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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.