Yesterday’s news that Epic Games bought Bandcamp for an undisclosed sum sent shockwaves through both the gaming and music industries, with the companies’ official statements raising more questions than answers. To begin to consider how Epic will steer Bandcamp moving forward, it’s important to give the players involved a close look.
Epic began as an indie outsider in the early ’90s, giving itself an outsized name to match its ambition. Since then, it’s gone from a cheeky startup founded by programmer Tim Sweeney out of his dad’s garage to a pioneer in PC 3D graphics to a console-centric development studio. Most recently, it’s become a Games-as-a-Service (GaaS) company—where games are treated more like ongoing subscriptions than one-time purchases—with its eyes on establishing the building blocks of the metaverse. Sweeney still maintains a controlling interest, but Epic has hordes of investors and, as of last year, a valuation north of $28 billion—40 percent of which has been held by the Chinese tech conglomerate Tencent since 2012.
Tencent is ubiquitous in China. They own the nation’s most popular messaging app, WeChat (which boasts more than 1.2 billion users), and created the all-in-one online portal QQ, one of the most-visited websites in the world. Their subsidiary, Tencent Music, is the largest Chinese music service, with more than 840 million active users.
Over the last decade, Tencent has acquired pieces of dozens of international game studios, though last year it was reported that the company was negotiating with a U.S. government watchdog committee in order to retain its ownership in Epic. According to Reuters, the committee is examining whether Epic’s “handling of the personal data of their users constitutes a national security risk because of their Chinese ownership.” (Sweeney has claimed the company has no access to Epic’s data, and that he’s mostly left to run things as he sees fit.) Tencent’s investment in Epic was tied to an agreement to move Epic to a GaaS model, marking a significant sea change in Epic’s trajectory and prompting the departure of several longtime staffers. It also enabled Epic’s transformation from a successful indie into a global behemoth.
Bandcamp was founded in Oakland, California in 2008, with a simple premise: Artists should have more control over how they sell and market their music, and existing platforms charge too much for the services they provide. Bandcamp allows artists to charge whatever they want—including nothing at all—for their music, as well as use their digital storefront to sell other merchandise.
The platform’s ease of use and relatively low commission rate of 15 percent made it attractive to independent artists and labels, eventually helping to foster vibrant communities of lo-fi, offbeat, and experimental musicians—all while turning a healthy profit. And in an attempt to support struggling artists unable to tour during the COVID-19 pandemic, the company waived their commission for 24 hours in March 2020 in a move that was so popular that Bandcamp Fridays have since become an entire thing, cementing the platform as an artist-friendly force compared to big-time rivals like Apple Music and Spotify.
Since making a livable wage in the streaming economy is really only viable for the most popular artists and labels, the Bandcamp model offers a necessary alternative: Every vinyl LP or screen-printed hoodie sold via the platform represents thousands of streams worth of revenue, every purchase minting a new relationship with a fan that the artist themselves control. On Bandcamp, fanbases can theoretically be built from the ground up, without having to pay for playlist placements to compete for fractions of pennies.
So, much of the shock coming from musicians and fans over the acquisition is rooted in the fear that everything people love about Bandcamp might change. These fears are not entirely unfounded, even if Bandcamp co-founder and CEO Ethan Diamond tried to quell concern in his statement, saying, “The products and services you depend on aren’t going anywhere, we’ll continue to build Bandcamp around our artists-first revenue model.” The giant red flag is Tencent’s involvement, and its predication upon Epic’s adoption of a GaaS subscription model. Generating revenue through ongoing payments has been incredibly lucrative for platforms and publishers, but it can also devalue the art, reducing it to easily interchangeable content.
Bandcamp itself has allowed artists to set up their own subscriptions via the site for years, but that kind of patronage is more akin to a fan club than Spotify. The all-you-can-eat model of the major DSPs is antithetical to Bandcamp’s entire ethos, and if Epic goes that route and eliminates the option for consumers to purchase digital music directly from the artist, the marketplace Bandcamp has built up across the last 14 years will look completely different.
Which brings us to another question: Why would Epic want to absorb a platform whose entire identity is built around independence? For a few reasons. The biggest is that Bandcamp is the exact product Epic has been trying to build since launching the Epic Games Store in 2018—a widely adopted, creator-friendly retail platform with a fervent user base and vast reserves of goodwill. The Epic Games Store has struggled to compete with more established marketplaces run by Sony, Microsoft, and fellow developer-turned-platform Valve, whose Steam Store represents the gold standard of digital retail in PC gaming. The store has also been plagued by clunky digital rights management and a buggy interface, and their tactic of luring developers with exclusive deals has largely backfired, garnering ill will and accusations of bribery from gamers. Bandcamp, with its ease of use and patina of goodwill, is everything the Epic Games Store is not.
Epic is also one of the major players in the early iterations of the metaverse, a broad concept that for now refers to virtual spaces in which users interact with each other: playing games, telling stories, watching concerts—and, most importantly, buying things. Epic has already hosted virtual shows and screenings through its Fortnite platform, and regularly licenses music from artists for events and promotions. Acquiring Bandcamp’s platform gives them direct access to those artists, and potentially a frictionless way to license music for their metaverse properties.
As far as tech overlords go, you could do much worse than an acquisition by Epic, whose founder seems to espouse the same principles that came to define Bandcamp. For all its flaws, the Epic Games Store takes only 12 percent commission from developers. And Sweeney has been vocal about the monopolistic practices of Apple and Google’s software marketplaces, which, he argues, offer minimal services for their 30 percent commission, stifle competition, and consolidate too much power with the two companies that dominate the mobile software market. When Epic tried to skirt Apple’s rules requiring all in-app payments to be routed through their own payments system, Apple booted Fortnite from the App Store and threatened to terminate Epic’s developer accounts. Epic sued, and while the judge ruled in favor of Apple on nine of 10 counts, determining it was not a monopoly, they also found that Apple had violated California’s unfair competition law by preventing developers from informing users of other payment systems within their apps.
Beyond the lawsuits, Epic’s willingness to challenge the big boys has benefited everyone. Since the Epic Games Store opened, the rival Steam Store has lowered their commission, and a few months after the Epic suit was filed, Apple announced it would accept applications from developers making $1 million or less to be considered for a lower commission rate.
