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Tuesday
Dec142010

The Unfamiliar Sound of Competition and Managing Your Rights

Up until now, music was in a unique competitive product category: there simply wasn’t much competition (for consumer attention) between well-made songs.   

Songs are inexpensive, consumed in under four minutes, easily obtained, and songs are the only product in the world where billions of users…each own thousands of ‘competing’ alternatives.  In reality, uniformly-priced competitors are often stacked up and then consumed in succession, and in the age of the iPod, the stacks (the playlists) are growing instead of shrinking. 

However the modern world conspires to ultimately deliver, in every product category, the greatest value at the lowest price, and songs are about to loose their long held exception. 

There’s a clash coming between legacy songs (established hits) controlled by disconnected conglomerates versus new music solely controlled by artists that can instantly, with the click of a mouse, manage all of their rights.

Consider the (partial) concept control panel (below) for a set-it-and-forget-it, radio-like streaming music service…



For the purpose of this post, we are focused on price competition.  Assume that the popularity fader…simply works as expected.  I believe there’s enough work being done is this area to deploy this (popularity potential) feature now or in the near future.

Price Competition
The ‘stream / song price’ fader (shown above) controls price (consumer cost); it could just as easily control the flow of advertising insertions within a flight of music.

It’s only natural that the average music fan will want to listen to a combination of the lowest-priced music, popular music, music with popularity potential (within genres), and/or streams of music that are minimally interrupted by advertising intrusions. 

Let’s examine what the lowest priced, popular mix might contain: at the very lowest prices, the mix will contain the least amount music that’s controlled by entities that are unwilling or unable to waive fees and royalties; this includes music from established (signed) artists and almost all preexisting hits.  If users want (more) familiar music, they will have to either increase the price they are willing to pay per-stream / per-download, or expose themselves to more advertisements (by sliding the fader to the right).

We already know that users would rather not continuously listen to streams that are over populated with unfamiliar songs, so I suspect that most music fans will choose a place on the fader that includes a comfortable level of preexisting hits; obtained at an acceptable price.

Everybody and every entity in the world that plays or consumes music is price/cost sensitive.  People steal music because of price.  Music services are cost (label fees, streaming fees) sensitive.  Bars, restaurants and nightclubs are price (licensing fees) sensitive.  Even radio would love to reduce the costs connected to broadcasting music. 

Coming soon to a streaming service near you…  If your songs have popularity potential (within a niche/genre), you will be able to compete for spins against established artists and preexisting hits, and you will be able to be filtered into streams…all based upon price.  Moreover, you will be able to withdraw your willingness to suspend your royalty rights and forgo payments with the click of a mouse.  If you believe exposure leads to the revenue, then price competition is going to be great for unknown artists and not so great for legacy artists.

Now that you have the information above, here are four things to consider:

1) I do NOT believe that using a Creative Commons license  is the best way to withdraw your rights from the marketplace.  Wait until you are able to control your rights upon, and suspend payments from, individual streaming services via the click of a mouse.

2) If you are unknown, uniform pricing is not your friend (it’s probably not your friend under any circumstance).  Any deal, contract or law that shortens your ability to set your own price or to temporarily suspend your royalty rights is not in your best interest.

3) Remain vigilant and don’t get misled into believing that certain laws need to be extended, amended or adopted to protect “your” best interests.  Chances are, the laws and regulations will be protecting the entrenched interests of those that 1) don’t want to compete on price, or 2) exist off the back of the income streams you want to suspend and restore via the click of a mouse.

4) In today’s world, the interests of publishers, labels, management, investors and artists are usually not in alignment.  The last thing you want is a contractual situation that prevents you from freely using your songs to drive the remainder of your business.  For this reason, I am an advocate of entering into 360 deals with ‘partners’ that can deliver value to, and participate in the upside of, every facet of your business.

I want to hear from music publishers, industry attorneys and songwriters on the option of temporarily suspending rights and payments to compete for exposure on streaming services.  Consumers are one (huge) thing, but venues (restaurants, bars, nightclubs, etc.) pay for blanket licenses; I don’t think venues are going to stop paying for blanket licenses in droves, as music fans will expect to hear a reasonable flow of familiar music.  Then again, I could be wrong? 

In the US, royalties from traditional broadcast radio are only paid to songwriters. Can songwriters legally suspend their radio royalty rights in consideration for more exposure?  Artists, would you give full commission on the sale of your music (you get nothing until you click out of the program) to a popular radio station in exchange for ongoing exposure?   

about Bruce Warila

Reader Comments (6)

As one revenue stream after another is eroded for artists and writers, the value of "exposure" approaches zero.

December 14 | Unregistered Commenterfelix

Isn't paying (or ceding royalty rights to - same difference) a radio station for the purpose of exposure called payola?

Otherwise, this article has some thought-provoking points. It would be nice if songwriters/music lawyers/people with actual business experience dealing with streamed music revenue could weigh in on this topic.

December 14 | Unregistered CommenterInvisible Oranges

free is the new black.

you have to hold on to all of your rights to be able to benefit - give away a shirt and sell the album - give away some songs and sell a shirt, give away songs and shirts and get the gig, give away books - lecture, write another book........lecture for a reduced rate - sell books........dj.........grow, exist, sustain succeed

December 15 | Unregistered Commentermartin atkins

It is a form of payola but one that I can live with. I would forgo royalties (for a contractually limited time at least in exchange for radio play.

December 15 | Unregistered CommenterTJR

As someone new to process of controlling the value of their music (or seeing how the existing situation takes effect), this strikes me as a logical development.

It seems a piece of music is often gaining exposure as a fraction of how many tracks were downloaded that day and how good they were.

As streaming services get better at filtering the available offerings to ones the listener will appreciate, the above controls will become more valuable. Especially where artists can separate themselves more from Sony/BMG protocol.

Could be the best thing since fan targetting went the way of the cruise missile...

December 19 | Unregistered CommenterJames H

Interesting idea, but you fail to mention that 'cheaper' songs will never meet the quality of 'higher price songs'. Higher priced songs are 'better'. They sound better, are produced by more talented producers, written by better writers, played on by better musicians, all of which cost money. Bargain basement artists will never be able to compete with real music professionals. So songs, much like anything else, are pretty much 'get what you pay for'.

January 19 | Unregistered CommenterEMG

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