By guest blogger Taylor Lambert and Kevin Erickson
In the age of on-demand streaming, it’s common to hear people talk about music as “limitless”— something that flows forth endlessly like water. Indeed, musicians around the world release a huge volume of new music every day. But in practice, most consumers’ exposure to the world of new music is extremely limited. It’s one of the thorniest problems—if there’s so much music out there, why do consumers end up being exposed to so little of it? Why should the music marketplace be a winner-take-all system?
Of course, whether or not you view this as a problem to be solved could depend on whether you’re fortunate enough to be one of the “winners.” Still, media critics have long pointed to the role of gatekeepers who exercise considerable control what music reaches audiences. From radio programmers to retail managers to talent buyers to music reviewers and beyond, the most powerful labels do their best to keep their offerings front and center—often at the expense of independents. Radio is the still the number one source of “music discovery,” but commercial AM/FM radio broadcasters in this era of ownership consolidation tend to be highly risk-averse in their programming choices. Playlists are narrow and repetitive, as our research has documented. It has been the strong hope of the independent sector that online music services would be more democratic, allowing more artists to find audiences than was possible in the old-school media world.
Yesterday, on-demand music streaming service Spotifydid something pretty big by explaining in detail how it calculates and pays out royalties to rightsholders. With so many music industry pundits and practitioners in a tizzy about the economics of streaming, this move can be generally seen as positive. But as always, the devil is in the details.
It is certainly significant that Spotify took this step—probably long overdue—and we hope that it serves to increase the standard of transparency across the digital music sector. When a market leader like Spotify makes this kind of move, it can be a spur to other players to follow suit. However, it doesn’t really change much in terms of artist leverage on streaming on-demand services, nor does it impact most musicians and songwriters’ bottom lines. We spend a great deal of time considering this stuff—in fact, our own Kristin Thomson recently wrote a post for Music Think Tank about ways to make streaming music more viable for artists. (And if you need a primer on how the money flows on a variety of music platforms, check out these handy charts.)
Let’s say you’re approached by David Copperfield (it’s OK, don’t run!), and he asks you to be an audience plant for his next big televised spectacle. You’ll be privy to some behind-the-scenes secrets, and outing his magic as merely illusion could be a disaster for his career—other magicians will cop his tricks, his performances will lose their coveted mystique, etc. That’s no good. So to make sure you keep your lips zipped, he presents to you (pulled out of a hat, probably) a non-disclosure agreement. This is a contract that says your discussions regarding this particular event are strictly confidential, and if you go blabbing he can sue you for breach of contract.
Non-disclosure agreements (NDAs) in this context seem pretty straightforward, but what about all the NDAs that pervade the music industry? Why all the smoke and mirrors obfuscating the terms of agreement between streaming services and major record labels, or deals between aggregators/distributors and YouTube?
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, I care deeply about these debates and, more importantly, about ensuring musicians and songwriters are fairly compensated for their work.
Today, I posted a long-ish thought piece about this on Music Think Tank. Instead of focusing on the arguments about the fraction-of-a-penny rate per play, the article suggests some other changes to these music services that might make a substantive difference for musicians, songwriters and fans.
Revenue streams, access to markets, and how musicians, labels and songwriters are compensated
Wednesday, April 15, 2015
How are recording artists paid when their fans buy downloads on iTunes? How are songwriters paid when their music is played on Pandora? Since our founding, Future of Music Coalition has provided musicians, managers and labels with the in-the-trenches details about how performers, songwriters and labels are each compensated when their music is either streamed or downloaded on an array of music services. read more
On September 23, songwriters, publishers, record labels and digital music services announced they had reached an agreement on mechanical royalties for songs played on online music services.
Called a “breakthrough that will facilitate new ways to offer music to consumers online,” the voluntary agreement crafted by the Digital Media Association (DiMA), the National Music Publishers— Association (NMPA), the RIAA, the Nashville Songwriters Association International (NSAI) and the Songwriters Guild of America (SGA) ended a longstanding dispute about mechanical royalties for interactive streaming and limited downloads. read more