events in which sound recordings or songs are performed. This means that if reported they may take down your event(s) or remove your access to other features. Other global platforms such as YouTube and Instagram do not make ticketing available for music-based events yet but are understood to be working the issue.

For now, we need to look outside of big tech giants. There are two ways to organise a ticketed digital show. Artists and their managers can use a ticket seller such as Dice who then links the fans to a third-party hosting platform (and that could be a private YouTube link). Alternatively, there are plenty of integrated services who will take care of the entire event, from ticketing to streaming, and allow the artist to control the experience. Both models allow artists to control ticket prices. We will look at these two models by analysing examples of their use.

Ticket Gateway: Dice

Dice has been until now an innovative, if conventional in its business model, ticket selling portal. When it comes to live stream events, on the night, Dice sends the fans a link to the stream hosted on a third-party website such as Vimeo, Zoom etc.

The familiarity and excellence in user experience design of both Dice and, say, Vimeo, make this model an attractive option but it must be noted that this approach requires many clicks for the end-user, navigating from an app to a video hosting service via a confirmation email if you want to view on desktop. The requirement to download an app, to begin with, may even prove too cumbersome to some who may not already have it. On the other hand, Dice does have an established audience, which likely enjoys the curation of the platform, and can be reached through promotions and notifications

This model allows the creator to choose whether to broadcast, behind the paywall, either an actual live performance or a pre-recorded one (which was the case for Nick Cave’s). Dice’s back end is also attractive, as it allows creators to conveniently edit the event page and provides customer data such as average age, gender, the number of “saves” in the app, how many fans are on the “waiting list”. Dice also provides each buyer’s name and email, although, strangely, Dice specifies that this customer data is not to be used for remarketing. There is no initial set up fee and Dice retains a generous 10% of the ticket sales.

All-In-One Integrated Services: High-Spec to Basic

MAESTRO: High-End and Versatile

Maestro is a modular, high-spec, integrated solution which allows artists to create highly customised live streaming events nested inside a branded webpage, complete with interactive features. Adapted for access via mobile and browsers, Maestro offers a custom URL for each event. Further links to sell tickets, merch can be added. Interactive features such a chat, shout outs, fan polls, a donate button, social media feeds, Spotify profile can also be added. In short, Maestro offers a complete turnkey solution, and since it does not require fans to sign-in or download an app, access is rather frictionless.

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Branded Maestro landing page example with live stream player in the centre, a sidebar showing social feeds, Spotify, competitions, polls and more, and links along the top and bottom.

On the artist’s side, the experience of using Maestro is also frictionless as many tools required are integrated into the service — justifying Maestro’s premium price point. Services provided include website hosting, the livestream player, of course, analytics and data export. The service boasts strong bandwidth for delivering the video feed to fans and provides billing services for the paywall, collecting donations or ticket purchases. Maestro’s business model is based on thresholds for usage charge, on top of a $500 set up fee. 5,000 views cost $500 and each hour of live stream viewed is charged 8 cents per viewer, Maestro keeps 12% of the revenue from the paywall and donations and retains $0.65 per ticket sold. On the whole, according to Maestro, this adds up to approximately 18% of overall income for most projects. Of course, with this service you can freely set the price your fans will need to pay to access the livestream. Erykah Badu is a notable artist to have used this service. She priced access to her first live stream at $1, the second at $2 and the third at $3. With over 100,000 viewers, Badu will have grossed upwards of $100,000.

VEEPS: Simple and Accessible

Veeps offers a similar service to Maestro but much simpler and more accessible. There is no initial set up fee. Artists must create “artist accounts” on the website and have them verified before creating a paywalled event. Ticket prices are set by the artists and cannot go below $3. The transactions are artist-friendly since Veeps add a 15% service fee onto the ticket prices and it is the fans who bear the entire cost: there are no setup fees or deductions from the artists’ revenue. A key different with Maestro is Veeps presents as a hub or community, displaying upcoming shows on the homepage and locking fans into their ecosystem whereas Maestro is a faceless backend.

Using Veeps, artists can decide whether their live streams are made available on-demand after the event. Artists can either make them available for free on their usual channels or continue monetising access as paywalled on-demand streams via Veeps’ website.

As an example, L.A. Priest used Veeps in May to perform to fans “Live from the Shed”. He charged £5 for advance tickets and £7.50 for tickets bought on the day of the show. L.A. Priest chose to upload the video recordings of the live performance to his Facebook and YouTube pages straight after.

In our view, artists must, however, be mindful when doing this since they are making available for free something which other fans paid for, and it’s not clear what benefits the ticket holders got over the free viewers in the end. Fans may be happy to know that the performance is live at the time, but ultimately the video content is the same. Uploading live streams for free after the event sets a risky precedent and fans may be dissuaded from buying tickets to future live streams. Lastly, with modest budgets, live streams may not be super productions, so when made available on-demand afterwards (“out of context” in a way) alongside the rest of the internet’s on-demand videos, your video might lose the edge it had from being an exclusive, time-limited, paywalled live stream.

One of the disadvantages of Veeps’ is that fans must create fan accounts and watch the live streams via the Veeps website (whether on mobile or desktop). This means Veeps cannot send those all-important notifications to fans alerting them of the start of the event. The discoverability value-added is low too. With no app, they cannot send notifications recommending events you might like. No doubt Veeps will have mailing lists and social media presence but realistically as an artist, even your fans have to do the work and you will need to do all the heavy lifting when it comes to promoting your show and selling your tickets.

To conclude this section on the paywall model for making money from live streaming, we find that this is a more recommendable approach as the earning potential is higher relative to digital goods on ad-revenue. Artists can set their prices, can have more control over the experience, and collect data. However, the downside is that unlike a live tour in which artists could replicate the same show 20 times to new audiences, a show live-streamed is immediately expired. Some artists, such as Gorillaz for their December 2020 virtual shows will arrange multiple performances over a short period to cover different time zones, but the life span is still not several months. We recommend getting creative and innovating on your current live set. How can you deconstruct or remix your live show to spin off different versions? In our opinion, Nick Cave’s “Idiot Prayer” was inspired because he offered fans alternate versions of songs “from across the breadth of Cave’s career”. In the topical, isolation-themed performance he reworked both songs and concert setting to convey new meaning.

Other Features For Leveraging Your traffic: Linking Out

Perhaps, for some, capturing fan data may even become a strategic priority and the very reason why you would engage with your audience through the live stream medium. It will then become a necessity to send fans to a website you own and control.

We will discuss strategic issues around how a live stream project can and should live in your music marketing plan in a further article, however since this piece focuses on the features offered by the platforms themselves, let us explore those, with a focus on YouTube. The other platforms can be used to drive traffic through a simple URL in the stream description, the chatbox or your profile.

Promoting concerts and other events

Linking from your live stream

You may also be familiar with YouTube’s “Cards”. Simply put, they are overlays that appear at the top right corner of your videos at moments you chose in your videos, driving traffic to crowdfunds or merch purchase points on 3rd party sites or retailers approved by Youtube. You can add those cards to live streams too, and they will appear at regular intervals; when they don’t, a clickable tooltip, “(i)” will appear in the top right corner of your video, allowing your viewers to find out more.

Linking out to your merchandise site

Making a Living From Live Streaming? A Modest Living Until a Winning Business Model Emerges

Here is a summary chart of the features, platforms and rates paid by the platforms to help guide you towards the most suitable one.

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Rates paid by live streaming platforms (including Dice as a live streaming ticket seller)

The four native monetisation features offered by the top global platforms, as they exist today, do not all show the same potentials. The membership model seems appealing on paper and could be a great way to convert fans into paying subscribers. Will they take you up on it? Will you, as an artist, find sufficient content to release regularly? The second-best model in our opinion is the paywall or ticketed model. Many in the industry will find comfort in the familiarity with this business model, but do not be fooled: online viewers have high expectations, and you will not lure them to simply pay what they can get for free elsewhere.

Among the other two models, the ad-support is a turnkey solution that will pay you, but this will only be viable for those artists who will count viewers in the five or six digits. Lastly, digital goods as they exist today may offer some rewards to popular streamers, but artists and their management will find it difficult to budget and plan around those unless, or until, this model matures.

All in all, how you as an artist will make use of monetisation features will also be determined by how you chose to engage with fans and the content of your live streams. Live streaming is a new format rather than a new channel through which to funnel old formats, and we will expand on this in a future article. Nick Cave was a trailblazer in this regard because his show seemingly took inspiration from the loneliness of lockdown. He reworked his performance to provide a unique take, which fans would otherwise not have seen. Hopefully, he will inspire many in devising appealing and unique live stream productions, rather than replicas of actual concerts.

Written by

Working at Believe, licensing and managing relations with digital music platforms. LLM Intellectual Property Law. https://www.linkedin.com/in/henryprince/

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