The debate about streaming services vs. downloads has finally calmed down after a short period. The lack of accurate data to understand what is really going on, hope for better times and contradicting testimonials made it fade away, but for how long? My guest post on Digital Music News – about how some of our label clients were taking down their releases from Spotify – generated significant debate, both online and in my discussions with clients. I decided to do a survey amongst FUGA users. Together, the survey respondents – our client base – represents a significant portion of independent music.
The survey results were as follows (click images to enlarge):
A majority of respondents thought streaming cannibalises download sales; but just after them, over a third thought the opposite.
The jury is completely out on whether this is a long-term trend, or if it will blow over in time…
However, a resounding majority of respondents said they would not take their music down from streaming services.
The results of the survey, plus further discussions with several record label executives, artists and other music industry professionals on this topic show an inconclusive answer at this stage. We cannot at this time determine whether or not Spotify will harm your business.
In my own opinion, we need to look at this from a broader perspective. I have no doubt in my mind that the intentions of Spotify are honourable. Their CEO, Daniel Ek, and his team are actually making an effort to bundle music & technology, in hopes of giving listeners a great experience. For consumers, Spotify’s proposition is clear; for producers, not so much… yet.
The music business has become a data-driven industry where the life-cycle for most products is short, and the target audience spread around the globe. Looking at financial reports coming from digital service providers like Spotify, I can only gain knowledge on what money has been made where. Even understanding that can be challenging, to say the least. A playing field that is so fragmented and fast-changing requires quick and accurate information about its players.
As content owners, you need information on who bought your music, and all the background data. Spotify (and all other consumer-facing digital music services) has a deep and profound understanding of their clients and their behaviour. This could prove to be very valuable to content owners and help them with their business. Music is not like water and will never be. The knowledge of online retailers about their clients are deeper and broader than it ever was with a physical product. This can help target the right audience for a release, and make marketing and promotion way more efficient. The cost of distribution is low and the cost of marketing and promotion can be lower too. The growth potential in digital is still huge and we are just at the beginning of a new world where everything is connected and instant.
Without entrepreneurs like Daniel Ek, Steve Jobs or Amazon’s Jeff Bezos, we might still be waiting 10 minutes before our personal computer turns on, we would still need bags to carry our music around or have to go to a store to get what we need. Piracy has finally become a topic at the top of politicians and law enforcement agencies around the world.
So the way I look at it, the music industry has the chance to bring back prosperity. It is normal that people and companies make mistakes and sometimes get it wrong, the music industry and its players are no exception herein. The Spotify of today will be different from Spotify in two years’ time. Not everything they do will satisfy artists, labels and other players in the business. In a time of change and with the tools and the means to connect with each other on a global scale, we need to collaborate and figure out what the best way forward really is.
To quote Winston Churchill: “To improve is to change; to be perfect is to have changed a lot.”
In developing the right release strategies, thinking of product life-cycles and facilitating the “fast moving” audience is key in creating a healthy business. Digital service providers should become more advanced and provide more data to help understand the client and their business.
Real-time reporting and sharing of data is what we all should be focusing on. Becoming more lean in the way we operate our businesses, and letting technology become an opportunity instead of a threat, should be the adage.
My advice to all content owners is to start thinking about all of the above and not treat a music catalogue like a body of water. Every release is different and should be treated as such. In some cases it might be better to let Spotify wait for a couple of weeks and first harvest the iTunes sales; however, in some other cases it might be the wrong strategy.
I advise content owners to choose their technology partners based on their ability to help them better understand their business and based on their technical excellence. The better the music, the better the deals to be made. The more accurate the data, the better the choices are on to whom to promote and distribute to.
Holland-based FUGA distributes labels such as AWAL and Ministry of Sound to platforms like Spotify, iTunes, Amazon and Rhapsody.