Why streaming sucks

spotifyAs soon as digital copying became inevitable the record industry decided they could lock-up music delivery. Their first effort, the in-house SDMI consortium, failed. Subsequent attempts to use third party DRM also failed. CD copy-protection was a disaster and after a few years Amazon, then Apple, dropped DRM on downloads.

Streaming is the current plan for locking up music and breaking the retail power of Amazon and Apple, although it is not new. The customer never owns streamed music unless they pay again, and when their subscription ends no music has changed hands. This is called “access” rather “ownership”. The first comprehensive Major label streaming service, Listen, launched in 2002, it is now called Rhapsody and has about a million subscribers.

I have always been sceptical about streaming as a mass market substitute for music sales although many access evangelists would disagree. UMG expects streaming services to have 2 billion subscribers one day but after a decade there are just about 10 million, worldwide. Here are the main reasons why I think streaming has to change beyond recognition to succeed.

Premium pricing

Streaming subscriptions are priced as a premium product. That is, they are priced at twice what the average music buyer spends. And yet streaming doesn’t have a premium feature set: it is audio-only, it is not 100% reliable, its music repertoire and added-ons (e.g. band biographies, ticketing, lyric sheets, artwork, merchandise, etc.) are limited, new music is often delayed, and each service requires its own subscription. If you change services you lose everything, nothing is portable—you can’t share a subscription.

The record industry also hopes streaming will facilitate “music discovery”. A reliable music discovery service would be a premium product, if it worked.

The final drawback is that this premium product returns the smallest reward to its artists. This matters because music fans care about their favourite artists in a unique way. The most popular social media figures are not politicians, record company bosses, games designers or even media celebrities, they are music acts. Fans want to see artists rewarded fairly and artists want to get the market data they need from middlemen.

Either the price must drop—probably to $2.50 a month or less—or the product must change.

Audio v. YouTube and the rest

There are some audio-only situations: driving, jogging and background listening for example. Streaming—given suitable playlists—is a suitable product but it faces competition from radio, which does the same thing free.

Audio is only one aspect of today’s multi-media world. Artists play live, make records, make video, sell merch, blog and tweet. Any audio-only product is severely limited, especially when YouTube and other resources are just a click away. Why would any buyer blow their entire music budget on access to audio-only in 2013?

Streaming music repertoire

Daniel Ek likes to say Spotify has everything, everywhere but it doesn’t. There are still some big name holdouts but even without them there’s a lot of music missing. All the online music services offer about 25 million tracks out of the 100s of millions that have been recorded.

Streaming might be OK as a mass market product with just the chart music from the past 50 years, but it doesn’t even have that. And even if it did, chart music radio has that niche covered.

(Last year I tried the Apple Cloud music product. The repertoire record companies and digital aggregators make available to Apple, Amazon, Spotify and others is very similar. About 25% of my 11,000 track library was not matched by Apple.)

Streaming music reliability

Streaming music services depend on mobile carrier up-time and coverage, Internet availability, server up-time and device up-time.

I have seen many streaming evangelists claim they don’t keep any other music but we all experience Internet and mobile network down-time. Anyone who has a streaming subscription will have service interruptions. The evangelists can obviously live without their music because they will have to from time to time.

I have iPods, computers, CDs and mobile phones. I always have something that will play my music and I even have several copies of my digital library. It seems likely other music buyers in the premium market will have similar resources these days.

Music discovery

Many people have tried to crack music discovery: Peter Gabriel’s The Filter, Amazon’s collaborative filtering (“people who bought X also bought…”) and so on.

But music discovery is something we do, not something done for us. Here’s some of the places I discovered new music I like recently: cinema trailers, radio, YouTube, email from friends, Twitter, music media reviews, DVDs and TV. These sources help me discover music and lend context to it but they don’t do the discovery.

In short, anywhere music happens or gets discussed is a place where it might be discovered but streaming services are never going to offer this as a premium feature because nobody can.

Streaming sucks

OK, 10 million people pay for it and 20 million others like it enough to endure the adverts. Record companies get extra income and probably see it as a win but it’s not exactly taking off. Recently one of my favourite music biz economists, Will Page, moved from PRS to Spotify, and another, Ian Rogers, moved to Beats. They know what’s what and can point the way forward. But serious disruption is necessary if streaming is ever going to not suck.

Should Amanda Palmer pay her musos?

The debate about Amanda Palmer’s money and volunteers

No week would be complete without a music biz storm in a teacup and this week we saw an open letter from Amy Vaillancourt-Sals protesting Amanda’s request for classical musicians to play live for the fun of it.

The media and commentards chipped in copiously of course: On Amanda Palmer’s unpaid orchestra: A DIY-crowd-sourcer’s take

Everyone makes good points but their generalities and over-statements quickly swamped the specific case.

  • Should pro musicians be paid? It is blindingly obvious they should.
  • Will pro musicians be paid every time they play? It is equally obvious they won’t.

I could make 83 points about this too but let’s stick with two or three.

Amy raised the question of Amanda Palmer’s Kickstarter $1 million and the media churned out this nonsense: The kickstart millionaire singer who won’t pay her musicians. Most global albums cost well over £2 million these days. Amanda Palmer is not a millionaire—that Kickstarter money has to pay for pledgers’ goodies (see Where All This Kickstarter Money Is Going by Amanda Palmer) and a lot of globetrotting. There is no more $1 million. Trust me, it’s been spent. In fact AFP has raised additional money from investors just to keep going. When she flies her band to Japan, Australia and Europe it costs money.

So how about the full time band? Of course they get paid, and AFP’s inner circle—I don’t pretend to know the details but she has a permanent staff and they too get paid. Forget the social media wankistas, this is DIY. It’s not about doing every last thing yourself on a shoestring, it’s about running your own show and it takes a team to launch a global release with a D2F campaign and world tour. That doesn’t come free.

(There are undoubtedly solitary social media junkies working 24 hours a day in a garret stubbornly in pursuit of their artistic dream with no help from anybody and no funding. When the first example from their ranks sells 1,000 albums let me know.)

Finally there’s the question of AFP’s fans. I did some quick arithmetic on her social media audience, I’m not talking about the headline numbers, just the 1 in 20 who are real fans. The ones who buy her records, attend her gigs, submit artwork, post ideas and feedback—the audience and friends who helped her over the past decade. When she asks for volunteers she’s talking to these people who care enough to chip in and go out of their way for her. It’s preposterous to imagine professional musicians without that commitment would give their time and skills for free.

So it all boils down to this. Should Amy get paid? She’s a pro musician, yes she should be paid for her work. Should everyone who works with Amanda Palmer get paid? Not if they volunteer. Should Amy work with Amanda? Obviously not. Should Amy be offended Amanda even asked? Getting offended by people is not their problem, it’s yours.

August links, articles and news

I’ll be distracted by Logic and music for a while longer, so no time for ‘proper’ blogs at the moment. In the mean time here’s a bunch of links from the first part of August. I have posted some of these—among many other things—on Twitter already. The big news of the month so far is the second part of Hooper’s copyright report with proposals for the Digital Copyright Exchange, now called the Copyright Hub (see below).

GigaOM Freemium has run its course another theme of the month has been the decline of Facebook and the growing flaws in the ad-supported web site economy.

Bandcamp Merch! Bandcamp adds merchandise functionality to its already excellent and rightly popular indie music store.

Ars Technica Apple’s case that Samsung copied the iPhone—in pictures

Wired UK French culture minister thinks HADOPI is a waste of money (that’s 3-strikes in English).

Wired UK How Apple and Amazon security flaws led to an epic hacking is a must read which reveals Apple IDs and Amazon credit card details are very easy to break into. The promised follow-up article did not appear yesterday but I will look out for it.

Hypebot Billy Van went from 2,000 to 100,000 fans (Case Study)—but the metrics exclude anything I would consider meaningful growth. It may be there but I can’t see it. Some of the comments also ask revealing questions.

All Things D TuneIn Creeps Up on Pandora, With 40M Active Listeners

The Atlantic How you turn music into money is another article about the truly spiffing DIY goddess Zoe Keating.

Dangerous Minds A statement by Nadya Tololokonnikova (Pussy Riot)—making our punks look rather tame, Pussy Riot will probably be jailed for calling out Putin as a faux democrat and the Russian Orthodox Church as political poodles.

The Telegraph Musicians getting ‘more than half of royalty income from online streaming’ was probably the hyperbolic story of the week—some musicians may be but the whole thing seems to have been cooked up for PR, there are few hard facts and no overall stats.

Music:)Ally Interview: DIY musician Alex Day talks fans, the irrelevance of radio and why YouTube changes everything

And finally the second part of the Hooper Report analysed by Out-Law.com New UK ‘Copyright Hub’ would help address problems with copyright licensing framework, report says with a link to the pdf of the IPO report itself.

There is no new boss

Google sucks, but stay calm

A couple of months ago David Lowery posted Meet The New Boss, Worse Than The Old Boss? on The Trichordist. A lot of what he says is undoubtedly true but it doesn’t add up to a persuasive argument. As a general proposition it lacks focus (was Atlantic better than Spotify? quite possibly) and who is the “new boss” anyway? This is my take on the angles that don’t quite hang together.

Lowery’s premise is he was promised the Internet would liberate, empower and enrich him. I’m surprised anyone would think that—I didn’t hear that promise and it’s hardly likely to happen. And he is disappointed…

…the music business never transformed into the vibrant marketplace where small stakeholders could compete with multinational conglomerates on an even playing field.

Again, that Internet Santa Claus idea isn’t serious, surely? I know a lot of musicians, some signed to big labels and publishers, some independent, others semi-pro and many amateurs (like me). To my knowledge none of them expected that.

His next argument is the music business, once dominated by broadcasters and others,  is now dominated by tech conglomerates. He calls Apple, Amazon, Facebook and Google “the new boss” and he’s disturbed how dependent he is on them. If that’s true for him fair enough, but it’s not generally true. I don’t know a single artist whose craft or business is dependent on them, or who thinks that way.

We’re addressing the music business here. Apple and Amazon are big music retailers but nobody has to use them. Facebook and Google give access to two large audiences but frankly only YouTube is a unique music business asset. Otherwise I don’t use Google, or Facebook (although I have a zombie page there). Lowery’s concern seems to be more about their lobby against copyright but that doesn’t make anyone dependent on them. It’s just what big business does, especially in the USA and increasingly here too. The Google lobby has undermined WIPO but copyright is still enshrined in human rights law, their lobbying may well come to nothing.

Last, he argues disintermediation promised artists a bigger cut and that hasn’t happened. This is tied to the Santa Claus delusion: he liked big label advances but expected more when the labels were swept away. Not very likely. In fact the big labels are now half the size they were and the Internet has significantly increased competition in the independent sector. Disintermediation was never going to give everyone a windfall but it does mean some small acts can make a living where they previously couldn’t. If they don’t sell 100k singles or 500k albums they won’t be signed by a Major today. Would they be better off signed, with a multi-million advance? Stupid question.

So I don’t buy his general argument. The Internet was never going to be the promised land, that’s simply a straw man (his article is full of them). Under the old boss, for every 100 acts signed only 10 released a record and only one made money. Sure, the 99 still had their advances if they were lucky (today advances are rare) but the successful one had to pay the 99. And the new boss? Apple, Amazon, Facebook and Google aren’t anyone’s boss, least of all Facebook.

Along the way Lowery makes many points I agree with. I won’t list them—there are far too many. But wherever he leans his main argument there is invariably a crumbling factoid failing to support it.

Just say no

He talks down the power of the old labels: if you don’t want to do something you just say no—that is the most unbelievable piffle. Just read a book about Motown for God’s sake. But we needn’t to go back that far because yesterday Alison Moyet revealed her new record deal just collapsed, why? She refused to appear on a reality TV show. Just say no my arse.

Artists losing money

He quotes a lot of today’s acts losing money on records and losing money on the road but a lot of artists always lost a lot of money. That doesn’t mean it never happened under the old boss or that the Internet has failed. Is this what he means about the Internet enriching people? That artists should always make money?

The FMC are Google’s poodle

I have no idea where this one comes from. I’ve followed the FMC for years and they have done nothing but campaign tirelessly for musicians. Maybe Kristin Thomson (co-author of the seminal guide to running your own label, before the web happened) trod on Lowery’s toe once or something. Or perhaps he’s just phobic about anyone who suggests his beloved old Major labels might be left behind by technology.

Apple, Amazon and risk

He spends some time on the economic theory of risk and reward although it’s way off his path from the pipedream he was promised to the harsh reality of, well, reality. His analysis of income from online sales shows Apple and Amazon take a cut (and aggregators take a cut). They are distributors and retailers like Pinnacle and HMV, or Our Price, in old money. But he wants them to reward the artist because they don’t take enough risk. Well, distributors and retailers never did anything for the artist apart from a bit of advertising and of course getting money from customers. Pete Townsend came out with the same daft idea in the BBC 6Music lecture. Apple is not a record label, they are a shop.

Record labels and risk

But when he looks at the old boss he finds evidence for investment and risk. He puts a lot of expenses in the label column that labels never paid (recording, promotion, breakages, advertising, publicity). Everything the label used to shell out was recoupable, so they added it to the sum they could take direct from sales before the artist saw any royalties. For 9 out 10 artists that was a risk that didn’t pay off but the label got it all back from the one hit. When you control TV and radio I wouldn’t say that’s much of a risk. No record label audit has ever found the artist was overpaid but they have frequently found the opposite, to the tune of millions.

So to sum up, what he really liked about the old boss was the advances and how nice they were, and what he doesn’t like about the Internet is Apple, Amazon, Google and Facebook being the new boss. Well they aren’t.

There is a lot to dislike about Google: they facilitate copyright infringement; they commit copyright infringement and drag their feet over DMCAs; they lobby against copyright; they facilitate access to infringing material and earn money on advertising for it; their search results are cooked; etc; etc. But that doesn’t make them the new boss and it doesn’t make the old boss suddenly look attractive. Lowery seems to hate Google so much it triggered latent Stockholm Syndrome.

With a different sense of perspective I think it’s possible to repudiate both Google and the Majors. Who needs a boss anyway?

History repeats… a bit

There was a gold rush in new music media—new startups appeared almost weekly and patent disputes broke out. Even though the new kid in town spent more time in court than developing the product buyers couldn’t get enough music players and content. This was before World War One—the flat disc was replacing the recordable cylinder.

Berlinner accumulated many patents but history suggests his success was down to ease of manufacture (stamping), flat storage, and louder playback without amplification. (Amplification didn’t hit the mainstream until 1925, the disc was launched 30 years earlier.)

The current music format upheaval is different and although history doesn’t repeat exactly it probably has something to tell us. When Berlinner launched the disc in 1895 he laid the foundations for today’s record industry and defeated the incumbent. Edison made his cylinders until 1929 but never came close to retaking the recorded music industry he had started. Perhaps he hoped amplification would redress the balance but in the 1930s half of all American record production went into jukeboxes where once again discs ruled. However, there is a more important winner in this story—the customer.

The cylinder was perhaps more capable than the early disc, it was recordable and Edison had the resources, a killer brand and marketing power. Nevertheless customers chose the disc, decisively. It’s futile to second-guess the customer, they choose what they want.

In the late 1990s, faced with a new format (MP3) they didn’t control, Berlinner’s descendants made a series of attempts to regain the upper hand. But customers didn’t like what was offered. DRM on downloads, DRM on CDs, Major label web stores, subscription streaming… the verdict of the public has been decisive. Music distribution today can be summed up under 4  headings—CD sales, download sales, file sharing and radio. Overwhelmingly that’s what people want. Of the 2 billion online we know around 1 billion will be music customers. 900 million of them don’t use a big label streaming service and of the 100 million who do less than a quarter pay.

The evangelists of music streaming commerce—who have flogged this particular horse for over a decade—have made little headway. They tell us people “prefer access to ownership”, but quite clearly they don’t. We are told it’s early days but it isn’t—it was early days in 1995 when MP3 became available to everyone with a telephone line. There must be a point when it’s obvious streaming doesn’t sell. For me it was iTunes outselling all the streaming services overnight… in 2003. The Major labels will catch up one day, maybe.

Good singles sell—make more

Mark Mulligan posted a useful article on 29 Feb Is the UK Music Industry Sleepwalking into a CD Crisis? He classifies buyers in the usual way and explores possible industry-centred solutions. But things look very different from the artist’s point of view.

First of all the CD collapse is not a UK music industry problem, it’s a Major record label problem, and there’s no guarantee their traditional cash cow will ever come back in any form. I have written about that before.

But something else changed profoundly in the world of megastar albums. As deals got better they stopped making two a year, and as labels’ PR got better they filled albums with tracks nobody really wanted. As soon as the fans had an alternative they went for it. That’s why single sales are up and album sales are down.

So maybe this isn’t a problem about digital formats—maybe it’s a problem with quality and quantity of music. If megastars made more and better singles perhaps the problem would disappear. After all, fans used to buy more tracks.

There are two examples which suggest this might be true. Rihanna is one of the few current megastars who stepped up production. Her team saw the move away from albums and switched emphasis—with Rihanna’s fans—to singles. That has undoubtedly worked. (Of course, the blame for infrequent releases doesn’t lie entirely with artists—managers at big labels think and work in years rather than weeks.)

Then there’s the DIY and indie sector where we also see growth. These acts never had the luxury of big venues and a big record every three years, so they are ideally suited to a world where fans have access and work-rate means income.

Maybe the answer is music streaming into every living room but I don’t see that happening.  I don’t see people asking for that. I see them supporting artists who gig regularly and make more great tracks worth buying. That is what’s happening.