You’ve probably noticed, but I took a break from writing, spending most of 2018 really looking at the music business. When I decided to jump back in the game in late 2016, I reentered a world vastly different from the one I had walked away from decades earlier. While the music I discovered was spectacular (and continues to be), many of the obstacles artists face today required some examination to understand their role in the new ecosystem. Well, the time for examination is over. It’s now time to pass along my observations. Some, if not most of this will sound familiar, but it is important to me to keep these discussions ongoing.
There is no doubt the entire music economy has crashed to levels not seen since the advent of recorded music. Sure, the big labels are still able to cash in on their very rich catalogs of classic music. But, for most of the rest of the industry, pickings are slim. Thanks to the power of Apple, music sales are stuck at a price point reminiscent of the 1970’s, with the bulk of that price point remaining with a company that had absolutely no part in the creative process. Add to that the options for consumers to stream unlimited music for free from places like Spotify, who purposely keep their prices far below what is needed to be profitable, and you quickly see an environment far different from the pre-technology era. Musicians can no longer rely on the sale of their ‘product’ as a means of support, and in many cases resort to giving away their music for free to stay relevant and visible.
With the switch to an online listening habit, more focus is being paid to royalties and performance fees, which is where I want to spend a good portion of time in this article. There is a sub-culture that believes these are the meal ticket when nothing could be further from the truth. I spoke with one artist a month ago who had gone over their royalty statement. After releasing a new album, it was streamed in Russia and royalties were paid on those streams. For right around 7700 streams, the artist received 97 cents. Not 97 cents per stream, 97 cents in total for those 7700 streams. I’ve said it before and will say it again- no artist has ever become rich off performance royalties. At the current payout rates, most artists will never see more than coffee money for their efforts.
This appears to be a continuing trend, as all new legislature concerning performance rights in America give the keys to the car to the big corporations to monitor and administer the process (see The Music Modernization Act). The rich will get richer, and the emerging artist will continue to see a pittance in revenue for the works they have created.
Add to this the growing number of pirate “radio stations” popping up all over the internet that openly flaunt the rules, and you have an ecosystem where the consumer expectation is that music is now something I never have to pay for. Once that mindset is created, it will take decades to level the playing field. Why should I pay to hear a song, when I can over to Bobby’s internet station and request it. Because of the non-existent policing in place, Bobby isn’t paying a cent in royalties and is gaining quite the following because he allows listening behaviors that fall outside the established rules, and in many cases draws revenue in doing so. Meanwhile, those stations that are trying to play by the rules struggle, both from a financial and visibility perspective. I will be expanding on this subject in a future article, as I believe this sector of the industry is a key component to the success and recovery of the music economy.
I’ve actually had artists argue this last point with me. Artists that are very vocal about the right to get paid for their art (and rightfully so) are willing to look past the fact that Bobby isn’t paying them. To those artists, I say this- you can’t have it both ways. If you want to earn your rightful share, you need to demand that equal share from everyone that uses your music. Quite honestly, you gave up the right to make that decision when you registered your song for royalty gathering (check the agreement you signed with whatever PRO covers your material). By openly supporting pirate radio and allowing it to operate, you are effectively shooting yourself in the foot. This, by the way, is the only of conversation where I lay any type of blame at the feet of musicians.
So, the artist cannot rely on music sales to earn a living, nor performance royalties. Fortunately, they have live performances to line their pockets, right? That would be a ‘no’. For most artists, performing live consists of playing in establishments that, like consumers, feel they are entitled to next- to-free music, something that will draw people in and drink lots of beer, maximizing their profits, but barely putting anything in the artist’s pocket. Tip buckets have become the order of the day, and in many venues, the main source of revenue for a musician. The bar is ringing up hundreds, if not thousands of dollars in sales, and feeling good about slipping the band $100.
However, there is a new wrinkle to the live performance dilemma- people do not seek out live music, as they did years ago. Live venues are disappearing, because they are no longer drawing the crowds they once did. The computer age, an age where I can listen to music whenever I want, also allows me the ability to go to a site like YouTube and find live footage of the bands I like, and do it for free. There is no incentive to go out and find live music. As a result, the live performance revenue stream has been severely hampered for most, making it impossible to earn a living playing music.
The problems are many, but the solutions are few and make sense to all but the big corporations that control the business:
- Music pricing for the sale of music needs to join the 2018 world economy, and not be stuck in the 1970’s. Companies like Apple have already established their cost of service (by requiring nearly all of the 99 cents charged for most singles) so the increases can be passed along to the artists.
- Free unlimited streaming of music by companies such as Spotify needs to be identified as an anti-competitive practice that only benefits big business, and these companies should be compelled to offer a pricing model that allows for profitability, instead of baking quarterly losses year after year because of the rock bottom pricing.
- There needs to be a concerted effort to clean up the internet radio industry, an industry I firmly believe can be at the forefront of the new music ecosystem going forward with the proper controls in place.
I’m going to stop here for now, because there are another bunch of lessons learned during my summer vacation, which I’ll save for the next article. That article will deal with the attention seekers that are popping up all over the place and deflecting the attention away from the music and the incredible burden placed on artists to create and market their music, among other things. It could be an interesting read.