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Streaming: Some Could Be Looking At It All Wrong

Posted December 11, 2014

by R. Merideth


Streaming: Some Could Be Looking At It All Wrong

The current big struggle between songwriters/artists and the streaming services has picked up some serious steam in the last few weeks.  Major artists & labels are now taking a stand against Spotify, songwriters & publishers continue with concerns about Pandora, monetization has started on SoundCloud, Irving Azoff has started a PRO and YouTube is now jumping into streaming with Music Key.  

Personally, I love the debate and the challenges that all of these issues bring to the table.  Not only do we have movement in rates, but we also are able to hear the voice of artists and consumers via social media.

However, there is a bit of missing information.  Everyone has been so anxious to get their opinions out in their blogs and comments that some factors seem to be lost from the landscape.  

  1. Artists and labels have the right of distribution.  Since the beginning of copyright law, owners of recordings have been able to say which distribution channels can carry their recordings.   Taylor Swift and her label, Big Machine, have chosen to remove their recordings from Spotify and not from Pandora.

    It doesn’t matter whether the reasons are financial, promotional, superficial, or simply personal, the fact remains artists have the right.  Just as a label could choose Wal-mart, Tower Records, a certain radio market, or even an iTunes exclusive; where consumers could find their music has been the choice of recording owner.   Artists can choose which services they want to utilize.

  2. Digital streaming services are the new radio.  Decade after decade, consumers of music have turned on the radio and provided themselves with a soundtrack to their lives.  What developed was a complex relationship between radio, record labels and publishers.  Radio had to find a balance between advertiser dollars and royalties due for the music.  Listeners heard music free of charge, but it was at the discretion of the playlists created by the radio stations.

    The online streaming services offer the opportunity to distribute to music lovers on a worldwide scale.  Listeners can now play their choice of music when they want, where they want and how they want.  Absent are the gatekeepers who work from a playlist fit precisely to their market.  This is important to remember, as folks often look at the current music audience and see people who want to steal the music and villainize a consumer who only wants to listen.   

    I don’t think it’s really ever been about listening to free music.  People have had that ability since the dawn of radio.  I think for music consumers, it’s about listening to the music they want on their own terms.  

  3. Are streaming services actually free?  I keep reading the increasingly popular misconception that streaming equals free.  This is incorrect.  Music is never free.  Someone is always paying for it.  While the business models that support streaming might be nascent right now, they are building steam and the revenues are climbing each month.    

    Even if listeners don’t become digital service subscribers, they are still hearing ads. Consumers either listen with commercials paid for by advertisers (like traditional radio) or they pay a subscription fee to get the commercials removed.  For virtually all the streaming services on the market, there is some type of monetized elements.   On all of the legitimate streaming services, there is an advertiser paying to have their ads appear alongside the music, money is being generated somewhere.  And absolutely, some of this money is owed to the people involved in making the music.  Whether it’s three guys in a garage with a laptop or the hundreds involved in the release of a major artist, these people have put their time, energy, blood, sweat and often tears into the creation of a piece of musical art.  It’s theirs.  They give it to the world and when someone uses it to make money, the creators need to be paid for it no matter how it gets to the consumer/listener.

  1. Streaming service revenues are being confused with other revenue streams.  (Or at times, some revenue streams are being ignored.)  There’s a large call to arms whenever an artist or songwriter publishes their royalty statements.  Everyone immediately jumps on the freak out train and rarely does anyone reading and commenting on these blogs take the time to educate each other about streaming versus other licenses.  

    Case in point is YouTube.  Everyone is quick to point out the micropennies the major PROs are paying out for views on YouTube, yet no one steps up to say – hey, aren’t you also getting paid on the ad revenue side of those YouTube views?  When someone watches a YouTube video in the US, you are generating performance income.  When there is an ad on that video, you are also generating income via another source.  There are two revenue streams to consider.

    When I see the postings of songwriter’s PRO statements online, I immediately wonder if their publishing is also represented in the YouTube CMS and if they are properly considering the ad-based revenue.   

    As a songwriter, if your metadata isn’t in the YouTube CMS system, you are missing some amount of money.  Until one has their metadata in CMS and actually look at the viewership and advertising analytics, there is no way to accurately tell how much money is being generated.  But if one is going to use YouTube monies to critique and compare them with other online digital services, shouldn’t one take all of the revenue streams into consideration?

  2. Competition can fuel benefits for artists and songwriters.  What gets me so excited about Swift’s and Azoff’s actions isn’t that creators are sticking it to the “man”.  It’s the idea that the really great piece of the puzzle that’s been missing is competition.   If you want to stream Swift’s album without buying it, you still can legally, by listening to Pandora.  Whether knowingly or not, Swift has effectively opened the doors of competition in the digital streaming marketplace.   

    I’m confused why this appears as a new concept.  This whole time labels and publishers have talked about getting music on all the services, the mantra has been, “It has to be on all of them.”  No-it doesn’t.  All along we’ve had the ability to say, I want it here and not there.  Creators of high value sound recordings can go to the services and say if you want my music, give me a better rate.   

    When that works—and it will—the effect will translate for lower level artists as well, until we reach the days where rates for sound recordings on the streaming services collectively have risen.

    For songwriters, if Azoff has his way, there will be a new PRO in the playing field very soon.  There are others of us on the horizon as well.   This means more competition for the performance rights of songwriters.  SESAC has been out there on their own working for higher performance rates.  Now, they can be part of a larger voice calling out for negotiation of royalties.   Services that don’t pay the higher rates, won’t get the performance rights to the music.   It really could boil down to something that simple.  

What does all of this mean?  The digital services will have to find a new way of balancing their advertising and subscription income with the royalty rates required by an empowered music industry.  It may take awhile, but the time is coming.  The playing field is being changed to one where the creator and the listener are on top again.  It won’t be easy, but the time to take control as a performer and/or songwriter is now.   We’ve always had the rights, we’ve just not exercised them in this way.   Gone are the days where the industry sits back and waits to see what will happen.   It’s going to be an interesting 2015 for all concerned.  Keep the outlook

positive and it will the year we want it to be.

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