Tag: Taylor Swift

@ashleyjanamusic’s Video Tells You All You Need to Know About Spotify’s Attitude Toward Artists

By Chris Castle

[This post first appeared on Artist Rights Watch]

Mansplaining, anyone? If you remember Spotify’s 2014 messaging debacle with Taylor Swift, we always suspected that the Spotify culture actually believed that artists should be grateful for whatever table scraps that Spotify’s ad-supported big pool model threw out to artists. They were only begrudgingly interested in converting free users to paid subscribers, which still pays artists nothing due to the big pool’s hyper-efficient market share revenue distribution model. 

And then there was another one of Spotify’s artist and label relations debacles with Epidemic Sound–Spotify’s answer to George Orwell’s “versificator” in the Music Department that produced “countless similar songs published for the benefit of the proles by a sub-section of the Music Department.”

The common threads of most of Spotify’s crazy wrong turns–and they are legion–is what they indicate: An incredible heartless arrogance and an utter failure to understand the business they are in. A business that ultimately turns on the artists and the songwriters. As long as there is an Apple Music and the other music streaming platforms, artists can simply walk across the street–which is why Taylor Swift could make Daniel Ek grovel like a little…well, let’s just leave it at grovel.

But–this long history of treating artists and especially songwriters poorly is what makes it so important to preserve Apple Music as a healthy competitor to Spotify and the only thing that stops Spotify from becoming a monopolist. A fact that seems entirely lost on their boy Rep. David Cicilline’s anti-Apple bill that “seems aimed directly at Apple and has Spotify’s litigation against Apple written all over it.” (Mr. Cicilline runs virtually unopposed in his Rhode Island elections, which if you know anything about Rhode Island politics is just the way the “Crimetown” machine likes it.)

Why are ostensibly smart people given to such arrogance? Mostly because they are rich and believe their own hype. But never has that reality been on such public display in all its putridness than in a truly unbelievable exchange at the Sync Summit in 2019 in New York between home town independent artist Ashley Jana and former Spotify engineer Jim Anderson who was being interviewed by Mark Freiser who runs that conference (and who doesn’t exactly come off like a prize puppy either). 

Ashley recorded the entire exchange in (what else) a YouTube video and Digital Music News reported on it recently. Here’s part of the exchange between Ashley and Mr. Anderson after Ashley had the temerity to bring up…money!

Jana: We’re not making any money off of the streams. And I know that you know this, and I’m not trying to put you on the spot. I’m just saying, one cent is really not even that much money if you add 2 million times .01, it’s still not that much. And if you would just consider —

Anderson: Oh, I’m going to go down this road, you know that.

Interviewer (Mark Frieser): This is really not a road we’ve talked about before, but I’m gonna let him do this —

Jana: Thank you again.

Anderson: Do you want me to go down this road? I’m gonna go down this road.

Frieser: Well, if you need to.

Anderson: Wait, do I go down the entitlement road now, or do I wait a minute?

Frieser: Well, you know what, I think you should do what you need to do.

Anderson: Should we do it now?

Frieser: Yeah, whatever you feel you need to do.

Anderson: So maybe I should go down the entitlement road now?  Or should I wait a few minutes?

Frieser: Do you want to wait a few minutes? Maybe take another question or two?

Anderson: [to the audience] Do you guys want to talk about entitlement now? Or do we talk about —

[Crowd voices interest in hearing the answer from Anderson]

Jana: I don’t think it’s entitlement to ask for normal rates, like before.

Anderson: Normal rates?

Jana: No, the idea is to make it a win-win situation for all parties.

Anderson: Okay, okay. So we should talk about entitlement. I mean, I have an issue with Taylor Swift’s comments. I have this issue with it, and we’ll call it entitlement. I mean, I consider myself an artist because I’m an inventor, okay? Now, I freely give away my patents for nothing. I never collect royalties on anything.

I think Taylor Swift doesn’t need .00001 more a stream. The problem is this: Spotify was created to solve a problem. The problem was this: piracy and music distribution. The problem was to get artists’ music out there. The problem was not to pay people money.

You really should listen to the entire video to really comprehend the arrogance dripping off of Mr. Anderson’s condescension.

by theinvisiblestagehand

Windowing Works! 9 of the Top 13 UK Albums NOT on Spotify…

Windowing isn’t just for Adele and Taylor Swift anymore, Music Business Worldwide reports the following:

Four of the Top 5 current UK midweek albums aren’t on Spotify – and are, streaming wise, particularly fragmented.

A quick scan down the rankings, sent to labels today, shows that the same fact applies to five of the Top 6, six of the Top 10 and nine of the Top 13.

We started suggesting that windowing was one of several viable solutions to combat the negatives effects of streaming music ubiquity as early as 2013 when we stated “Why Spotify Is Not Netflix, But Maybe It Should Be“.

We were told we were “out of touch”, “luddites” and we “didn’t understand the new digital economy.” But we persisted on this point with additional writing in 2014, “How To Fix Music Streaming In One Word, Windows“.

Again, many resisted what is just common sense. The record industry always had utilized windows (or windowing as some prefer), but it just looked a little different than the way the film business did it. But it was there, and it always had been there.

In a December 2015 post we got more specific, suggesting that record labels experiment with more disruption and innovation following Taylor Swift and Adele successfully windowing off of Spotify during the initial release window of their latest releases. We wrote, “Three Simple Steps To Fix The Record Business in 2016… Windows, Windows, Windows…“.

In that post we included this:

This is not a philosophical discussion. This is financial reality. Respected stock analyst Robert Tullo who is the Director Of Research at Albert Fried & Company says this:

Longer term IP Radio and Spotify are good annuity revenue streams and great promotional tools. However, we believe the system works better for everyone when artists have the right to distribute their Intellectual property how they see fit.

Ultimately we think windows for content will form around titles that look much like the Movie Windows and that will be great for investors and the industry as soon as all these so called experts get out of the way and spot trading fashionable digital dimes for real growth and earnings.

So here we are in the spring of 2016. As simple math and economic reality effects more artists, managers and labels first hand the truth becomes self evident.

YouTube is the next windowing battle to a restoring a healthy economic ecosystem for artists. You can’t window if you can’t keep your work off of YouTube. That’s not YouTube, that’s YouLose…

by Trichordist Editor

Artists Rights Advocates Make Gains in 2015… Web/Tech Admissions Laid Bare.

So many of the issues we’ve been talking about for years are finally becoming part of the larger and more mainstream conversations about artists rights and an ethical internet.

Seems like there is a little bit more than a slight draft blowing on house of cards that Silicon Valley has built. Here’s a quick recap.

FREE, UNLIMTED, AD-SUPPORTED, ON DEMAND STREAMING IS UNSUSTAINABLE.

Pandora CEO Mike McAndrews first started teasing this talking point during an earnings call in October. You can read those comments at Re/Code. But it was the more direct article McAndrew’s authored for Business Insider that really cemented what we’ve been saying all along…

“This gray market is unsustainable. If consumers can legally listen to free on-demand music permanently without converting to paying models, the value of music will continue to spiral downward to the benefit of no one.”

There is no turning back from this admission.

It’s funny how in years past so many in the music and tech communities could not and would not admit to this simple fundamental truth often telling musicians the true value of their platform was “exposure” so artists could “tour and sell t-shirts”. Well it now looks like the wheels have been run off that nonsense for good.

What would be really great is to see Pandora join the fight with artists against Ad-Funded Piracy. Pandora, Spotify, YouTube and every other Ad-Supported music platform must be aware of the fact that the downward pressure from these infringing pirate sites not only diminishes the value of music, but also the value of advertising on legitimate and licensed paltforms.

WINDOWING WORKS. ASK ADELE, TAYLOR SWIFT AND THE MOVIE BUSINESS.

Taylor Swift, Adele, Beyonce, Prince, Coldplay, The Black Keys, Thom Yorke and other artists have proved that Hits Don’t Need Spotify, but rather Spotify Needs Hits. The Wall Street Journal reports that Spotify is caving in on windowing.

Now, the service is caving in, according to people familiar with the matter.

In private talks, Spotify has told music executives that it is considering allowing some artists to start releasing albums only to its 20 million-plus subscribers, who pay $10 a month, while withholding the music temporarily from its 80 million free users. The company is only interested in withholding albums that can be kept off of other free music sites, such as Alphabet Inc.’s YouTube, for the same amount of time, one of these people said.

There is no turning back from this admission.

This means that Spotify has admitted that it is NOT a discovery medium, it is a retail outlet. Spotify is the digital cut-out bin offering the lowest amount of value to artists. The big problem for Spotify now is who decides who is a lessor or greater artist? Who is going to have that conversation with artists and managers that they are a lessor artist and not worthy of Spotify’s stamp of approval to only be streamed to paying subscribers? Ironically, but predictably the new boss is worse than the old boss.

As with Pandora’s admission about unlimited free streaming being unsustainable, Spotify also recognizes that Ad-Funded Piracy, particularly of the YouTube variety (and mentioned by name) must be managed effectively for windowing to work.

YOUTUBER’S GET PIRATED ON FACEBOOK EXACTLY HOW MUSICIANS GET PIRATED ON YOUTUBE, AND THEY DON’T LIKE IT.

Here’s a shocker. YouTuber’s who create original content through their own investment of time, money and resources are outraged when Facebook users “Freeboot” (aka Pirate) those videos depriving the original creator of the revenue. Hank Green writes a post on Medium that breaks it down.

According to a recent report from Ogilvy and Tubular Labs, of the 1000 most popular Facebook videos of Q1 2015, 725 were stolen re-uploads. Just these 725 “freebooted” videos were responsible for around 17 BILLION views last quarter. This is not insignificant, it’s the vast majority of Facebook’s high volume traffic.

There is no turning back from this admission.

Every argument that has been used against musicians, filmmakers and other creators for using the DMCA to protect their work suddenly takes on new dimensions when the tables are turned.

Larry Lessig had convinced a generation that they we’re being criminalized because musicians were “out of touch” with the “sharing economy”. When musicians issued DMCA notices to YouTube they were vilified, taunted and publicly shamed “Sorry that video is no long available due to a copyright claim by the artist.”

THE DMCA IS NOT A “LICENSE” FOR INFRINGEMENT, COX LOSES SAFE HARBOR IN JURY VERDICT. 

Perhaps the single greatest ruling of the year involves Cox Communications losing it’s safe harbor under the DMCA. Digital Music News reports on the jury verdict.

Ultimately, the court found the situation to be more complicated than that, with Cox now ruled guilty of both contributory and willful contributory copyright infringement by a federal jury.  The jury award is $25 million, though that probably represents a small prelude to damages that could ultimately push into the hundreds of millions.

There is no turning back from this verdict.

For those of you keeping score at home it is the DMCA abuse that has been used as a shield against copyright infringement liability by the internet and web/tech communities. Many businesses including many ISP’s and content hosting platforms such as YouTube have used the DMCA to build massively profitable businesses that are largely comprised of infringing works, otherwise known as User Pirated Content. That may be about to change thanks to this ruling.

THE PIRATE / FREE CULTURE MOVEMENT HAS FAILED. 

In a recent interview Peter Sunde, the founder of The Pirate Bay, the flagship of the free culture movement admitted he had failed and was giving up. The most interesting admission by Sunde is at the end of the interview where he echoes what we and other’s have been saying for years.

So, is there like a concrete thing we should focus on? Or do we need to aim for a new way of thinking? A new ideology?

Well, I think the focus needs to be that the internet is exactly the same as society.

There is no turning back from this admission.

There is an excellent open letter in response to Sunde by David Newhoff at The Illusion of More that is well worth reading with a detailed look at why Sunde has failed. But it is Sunde himself who makes the most profound admission.

We have centuries of rule of law for civilized societies that respect and protect individual creators rights in the authorship of their work. The United Nations Universal Declaration of Human Rights, Article 27, part 2 states “Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.”

The greatest irony here is that Sunde set up The Pirate Bay as an attack on capitalism, but he started by attacking artist’s and creator’s moral rights firsts. The paradox of “pirate logic” expands when one recognizes that The Pirate Bay was said to be making over four million dollars year. Yeah, that’s the way to fight capitalism, attack the ability for artists to survive and pocket four million a year. We couldn’t make this up if we tried.

SO LETS CHECK THE MATH HERE AT THE END OF 2015

  • Pandora attacks Spotify stating the Unlimited, Ad-Supported, On Demand, Free Streaming is Unsustainble.
  • Spotify attacks YouTube stating that Windowing Can Only Work If Windows Can Be Enforced.
  • YouTuber’s attack Facebook stating that Stealing and Monetizing their work Without Permission is bad.
  • Cox Communications attacked the DMCA stating “F*ck The DMCA” and lost.
  • Peter Sunde attacks Capitalism stating that… oh well, forget it… it’s nonsense.

There is a lot of work to be done, however these admissions set the framework for the future of these conversations going forward.

jean michael jarre IRM 1

[NOTE : THIS ARTICLE WAS UPDATED ON SATURDAY DEC 19 TO ADD THE PARAGRAPH ABOUT COX COMMUNICATIONS]
by Trichordist Editor

How Many More Records Could You Be Selling This Holiday Season If Your Album Wasn’t FREE Streaming?

happyholidays

Adele, Taylor Swift, Beyonce’, Coldplay and more artists are fully understanding the value of not giving away their work for free right out of the gate. This is especially important during the biggest consumer spending season of the year. Why would anyone with a solid fan base and known demand for their work give it away for free during most profitable window of the year? This then begs the question how many more records would you be selling this holiday season if your record was not available on free streaming platforms?

Spotify and other free streaming services should be structured more like Netflix. The film industry understands the value of strategic pricing in the context of time based value propositions. Friday night block buster movies are not available on Netflix at the same time for a good reason.

There has been a lot of good work and innovation by the film industry to create “day and date” titles that are available both in theaters and as video on demand at the time of release. However none of these are made available free to consumer on an advertising supported platform. In fact, all the major film and tv streaming services require payment of some kind, be it subscription (HuluPlus, Netflix, Amazon Prime) or transactional fees for rental or permanent download (Itunes, Amazon, Vudu).

“Or Else They’ll Steal It!”

The only argument that is ever made against the use of windows is that tired old song that they like to sing in Silicon Valley called, “Or Else They’ll Steal It.” The problem is of course, they’re already stealing it, and will continue to steal it until there are real consequences to not do so. But the film and tv industries are not listening to the song of Stockholm Syndrome. Instead the film and tv industries continue to innovate and experiment with new windows, digital distribution models and competitive pricing based on the new value propositions.

Converting consumers from “pirate 2 paid” is dependent upon giving consumers more value and pricing options, not less. If the record industry doubts this for even a split second the proof is expressed in a single word, “vinyl.”

By contrast the record industry has given away valuable profits to tech companies like Spotify who give little in return for the high value products that are being licensed. The ubiquity of distribution on streaming platforms drives the price of all products to zero.

Windowing allows for price elasticity and rewards consumers who are willing to spend more for the premier product or experience. Of course, for windowing to work there has to be a fair and regulated marketplace where artists and rights holders actually can withhold their work from various platforms should they chose to do so.

If we’ve learned anything at all in 2015 it is that YouTube is probably the single greatest threat to the ability of artists and rights holders to have a long term sustainable business. There can be no windows if everything appears on YouTube via User Pirated Content anyway. 

The grand irony here is that in a well controlled and regulated distribution system, it is far more likely that all stakeholders would have the ability to generate greater profits within their sectors. We now have a decade and a half of data behind us while heading towards the second half, of the second decade, of the new millennium. It’s time to for the adults to put an end to play time.  It’s just math and common sense.

Windows work. Period.

Business decisions need to developed through common sense, innovation and time tested principles of basic economics. We’ll repeat our previous suggestion for an industry wide, consistent windowing platform strategy below.

Windowing works better when there is a reasonable amount of consistency. Our friends in the film business have been highly effective at windowing for decades and there’s no reason why it can’t work similarly well for the record business.

Every new release should have the option to determine the release windows when the record is being set up. For example the default could be 0,30,60,90 day option for transactional sales, followed by 0,30,60,90 day option for Subscription Streaming prior to being available for Free Streaming.

Windowing is not new for the record business. The industry has never had pricing ubiquity across all releases, genres and catalogs. There has always been strategic and flexible pricing strategies to differentiate developing artists, hits, mid-line catalog, and deep catalog. An industry wide initiative to re-allign time proven price elasticity is the key to growing the business and developing a broad based sustainable ecosystem for more artists.

  • Windowing allows for Free Streaming to exist as a strategic price point.
  • Windowing allows for Subscription Streaming to exist as a strategic price point.
  • Windowing allows for Transactional Downloads to exist as a strategic price point.
  • Windowing allows for artists and rights holders to determine the best and most mutually beneficial way to engage with their fans.

Windowing is the key (as it always has been) in rebuilding a sustainable and robust professional middle class that will inevitably lead to more artists ascending to the ranks of stars. Some will become superstars and legends capable of creating the types of sales and revenues currently achieved by Adele, Taylor Swift and Beyonce’. To get there however we need to abandon Stockholm Syndrome and embrace windowing that works for everyone.

 

by Trichordist Editor

What’s Good for Adele, Sucks For Everyone Else… And Here’s Why…

We celebrate in all the success that Adele deserves. Like Taylor Swift and Beyonce’ before her the ladies are leading the industry with common sense. We applaud all three for windowing their new albums off of Spotify and other FREE streaming services. We also have some concerns about the implications for other artists who currently can’t do the same.

It would appear the new way to sell music and make money is the same as the old way to sell records and make money. Make a great record, don’t give it away for free, and partner with a major label.

Of course there are those who might say that the success of these female artists is due to the fact that they also have a female audiences. One could argue that there are far fewer women pirates and that alone is a key factor in driving these types of phenomenal sales figures. Perhaps women are more mature consumers than their but scratching, booger eating male counter parts however these types of pop music sales generally transcend demographic limitations.

But what works for Adele, Taylor Swift and Beyonce may not work for other artists and here’s why – it’s called income redistribution. The top 1% of artists are capturing 77% of recorded music revenues. That means everyone else, the remaining 99% of artists are dividing up the remaining 23% of recording revenues among them. In short that leaves an ecosystem with superstars on one end of the spectrum and hobbyists on the other and not much of a middle class in-between.

The Top 1% of Artists Earn 77% of Recorded Music Income, Study Finds… | Digital Music News

In other words, the exact opposite of the Long Tail, a theory that seemed exciting at the time but has now been thoroughly disproven (MIDiA’s report is titled The Death of the Long Tail: The Superstar Music Economy).

Perhaps the larger irony here is that those who sought to destroy the major labels through piracy have only empowered them. The major labels now not only capture the larger share of revenue from recorded music but also as a result they also capture the most favorable deal terms (including equity shares) from the digital service providers (DSP). The net result being that indie and DIY artists who once accounted for a robust middle class of musicians have been pushed down into the realm of hobbyists. Of those few, rare indie/DIY outliners that manage to flourish none of them will get equity stakes or the same terms that the major labels do from the DSP’s.

There is no internet empowerment for professional musicians. There is no democratization of music in creating a new and robust ecosystem of middle class professional musicians. Internet piracy and the new “digital music economy” have only created equality when everyone is equally poor. That’s a pretty lame revolution.

Revenge Of The Record Labels: How The Majors Renewed Their Grip On Music | Forbes

FORBES estimates that the three labels have amassed positions in digital music startups valued at almost $3 billion–or around 20% of the $15 billion or so the labels are collectively worth. The percentage will shoot even higher if and when Spotify goes public. And some bets have already paid off: Universal Music Group took an early position in Beats by Dr. Dre and owned 13% when Apple bought the company for $3 billion last year, resulting in a $404 million score.

WINDOWING THAT WORKS FOR EVERYONE

So what does this mean for the non-superstar artists? Very simply, windowing works. Windowing works better when there is a reasonable amount of consistency. Our friends in the film business have been highly effective at windowing for decades and there’s no reason why it can’t work similarly well for the record business.

Every new release should have the option to determine the release windows when the record is being set up. For example the default could be 0,30,60,90 day option for transactional sales, followed by 0,30,60,90 day option for Subscription Streaming prior to being available for Free Streaming.

Windowing is not new for the record business. The industry has never had pricing ubiquity across all releases, genres and catalogs. There has always been strategic and flexible pricing strategies to differentiate developing artists, hits, mid-line catalog, and deep catalog. An industry wide initiative to re-allign time proven price elasticity is the key to growing the business and developing a broad based sustainable ecosystem for more artists.

  • Windowing allows for Free Streaming to exist as a strategic price point.
  • Windowing allows for Subscription Streaming to exist as a strategic price point.
  • Windowing allows for Transactional Downloads to exist as a strategic price point.
  • Windowing allows for artists and rights holders to determine the best and most mutually beneficial way to engage with their fans.

Windowing is the key (as it always has been) in rebuilding a sustainable and robust professional middle class that will inevitably lead to more artists ascending to the ranks of stars. Some will become superstars and legends capable of creating the types of sales and revenues currently achieved by Adele, Taylor Swift and Beyonce’. To get there however we need to abandon Stockholm Syndrome and embrace windowing that works for everyone.

This one chart says it all…

FreePaidChart

 

 

by Trichordist Editor

Why Apple Music and Tidal are the right business models with the wrong optics.

Since Spotify launched in 2010 the music business has been in an existential crisis. Convinced that ad-supported unlimited free access to on-demand music would ultimately grow recorded music revenues the major labels opted into what may be their worst decision ever. This decision aided by an estimated 18% (or more) equity position in Spotify has not grown overall music revenues over the past five years. In fact, for the year ending 2014 global revenues reported by the IFPI stated that revenues were at the lowest point in decades. So what to do?

For starters the first and most obvious solution would be to eliminate the unlimited ad-supported free access to on-demand music. This is the model that made ad funded, for profit piracy so popular on over half a million infringing links from unlicensed businesses served by Google search and delivered to your inbox by Google Alerts complete with social media sharing buttons. These unlicensed businesses are receiving hundreds of millions of DMCA notices annually from artists and rights holders. Let us not forget that this is also the same model that Daniel Ek helped to perfect as the CEO of u-torrent the worlds most installed bit-torrent client. Ek has said he’d rather shut down Spotify than give up his failed ad supported business model.  We thought Spotify was built on converting ad supported (where Spotify board member Google makes money serving ads) to subscription (where artists make money).  So much for that.

And this is who the record business is taking notes from? Perhaps that’s why Universal is restructuring.  This may have seemed like a good idea to some senior executives but it turned out to be a complete disaster.  Time to change.

Despite moves in the right direction by Tidal and Apple Music the optics for both of these companies at launch of their respective streaming models have been somewhere between missteps and an absolute disaster. Dismissing for a second that both Apple and Tidal could be the targets of public relations campaigns by competing corporations such as Spotify, Pandora and Google (YouTube) let’s look at what each is offering. Tidal and Apple Music offer no unlimited ad-supported free access to on-demand music. That means no business to those selling advertising… like, Google.

There is nothing more important to the future of the recorded music ecosystem than removing the unlimited ad-supported free access to on-demand music.

For all intents and purposes even free streaming is ownership and here’s how you can tell. If you can chose it, and access it, you essentially own it whether you pay for it or not. Streaming replaces ownership at the consumer level but does not compare to ownership on price. At some point there needs to be a market correction to properly value music consumption.

The launch of Tidal should have been a rallying cry for all artists to support a business model that limited free streaming, incentivized paid subscriptions through exclusive offerings and diversified consumer experiences with higher quality streaming formats. This is the model we should be focused on. As the Buddhist saying goes, “trust the teaching, if not the teacher.” In other words it doesn’t matter if you don’t like Jay-Z and Madonna.  And securities laws makes the whole stock issue so difficult that Tidal would have been far better off saying they’d pay all participating artists a bonus in the cash from the company’s own stock sales rather than get down the rabbit hole of who gets stock and who doesn’t.

Unfortunately the celebrity that could have united a community, instead divided it through messaging that most would acknowledge appeared to be less than inclusive. Worse, the optics appeared to be elitist whereby those already rich and famous seemed to be more focused on their own fortunes as opposed to a sustainable ecosystem for the next generation of musicians.

Perhaps if each of the artists at the Tidal launch would have appeared with a developing artist they were supporting the messaging and optics would have been more inclusive and more about community than celebrity.

We have to acknowledge what kind of business we want going forward. Clearly, unlimited ad-supported free access to on-demand music is not working. Both Tidal and Apple Music do NOT have unlimited ad-supported free access to on-demand music. So what’s the problem?

Following the Apple Music launch Spotify announced it had achieved 75m global users (we love that, “users” no kidding) and 20m paid subscribers. So let’s look at the numbers in relationship to what Apple Music could bring to the market place. Keep in mind that 55m of Spotify’s user base are NOT paying for the service. Based on reporting we’ve been provided the free tier accounts for 58% of plays which is only 16% of the total revenue.

With all the back and forth between Apple and labels and the announcement last week by NMPA of the publisher’s deal—freely negotiated without government “help” by the way–it’s pretty clear that Apple announced Apple Music without all their ducks in a row contractually.  This opened up an opportunity for haters who are just gonna hate.  Now that the picture is becoming a bit clearer, we feel more confident than ever that most of the noise is coming from competitors who would like to create yet another consent decree situation but this time for artists and record companies.

So there are a few questions we need to ask about the launch of Apple Music to evaluate the trade-off for eliminating the unlimited ad-supported free access to on-demand music. But before we ask those questions, we need to understand the mechanics of the Apple Music ecosystem.

First, the 90 days free without payment at launch requires the understanding that all consumers will get 90 days free at Apple Music whether they sign up at launch or at any other point later. This means that some people will opt in at launch, some will opt in at some later time. Based on what we have seen of how these streaming subscription services scale we have to ask a few questions.

How many people will have access to opt into Apple Music Streaming on launch? We’ll assume it’s the entire installed user base who upgrade into iOS 8.4. Here’s some back of the napkin math from the iPhone 6 launch when Apple dropped that U2 album into everyone’s Itunes.

According to CBS News 33 Million people of the 500 Million Global Itunes users “experienced” the U2 album. That’s just 6.7 percent of Apple’s reported consumer base.

So what kind of adoption and conversion rate could one expect from the launch of Apple Music? 10 million paid subscribers? 20 million paid subscribers? 50 million paid subscribers? It’s hard to know, but anything north of 20 million pretty much beats Spotify on paid subscribers.  And if you are looking for the company that has defined a paid music service, who you gonna call?  Apple or Spotify?  Who do you trust going forward?

What if Apple is able to convert 30 million or more consumers to paid streaming in only four months when it has taken Spotify five years to acquire 20 million paid?

BREAKING NEWS AT PRESS TIME. APPLE WILL PAY ARTISTS DURING THE FREE TRIAL PERIOD!
Apple Reverses Course, Will Pay Artists During Apple Music Free Trial | Mac Rumors

Of course, Apple should use a couple of bucks from it’s 178 billion dollars in cash reserves to compensate musicians for the consumption of their music during the initial 90 day launch of Apple Music. This would  incentivized artists to promote the service as being both fair and artist friendly and give Apple the thumbs up from the people that matter the most, the artists themselves. Apple’s purchase of Beats was a three billion dollar acquisition, so surely there’s enough money in those coffers to pay artists something.

To put these numbers into perspective Spotify claimed to have paid artists and rights holders two billion dollars globally from it’s initial launch in 2008 through October of 2014.

Here’s some more perspective from asymco.com: In 2012, global music revenues were reported at $16.5 billion, with $5.6 billion coming from digital music. Of that $5.6 billion in music downloads, Apple paid labels $3.4 billion for iTunes sales, which is about 60% of the total digital revenues industry wide—IN LESS THAN ONE YEAR.

In 2012, Apple’s transactional digital model created more revenue for artists and rights holders in less than a year in then it took for Spotify to earn almost 6 years.

If we want to break the death spiral of unlimited ad-supported free access to on-demand music we have to embrace the trade-off of offering limited free trial periods as an incentive for consumers to make the switch.

And by the way—compare the classy way that Eddie Cue of Apple handled Taylor Swift compared to Daniel Ek who comes off like a semi-stalker.  Who understands artist relations the best?

The problem with ad-supported unlimited free access to on-demand music is illustrated below showing Spotify domestic streams and revenues. It’s just math and it’s time to move on. Apple Music and Tidal are showing us the way.

 

by Trichordist Editor

Artist Rights Leaders: Taylor Swift

0202

 

After the Charlie Hebdo tragedy, we thought we should start recognizing and praising those who stand up for artist rights.  We will also identify those who oppose artist rights and tell you why we think they are villains.  Not all of these people will be famous and you may not recognize some of their names, but that’s kind of the point.  We also want to emphasize that we’re not comparing anyone to anyone else, we’re just appreciating people for what they do and who they are–on both sides.

When we look back on the last year, there’s probably no one who did more for artist rights than Taylor Swift.  She really did not need to take on these issues, she could easily have sat back and let the money roll in.

And yet she did.  She put her career on the line and challenged the definitive “new boss” digital business–Spotify.  She challenged them in a very straightforward way by simply saying no.  Taylor had a lot to lose, and she went above and beyond to stand up to the “new boss.”

Spotify’s Daniel Ek revealed himself and did his best to play the “Lars card”–he talked down to her and attacked her.  Not as badly as the calculated and well-financed humiliation of Metallica by Napster’s litigation PR team, but a strain of it.  Can you imagine Steve Jobs doing that?  No way.  But that’s OK, we finally got the evidence on who this guy Ek really is and what his company really stands for.  Same old same old.

Taylor also showed that you don’t need YouTube, either–and she turned her team loose to present herself on YouTube the way she wanted, not the way YouTube wanted to force her to be presented.

She challenged The Man 2.0 by simply being who she was and exercising her rights as an artist–the very rights that the “new boss” constantly tries to take away from us.  It’s really simple:  The new boss needs hits, and hits don’t need the new boss.

And Taylor Swift showed us that artists can be strong and classy and successful, all at the same time.  She reminded us that it’s OK to take care of our business the way each of us want.  And she said it in the Wall Street Journal!

Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.

 

by thetrichordist

How to Fix Music Streaming in One Word, “Windows”… two more “Pay Gates”…

We’ve written about this before in two posts, Why Spotify is not Netflix (But Maybe It Should Be) and Streaming Is the Future, Spotify Is Not. Let’s talk Solutions. In Both posts we talk at length about how the problem is not technology or streaming itself, but rather the very restricted business models and poor economics that currently exist. No amount of selective double speak from Daniel Ek will change the bad math that Spotify can not scale at current rates.

Jason Aldean now joins Taylor Swift in removing his music from Spotify which leads us to wonder how many more artists with the ability to do so will remove their new releases and/or catalogs as well. This may also be a good time to revisit those two previous posts mentioned above.

So here is the question, is the record business really utilizing the new digital platforms correctly to address the current market place? Perhaps by looking at the options available to consumers from movie streaming, rental and download businesses we can find more robust and flexible opportunities for artists.

At the very least windowing releases allows artists, their managers and even labels the ability to manage and maximize current revenue streams more effectively. Windowing opens up strategic decisions about tier based pricing relative to the value proposition for both the artist and the consumer. Windowing may not fix all of the problems artists are facing in music streaming but it will be a great first step towards recognizing that the artists should have some direct participation in deciding how their work is consumed.

It’s not that streaming can’t work. It can. It’s that Spotify is a bad business model that has unsustainable economics and exploits artists because it is a wall street financial instrument and not a music company.

Pay Gates may be another solution (which is essentially a window). For example, Spotify premium paid subscribers could access the new Taylor Swift record, but not those using the free version of the service. This also allows artists to determine which songs can be accessed for free for greater promotional value, and which songs are intended to maximize revenue.

Why does Spotify unilaterally get to dictate to artists, managers and labels how to best maximize their relationships and revenues with their own fans?

As Spotify is a destination platform, and not a discovery platform we could see where the current hit singles are only available to paid subscribers while select album tracks could be accessible for free. The tracks on the free tier are monetized only by advertising revenue which pays very little, but there may be a promotional benefit to build awareness on lesser know songs.

Even the old school record business had tier based pricing. There were front-line, mid-line and budget pricing tiers. Front-line titles were often deeply discounted for premium in-store positioning. Mid-line titles were discounted as an incentive to stimulate more sales from recent catalog titles. Budget titles were mostly oldies and very deep back catalog. Primitive as they were, these were windows.

Yes, we know the choir of “or else they’ll steal it” from piracy apologists will claim that anything less the complete devaluation of music as fodder for advertising revenue is pointless. We’ll take our chances with Jason Aldean, Taylor Swift, Adele, Coldplay, Beyonce’, The Black Keys, Thom Yorke and the growing number of artists that are either removing their catalogs from Spotify, or windowing them.

Bring on the windows and pay gates! Let’s see some “innovation” and “disruption” that actually works for artists and not just the new boss. The outcry (from Spotify) of artists removing their songs also proves another very important point – all music is not equal. If some weekend hobbyist does not put their music on Spotify or pulls it off Spotify it doesn’t make headlines. Taylor Swift, Adele, Beyonce, The Black Keys, Thom Yorke, etc – all make headlines because people  actually do VALUE professional music. Professional music, has a professional price.

If Spotify is such a good business for artists, why not let each artist decide if Spotify works for them? Why does Spotify publicly shame artists to convince them how good they are? The lady doth protests too much, wethinks…

It’s funny how long it’s taken the record industry to realize that if you keep allowing something to be given away for free there is no incentive to pay. Who knew?

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RELATED:

Why Spotify is not Netflix (But Maybe It Should Be)

 

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

 

Spotify’s Daniel Ek is Really Bad At Simple Math, “Artists Will Make a Decent Living Off Streaming In Just a Few Years”

by Trichordist Editor

Why Taylor Swift Is Winning The War On Streaming – It’s About The Math Silly, not Technology…

Streaming is Good, the Economics are bad – Get It?

There’s a media pile on claiming that Taylor Swift is going to lose her war on streaming… really? Is there a war on streaming? No. There is no war on streaming. The battle is over economic injustice, not technology. We’ve written about this before…

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

and

Why Spotify is not Netflix (But Maybe It Should Be)

The record business would do well to look at the solutions and marketplace that the film industry has developed with varied and robust consumer options in the streaming landscape. These include different access and payment models, not one business for all.

So let’s get this straight, and go right to the heart of the issue. It’s just math, and it’s simple math at that. We’ll ask again if anyone can show us how streaming scales to sustainability for artists and rights holders. Let’s see it, because this is how it looks to us…

SPOTIFY MATH FOR THOSE OF YOU AT HOME WITH CALCULATORS:

Spotify has ONLY 3m paid in the US at $10 each.

$10 x 12 mos = $120 per year. Pay out 70% that’s a gross of $84 per year per subscriber. Simple Math.

That $84 per sub is in revenue to all artists in rights holders. Times that by 3m and you get a whopping $252m a year in a $7b business.

Multiple that by 10, to get 30m subs @ $10a month and that’s only $2.5b a year… and that’s a big IF Spotify ever gets to 30m paid in the USA… and IF they do, that’s ONLY 2.5b in revenue against the $7b now…

So you effectively cut the revenue to everyone by 1/2 to 2/3rds… how does this math work without raising the price of subscriptions? It doesn’t.

It’s just math.

So please get your arguments right. No one is arguing against streaming as a technology or distribution mechanism. They are arguing over the fact that these piss poor business models can not exist or operate without artists subsidizing VC funded or publicly held companies.

If these business models are so bad that they can not afford to pay for the cost of goods to maintain a sustainable ecosystem it’s time to go back to the drawing board and start over. That has nothing to do with streaming, technology or distribution and everything to do with exploitative economic injustice.

It’s just math silly.

 

 

by trichordist