Not Another Streaming Debate

musicGuest post by  of Black Box

In 2009, Jordan Kurland invited me to my first Bandwidth Conference when it was hosted in San Francisco; great name, no press, invitation only. The space was perfect for productive and intimate conversations. Five years later, Ashli Lewis (founder and organizer of Bandwidth) continues to keep the conference true to it’s roots as a music meets technology heart-to-heart. When I got a call from Ashli over the summer inviting me to lead a discussion at Bandwidth, I immediately thought yes. I asked my friend and colleague Michele Fleischli to co-facilitate a session about artist development in the face of technology and the new music economy. Michele and The Windish Agency, where she works as head of creative, can certainly teach us a lot about developing music today.

In the end, a personal emergency kept Michele away so I headed to opening night solo. Within mere moments of the session’s start, attendees jumped into a spirited and smart chat about what artists can do today to control their own economic future. I have been in the music business, whether I knew it or not, since high school. It’s been over 25 years, mostly at major labels. Last summer, I left Warner Bros Records and decided to start my own company, Black Box. Although the business has gotten a lot more complicated, its definitely more exciting today than it has ever been.

There is a very strong entrepreneurial spirit amongst today’s artist and the surrounding music community. New alliances and platforms are launching every day. Just in the last couple of weeks, we have been hit with the launch of YouTube Music Key, the resurgence of artist management juggernaut Maverick, Swift’s beef with Spotify, and Azoff’s issues with YouTube. Behind all of these new deals and tiffs is a common theme – leverage, and who has it in this new music economy.

Rightfully so, the topic is hot right now and lots of factoids are being thrown around in the media. Like this one; The average rate that Spotify pays rightsholders is around $0.007 per play. At that rate, approximately 1,000 song streams equates to the revenue equivalent of one album download. The conversion of free to paid subscribers will alter that financial picture somewhat, but there is no doubt that there will be more pain before we get to Dave Grohl‘s vision of “nirvana.” (Pandora’s conversion rate of paid vs. free subscribers is any where from 1.5% to 4.6%, depending on how an active subscriber is defined). There are also a lot of glaring omissions in the reporting of streaming’s financial facts and what these services are paying major labels for licensing.

Music_Streaming_ServicesNow, I don’t believe anyone at the conference doubts the potential for a lucrative streaming model. My own business is making a strategic bet on it and others at Bandwidth shared sentiment. But curious as I am, I posed a question; do you believe that streaming is lucrative for artists in genres other than pop? Kurland, who lead a discussion about artist management that weekend, recently sent me an article by jazz musician and President of the Content Creators Coalition, Marc Ribot. Marc is conducting a study on the economic impact of streaming services on musicians. He points out that although independent artists constitute only 38% of market share, they represent 90% of working musicians in the industry. They happen to also make up a vast proportion of the repertoire on streaming services.

So, how does the streaming economics affect this group, the rank and file of our business? And why do they matter?

Technology pundits hate this debate. Especially the focus on economics. They say things like: Why can’t we just give the consumers what they want and the rest will take care of itself? If your music isn’t being shared en masse, than maybe you’re not that good any way. Streaming could very well be technology’s answer to natural selection.

Personally, I believe that our creative future depends on those artists on the fringe. It has certainly been the case with technologists. If there is no business for experimenters, that is, if they can’t get past the short-term pain of streaming’s economics before it scales, our culture will suffer.

We must focus on how artists of all shapes and sizes can drive their economic future and independence. The relationship an artist has with his or her fans is their most important lever. The question then becomes, how do we move away from “likes” to “engagement” and how can artists profit from it? How do we forge more powerful and financially rewarding relationships with brand partners and media? How do we have conversations with platforms and encourage them to reward developing artists that can positively impact the culture?

The labels used to drive artist development in the old music ecosystem. Who owns the role of artist development today? The artist. Who funds it? An ever growing community of fans, labels, publishers, agents, media, and brands-all with skin in the game. Now, that is some serious bandwidth.

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  1. thanks for calling attention to the problem, Unfortunately, i can’t share the article’s optimistic conclusions::
    >”If there is no business for experimenters, that is, if they can¹t get >past the short-term pain of streaming¹s economics before it scales, >our culture will suffer.”
    yes, but this is not just true of so called ‘high culture’.
    Every form of today’s ‘pop’ began as a regional and/or niche market:
    punk, country, hip-hop: you name it. Defunding niche markets is now killing the goose that lays the platinum egg.
    whether such defunding is temporary; the question of when, if, and under what terms for artists, streaming will ‘scale’ is still very much open. We see very little evidence that the sanguine claims of Spotify et al are justified.
    “Who funds [artist development today]? An ever growing community >of fans,labels, publishers, agents, media, and brands-all with skin in >the game”
    The question of ‘who funds’ begs the question of whether the funding is just or sustainable.
    There’s no evidence that the sources cited above are replacing the funding lost or providing a sustainable future for artists, niche or otherwise.
    This becomes obvious if you look a bit closer:
    Fans: Kick Starter proudly announced having hit the hundred million mark in total monies raised for ALL projects since its inception. But the record industry alone has lost over 7 billion A YEAR: crowd sourcing is welcome, but entirely inadequate..
    Labels: are less likely than ever to fund niche artists. And many are
    imposing draconian ‘wrap around deals’ on those artists they do fund.
    Publishers: Publishers are being hit as hard as labels, if not harder. how exactly are they supposed to make up for labels’ cuts in artist
    media: where’s the beef?
    brands: well, if we want to turn music into ads, cool. (not). And again:
    where¹s the evidence?
    Unfortunately, optimistic projections don’t pay our recording costs.
    Reality: 25 yrs ago, even entry level labels were expected to kick
    something towards production.
    Then they expected artists to bring them finished product. Now, on top of this, many are charging artists 3-7000 dollars to ‘share the risk’.
    Reality: most emerging or niche market artists are funding their career
    development out of their own pockets. Many who can’t afford this are
    leaving, or never starting. The US Dept of Labor Statistics shows a 40% decline in the number of taxpayers listing their career as ‘musician’.
    Reality: artist development money comes from sales or investments. You can’t sell what people can readily get for free or next to nothing, Nor will people invest in something that can’t be sold. Our culture will suffer unless Google et al cease to destroy the market with models based on infringement.
    >”Technology pundits… say things like:
    >Streaming could very well be technology¹s answer to natural >selection”.
    yes, and racist pundits say similar things about the prevalence of people of color in the US prison system, as do sexist pundits about the wage differential between men and women.
    But such ‘pundits’ are hiding a social denial of the basic right of women and people of color to equal treatment under the law behind a false comparison to ‘natural selection’.
    The right of people to choose whether to give away their work for free..or not… is also a basic human right. I know Google’s a great big
    corporation, and they can get away with a lot. But those who support basichuman rights should think very carefully about denying artists equal treatment under the law. Because its a slippery slope, brothers and sisters. Hey, next thing you know, they’ll be giving your metadata to the CIA.
    Streaming itself isn’t the issue: we all know its here to stay. The
    unsustainably low rates now paid by streaming services are a whole other question.
    And its a question about people, not nature or technology:
    You won’t find pornography on YouTube. Why? Because Google has chosen toscreen it. You will find massive copyright infringement. Why? because they’ve chosen not to.
    there’s nothing natural about the selection of those who can afford to pay for recordings out of pocket as the only ones permitted a career in music. Its killing the careers and dreams of a lot of talented young artists, and impoverishing the culture we all share. Those manufacturing that selection are people,, and they need to be held accountable.

  2. Excellent points Mr. Ribot. This also left me both offended and bemused:
    >”Technology pundits… say things like:
    >Streaming could very well be technology¹s answer to natural >selection”.
    Streaming a la Spotify is by no means an egalitarian mode of discovery for indie artists. It is more akin to a library’s card catalog (remember those?); if you already know what you’re looking for you can find it. And mega “success stories” like Ed Sheeran’s are in no way the result of this sort of organic discovery that non-creators love to fetishize; his is the result of a very specific marketing plan that cost a number with many zeroes in it.
    Mr. Ribot is correct, the current model is just not sustainable. And all your rosy predictions of a kumbayah singalong future are already being proven wrong; ask any independent musician if their decline in income from sales, regardless of new opportunities afforded by crowd funding (just how many Kickstarters can you do?) has affected their ability to produce and promote their music in a significantly negative way. If the best indie musicians can hope for is “exposure”, then our landlords better start accepting that as rent payment.

  3. Spotify’s answer is that as they increase their number of paid subscribers, the payments to artistes/labels will increase. Do artistes have any reason to trust them?
    By then, so many *more* millions of songs will have landed on Spotify, creating a bigger pool of competitors for listeners’ attention.

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