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.

What’s wrong with DMCA, ACTA and all that?

The name on the box doesn’t matter if the contents do something else

I’m no freeloader. I don’t have an iPod full of bootleg tracks. I don’t have much time for the shenanigans of either Big Content (“the web is eating my lunch”) or Big Technology (“copyright is breaking the web”). Or freeloaders. If I represent anything besides myself it’s artists and their rights, and consumers and their rights.

We’ve heard a lot of noise from both sides of the Big Web Content battle and seen a lot of legislation and legal activity too. Big Content has been suing everyone it can think of and Big Technology has been facilitating infringement in as many ways as it can. The impact on artists and consumers is what concerns me.

“I have confused things with their names, that is belief.”

Jean-Paul Sartre

Yes, it’s my old favourite. I’m not saying Jean-Paul would come down on the same side as me but I think he had a point. Behind the rhetoric are vested interests—actions speak louder than words. I simply don’t trust the motives of the record industry or the Internet lobby. We have seen what they say and we have seen what they do. It doesn’t add up.

The DMCA provides a safe harbour for web sites that (ostensibly without knowledge) host infringing material, on the understanding they will remove it when they know. DRM (from SDMI through the Sony rootkit fiasco and beyond) was intended to safeguard digital copyrights. More recently we’ve seen SOPA, PIPA, ACTA and many other proposals kick up an almighty row leading to no solution at all. And I’m sure there will be more (some variant of 3-strikes under ISP police is popular at the moment).

I support the record industry taking copyright infringers to court, whether or not it made sense they were entitled to do it. On the other hand the damages they claimed (in one case more than the annual earnings of the USA) were ridiculous. And their preference for settling overblown amounts without testing them in court wasn’t right. They had a righteous cause but treated the accused as if they were guilty, without trial.

Likewise the Internet lobby had a reasonable case for DMCA, it sounds rational, then we saw how Google, Grooveshark and others used it. The man in the street can’t get material removed from YouTube, even a journalist on The Guardian can’t get infringing material removed from Grooveshark. Google keeps record labels sweet by taking down their material on demand—even when it turns out not to be theirs at all. But what good is the DMCA for you and me?

When Big Content brought ACTA forward I didn’t trust them because we see how they use DMCA. ACTA, the Anti-Counterfeiting Trade Agreement, sounds like a good thing but we already had an international IP treaty, WIPO. Shouldn’t IP trade sanctions refer to that?

Where has all this legal noise got us? Is copyright better protected? Does the Internet offer us a great music experience? No and no. And while old and new vested interests wrestle each other for control of web content their propaganda is echoed by media pundits who take one side or the other. The debate is a classic establishment puppet show—self-serving outrage and mumbo jumbo.

If that debate mattered much I’d get stuck in, but I don’t think it does. This whole mess is being resolved slowly by events, not the pipe-dreams of big business academics and bureaucrats. Both sides are quite mad and they are both losing the war. Increasingly what matters is a new music economy with no big business champions or media voice, one that grows while the others shrink.

Another music biz links post

The mid-to-end August pick of my Twitter lists and general browsing is this. I read everything I retweet or post in these round-ups so if your music biz interests vaguely coincide with mine you should find them interesting and sometimes infuriating.

Interesting looking trailer from Musformation.com about a forthcoming video.

Wired UK French culture minister thinks Hadopi is a waste of money—France’s three-strikes ISP infringement policing under threat.

CMU Most stakeholders satisfied with Universal’s EMI concessions, but some push for more the UMG/EMI negotiations drag on.

Search Engine Land How YouTube Will Escape Google’s New Pirate Penalty Google said they would degrade search rankings for infringers… apart from YouTube of course.

CMU YouTube top music source for young Americans, though CDs still selling a big noise a week or two ago was a report revealing that young people use YouTube for music a lot.

Billboard.biz Updated: Jeff Price, Peter Wells Out of Tunecore astonishing news the public face of Tunecore has left the building. Users will be feeling unsettled, Jeff is a great champion of DIY and indie artists.

Buzzsonic A useful collection of music infographics, cartoons, etc. Adrian Fusiarski’s Pinterest page.

CMU Streaming revenues growing fastest, though overall music spending still declining—there was a report by Strategy Analytics about streaming and physical sales. Interesting but limited to the usual not-comprehensive sources.

Digital Music News A Breakdown of Every Single Dollar a Major Label Makes… in this case WMG, including publishing by the look of things (I thought Warner publishing was separate).

All Things D TuneIn Creeps Up on Pandora, With 40M Active Listeners a web radio aggregation app grows large.

Prescription PR Is social media really that helpful to bands? refers to a Guardian article asking the same about authors of books.

Paste Infographic: The Best Record Labels (2004-2011) good infographic showing record sales by year by label, not for the colour blind though.

NPD Group Teens Credit Word-Of-Mouth Most Reliable Shopping Source the No Shit Sherlock award this month goes to NPD for discovering word-of-mouth is how most teens pick up on the music they buy.

Daily Herald Spotify, Pandora spur U.S. digital music sales past CD purchases—another press release, about digital overtaking CDs, again. Nobody knows when or if this has happened. So many tracks and albums are not monitored.

Music Technology Policy Interview with Andrew Shaw of PRS for Music on Negotiating with Google a guest post by Jonathan David Neal revealing what happened behind the scenes with Google and PRS.

TorrentFreak The Copyright Industry – A Century Of Deceit Rick Flakvinge’s summary is useful and accurate but I don’t agree with his conclusion.

New York Times The New Rise of a Summer Hit: Tweet It Maybe how social media is pre-empting the old record label and radio hit-making process.

DGM News A Letter To Lucien Grainge by Sid Smith at DGM (Robert Fripp’s music company). UMG/EMI still confused about their non-ownership of the King Crimson catalogue after 19 years.

Soundboy Where free streaming music lives 2012 Ian Hogarth of Songkick analyses his online listening. I’m interested in this because a lot of music biz people claim to be Spotify-only (“I don’t have any CDs, just Spotify” what?). At least 25% of my record collection is not on any streaming catalogue, Spotty included.

Hollywood reporter Newt Gingrich Settling Lawsuit Over Use of ‘Eye of the Tiger’ good discussion of the legal grounds and case histories of liberal musicians suing Republican candidates.

Barry Sookman Fair use for Australia? informative look at Fair Use in Australia and elsewhere.

New York Times Pandora and Spotify Rake in the Money and Then Send It Off in Royalties

A bunch of music biz links

 9 music biz stories from the past week…

The Recording: It's Been Losing Its Value Since 1962...

Big Four Music Labels Hire Students To Chase File-Sharers

Why are The Sex Pistols still the voice of anarchy in the UK?

A Record Label With A Midas Touch

When iTunes Becomes Obsolete

Map of the World’s Most Dominant Websites: Who Rules Asia?

Can Artists Get Rich In A Streaming Music Industry?

Recap: “The Future of Audio” Congressional Subcommittee Hearing

Did an Indie Band Inspire a Volkswagen Ad?

Digital is not outselling CDs

How a BPI press release included non-sales figures to get a headline, and succeeded

This week the BPI made a big noise about digital beating CD for the first time but this “significant milestone” included streaming royalties (such as Spotify subscriptions and advertising). Of course, the media—who should give the story behind the headlines—failed to explain what this press release actually means.

Although this Guardian story describes where the numbers come from they don’t say why income from music online is rolled up with “digital” but income from traditional broadcasters such as the BBC is apparently excluded. And this Guardian discussion  ignores the fact these numbers don’t reflect sales: “It’s good news that digital music sales are outstripping CD sales for the first time.

They aren’t.

CD sales figures don’t include sync, master licenses, PPL or PRS/MCPS royalties. So, when might the tipping point actually occur? Not for a few years yet.

Billboard story this week (“UK’s PRS For Music Says Digital Royalties To Match Physical By 2014“) tells us non-sales income from music is still heavily biased away from digital. Assuming this pattern applies across other categories such as PPL that suggests the BPI are suffering from premature proclamation.

Your music collection is too big

Music sites that claim to have “everything” don’t.

I’ve read as many accounts of cloud music services as I could find. People generally report they have tracks you can’t get online and each service has 80% or less of the tracks they want. My experience with iTunes Match backs this up.

When music biz experts debate which music streaming service is the next big thing they’re missing the obvious fact that none of them are.

If you’re under 25 and like only chart music from the last 10 years you’ll have better luck. Most music buyers have an album collection of around 100 titles (at 25 it would be more like 50) but people who are into music have broader taste and much bigger collections.

The debate about music streaming solutions isn’t for fans with 1,000 albums who spend their time looking for new music. It’s all about the mainstream. You might think music industry experts would be talking about services for the biggest customers instead of the most customers. Opinion formers and early adopters must look elsewhere. This innovation isn’t for them, it’s for people who don’t want much.