While Spotify's recent stock market roller coaster has failed to offer much benefit to artists, Chris Castle here looks at how some interesting moves by streamer Tencent could be adopted by other streaming companies to put fans on a path to greater artist sustainability.
Guest post by Chris Castle of Music Tech Solution
There’s three obvious things we know about streaming if we know nothing else: Everyone who works for Spotify got even richer in their stock market cashout while the overwhelming majority of artists and songwriters on the service languish; per-stream royalties are pitiful which matters if you don’t get minimum guarantees; plus streamers lose money because they spend too much on overhead, especially salaries and rent.
There’s a less obvious problem we know but that doesn’t come up very often–streamers don’t empower fans to reward the artists they love, much less the songwriters who write the music it all starts with. Imagine if fans could actually give money directly to their artists (and sign up for direct communications outside of the service).
But–thanks to inspiration from Tencent’s “virtual gift” feature, artists may have renewed negotiation leverage in actually getting streamers to empower fans to make direct contributions to the artists they love in the form of small “Ethical Prop” payments. Of course, in order to be entitled to be “ethical” handle, the streaming services–including Tencent–will have to make some changes in their current business practice.
Simply put, Tencent allows users (all users, subscription or ad-supported service) to make virtual gifts in the form of micropayments directly to artists they love. (The feature is actually broader than cash and applies to all content creators, but let’s stay with these socially-driven micropayments to artists or songwriters.)
“Tencent Music is a major part of the micropayment ecosystem because they let you give virtual gifts,” Cramer said. “If you want to tip your favorite blogger with a song, you do it through Tencent Music. In the latest quarter we have numbers for, 9.5 million users spent money on virtual gifts, and these purchases accounted for more than 70 percent of Tencent Music’s revenue.”
We are pioneering the way people enjoy online music and music-centric social entertainment services. We have demonstrated that users will pay for personalized, engaging and interactive music experiences. Just as we value our users, we also respect those who create music. This is why we champion copyright protection-because unless content creators are rewarded for their creative work, there won’t be a sustainable music entertainment industry in the long run. Our scale, technology and commitment to copyright protection make us a partner of choice for artists and content owners.
But–how to make “music-centric social entertainment services” into the Ethical Props? First, the streamer needs to take a smaller cut and they need to do some “Artist Services” work for their share. If you want to get paid for artist services, then serve the artist for your payment (to get all antimetabole about it).
Apps may enable individual users to give a monetary gift to another individual without using in-app purchase, provided that (a) the gift is a completely optional choice by the giver, and (b) 100% of the funds go to the receiver of the gift. However, a gift that is connected to or associated at any point in time with receiving digital content or services must use in-app purchase.
(That’s section 3.2.1(vii) in Apple’s App Store Review Guidelines for those reading along at home.)
And here’s where the “nonecoupable” issue returns–these monies should be paid directly each artist who opts-in to the feature. Sony and Universal learned to leave some on the table–we’ll see how far that goes. But certainly independent creators should get the benefit of 100% of any Ethical Prop.
On the songwriter side–now that lyrics are so prevalent and even Spotify is adding songwriter credits, it should be pretty simple for the discerning fan to give an Ethical Prop to a credited songwriter if the songwriter opts in to the Ethical Props.
Ethical Props present a win-win opportunity for services and all artists that want to break the headlock of hyper-efficient market share distributions on streaming services. As we all know and Tencent acknowledges, sustainability requires more than a per-stream royalty that starts 2, 3 or even 4 decimal places to the right.