Due to the timing of Spotify’s 5th anniversary and the much-anticipated impending launches of rival streaming services such as Daisy/Beats Music etc…, there has been much debate around streaming and the future of artists’ revenue. Many very interesting pieces have been written which I encourage you to read, starting with Mashable’s “Spotlight” article on Spotify. Here are my two cents.
1. Are Artists and Streaming Companies’ interests incompatible?
Despite streaming services all promoting themselves with artist-friendly taglines, their focus is elsewhere. They have to please their investors who pump years of cash into their venture to gear them up to the level where they can file for an IPO and become publicly-traded, which is when their shareholders will finally make a profit.
Meanwhile, they need to ensure they regularly raise enough funding to expand internationally and swiftly improve user features/integration, which in turn keeps their investors confident in their ability to deliver.
And for all this to happen, they need to boast having the largest catalogue available, so as to appear relevant for huge chunks of market share and stay well-placed in the race / game of bluff of who is best poised to become the winner that will take it all.
Why is this a problem for artists? Well, first of all, they don’t appear in the equation because streaming companies have licence deals in place with master owner organisations (aka labels), not artists directly. Galaxie 500 drummer Damon Krukowski rightly remarks: “Musicians are not stockholders. We’re not clients. We’re not even providers. We’re nowhere on the list. They did their deals with the major labels that gave them the keys to the kingdom… They’re not counting on royalties for payback.”
So streaming services need to please their investors but have no obligations towards artists, factually.
2. Streaming companies’ artist relations strategy: dazed and confused
As initially mentioned, streaming services tend to promote themselves as artist-friendly. But they confuse being genuinely interested in promoting artists’ interests and being so crazy about music that they want to world to listen to more of it: those are two very different things. Which lead to radically opposite strategies and actions.
The first would mean finding immediate solutions, the second entails a long term approach in which artists are expected to wait to reap its benefits (if any at all, ever). The confusion extends to (not) deciding between being artist-friendly vs. being artists’ friend/preferred partner.
Some companies are finally getting their act together to go beyond having technical features that take care of themselves and have started highlighting their catalogue in new ways both from an editorial and a technical support to other media standpoint.
Spotify, for example, has launched its “Landmark” initiative, which is wonderful for music fans who can really delve back into the past of a specific band/era. It doesn’t solve the problem linked to its Radio and Discover features (they just don’t work and there is no added value for listeners) but it’s a great editorial move: smart, thoughtful, music-lovin’ cred points definitely achieved there.
Deezer and Spotify also announced being part of the BBC deal a couple of days ago. As a music lover, it’s incredible news and made my day. This deal will significantly help amplify trusted music media curators like the BBC (and hopefully many more to come).
Yet again though, this serves music lovers’ (and users) mainstream interests here, not emerging artists.
3. There’s also a PR problem.
Streaming services trying to cut short any uncomfortable questions by saying they are constantly talking to managers and artists on the topic can only help them brush through for so long. The unfortunate recurrence of public spats between artists and streaming services seems to point at difficult (sterile?) discussions around money pay-outs (if any) and that’s about it.
When a company puts forward fairy-tale stories of artist here or there being luckily highlighted by a prominent shareholder user (Sean Parker for Spotify for example) in lieu of a global artist-centric strategy, it’s not ok.
And being so convinced they are the artists’ only solution, streaming services tend to get offended every time an artist calls them out on revenue splits. I’m personally getting tired of reading variations of the “I’m-feeling hurt-when-you-question-my-motives-because-I-believe-I’m-in-this-for-the-greater-good-of-humanity-and-you-just-don’t-realise-as-an-artist-that-this-includes-you-too” answer/attitude.
It makes the company look immature, emotionally confused about its motives in regards to artists and gives the impression it feels at fault. It also makes the streaming service come across as awkward towards artists (at best) or condescending (at worst) which is counter-productive, if not disastrous in terms of PR. You’re doing it wrong.
4. Over which period of time should we be judging how relevant Spotify and co are proving anyway?
A company can take years to get off the ground, especially in tech and startups like streaming services, where the starting point in the VC system is that it needs funding, and will take a certain number of years to make a profit, because it needs to reach a critical size and number of users/customers to do so.
Plus it’s only natural music industry media coverage should have progressively integrated tech, as it has been the main disruptor behind music “consumption” and “user/consumer” habits. The problem today though, is that music industry coverage is very much skewed in favour of tech because it pervades the evolution of music industry: we all have startups’ prerogatives in mind as they match users’ interests in the short term while we still have relatively hazy notions of how artists’ priorities actually translate into reality, probably also because we only see them mentioned when they have something to sell or complain about their situation.
Meanwhile, artists create music and art and need to eat, pay their rent and just get by on a daily basis. So the importance they attach to the pay-checks they receive quarterly is huge, and the higher the number of streams, the bigger the feeling of discouragement and disappointment when they realise streaming is not going to prove a reliable source of income.
Especially when they read in the press about the amounts of funding streaming companies receive as well as the amounts they publicly announce in its quarterly financial / P&L reports. Artists don’t really care if studies reveal that streaming helps them sell more concert tickets and albums. Artists will say maybe-they-do-but-only-for-so-and-so-at-the-top-of-the-pack-and-it’s-not-working-for-me.
Artists understandably scoff at streaming services’ very basic argument that growing their topline and achieving nothing less than world domination is the only solution to grow their revenues from the service.
Artists and the tech world aren’t looking at the situation with the same priorities or timing in mind. It’s a short-term vs. long-term clash here. It’s about those who prefer one in the hand and others who prefer two in the bush (but don’t have a hunger problem while they wait for it). Artists and Spotify’s investors’ interests are at complete odds with each other.
Business is business. What streaming services’ investors and artists are looking for are concrete results, but for opposite reasons. The first category likes what it sees at the moment, the latter is becoming increasingly indignant about the way it is systematically called upon to embrace the situation while getting nothing but the promise of future recognition at best, mere awareness at worst. Time is money indeed.
So the answer to the period of time over which things should be judged will never be the same according to the people concerned.
5. But what’s in this for artists? Is the streaming revenue debate going to end, ever?
Does that mean artists should expect streaming revenues to compensate album sales revenue? Not in my humble opinion. I had explained why in a previous midemblog post (“Adapt or die: why mourning your losses will get you nowhere“.)
But let’s keep in mind that the monetisation of their recordings used to be a major revenue stream that they can no longer count on, and the pill is difficult to swallow because they feel the end of that era was decided without them being able to ever have their say. All they are left with is the occasional possibility to publicise their discontent and disagreement of the consequences of a Yalta-like situation, but even that isn’t very satisfying. They cannot speak as a common voice, at present, they can only strike out individually when the straw breaks the camel’s back of an already established artist. This in turn generates a PR spin of media hype around the messenger, to which streaming services respond to with the usual answers that they have artists’ best interests at heart, but need to grow bigger to be able to pay them more. It is a waiting game artists are utterly sick of and it’s very frustrating indeed for any artist to hear these arguments over and over again when their daily concerns are to find reliable ways to fund their career but without having to run side-jobs on top of this.
Plus it creates a divide between established artists who built their career on certain business model and context, worrying the younger generation will not be able to be as lucky as themselves (David Byrne / Thom Yorke & Nigel Godrich), and the emerging artists who see things very differently to the point they believe they will work out a solution and aren’t hesitating to experiment with innovative formats that match today’s music consumption habits and panoply of technology available to all music fans worldwide. (Nicolas Jaar & Björk).
OK. So what now and next on the streaming front?
6. B-B-BREAKING NEWS: MUSIC IS A POWERFUL EMOTIONAL VECTOR AND ITS LISTENERS ARE HUMAN!
I know geeks have taken over the world, but it seems amazing to think it is only now becoming a common assumption that music isn’t just a database managed by an algorithm. Difficult to believe, but for some mysterious reason, music doesn’t self-produce and come out of a magician’s hat. After many years of intense research, streaming services have now discovered music is a sum of human emotions that each artist, songwriter and/or composer has spun into an incredibly personal version of what they wanted to say and share. Can we please take a minute to take in the extent of what this means for humanity?
Bottom line: everyone is now rushing to close deals with trusted editorial sources and promote themselves as ground-breaking because they rely heavily on human curation, user interaction and fan playlists. These last few weeks have been a festival of press releases, upgrades, announcements and timely leaks.
The question is now: if everyone is focusing and relying on their users to contribute their knowledge to get ahead of their competitors, does this mean streaming services aim to become media empires? Or do they ambition to remain improved algorithm managers?
How do you attract these people?
– Because you offer the best pricing and/or other services / freebies to attract them?
– Because you make it super easy for people who have been using rival services to switch over to you in a couple of clicks and still keep all the playlists they previously curated elsewhere?
– Because you’re cooler, have spun the better story and come across as the most artist friendly? (Note how convenient it is for Spotify’s competitors that the Swedish company should have let itself be cornered into bearing the brunt of artist discontent and not thought ahead about the implications of their image and strategy to counter this and deflect back on competitors).
– Because you flaunt your vision and your precocity / the fact you were the first to do this and have been doing so for so many years? (This is my jam, for example)?
How will these services stand the test of time? If there is no difference between each service’s value proposition at the end of the day but the quality, frequency and amount of its users, are all players in the streaming field readying themselves to tread the same path as any other tech company like Facebook & co, for whom stock exchange value is based on the amount of private data it collects and resells? Time will tell for sure, but I will be attentively scrutinising any moves in this area very closely indeed.
Emily Gonneau is the manager of artists like Emilie Chick, and a consultant for OK Go. Read all of her midemblog posts – including our most-shared ever post! – here. You can follow Gonneau’s company, Unicum Music, on Twitter & check out its website here.