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« MusicThinkTank.com Weekly Recap: Value Added Streaming | Main | Choosing the Right Music Producer For You »
Friday
Oct252013

Value Added Streaming

The internet-fueled debate about the pros and cons of Spotify went another round last week, with contributions by David Byrne, Dave Allen, Jay Frank, Bob Lefsetz and Fast Company. I read them all, as I’ve done with the previous public debates about whether Spotify is a good or bad thing for musicians. As an indie record label owner and a long-time advocate for musicians through the Future of Music Coalition, I care deeply about these debates and, more importantly, about ensuring musicians and songwriters are fairly compensated for their work.

Most of these articles have focused on the per-play compensation that performers and songwriters receive, something that’s between 2/10ths of a penny, and a whole penny per play, depending on the subscription level of streamer (ad-supported versus premium), geographic location of the service and the listener, and – most importantly – the deal that the artist has with his or her label, publisher and/or aggregator.

Most writers argue that this fraction-of-a-penny rate is a trifling amount that cannot sustain artists. [And, indeed, it would be impossible for musicians – except those at the tippy top – to rely solely on on-demand streaming services for their month-to-month income. However, this is just one revenue stream of many. The majority of musicians rely on a mix of income streams based on their compositions, sound recordings, performances, brand, and knowledge of their craft, the makeup of which is highly dependent on their role, genre and career arc, as well as their memberships, teammates, and whether they get radio airplay. This is something that we have documented as part of the Artist Revenue Streams research project, which has been examining changes in musicians’ income streams over time.]

Other writers have countered that debates about this fraction-of-a-penny rate neglect the fact that this economic equation has three parts to it: (a) size of paying audience, (b) number of times something is streamed, and (c) the payment per stream. Streaming services continue to argue that artists will get paid more if (a) the audience grows, whether through an increase in paid subscribers or more bundling with devices, as it will increase the chance of (b) more streams and more company revenue.

As an advocate for musicians and songwriters, I’d like to see an increase in (a) audience size, (b) number of streams and (c) the payment per stream. But I also know that the per-play rate for on-demand streaming services was set through private negotiations between the platforms and the biggest record labels in the world, and that individual musicians (unless you are as powerful as Metallica or Pink Floyd) have almost no leverage over that (c) per-play rate.

On-demand subscription is still a crowded marketplace, currently represented in the US by Spotify, Rhapsody, Rdio, Cricket/Muve, Slacker and Google Play. Then there are the non-interactive services: Pandora and Sirius XM. And the new hybrid: iTunes Radio. And the upstart: Beats. And the elephant: YouTube. Not all of these will survive, as most of these really, really, really need to grow their user base in order to turn a profit.

Here’s a bold prediction: The winning music services will be platforms that satisfy users and musicians.

Instead of digging in harder on the per-play rate issue, let’s look at some other changes to these music services that might make a substantive difference for musicians, songwriters and fans. Full credit goes to Zoe Keating, Erin McKeown, Casey Rae, Ann Chaitovitz, Jean Cook, George Howard, John Strohm, David Touve, Mark Mulligan, the Fair Trade Music Campaign, and many others for inspiring and informing this list:

Display: This is basic, but essential. Every streaming platform has made specific decisions about what metadata is displayed on an artist or album page. Usually it’s Track Title, Artist Name, Album Name. These as also the kinds of searches a user can do. What’s usually not displayed or searchable? Composer/Songwriter. Label. Release Date. Conductor. Soloists. I understand that services have very practical decisions to make about user experience, simplicity, and how displayable data translates to mobile apps. But artists and aggregators routinely deliver all of this extra metadata to the services, and it would be great if it was available via a “more info” or “credits” tab. And, in the case of classical music, Artist Name/Performer and Composer should both be visible and searchable. Otherwise, searches for specific recordings are fruitless, and classical music simply becomes invisible.

Drive: Services should build out tools that make it dead simple for listeners to take action when they hear music they like and they want to engage more with the artist or band. In a perfect world, platforms would provide artists and labels with backend access to a dashboard, where they could pick and choose the widgets or links that are most appropriate to display on their artist page. Why customizable? Because the tools and information that are useful to Fleet Foxes are different than those that matter to Fugazi, or Frank Sinatra. Options could include: one-click access to an artist’s website or social media, one-click downloads of MP3s, embedded tour dates and an easy way to buy a ticket to a show from the venue’s primary ticket seller, or direct ties to merchandise. Many of these activities are worth, in dollars, a lot more than the micro-penny value of the streams themselves.

Data: Give musicians, labels and managers access to anonymized data and heat maps about the customers who are listening to their music. This could potentially help musicians and their teammates make better decisions about where to perform live or how to attract more fans.

Discovery: All the services offer a variety of tools – recommendation engines, pre-programmed stations, user-generated playlists, links to what friends are listening to, customizable sliders, and so on – that can help listeners find music that they might like, or discover something new. Awesome. But there is a lot of untapped potential here to use artist and song metadata to make the connections between various musical projects across time.

Think of metadata as the limbs of a musical family tree. Services could make it easy for a Foo Fighters fan to trace Dave Grohl’s musical history back to Nirvana and, before that, Scream, and also follow his work as a hired gun drummer, which includes playing on Queens of the Stone Age and Nine Inch Nails albums. Using metadata for discovery could be particularly great for songwriters, composers and producers. It could be used to connect the threads on Carole King’s work as a songwriter, from the Monkees to James Taylor, or to follow the production credits for Dave Sardy, or to point out that the Paul Williams who is featured on the new Daft Punk album is the same Paul Williams who wrote “Rainbow Connection.”

Perhaps I’m simply being nostalgic for the days of studying album credits, but platforms that encourage this kind of “down the rabbit hole” discovery would not only strengthen the musical connections that make artists’ careers noteworthy and inspiring, but also encourage listeners to spend more time engaged with the music platform, participating in the type of liner-notes learning that has fallen by the wayside with the domination of MP3s.

More Control: This suggestion applies most specifically to YouTube which, unlike all the other music services, allows musicians to upload their own work directly to their platform and lets users generate videos using other musicians’ music. YouTube has created its own clever system to deal with licensing and compensation, but because there is no subscription fee, all of the income generated from the site is based on ads. This is great for the user – FREE MUSIC! – but the musicians whose videos are posted have no control over the ads that are associated with their music. It also makes it impossible to create a more personal or immersive experience, or one where artists would have control over the prices for viewing their content.

There’s little doubt that YouTube will continue to dominate the music discovery and listening world in the years to come. What would vastly improve it would be giving musicians the ability to create optional premium tiers where musicians could gather paying subscribers for an ad-free experience. (Breaking News! A version of this apparently near launch)

Transparency: While this article wasn’t designed to talk about the micro-penny-per-stream rates, it’s worth mentioning that all of these on-demand services could do a much better job of disclosing the rates they are paying per stream, and ensuring that rightsholders – from the biggest label to the smallest indie – are getting paid equitably. As noted earlier, these per-stream rates are set through private negotiations between the big labels and the services, with the contracts subject to nondisclosure agreements. Absent any official word from the services, advocates, the media, and musicians themselves are left guessing about what those rates are. Sure, various musicians and songwriters have posted their per-stream royalty statements to blogs and websites, but without more complete information, we are simply hypothesizing about the range and differences in per-stream rates. And, some services prohibit musicians from talking about payments, which means they could be kicked out of the service for disclosing the finer points of their deal. It’s time for these on-demand streaming services to adopt greater transparency and demonstrate a commitment to equitable payments to all rightsholders.

We are already seeing services embrace some these features. Many offer one-click MP3 downloads. Rhapsody is participating in The Recording Academy’s Give Fans the Credit campaign, and Blue Note’s app on Spotify shows what kind of historical tours are possible with rich metadata. Shazam’s app allows users to push discovered music to Rdio, Spotify or buy it on iTunes. Spotify is embedding tour dates on artists’ profiles via Songkick. Pandora offers one-click purchases via iTunes and Amazon and has done some early stage data sharing with some musicians. In May 2013, YouTube rolled out a pilot premium channel service and it looks like they’re set to launch a more robust version. The soon-to-be-released Beats promises human curation and will possibly tie in more e-commerce.

Despite over ten years of development and growth of various on-demand streaming and subscription services, we are still at the early stages of these digital platforms. Platforms will transform and adopt new features to stand out in a busy marketplace and, hopefully, entice more customers. The music services that will win, in the long run, will be those successfully enhance the connections between musicians and fans. But it will take continued pressure from musician and songwriter advocacy groups to ensure that services do not just treat music as a crowd-gathering mechanism. We need to work together to propose practical solutions. 

This is also why conversations involving lawyers, technologists, policymakers, labels, musicians and songwriters are so important. On-demand streaming is one topic, but there are many other policies and business practices that determine if, how and how much musicians are paid. Compulsory licenses, new business models, performance royalties, copyright reform, metadata and musician advocacy are all part of an artist-driven conversation that will be happening at the 12th annual Future of Music Summit in Washington, DC on October 28 and 29. Want a better music ecosystem? Join us.

Kristin Thomson is Co-Director of Future of Music Coalition’s Artist Revenue Streams Project. @kristinthomson. Special thanks to Zoe Keating for contributing to this article. @zoekeating

Value Added Streaming

Reader Comments (3)

There are a couple of semi-random points I would like to make concerning this topic. For one, it never gets mentioned somehow that because these streaming services are free, you are often spinning tunes that you actually already own elsewhere. If Spotify didn't exist, I would just be playing the CD I purchased ten years ago. So, while probably not a windfall, bands have to technically be pulling in revenues on product people already bought to some extent. And despite hearing doom and gloom stories for the past decade about it going down in flames any day now, I don't see FM radio disappearing anytime soon. Personally I listen to it just as much as I did ten or twenty years ago. It doesn't seem to be the least bit different, either, as far as how many bands get broken via radio, nor how popular these artists become, nor how many stations there are - is it me, or are there now more spots on the dial now, not less? Obviously the record companies are taking a huge hit from their multiplatinum $18.99-per-CD heyday, but you could just look at this as a long overdue market correction. In my opinion, while it's harder to rake in Rolling Stones type money these days, it's easier to make a solid living from your music.

October 25 | Unregistered CommenterHorace Copes

You missed one important item:

Selection:

If artists and labels want top dollar royalties from streaming services, then everyone and everything has to be available on those streaming services.

Metallica, Pink Floyd, Bob Seger, The Eagles, Atoms for Peace, the band Paul McCartney was in before Wings. You see where this is going? Why would anyone pay top dollar for a streaming service that doesn't have these artists?

It’s clear that streaming services are the future. But it’s not fair for artists and labels to ask for premium pricing from streaming services unless they serve up all of their music.

If a streaming service has all music, it can ask for a premium price. Artists clearly deserve their fair share of that premium price. But streaming services can’t charge premium prices to pass onto artists unless everyone participates.

October 28 | Unregistered CommenterLlew Roberts

Kristin, thank you for this article! Your prediction that the winning music services will satisfy both users and musicians is quite optimistic. I think this might happen in the long run. In the short run (or under current rules), the winning music services will however be the ones that satisfy major rightholders they have to negotiate with. And the latter unfortunately don't always have the same wishes as musicians and users.

November 7 | Unregistered CommenterNikita

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