There have been a couple of important stories in the last week or so. The first is the latest lawsuit against Spotify (here’s the Music Business World article and the Billboard article, plus the article on Apple also being sued).
I’ve worked for artists and songwriters for 30 years, and they always have to be paid for their work. But it’s hard not to have a little bit of sympathy for Spotify here. It’s incredibly difficult to identify and license every songwriter for every recording on a streaming service. And there isn’t (yet) a database to tell you who you need to get a license from and where to find them. Which is a real issue in the US where the penalties for not getting a license can be severe.
It’s Spotify’s obligation to get their licensing sorted, not the rights owner’s obligation to chase them. But do we really want to drive Spotify out of business here? Streaming is the reason the industry is growing again, so it seems a little like shooting ourselves in the foot. Maybe we should fix the underlying problem…
Predictions for 2018
More interesting was the piece in Forbes on their music industry predictions for 2018. There were the usual suspects – Spotify goes public, Amazon gets bigger, Google gets its act together, hi-res audio grows and vinyl stalls. Not much to see here.
But #6 is a real beauty: major labels lose the middle-class artist. What??
The author (Bobby Owsinski) explains it as “lower income from catalog and physical product results in fewer and lower advances to artists. Artists and their managers realize that it’s better business not to sign with a major unless they're on the cusp of superstardom, and opt to maintain a DIY approach instead.” Mark Mulligan had a similar thing to say in his blog.
There are 2 points being made here. The first is that streaming undercuts catalog sales, which underpins the major label model (around 50% of sales revenue comes from catalog i.e. recordings older than 18 months – so it’s a big deal). The second is that artists now have more freedom to not sign a deal with a label until later in their careers (or at all).
The first point seems counter-intuitive. Streaming is meant to democratise what we listen to – so while new releases will continue to be the main driver, the very point of streaming is that you have access to everything for ~$10 a month. In theory we should be listening to a wider range of music, and catalog will thrive.
That’s happened to a point but the streaming services all recognised that we (the consumers) need to be guided, otherwise “everything” is overwhelming. This is the most compelling part of streaming – sophisticated algorithms that quietly help us navigate 30m songs, re-discover music we’d forgotten about and find new music we’ll like. We may not have record stores anymore but this is much better and easier than it ever was.
Separately the shelf life of music on streaming services may be almost double what it used to be in the physical world (here’s the MBW analysis if you want to dig deeper).
It used to be that a new record was released, marketed and promoted with short term sales and chart position in mind. Streaming (and social media) tips that on its head, they’re not beholden to the old timelines and our music is literally on tap. However if you can listen to anything, anytime, then not only do we need help to find it as above, but the music needs to be good to get our attention. No fillers. And if good music really has a longer life, that fundamentally changes how we market music, the development of artist careers, and maybe even the way we value music.
The real story is the DIY revolution. It used to be that record labels had a lock on global sales and distribution, but streaming & social media have democratised that. Now artists can build a direct relationship with fans through streaming, social media and live, release their own music directly and only outsource the bits they need help with. An artist can now build a global fan base and a career without a label.
Does a label offer something an artist can’t do? Absolutely, no doubt about it. But that “something” has changed. There are plenty of examples of artists going the DIY route to a point and then leveraging the muscle of a major or indie label to push them over the top, or into markets they can’t reach, or to help them build their career in a different way.
This has got to be a good thing. DIY business models are pushing the needle on the music business in a positive way because artists can see a way to build a career themselves if they’re savvy and willing to work hard. Yes, it’s more fragmented with more small labels and DIY artists. But that should light up the hearts of the bigger labels. Streaming, social media and the DIY revolution they’ve unleashed make it easier for bigger labels to pick and choose the artists they want to work with and can make a difference to, having already seen their track record (and data) in the real world.
That has to be a better business model than signing a young artist, and (with all the best intentions) throwing a bucket of cash at it and hoping for the best. A one-in-ten hit rate is not only not good enough anymore, it’s not necessary.