The Delta Snake Review

The Delta Snake Review


Monday, June 9, 2014

Will Streaming Destroy The Music Industry & The Fairy Godmother Fantasy

One of the biggest current trends in digital music is streaming, and it's made a noticeable enough dent in digital download sales that even Apple has bought a streaming service to incorporate into iTunes.

I've already read a few editorials about it being "free" music, a few semi-famous musicians complaining about the low royalty rate, and statements that it will destroy digital sales (which destroyed CDs which destroyed vinyl LPs which destroyed 45s which destroyed 78s, etc).

Personally, I doubt it will destroy the music industry, which always makes apocalyptic claims about any change in music trends that it can't control.

Streaming is obviously a new form of radio, but one where listeners can choose songs, and probably just like old time radio, will never make any particular musician wealthy by airplay alone.

I've read statements by musicians that were very critical of streaming, but the statements are similar to the kinds made anytime a musical era is beginning to change.

Which is the thing we have to keep in mind about streaming. It's not big business yet, the royalty rate isn't very high, and one big streaming service doesn't bother with royalties. It's an industry needs to grow up.

Like I said in earlier blogs, we're probably back to the age of singles, where airplay simply publicized a song, and musicians made most of their living from live performance.

Some artists always become rich in every era, and whether they're conscious of it or not, that's still the fantasy of quite a few musicians in this present age.

It's basically the fairly godmother fantasy, but in industry terms, "being discovered."

In it you play your music, some A&R guy finds you, the record company signs you and gives you a huge amount of money, promotes you, then comes stardom, and then all the drugs, women, mansions, and the means to hire bodyguards to keep the public that made you a star away from you.

Not to mention the full power of a wealthy record company behind you, dishing out payola to make sure your song becomes a hit, money for publicists, and legal protection from your mistakes.

And if the record company was particularly honest, you got regular royalties from your sales and airplay. In some ways it's a unique system. No guitar company takes a piece of your action once you buy their product. The music industry has been like the newer software industry as it restricts the use by the buyer, and in the case of music, wants a fee for any public use every single time it's product is played, even by kids in a school musical.

Kind of like a laundromat, to use the washer and dryer you have to keep popping in the quarters, but in this case, you own the appliances.

That was the success fantasy, and to a large degree it was true for a lucky few.

The reality was that the record labels were in fact choke points. Thousands of artists spent their own money making demos, sent them to A&R departments that would listen to maybe the first three cuts, pick a few from that group for development and sign them to contracts.

Most would receive a large sum of money, but virtually all of it was really an advance against future royalties, and the group was expected to cover the expenses of making the record from that money also.

If the record became a hit, and it made the advance back, the artist would get more money. If the record flopped, the artist still owed that advance and it became a big debt instead.

At that point, if you were lucky, the record company would simply write the debt off and of course own your music. If it was a less wealthy label, you could find yourself playing disco or whatever was popular at the time so the record company could try to recoup its investment.

The philosophy behind this was that even if there were hundreds of failures, there would be a few that would become massive hits, and that subsidized the losses.

I don't think there's any solid evidence that this was a superior system of getting new music to the public. 

Plus if an artist disappointed the company, and that could even mean getting only a gold record instead of platinum, a music catalog could quickly sink into obscurity from the label's apathy (and stay the property of the record company). The music would simply keep it in the vaults because it wasn't profitable to release it.

Some of the 60s artists, like Tom Rush, figured it out early and began releasing independently. Without all the overhead, they found they could make a comfortable living releasing their music even without the benefit of massive sales.

The web and digital age changed that to a large extent. An artist could bypass the demo stage, which could cost the artist a lot of money, and still leave them in obscurity, and take their music directly to the public.

The trade-off was that you were on your own. There isn't a company investing a huge sum of money to promote you.

What really transformed the digital age wasn't the sites that sold MP3s. It was the change in distribution. No matter how big the record company, it was always at the mercy of the distributors who always held the real power in the industry. 

Walmart for example, accounts for a huge percentage of national record sales, and could dictate to the record company how it released a CD, and could even make them change the lyrical content.

Once distribution companies formed that could take an indie artist's music and get it on the digital sites for small fee, that's when the old industry model began to break down.

It was a viable model, most of those distributors didn't take a huge cut of an MP3 sale like a record company would. If an indie artist sold a .99 song, most of that money came back to them.

Streaming is different, it works like radio. The artist gets paid a very small royalty every time song is played, and only if it's played. If you have a publishing deal, that royalty rate can be increased.

The thing is, there's no record company dishing out payola, perks, and in some cases even women to make sure the DJ played your song. For one thing there aren't that many DJs left in the radio industry, and most are talk show hosts.

So it goes without saying that you're not going to get rich through streaming. If streaming gets as pervasive as radio, then the amount of money an artist will get will go up.

The whole thing is still very new. I'm sure at some point, popular artists or record labels will probably get the streaming industry to put in a different model, perhaps an on-demand system for certain songs.

The traditional record industry didn't benefit most musicians, so any changes in the streaming industry will probably not be much help to the indie artist either.

One thing that does seem certain is that we won't see as many rich stars, and it'll be harder for the average musician or artist to make a living off recordings alone, even if the odds of their music being heard improve (if they promote themselves).

The troubles of the music industry are going through aren't happening in a vacuum. That affects the payout too.

In the last couple of decades, entire categories of jobs have disappeared or have gone overseas. People are making less money everywhere, and the money that sustained a rockstar's lifestyle comes from that pool of people.

When times are tough, everybody makes less, and musicians who forget that their income depends on spending by average people can think they're being ripped off by some new industry like streaming.

They forget that being a musician isn't a service sector or regular hourly wage job. In the real world it's a sales job. Music is created, and the artist has to convince the consumer to buy it.

The last few decades were sort of a golden age for music, it made a lot of people rich, but it just might be that we're not in an age anymore where a rockstar can make several times more than a doctor (with a lot less work and liability).

Technology moves very fast, which means in an industry like music, which is very technology driven, there will be periods of upheaval. It won't be clear what streaming means to the music scene for a year or two, or if it's simply a transition to another more sustainable model.

The MP3 download era eventually stabilized into the iTunes model, for example.

The streaming era has really only just now begun in earnest. Judging it on what's happening now is shortsighted. The royalty rate is low because the industry is new and only starting to get established, what it pays out if it becomes the dominant form of music distribution remains to be seen.

The smart indie artists have always been the ones who studied the trend and adapted to it. That's a model that's never changed.

To look at it more positively, the opportunity to get your music heard is never been better in decades. Big changes bring big opportunities, and it's smarter to go looking for those than to sit around waiting for the fairy godmother.