The D2C market continues to power ahead in both creative and commercial terms. Here we look back at the key trends of 2019 and look ahead at how the business will change in 2020 and beyond.
#1 The market is booming and there is plenty more growth potential
D2C sales are unquestionably a growing part of the business, with Kantar reporting in July that sales in the UK from an artist’s store – as opposed to sales from another online or physical retailer – were up 28% in the preceding year. But before anyone gets too carried away, Kantar adds the caveat that D2C sales still only account for 5% of total sales of artist-related products.
Even so, there is an important marketing and consumer shift happening here and a lot of growth potential to tap into.
“Buying straight from the source allows people to feel a closer connection to their favourite artists – something that can be lost when using a streaming service, where the entire world’s back catalogue is at your fingertips,” said Giulia Barresi, entertainment analyst at Kantar, on publication of the report. “They can also benefit from a feel-good factor too, in knowing they are directly contributing to an artist’s success.”
This sense of connection is something that acts and labels have been keen to push and it is increasingly common for artists on an album release week to use their social channels to steer fans to buy from their D2C platform – not only because it will benefit their chart placing but also because it will benefit them financially. Kantar pinpointed “superfans” aged 35-55 as the key drivers of this trend, suggesting they alone are responsible for 56% of album and single sales, stressing the importance of investing in these relationships and growing them further.
As D2C in music powered ahead, there were a number of fascinating trends identifiable in the market this year that not only pushed revenues up but also helped to signpost the direction in which everything should move next year and beyond.
#2 D2C gets greener and more ethical
Unquestionably the biggest and most significant theme of the year was around making merchandise more ethical and much greener.
Ensuring products are not made in sweatshops and that they use sustainable materials is going to be a major issue in the coming years. There has been so much discussion around these issues that acts who might previously have turned a blind eye to such things are having to become more hands-on to personally ensure they are not the environmental and ethical holdouts here.
On-demand printing technology means there is now no risk of over-producing items so acts and retailers can work leaner and smarter. Terrible Merch has been one of the companies pushing for this for a number of years and in 2019 launched its app for touring acts so they can get real-time data on their inventory when they are on the road to ensure they can meet fan demand but are not left holding bundles of unsold stock by the end of the tour.
The 1975 addressed overproduction in a novel way in the summer at the Reading & Leeds Festival by “upcycling” their own unsold T-shirts from previous tours by printing the logo for their upcoming Notes On A Conditional Form album/tour over the top. They also encouraging fans to have the new logo printed, for free, on their existing shirts rather than buying new ones. The band added to their greener goal by offering a cassette version of the upcoming Notes On A Conditional Form album made from recycled plastic and packaged in recycled card.
#3 D2C goes from the physical world to the digital world and back
This year also saw a wide range of acts thinking and behaving differently around merchandise and D2C, applying the same level of creative thinking to it as they do to making their own music.
D2C does not have to mean online as the shop window to sell physical products to fans. It can, as Marshmello’s DJ set within Fortnite in February showed, also be used to sell virtual goods, with the EDM star selling skins for players in the game for 1,500 V-Bucks (the game’s own currency), which works out around $9.99 each.
On a similar level, K-pop supergroup SuperM not only sold seven different versions of their debut album (each with the face of a different member on the cover) that together would form the band logo, they also sold T-shirts that unlock augmented reality content through a dedicated app.
SuperM’s melding of the “real” and “virtual” worlds on display here is surely going to become a trend for a particular type of supercharged pop group.
Swimming in a slightly different direction was Cinematic Orchestra whose latest album, To Believe, had as a theme the importance of disconnecting from the digital blizzard of a life lived online. As part of the D2C strategy around this, the band created a special “offline” website that fans could only access by disconnecting their computer or phone from the internet. Doing so revealed where they could buy the 12-inch version of lead single ‘A Caged Bird’ / ‘Imitations Of Life’.
While Spotify has allowed acts to sell up to three different merchandise items through their artist profile on the service, it has been a somewhat underexploited feature. In the UK and Ireland, however, Universal Music used it as a way to sell an exclusive picture disc LP of When We All Fall Asleep, Where Do We Go?, the debut album by Billie Eilish. It was run as part of the streaming service’s Fans First initiative that offers incentives and rewards to the top listeners of an act; but rather than treat this as a giveaway, Eilish’s fans were given the opportunity to buy one of a limited run of 2,000 copies of the LP, again showing a way to link a digital audience through to physical purchases.
A different twist on Spotify as the starting point for D2C sales came with Bring Me The Horizon selling T-shirts that all had unique designs. They did so by getting fans to pick their favourite tracks from their amo album and then connecting to their Spotify profile where they would analyse their past streaming of the band’s music on the DSP and, based on the loudness and energy of those tracks as filtered through the Echo Nest, deliver a bespoke design that the fans could then buy.
Meanwhile Mabel promoted her debut album with the creation of a physical 24-page ‘zine that sold for £17 and offered insights into the making of her High Expectations album.
The Mabel ‘zine was also replicated on Instagram so that fans were not completely locked out and this shows how a physical and a digital version of the same product can co-exist.
#4 D2C gets self-aware
Sharon Van Etten also highlighted how D2C can be done with a tongue firmly in its cheek. Far ahead of her Remind Me Tomorrow album, a fan had made a T-shirt at home with the legend “When is Sharon Van Etten's next album?” on the front. Van Etten took the same design and created a limited run of T-shirts for sale on her own site with this on the front but snuck in the actual release date on the back and put them up for sale a week before she actually confirmed the release date.
Retailing for $15, the “When is Sharon Van Etten's next album?” T-shirts quickly sold out and this shows an artist with a keen self-awareness as well as a sharp understanding of their fanbase and the things that work for them.
#5 New chart rules, new possibilities
D2C is going to be increasingly important in the US from January due to changes in Billboard’s chart-eligibility rules. Following accusations of acts “gaming” the system and exploiting loopholes around bundling albums with other items like tickets and merchandise, new rules will mean the different parts of bundles must be available to buy separately (i.e. nothing can be exclusive to a bundle). These bundles must also cost at least $3.49 more than the cost of any merchandise item alone ($3.49 being the minimum retail price for an album to qualify for the charts).
But perhaps the most significant change in the US charts from next year is that “merchandise bundles can only be sold in an artist's official direct-to-consumer web store and not via third-party sites”.
In 2020, an artist’s D2C channel will sit even more centrally in their marketing activity.
2019 was not without its challenges, but in 2020 smart ideas, greener thinking and new US chart rules that place artist D2C stores at the heart of campaigns could end up creating the perfect storm.