As 2015 continues to unfold, a certain optimism is developing with regards to the music industry’s future. The debate now seems to be focusing on how emerging business models can be re-shaped to better serve artists, labels and distributors.
That is, at least, what (the now defunct) Gigaom writes in a post entitled “The music industry’s broken business could change in 2015“. Taking the example of the United States, it notes that “musicians are having a harder time than ever,” regardless of the revenue source – but also that “the internet has introduced new efficiencies that make it easier to track song sales and distribute payments.”
Streaming services in particular are under scrutiny from all sides. Internet royalties may not be making up the shrink of CD sales, but they’re on the rise in many territories. In Germany, to quote but one of them, they grew by 79% in 2014, Music Business Worldwide reveals. The shift is even more obvious in the US (see chart below).
Source: Peter Tschmuck/RIAA data
There are many reasons to believe in streaming as music’s saviour on a global scale. From [PIAS] revealing that its streaming income topped revenue from downloads in 24 countries in 2014 — as Music Business Worldwide writes — to the current battle for international expansion, the names of Deezer, Spotify, Rdio and those of their peers are at least in all heads, all around the globe. Rolling Stone even identified “nine key countries as being crucial to winning the international streaming wars”: India, Brazil, Sweden, China, Japan, Russia, Mexico, Germany, and Colombia.
The thing is, controversy around streaming services is also on the rise. Are indie labels getting their fair share from them? “Spotify has to understand that the future is indie… Independence will come from people like me, from artists by themselves, and from the management companies,” Because Music founder Emmanuel de Buretel told the By:Larm conference crowd a few weeks ago, Music Ally reports.
More and more artists are asserting that “major record labels are keeping nearly all the money they get from Spotify,” Techdirt writes (see chart below). In Sweden, songwriters from regional rights society STIM published an open letter calling for “a more balanced approach in the distribution of digital revenues,” according to Billboard. Last but not least, in an interview with Fast Company, Björk herself explained why she decided not to release her album on Spotify:
“A few months ago I emailed my manager and said, ‘Guess what? This streaming thing just does not feel right. I don’t know why, but it just seems insane’… To work on something for two or three years and then just, Oh, here it is for free. It’s not about the money; it’s about respect, you know?”
The debate is far from over. In a guest column on Billboard, Avicii’s manager recently delcared that “too many people have the wrong idea about what Spotify is” – in his opinion, the streaming service “is not a one-way street; it’s a two-way platform that allows you to creatively market your music while generating revenue.”
Streaming may actually just be a part of a much larger issue, as a panel suggested a few days ago at Mobile World Congress. In an unusually frank discussion with executives from Deezer and Rdio – reported by Music Ally – Ministry of Sound CEO Lohan Presencer accused the very nature of “free” music to be the industry’s main problem:
“No strategy for addressing the pernicious nature of legal free music is complete without putting YouTube behind some sort of pay mechanic. I fear it may be too late, but as an industry we owe it to ourselves to try.”
Is, as Björk, Presencer and Taylor Swift have suggested, the freemium model the problem? Should we expect new ways of charging music listeners on streaming services in the near future? That could at least explain why Apple’s interest for the industry keeps growing: the Cupertino firm is expected to launch its own streaming service this year, without a freemium option. With iTunes having over 800 million credit cards on file and being available in nearly 150 countries — compared with 15 million paying subscribers and 60 countries for Spotify — it’s hard not to imagine, as TechCrunch put it, that “when Apple’s streaming music service comes out later this year, it’s going to come hard”…
Billboard has an even more direct take: “Apple doesn’t want to compete – it wants to own the record business,” it writes, making some price assumptions:
Apple would not comment on its plans (the Cupertino, Calif.-based company bought Beats Electronics for $3 billion in May 2014) for what is believed to be an all-you-can-eat music service with a modest subscription fee. The price being debated: $7.99 per month, down from Beats’ now-standard — and arguably too high — $9.99 a month, with no “freemium” model. (The sweet spot for consumers, at which profit is maximized for the labels: $3.99 to $4.99, say experts.)
Should Spotify be worried? Officials say they aren’t, and count on their “big data technology” and “huge user base” to stay relevant in coming years, CNBC reports. The Swedish streaming giant also argues that its free, ad-supported tier plays an essential role in weaning music fans away from piracy.
Only time will tell if 2015 was the turning year for streaming and the industry as a whole! Or — and this is a credible alternative — the year when the notion of copyright reached a new, unprecedented level. No clue what we’re hinting at? As Quartz‘s analysis of Robin Thicke and Pharrell Williams‘ lost battle against Marvin Gaye’s family suggests, the implications for copyright moving forwards could be huge…
See you all at Midem in June 2015 to witness the latest evolutions of the music industry!
Top photo © Björk, via her Facebook page