How the Wolf Will Survive: How Musicians Make a Living in the Streaming Era

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David Byrne thinks musicians are doomed by streaming music.

More music is being made and listened to with greater frequency, diversity and depth than ever before in human history.

But musicians are doomed.

Here are my issues with Byrne’s flimsy refutations of “counter-arguments” to building a business around free access to music:

“1. Recorded music -— and especially the idea of making money from it —- is so 20th century. Suck it up and move on.”

If not by selling access to recorded music, Byrne asks, “what is the alternative model for making a living” for musicians?

First, there’s the assumption that all musicians make money from recordings. Let’s acknowledge the many composers and performers who aren’t recording artists that are already making livings without exploiting their sound recording copyright.

Second, let’s also acknowledge that musicians never have earned 100% of their living from recordings. The bulk? Sure. Performance is an important and fast-growing part of the industry. Bands can and do produce and release successful albums in totality without any “team” helping them.

Third, there’s a complete lack of understanding as to how value is created around free access to music these days. For being such a musical visionary, Byrne doesn’t seem to realize that a new music business is dawning where fans directly patronize artists and fund their works. This is the era of the niche artist supported directly by the fan, the rejection of the hit song economy. It’s time to question corporate-hijacked copyright and government-decreed royalty entitlements as the basis of musician income.

Nobody thinks crowdfunding will “replace” royalties, that’s not the point. The point is that government-decreed, corporate-lobbied copyright exploitation rates are anachronistic in the digital age. We need new models. Byre, Lowery and the pro-copyright pro musician (but not necessarily pro-musician) cabal perpetuate the myth that music career failures are due to external forces (“piracy”) and not their own failure to adapt.

Alarm over the idea that value is shifting from the song to the fan is understood but unwarranted. Think beyond the numbers you see getting smaller on your royalty check. Right now, at this very moment, musicians are thriving. Byrne is the minority. We laugh at complaints about your royalty check, the epitome of a first-world problem. Most musicians never see a royalty check. Not because their music lacks quality or an audience, but because they don’t understand the music business, and the whole thing is set up to exploit them. Literally — copyright exploitation is how the old model derives value.

Thankfully, that will soon be behind us. The new model (well, really the “original” model of music before intellectual property law existed) derives value from the direct relationship between artist and fan. Technology brings us back to that model by allowing for songs to be produced, marketed and shared at costs that continue to diminish. We are all connecting, and the copyright regime is more of an obstacle than a boon to musical creativity and productivity.

Yet despite three labels owning ~70% of the rights to the world’s music (thereby largely dictating the terms that streaming companies do business), musicians aren’t just surviving, we’re thriving. More recordings are being made than ever before.

Again, for such a tech-conscious person, how can Byrne miss the recording studios in every musicians’ basement? How can he miss broadband and mobile? A world of ubiquitous, free flowing music. Each song an opportunity to be heard, and an opportunity to be paid.

Recorded music still has great value. Free or near-free access is not a genie that’s going back in the bottle, nor should it. Free access to music is best for most musicians and all fans. Some pros will get smaller paychecks — particularly those who relied on government-decreed royalty entitlements and lawyer/manager fees for squeezing blood from the stone-cold labels. That paradigm is shifting in a more ethical direction, and we should be championing it by adapting, not wringing our hands in paranoid nostalgia.

“2. The move to streaming services as the principal means of music consumption inevitably does some damage. That’s how the world works and how things progress. Progress is disruptive. One simply has to adapt to the inevitable.”

Well, yeah. Duh. Nothing is ever black and white. There are going to be benefits and drawbacks with any major change like this. Progress is both disruptive and inevitable. We have to look at whether digital music is a net positive or negative, and I continue to be stumped by folks who think music or musicians are at risk in a world of abundant creative production. The only thing being devalued is gatekeeping access to music, and there are numerous other revenue streams that musicians today are tapping into to power their careers.

Byrne makes it sound like all of the sudden, every musician doesn’t know how they’re going to make a living. All he has to do is take a look at the musicians succeeding by straddling the old model and the new, rather than fighting the future, which by definition, is inevitable.

Byrne goes so far as to categorize a group of people as “digital and technological inevitablists”, which won’t pass a spell check.

Some deaths are inevitable: The rotary phone… the fax machine… recorded music “ownership”. I mean, we’re not still using sharpened rocks to cut our meat?

So, obviously, Byrne says, “the content will run out eventually” if sound recording copyright loses its value.

Say what now? More music is being made and heard than ever before. On the whole, most musicians are taking advantage of the changes in the music business. There is a small but vocal minority of Byrnes and Ribots simply aren’t connecting directly with their fans and offering the kind of value that would render these worries of selling access obsolete.

Musicians are not under threat just because the musicians who can’t figure out how to switch from copyright exploitation to something else are blogging a lot about it.

Thousands of established artists have already embraced crowdfunding and taken control of their careers. They stopped wringing their hands and got them dirty taking control of their own careers.

“3. Scale will make the difference. Your concerns and fears are premature because if these services are allowed and encouraged to grow and reach their ultimate potential- they will be 20 times larger than what they are now in North America —- then artists will indeed make a decent living from this music consumption model.”

I don’t think anyone believes musicians will make a living solely from streaming music, or that streaming music will dollar-for-dollar replace CD sales or downloading.

I also think any reasonable person sees streaming music having endemic financial problems, even as it scales to enormous user bases. The record labels are just squeezing too much juice out of the system for tech companies to make a decent profit.

Byrne obviously doesn’t realize what he’s saying here: “Monopoly, however, has not historically been good for consumers or for innovation -— regardless what tech companies say. Power corrupts; it’s a given.”

So… uh… this is awkward, but, you know copyright IS a monopoly, right? The very right you’re defending has historically not been good for consumers or for innovation. So, yeah, thanks for making my point for me.

Byrne ends on a note that we need more transparency, which most people in the tech world agree with and are striving to provide. Meanwhile, ASCAP and BMI have magical secret licensing calculations and the labels hide from their artists everything they’re not legally pressured to show.

“4. The Internet has been good for artists’ independence. They are freer now than ever before -— they can record more cheaply and even control their distribution, if they want to.”

OK, so Byrne knows about the democratization of recording, distribution, marketing, sales, merchandise, instruction, licensing, and publishing.

Obviously a bad thing.

Byrne: “artists can’t really do a homegrown version of the on-demand streaming model.” Actually, they can and are actually doing that right now as we speak. Rabbit Rabbit and Deadmau5 are just two examples. I think it’s the future of all music. Bam! I just gave you the next big business plan in music. That’s how wolves… musicians… whatever… will make money as music streams like tap water. Each one of us will have our own branded “channel” where we directly engage and monetize fan relationships. This is a practical, logical way artistic control can be preserved in the transition from copyright exploitation to direct fan patronage. But it’s much more fun to say the sky is falling!

Oh, another understatement of the decade: “There has been a flowering of creativity and possibility somewhat thanks to the web.”

That’s like saying, “There was a great deal of reading and writing somewhat thanks to the printing press.”

Byrne is missing the point that the web is us. I’m all about respecting my elders but I’m not sure we should be taking cues for the future of music from a 61-year old who stands like a pale, naive foreigner amongst the digital natives.

“5. Streaming services are like broadcast radio, which music folks worried about at first, but eventually decided that it actually helped promote musicians work —- so some fees were waived.”

When broadcast radio came along, it threatened and co-opted labels. RCA bought Victor in 1929. The labels came fighting back, and a decade later we had BMI opening to lure artists away from labels and onto radio-owned properties. The standoff was settled by the government and that’s why we have this ridiculous entitlement system that was always broken and is now crumbling.

Eventually labels used payola to buy out radio and control the music marketplace and were able to get a final leg up on on radio, but not before they dumped a huge portion of their profits into independent promoters who greased the palms of broadcast programmers.

Today, corporate ownership of media and record companies is so consolidated, most negotiations are done behind closed doors with no input from musicians whatsoever.

This is the industry Byrne is defending in his piece.

Suggestion #1: “What if there was no free on-demand streaming (unless the artist is directly controlling that access through their own site or as a publicity endeavor).”

Byrne answered his own question, he just put parenthesis around the answer for some reason?

If you were being serious, then we have a unicorn to sell you. There is no world in which free on-demand streaming of music does not exist. Or rather, there is, and it’s a scary totalitarian dystopia where we’re likely to have bigger problems that stimulating musical productivity and creativity.

Suggestion #2: “Artists should get 50% of the income streaming sites now pay to labels”

Ha ha ha. We have a herd of unicorns to sell you.

Why does a post demonizing the music tech industry pose a solution that points out the real exploiters, the big three labels? Music rights corporations and industry organizations are clearly responsible for low musician wages, not tech companies.

Suggestion #3: “The artist should have approval whether his or her work can be used.”

Again, this is a label problem, not a tech company problem. Independent artists have total control to pick and choose each individual distributor. This is widely known… most musicians are independent. Welcome to the future of the music business: independence. It can be scary for people used to mailbox money, but we like it.

The only way to have total approval over whether your work is used is to not make it. Music is free. One way to create value around it is by controlling access through copyright law. But don’t confuse music with copyright.

Suggestion #4: “Transparent accounting and data sharing.”

Again, the labels are obfuscating. The tech companies are trending more transparent.

Is this whole thing just a Machiavellian scheme by labels to transfer their unethical history of corruption and exploitation onto a tech industry that wants to turn consumers into creators?

What is Byrne thinking? If the musicians that look up to him follow his lead, they’ll be more broke and confused than they were before they started blaming their own fans for destroying their music careers by sharing their songs out of pure love for the music.

Back to reality, folks!


photo credits: wolf by Arran ET; microphone by Paul Waite

Stop Confusing Music with Copyright

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Imagine a world in which there is only bottled water. Then, quite rapidly, changes in technology connect every household to a municipal water line so they can have tap water.

Suddenly, you don’t have to pay for water every time you want to drink it. And even though you’re paying a small monthly fee for access to the municipal water line

This is what’s happening in music. We’re hooking up and turning on the taps. We’re reclaiming the water as a public resource.

Recently there was a putrid click-bait post on Digital Music News titled “Why Streaming Music Isn’t Like Bottled Water“. It’s part of a trend — albeit a trend quarantined to snarky music bloggers and obscurity-fearing professional musicians — to paint streaming services as the great evil.

What bothers me the most about knee-jerk demonization of tech companies is that record labels are really the ones to blame. It was the labels that used lawyers and lobbyists to bring copyright under corporate control. Don’t hate the industry that’s trying to make it more fair!

I would agree it’s naive to think tech companies would have anything but their bottom lines in mind when it comes to decision-making, just like the corporate oligarchy controlling music copyrights. Nonetheless, look at all the great music that has come out of the labels despite them being largely evil empires. The same will be true of tech companies, but they still have a long ways to go before they can compete with the unabashed exploitation of musicians at the hands of the labels. Remember McLuhan: “The medium is the message.”

Sure, making music more fair means the 1% of musicians who earn 95% of the profits in the music industry are going to have to take a hit to their paycheck. That’s the shift caused by technology in many corners of society, in music it is embodied by the streaming services. The record labels are the ones who want to see the 1% hold on to their money, because they collect over 50% of their revenue before it makes it to the artist! Who’s screwing who?

Back to bottled water. It’s been a popular thing for technologists to say that “music is like water” because… well… it is. It’s kind of common sense and obvious. Tens of thousands of people have agreed. This is why the click-bait trolling article was written in the first place, like a kid kicking a bees’ nest.

If you visit the link, you’ll notice I started to refute the article point by point before getting overwhelmingly bored. I’ve been fighting against the trolls who demonize the music tech industry for years. It’s getting tiresome. What’s more, the world I talk about — the world in which music flows like water — is already here. We’re never going to regress back into the world that the copyright maximalist musicians are trying to complain us back to. This much is clear in their total lack of advancing any workable solutions for increasing the value around music.

Here’s the problem: Musicians (and many others) are confusing copyright with music.

Music is Free

If you don’t understand why music is free, please take a second to hum a song. Now try to put a price tag on it. You can’t. You need some sort of way of gatekeeping access to that song in order to create value around it. There are two ways: build a fence to keep people out, or build a fence to keep people in.

Copyright is the fence built to keep people out. Patronage is the fence built to keep people in.

Copyright Productizes Music

Copyright has been the way we’ve generated value around music for roughly 200 years, first by protecting sheet music, but most importantly by protecting the song recording. For the first time in the music business, the gates didn’t have to be physical to create value around song. Prior to the invention of the recording, the only way to create value around music was to attract patronage — the main way of doing so was to be paid for a performance. The way to create value in a performance is to charge those who pass through the entrance. The gates were physical and literal.

With copyright, the gates became more like music — ineffable, conceptual. Over time, listeners and musicians were brainwashed by the copyright industry to combine copyright and music into a single concept — “sonic product” — the idea of music as a product to be packaged and sold like any other consumer good. The free music, like that on the radio or TV, was just promotion for the sale of the product — a free sample.

But the product of music isn’t like consumer packaged goods. The “packaging” is copyright, a law that you can’t touch, smell, taste or hear.

That’s where the bottled water analogy comes in.

Streaming music is tap water in a world where bottled water used to be the only choice. Oh sure, you can saddle up to the water fountain of radio, or the office cooler of music television. But to have on-demand access to the water that you want, a bottled-water system makes no sense when tap water technology is here. Sure, plenty of listeners will continue buying bottled water because of its perceived convenience or quality, the rest of us are thirsty and just want a drink.

We’re undergoing the same kind of fundamental shift that happened when music moved from performance to recording, from patronage to copyright.

Of course, the multibillion-dollar bottled water will fight with all its might to protect its profits. This is the true crisis in music — corporations ruining music just for profit. Tech companies are also trying to profit, but they’re doing it by building walls that keep people in, not walls that keep people out. The tech industry is building the music taps, the listeners want it, the musicians want it — only the bottled water industry wants to fight it. Unfortunately, the bottled water industry (and the labels) have lots of money and lawyers to ruin society with!

We need to stop confusing copyright with music. Music exists independently from the access-control mechanisms we use to create value around it. This is not to say the forces of business and technology have no role in shaping music. Quite the opposite is true — we tend to underestimate just how much commerce and technology shape creativity.

But when it comes time to talk about what music really is, the cacophony of music bloggers and complaining professional musicians drowns out the truth.

Music is like water. It’s a free but precious resource necessary for human life that must be maintained and made fairly accessible for humanity to progress. And like water, it is constantly under threat of corporate control for the best interest of the corporation, not society.

The record labels are the water bottlers. You pay a premium, and you feel it in your wallet every time.

The streaming services are the tap. You pay a small monthly fee, and metering makes sure the costs and revenues are evenly distributed.

But guess what? The water analogy doesn’t stop there. Do you see the ocean?

In the music analogy, the ocean is the sea of musicians — the majority of musicians — who don’t make a penny playing music. Forget money, they don’t even get a chance to be heard.

Right now, the sea is undrinkable unless you build an expensive system to filter it. This is exactly where the music industry is right now. We’re trying to figure out a way to filter the millions of musicians playing across the world and deliver something of value to the listener. Or, in water terms, we’re trying to desalinize the ocean.

We’ve come to define the hit song as the pinnacle of music, but that’s not true. The pinnacle of music is in every musician being heard, whether it’s by one person or one million. We’re getting there, and it starts with moving past the bottled water industry.

Even as mainstream culture grows even more monolithic, one by one, people are waking up to this new way of thinking about how we create value around what we create. Control is moving from the corporation back to the individual as profit takes a backseat to community. Music isn’t a product to be sold, it’s a service we provide to each other.

It’s the most exciting time to be a musician… and it’s a pretty exciting time to be a human in general.

So pour yourself a nice, tall glass of tap water and toast to the future of music, where all musical thirsts are quenched!

Spotify Artist Payment Transparency Challenges Corrupt Music Biz Status Quo

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At last year’s Rethink Music conference, I peppered Spotify CEO Daniel Ek with questions about their failure to be transparent about artist payments. I saw the makings of what would be a PR nightmare for the company in 2013, just as the now-infamous artist payment infographic started making the rounds.

Spotify must be finally listening to public opinion, because it has started an all-out assault on all the negative press it’s been getting. Mainstream artists like Beck and Thom Yorke have been complaining in public about how the streaming music model simply doesn’t work. Documentaries are being made about the so-called “demise of music” (utter rubbish), mostly filled with more complaining artists that provide no solutions, only ire. Spotify is often the voodoo doll in all this streaming music hate, though a special place in hell is reserved for Google and their indexing of file-sharing websites.

The new Spotify for artists website is ground zero for musicians to learn about how Spotify really works (at least, how its PR staff would like us to think it works). I recommend checking it out though, because so much disinformation has been spread about streaming music royalties.

Still, we’re missing the big picture here — not surprising since we’re talking about the music industry. One of the cardinal rules of the people who make the majority of money in music (hint: it’s not the artists) is to obfuscate all the financials.

That’s why Spotify’s move toward greater transparency is pretty amazing. I’m led to believe it’s just beginning, with the company planning on offering automatic audits of royalty payments so artists can see exactly what they’re earning.

Let’s recap how the music industry traditionally worked so we can see how lack of transparency is one of the roots of artist exploitation. This is not the path every artist takes, but it is the status quo:

1. An artist’s music and career shows promise, either by gaining popularity, having the right industry connections, or just being an act that’s profitable to “sell” to the public.

2. Artist signs the rights to their music over to record labels and/or music publishers so they can be exploited. They hire multiple team members to handle various aspects of their business, each taking a cut.

3. The majority of artists never see a dime because they never recoup the cost of producing and marketing their album, which is required before receiving royalty payments from their label. Even then, their payments are a small percentage of total revenue. Publishers take 50% of all licensing revenue. Managers take 10-25% of most revenue. Booking agents take a similar percentage of ticket sales. Other royalties are collected by PROs like ASCAP and BMI, who keep a secret percentage of all revenue to pay their employees, fly them to conferences on exotic islands, and otherwise run the business of collecting and distributing artist revenue.

4. If the artist is in the right place at the right time with the right people, they may be lucky enough to sustain a career, even after all the percentages and cuts are taken out of their revenue stream. At this point, the rights to their music are worth exponentially more than they were when they were signed. Unfortunately, the way the record labels operate — and the way they have lobbied to structure copyright law — means that artist rarely gets to cash in on the true value of their music. The labels, lawyers and businesspeople are the true profiteers of the music industry. Worse, the musicians and their music are treated as mere product to be sold and consumed. This is the true devaluing of music — exploiting artists at a low point in their career while simultaneously reducing music to another consumer packaged good.

The music industry, on the whole, is still unquestionably corrupt. As we all know, transparency is toxic to corruption. Shining a light on secret practices benefits us all.

All the traditional players in the music industry are stained by mostly hidden corruption. There’s a rich history of collusion, price fixing, price gouging, payola and other patently illegal practices that almost always result in settled lawsuits and no admission of wrongdoing. (The same practice has infected virtually every large, modern industry — corporations are really just instruments to gain market favor and profitability.)

Record labels are well-known for stiffing artists on millions in royalties  through backroom accounting, legal loopholes and business-savvy manipulation. Even the PROs — vigilant protectors of artist’s rights to profit from the exploitation of their work — have a totally secret formula (some say no formula at all) for paying artists. We really have no idea what percentage ASCAP or BMI is keeping for itself. Even worse, because the labels and broadcasters and other multinational media conglomerates have the most leverage with PROs,  the average independent artist is gets screwed — in the dark, thanks to the lack of transparency.

A minority of artists hate streaming music largely for two reasons:

1. They see their royalty payments shrinking.

2. They equate this with the “devaluing of music”

At the Future of Music Summit this year, the theme was basically “is music being devalued?” Those artists that saw their royalty payments shrink generally answered “yes”, those who saw them grow (like most musicians) answered “no”.

Here’s the deal: Music is not devalued by streaming technology. First of all, the value of music should not be measured in dollar signs. I know that seems a little kumbaya-ish, but it doesn’t make it untrue. We musicians and fans know that the value of music is in how it shares experiences, creates bonds, provides catharsis, sets a mood, heals our psyche, etc. One cannot equate (as anti-“piracy” advocates often do) the value of music to the value of a consumable good like food or energy. Music is not consumed, it is free. Labels package it and market it for sale, but it is never actually consumed. It is free to share, free to listen to, free to be played.

Over the last 100 years, the music industry has set up barriers to sharing, listening and playing in order to profit. This was done ostensibly to protect musicians’ ability to make money and thus continue playing music, but a quick glance at history shows the utter hypocrisy of this view. Shadowy accounting, non-transparent business practices, litigation and legislation aimed at grabbing a bigger piece of the pie — these are just a few of the corrupt actions that are status quo for those that exploit musicians for profit. This is the real devaluing of music.

Let’s look at the actual market value of music. Surely we can agree that the market value of music is going down?

Absolutely not. The market value for music is actually rising.

What’s devalued — in the sense of the market — is paying for access to music. Copyright creates the barriers that prevent sharing, listening and playing music. Corporations control these barriers through technology, law and the market. The technology is the apparatus of control. The law (such as the perpetual extension of copyright term length) is the framework that prevents technology from getting too far outside their control. The market is what allows them to acquire music rights for next to nothing, and then reap all the benefits (and to be fair, suffer the risks) of inflating and exploiting the value of those rights.

The ‘Wizard of Oz’ pulling the strings on the whole facade is still the record labels — primarily the majors that own ~70% of the rights to all music on the market. Is it not plain to see that the last decade has been about the labels using streaming music to rebuild the industry of exploitation, to stem the bleeding that free access to music inflicted on physical sales and downloads? Is it not totally obvious that artists should be complaining about their onerous contracts, the ones that take all the value out of their rights and leaves them with a small percentage?

The always incredible Billy Bragg is just the latest artist to point out that the artist uproar over Spotify payments is ridiculous, given that the labels are the true culprits of artist exploitation. We need more voices like his.

Here’s why the Yorkes and Becks of the world are upset: they sold out their rights for large royalty checks that are now shrinking. They’re 100% wrong to point the finger at streaming services. Come on, who do you think negotiated those royalty payments in the first place? The reason these stars can’t blame their labels is that they are complicit in the exploitation business. As technology tears down the barriers to share, listen and play, the value of exploiting one’s rights shrinks. This is why big artists are defending their labels, crying that the sky is falling, and using fear and negativity to somehow scare fans into… what… buying CDs again?

This is the core problem of the “music is devalued” camp. They have no solutions! I’ve been debating these folks for years, and the only thing I’ve heard them come up with is “stop piracy”. If that were even possible — which it’s not — all it would do is protect the rights held by record labels. It does nothing to help most artists. It’s purely self-centered around one’s own paycheck. It does nothing to stop the system of exploitation, it only adds fuel to the fire. Regardless, study after study shows free access to music encourages sales.

That’s why Spotify’s move towards transparency is so important. It challenges the industry status quo of anti-artist secrecy and empowers musicians to actually see how their revenue is coming in. This is something that’s simply not possible with labels and PROs, unless you are one of the few artists with the legal or market might to apply pressure for an audit.

Transparency is coming to the music industry, and fans and artists are loving it. It’s actually increasing the value of music. Take another example: crowdfunding. In the past, artists funded their albums by signing their rights over to a label, and in return the label would take the financial risk of paying for its production and marketing. Of course, “risk” is perhaps a strong word, because most labels just let 9 out of 10 bands fail and then put all their money behind the one that showed market traction.

Today, artists are increasingly using crowdfunding to replace the role of the record label, at least from a financing perspective. With digital tools, bands can market themselves with virtually no budget. Distribution is democratized. For independent artists operating on small-business scales, there is less and less need for the exploitation of a label.

What’s best, crowdfunding is completely transparent. In the past, the fan would buy a CD but have no idea how much money got to the artist. Now at least they know that Spotify pays artists 70% of their revenue, comparable to iTunes. But crowdfunding is even better — on most platforms, fans see how much the album will cost to produce, and know that almost 100% of the funds are going to the band (the real figure ranges from 80%-95%, still a great improvement over the ~70% status quo).

Here’s the real key to this debate: the value of a fan is going up for artists. The value of a fan is going down for labels, because their revenue is based on exploitation and they have less opportunity to gatekeep. For artists now directly connected to their fans, crowdfunding is a viable and transparent way for fans to know their money is going to the artist. And because of that, they give a lot more of it. Nearly all artists who try crowdfunding find that instead of taking a small percentage of an album sale, they can make 10x the profit by taking money directly from a fan. Part of this is that the fan knows the money won’t get caught in the non-transparent, behind-the-scenes corruption of the music industry. But the fan also wants to feel like they are the label, like they are participating in the creation of the artist’s music. Patronage has far superior value to the fan than exploitation, not to mention its ethical superiority.

Spotify is trying to be a meritocracy. They want to take the whole royalty pool and split it up evenly based on plays. That’s why artists are seeing line items for thousandths of a cent. But it adds up. More artists are seeing their streaming revenue grow than shrink, but those who are seeing it shrink have market dominance and a loud voice. The exponential growth of crowdfunding and streaming music payouts is evidence enough. Anecdotally, I’ve seen my band’s streaming revenue double year over year.

Ultimately, I’m no grand champion of Spotify. I am in the camp that thinks they’ll never be profitable so long as the labels scarf up all of their revenue. Long-established streaming music sites like Turntable.fm are already being shut down by the music oligopoly for not scaling to big enough profits. I see access to music gradually approaching free again — the next step is already underway: the bundling of streaming music with consumer electronics. Eventually, music will be a utility like water — paid for by distributing the costs across the total population, and rarely a conscious expenditure. People still buy bottled water and folks will still buy physical product. But make no mistake: While large corporations will fight it with every lawyer they have,  no one can stop the web from bringing music on tap to the people of Earth. With streaming music, we’re already seeing corporations reluctantly embrace freer access, so long as they can still negotiate their onerous terms for artist payment.

Let’s be clear. There are plenty of people at the labels and at the streaming music sites that are fighting the good fight for artists. They realize the system is compromised and corrupt, and they are trying their best to work within that paradigm to eke through positive change. But anyone who’s trying to fight this move toward transparency is anti-artist, period. Spotify may only be doing this to protect its bottom line — if they were true crusaders they would expose the labels as the reason artists see little of their streaming revenue. But the labels keep the lights on, and Spotify still thinks it can be the alternative to “piracy”.

Sharing, listening and playing music ought to be free activities, because they actually increase the value of music. Artists are moving past the point of needing barriers to exploit rights, but labels have no other choice. I expect the transparency wars are just beginning — and I will be there tugging the curtain down with millions of my fellow musicians.

TL;DR: Transparency increases the market value of music — it combats music industry corruption. Ending piracy is not a solution — it perpetuates the corrupt status quo of artist exploitation.

Future of Music Summit 2013: A Feisty In-Depth Preview

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I am beyond pumped to be headed down to Washington, DC next week for the Future of Music Summit.

The Summit is 2-day conference for music industry professionals and musicians, and is organized by the Future of Music Coalition. The FMC is a non-profit that advocates for musicians’ rights, and helps educate musicians on issues that are important to them, even though they may not realize it. Besides giving musicians a voice in Washington, they may be best known for their Artist Revenue Streams research project that gives incredible insight into the details of how musicians make money in the digital age. The Summit will begin with the latest analysis on that treasure trove of data.

I’m also looking forward to the rest of Monday morning, where conference attendees will be serenaded by government leaders in intellectual property, followed by a counterpoint on copyright from musicians and music businesspeople.

I’d like to ask the copyright panels how they would reform copyright to balance the needs of the individual and the culture versus the need to profit from corporations who have all the legal and lobbying resources to shape the law. Shouldn’t we decriminalize song sharing by adopting some of the ideas successfully employed by Creative Commons? Don’t we have enough studies showing that “piracy” actually increases fan engagement and spending?

I would also question whether virtually infinite copyright terms perpetuated by corporate lobbying have anything to do with the original intent of copyright. I would ask the musicians if copyright exploitation is perhaps a less ethical business model than direct fan patronage, and now that technology has enabled the latter, we should focus on what technology now enables rather than stifling innovation to protect anachronistic models.

Finally, I would posit that free access to music is a net benefit for promoting all of the underlying tenets of copyright: the right of the individual to be compensated for their labor, the right to own and control one’s personal expression, the right of society to benefit from creative works, and the right of a culture to use those works to perpetuate itself. Has anyone noticed how our copyright system works against these ideals by hoarding wealth at the top, appropriating our personas, creating a large deadweight loss in music consumption and denying cultural re-use of creative works, in a culture increasingly based on re-use?

All that will probably have to wait for the cocktail party. Maybe I can get the person who curates the copyright panels drunk and you’ll see me and Larry Lessig up there next year wrestling some lawyers from the Copyright Alliance and the Center for Copyright Information. The gauntlet has been thrown.

The lunch breakout session is the “Band as a Business” workshop, which is funny, because that’s almost the same name as my free “Band as Business” video course on Udemy. I reached out to workshop facilitator Paul Rapp when I realized he was 2 hours north of me in Albany. I asked him why crowdfunding wasn’t covered, considering it’s the next big thing in how musicians can make money. I also dropped the whole copyright spiel on him, so maybe I shouldn’t be surprised I didn’t hear back. Looking forward to taking the workshop nonetheless, as there’s always something new to learn, especially for those who teach.

The rest of Monday is dedicated to the “Future” part of the Summit, where we’ll be discussing the cutting edge of music markets and marketing. I expect artist discovery and fan engagement to take center stage here. Over the last few years, we’ve really seen the music industry embrace the kinds of marketing best practices that were developed by natively digital companies. In particular, the idea of a “fan lifecyle” (analogous to a “user lifecycle”) is central to any modern musician’s business strategy. Success comes from identifying target fan markets, coming up with strategies to engage those fans, and then creating a system by which those fans drawn into an integrated marketing funnel, generating more revenue the deeper they go. Digital tools and services can go a long way to facilitate marketing and conversion, and I’ll be curious to see which names from that industry are dropped.

The last panel of the day is the one I’m looking most forward to — a discussion of streaming, crowdfunding, and the future business models of music. Most people are confused when it comes to this topic, and I understand why. But I’ve been a digital native all my life, and I’ve dedicated my life to music, technology and the intersection in between. The “future” of music business is, without a doubt, many different streams. The days of one dominant stream from copyright exploitation are leaving us. When we talk about the “old” business model dying, we’re not just talking about selling CDs or MP3s, we’re talking about paid vs. free access to recorded music, and things are moving inexorably toward free. It’s a net benefit for fans and musicians, and more music is being made and listened to than ever before. It’s awkward and sometimes devastating to professional musicians who are having trouble adapting, or who put their heads in the sand and blame their own fans for their career woes.

At the same time, the “new” business models like crowdfunding are revolutionizing the band as small business… and it’s all just the tip of the iceberg. We have seen but a fraction of the potential for new music markets and models. Perhaps if the market wasn’t mostly controlled by a handful of enormous corporations, it would be agile enough to shift. But no matter, individuals will flip the paradigm and enable new categories of paid musician that defy the dominant “professional” title. Indies will continue to innovate. The majors will hulk along collecting back catalog royalties until music is a utility like electricity or water… and we’ll be there sooner than you think.

We’ll need a drink after that one. Lucky for me, Mailchimp‘s buying.

The second and final day of the conference features a potpourri of unexpected topics.

A history and analysis of the crossfader “as a tool for re-thinking music as a form of social action” seems to jive nicely with my piece on how copyright law undermines the power of music to effect social change. With no de minimis standard for digital sampling, the crossfader seems to be regarded more as a nuclear weapon than a tool for social change by the record industry.

I’m also looking forward to the panel on music and social change. MC5’s Wayne Kramer (who makes an appearance in my Band as Business course) chairs a particularly interesting pursuit involving instrument donation to incarcerated people. I’m a huge fan of music charities, and music’s ability to provide meaning, healing, joy, comfort or entertainment to people who are aimless, suffering, unhappy, uncomfortable or just bored. It’s the reason we have music! Too often we lose sight of music’s true purpose in pursuit of profit. As such, the following panel on “Nonprofit Models for Supporting Independent Music” shares similar potential for being an awesome eye-opener.

Before lunch, the Director of External Affairs from the U.S. Department of Health and Human Services will run out on stage and scream, “Musicians can afford health care now!” and then disappear in a flurry of pyrotechnics. Or not. But either way, I can’t think of a better place to tout the Affordable Care Act than a conference for musicians, even if I can build a better website myself, for hundreds of millions of dollars less.

The breakout session I’m headed to after lunch is all about how we can provide a better career education to musicians. That’s my mission too! I just launched the Songhack website to do just that — educate musicians on how they can “hack” the music business and make their own careers. My work with John Snyder at Artists House Music (we did the Band as Business course) has given me a unique look into the realm of institutionalized music career education, and the huge challenges it faces. I look forward to gaining more insight from the panelists of this talk… because despite the best efforts of the FMC, most musicians don’t have any idea how musicians make money!

Tuesday wraps up with a more philosophical take on the issues from our distinguished hosts and a group of accomplished musicians. Diving deep on the cultural value of music with the Producer of Blue Oyster Cult sounds like a pretty sweet ending to me.

I’ll be missing the conference-closing NPR All Songs Considered Listening Party. Gotta hightail it back to New York to keep the entrepreneurial machine running. But while I’m there, I’ll be tweeting up a storm and posting daily updates, both here at Mediapocalypse and over at the Songhack blog. Please join me!

Are you headed to the FMC Summit? Do you want to tell me how wrong I am about free access to music and throw a drink in my face? (I know there are some of you out there!) Or have you seen the same bright future for music that I have, and want to join forces to spread the good vibes? Leave me a comment or drop me a line on Twitter and we’ll hang.

See you in DC!

Rock Star Digital Music Freakouts Ignore Benefit to Everyone Else

(CC-BY-SA Jason Lam
David Byrne, the latest rock star to fight the tide of small screens from the Jumbotron. (original photo CC-BY-SA Jason Lam)

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it!” – Upton Sinclair

It’s the latest fad: rock stars hating digital music. Well, not really — it started with Napster. Back then, a lot of artists held their tongues, realizing that it would be mega-uncool to call their fans thieves just for being fans. Plus, the major labels had screwed them repeatedly, and it was schadenfreude to see them suffer because of their own greed and ineptitude.

Flash forward over a decade, and the labels have figured out how to continue to profit from gatekeeping access to the world’s music. Sure, they’ve seen their market share slip versus the indies, and now only own the rights to around 70% of recorded music. But they’ve once again managed to control the means of mass distribution, this time by dictating the terms of digital music streaming services so that they could not exist without the majors, legal or financially. (I’s also the reason why streaming royalty payouts are so low for most artists — the major labels, as always, take the lion’s share.)

The rock stars realize they’re being screwed again by the majors (what did they expect?) David Byrne is the latest to pile on While many famous musicians point the finger at tech companies ad exploiters du jour, Byrne’s piece rightly acknowledges the majors are culpable for setting the terms of streaming music. Nonetheless, he speaks in concert with many other high profile artists when he blames digital distribution of music for destroying music, saying “The internet will suck all creative content out of the world”. I respect Byrne as a musician and a well-spoken, well-written, thoughtful musical provocateur, but this is too much.

Most of the complaining is just reactionary vitriol, the same way journalists deride blogging, or photographers bellyache about Instagram. There were probably some pretty pissed off monastic scribes when the printing press came out.

The problem with creative professionals complaining about changes brought about by technology is that they’re focusing only on their careers. I don’t blame ’em. Only those with a laser-like career focus can find any long-term success in the creative industries. As it relates specifically to the music industry, I never would have expected vaudeville performers to welcome recorded music, or for Tin Pan Alley to welcome radio, or for the record and radio busiensses to welcome digital.

When rock stars and professionals make the digital music debate all about their paychecks, they not only pass culpability from the major labels that deserve it to the technology companies that enable freer access to music. Tragically, when music professionals make grandiose statements about how digital is killing music, they measure the decline only in the dollar amount of their paycheck, and they denigrate music in the same way the major labels do. They reduce one of humankind’s greatest evolutionary and expressive triumphs to mere profit, and they fail to ignore the benefit of digital music to everyone else.

Put simply, more music is being made and listened to than ever before. Digital music combines the best of recording (accessibility to high-quality music performances) with the best of radio (free access). It’s the best thing to ever happen for fans — and make no mistake, fans control the music industry, though more often than not they may not realize it.

There is no doubt the professional musician is on the decline, which is bittersweet. Most career musicians are working-class survivors, a group of ~50,000 musicians in the U.S. who have fought their way tooth-and-nail to profitability. Only a fraction enjoy profitable careers lasting more than a few years. A generally non-vocal majority of professional musicians are busy adapting to the changing market, but a handful of very vocal complainers are raising an awful stink about their shrinking paychecks. Again, I don’t blame them for being protective of their livelihoods — but look what good paywalling did for newspapers/journalists. Successful pro photographers found out ways to embrace Instagram, not fight it.

My biggest gripe with the anti-free access to music, professional musician mentality is that what little time it spends focusing on solutions, those solutions belie any understanding of the change that has already taken place, and ignore those who aren’t professional musicians — namely, the tens of millions of music fans that make their paychecks possible.

It’s absurd how many artists, Byrne included, just complain. At least crusaders like David Lowery are trying to articulate solutions, though they often reduce to useless catch phrases like “stop artist exploitation” or “piracy is stealing”. What is all this doing except making professional musicians look like entitled, out-of-touch geezers to their fans?

The other troubling development is that these activist musicians end up bolstering the exploitation-based business built by major labels, by virtue of the fact that major labels control the market. Every dollar musicians fight to earn back by more strictly enforcing copyright law is $99 that goes into the pockets of the labels. Even the labels are finally realizing after 125 years of fighting piracy, that the War on Piracy is like the War on Drugs or the War on Terrorism. To the extent that battles can be won, the cost of doing so — both financial and in the hearts and minds of fans — is unsustainable.

What these money-focused musicians miss is so obvious: it’s not about the money. As Henry Rollins said, “I’d rather be heard than paid.” This is not something that only professional musicians feel. Every musician feels this. Even fans feel this. And I think what every professional musician needs to realize is that their careers are transforming because digital technology awakens the musician in all of us. Music professionals no longer enjoy a monopoly on the title of “musician.”

Free access to music empowers the amateur and the aspiring musician to earn income on scales that were not possible before. It reverses the trend of music without context — instead of digital files floating around in the cloud, creators are now compelled to create imagery, video, and other media around the music, enriching the fan experience.

Free access to music is blurring the line between fan and musician, creating a new culture of creator-consumers, remixing and mashing up several generations of recordings to create a new art form. They curate playlists to become the new DJs. They sample at will to electronically create entirely original compositions with embedded links to music history.

Free access to music rebalances the world of music more toward performances, away from the hegemony of the recording. In a post-scarcity economy, copies of performances lose value, original performances gain value. This rewards the generation of new music without having to rely on messy copyright law. EDM is explosively huge, and so much of it exists outside the copyright exploitation paradigm.

Free access to music allows musicians to focus on what’s really important: their relationship with their fans. Gone are the days when fans were measured in dollar amounts. Success in music is now measured in attention, in engagement.

Free access to music de-emphasizes the ethically compromised business model of copyright exploitation in favor of direct fan patronage. It may not scale to gold records, but the only people that seem to care are the rock stars, and those that still believe in the rock star myth. And if you’re hell-bent on copyright exploitation as your main source of revenue, there are plenty of academic studies showing free access to music increases sales of access to music.

I get that it’s counterintuitive — especially for professional musicians — to see their disappearing careers as a good thing. But it is. You just have to consider that music is bigger than the ~50,000 professional musicians in the U.S. There are fifty times as many musicians creating music right now for no money, and waving it all away as crappy music is a defense mechanism. They are finding their audiences. They are supplementing their income and breaking even. They are being heard even if they aren’t being paid. And if they’re really good composers, performers, recording artists and entrepreneurs, they are getting more chances to be heard, more chances to build a career.

There is no doubt that free access to music is inevitable — if not here already — and will continue to be the major force in reshaping music. To the detractors and complainers, I’m afraid the question of whether that’s a net benefit to humanity has already been settled. The fans have spoken. They want the music back.

22 of Mashable’s “25 Tools for the Independent Musician” (Circa 2006) are Out of Business

(CC-BY-SA Greg Goebel)
Remember the Diamond Rio? This one’s for you. (original photo CC-BY-SA Greg Goebel)

Getting a successful tech startup off the ground is hard enough, let alone a successful tech startup targeted at musicians. Songwriters and performers are not the wealthiest bunch.

So, I wasn’t surprised when I started clicking the links in this Mashable article from 2006 that lists 26 useful digital services for independent musicians.

Bandbuzz.com has buzzed off.

Bandchemistry.com will “be right back”.

Indistr.com, a company that promised to let “independent artists sell their music directly to the public and the musicians receive 75% of the sale”, is toast. How could they fail with such a catchy URL?

Most of the links end up at 404s, 500s and domain parking pages.

Yes, the internet is littered with the carcasses of digital intermediaries trying to take their ~25% of musicians’ revenue by democratizing the music industry. Kind of makes you wonder which of the over 100 digital products and services currently being marketed to musicians will still be around toward the end of the decade.

The survivors tell a tale of acquiescence and acquisition.

Pump Audio, the popular independent music licensing service, went from paying artists 50% of revenue to 35% of revenue after they were acquired by Getty Images back in 2007.

Earlier this year, electronic press kit veterans SonicBids were acquired by Backstage, a company that mostly focuses on helping actors.

Amie Street was gobbled up by Amazon in a traffic grab in 2010. Before they were absorbed and shut down, the company had a really cool demand-based pricing model whereby the price of a song would increase as downloads increased. Fans could also earn store credit by flagging songs they thought were hits, which aided in discovery and curation. It was all kind of ahead of its time, and I’m not convinced we’ve seen the last of that model. Read about its legacy on Wikipedia.

A couple sites were still up but clearly abandoned. Only two sites seemed to have survived on their own. Unsigned.com is still a free music distribution platform open to any unsigned artist that cares. Artisttopia.com, billed as “the ultimate music experience” is still spinning personalized radio stations for people who have never heard of Pandora.

As Music Production Costs Fall, Shouldn’t Price Fall Too?

Your new favorite song could come from here. (CC-BY Matt Gibson)
Your new favorite song could come from here. (CC-BY Matt Gibson)

The cost to produce music is at an all-time low.

The price of music is… well… schizophrenic. A single track can be simultaneously obtained for free on BitTorrent, or purchased on the iTunes store for $1.29. Or you can stream it for next-to-nothing on Spotify, or for a fraction of next-to-nothing on YouTube. And you can still buy the CD for $14.95 to get that one song you like, if you’re a masochist or retired.

The free music debate is often framed as an epic battle to save music itself. Proponents of stricter copyright enforcement claim that keeping these price points high is necessary to keep the quality of music high. Without the proper funding, musicians will make less music, or if not less, at least worse.

I think we can all agree that while the price of music is effectively (with streaming) or literally (with torrenting) free, the cost of producing music is anything but. There is real labor, real expense involved in producing an album.

On the one end of the spectrum, you have major labels paying over $1MM for a single. On the other, you have Nirvana’s Bleach, a multi-Platinum-selling album made for $606.17 in 1989.

What does it cost to produce music? Whatever you want to spend, or can afford. That’s the problem with putting the pricing debate in perspective — the costs to produce vary as wildly as the results. There have been plenty of multi-million dollar flops and home-recorded hits, so how can one ever put a definitive cost on music production? We can only assign a range of possibilities, but doing so does help illuminate the debate.

Before we talk production costs, there is something important to be said for the fact that costs vary wildly. It would suggest that pricing of music ought to vary wildly, at least somewhat in line with the cost to produce it. And yet, the basement DIY record and the multi-million dollar Rhianna album both retail for $1.29/track on iTunes. This is because the price of music is fixed by the big 3 record companies that control around three quarters of the global music industry. And yes, those same three major labels were the ones who negotiated how much artists get paid on streaming services — an amount that as we have seen is so paltry as to only be sustainable on a large, major-label market scale.

Point is, music should cost whatever the artist and their business team wants. This idea is often invoked by detractors of free access to music. “You can make your music available for free, that’s fine,” they say, “but I have the right to charge for mine.” Which is true, and copyright makes it so — artists enjoy a monopoly over the right to distribute copies of their music at the moment they record or write down a song. The intent of copyright is to create value around this right, so that production costs (both in labor and materials) can be covered, and the production of music can flourish. So it would stand to reason that the value created by copyright would not remain fixed as production costs fall.

Nope. The major labels have consistently fixed the value of music copyright by litigating and legislating against any force that threatens to devalue music access fees. They have extended copyright terms to draconian lengths. Any technology that is outside of their price-fixing controls is sued out of existence, and the law is changed if it does not suit their litigious needs. Forget free access to music, the powers that be don’t even want variably-priced music!

Major labels have enjoyed an effective monopoly over the monopoly that copyright grants artists. This happened because the value of copyright was not intrinsic, rather it was hitched to the ability of a business to exploit it. In the past, it was incredibly difficult for the artist to exploit their own copyright to create value — they had to sign their rights over to a label to be exploited. They didn’t have access to the apparatus of production, marketing and distribution like they do today. Thus, the value of music copyright was in the value of being exploited.

Over the last decade, we’ve seen a major shift in the value of copyright, due in no small part to the falling costs of production. The cost of recording technology dropped to a fraction of what it once was. You can still spend a few million dollars building a state-of-the-art studio, but more and more are recording for less and less. Modern recording technology also speeds up the recording process considerably, so there are fewer labor costs.

Music listening is becoming a more participatory process, and more music is being made (via remixes, covers and mashups) just for fun or expression, without commercial intent. You can still spend a year writing an album, but plenty of musicians are vastly reducing the labor involved in composing an album by using technology to demo as they write, with feedback and collaboration happening at a faster pace.

Marketing costs are at an all-time low thanks to social networks and the ability of bands to connect directly with fans. You can still spend millions on a national marketing campaign (or get a consumer electronics company to underwrite it), but it’s now possible to market an album guerilla-style, and catch on virally without spending a dime.

And don’t get me started on distribution. Since the Napster days, the cost to distribute digital music has been effectively free. The real expense that these streaming sites have is not server bandwidth (a point that would be largely mooted by peer-to-peer technology). The exorbitant expense is in the labor required to seek out rights holders, get them to sign a digital service license agreement, and the accounting behind tabulating and paying out their share of the streaming pie. And when you’re talking about having to negotiate with the big three majors, you better believe the expense is going to be as exorbitant as the top entertainment lawyers can manage.

Digital distribution is what truly democratized the music industry, and the genie is never going back in the bottle no matter how much the RIAA continues quixotically to cram it in. I can distribute my music worldwide via any number of retail aggregators (CDBaby, OneRPM, TuneCore, DistroKid, etc.) for the cost of a magazine subscription. I can certainly distribute it worldwide absolutely free as well. The cost of digital distribution is near zero, and has been for quite some time.

So, there we have it. The labor involved in songwriting (to the extent you can call it ‘labor’) has been slightly decreased by technology. The time and cost of recording has been drastically reduced. Successful marketing can be achieved at a fraction of former costs. Distribution is nearly free.

The cost to produce music is much lower than it was just a decade ago. Shouldn’t the price of music adjust accordingly? Isn’t the pricing of streaming much closer to what’s fair for consumers? Doesn’t the declining cost of music production dictate that we charge less — even nothing — for access music? When you factor in new opportunities in direct fan patronage, a growing live music market and greater demand for licensed music, shouldn’t we continue to develop the intrinsic value of music as a service, and relax monopoly distribution rights on the music product in order to do so? This would be disadvantageous for the big three record labels, but a boon to most musicians and their fans, because a chance to be heard is a chance to be supported.

Satellite Predators: My “Sirius XM Sucks” Experience

siriusxmsucks
If you get one of these in the mail, do what I did. 

I have enjoyed satellite radio for the last three and a half years. There’s nothing quite like genre-sorted, slightly random playlists of singles peppered with a few b-sides.

But here’s the truth: Sirius XM sucks.

You bet Top 40 radio is unlistenable! Who wants to listen to advertisements for music sandwiched between advertisements for products when there are so many other options?

Pandora, iTunes, Spotify, Grooveshark, Turntable.fm… they’re all great on a desktop, workable on mobile, but get most into a car and you’re a slave to cell signal strength.

It’s crazy that a world of digital music still can’t compete with satellite radio for convenience in the car. And it’s all because they followed the business model of the 8-track cassette — build the damn thing directly into the dashboard of every American-made car.

Sirius XM has a market monopoly on delivering music via satellite. I’ll admit it, I hated them even before using the service, and I ended up a customer anyway.

In 2008, the FCC approved the merger of Sirius Satellite Radio and XM Satellite Radio, basically saying it was OK to create a satellite radio monopoly because otherwise the companies would go out of business due to competition from digital.

The merger was a profitable move for both companies. Without the government’s blessing on its monopoly, satellite radio might have gone the way of the 8-track. But the industry elite had deemed satellite radio too big to fail.

The merger was not good for artists or fans, but who cares about them, right?

No, this blog post is not about the obvious ethical bankruptcy of the FCC or of large media conglomerates like Sirius XM. It’s about my personal experience with their predatory billing practices, poor promotional ploys and abysmal customer service that led me to cancel my subscription today.

I ended up with satellite radio as most people do — with a free 6 month trial in a new car. When the six months was up, I was offered a great introductory deal. I forget exactly what the rate was, but it was far less than the $18.99/month default payment plan ($227.88 when billed monthly for a year). I made sure that I was purchasing a single year of service, and made sure Sirius XM knew they did not have my authorization to charge my card after my year was up.

$227.88 per year is waaaaaaay too much for satellite radio. And this is the low end of the cost — if you don’t own the hardware or want to access your Sirius XM online, it’s going to cost you extra. If the FCC’s intent was to ignore the issues of customer price fixing and price gouging in order to maintain satellite radio’s profitability, they did a great job.

But nobody pays $227.88 for their first year of Sirius XM. They sign on for 30%, 40%, 50% off or more. And like any bait-and-switch introductory rate, the fine print says that unless you call to cancel your subscription, you will automatically be billed the full $18.99/month in perpetuity.

After my initial free six months and toward the end of my killer one-year deal, I started getting the expected renewal offers in the mail. There seemed to be a new one every two weeks — even before I could consider the 50% off, they were throwing 60% off at me. 70% off. Finally, I got an offer to get 6 months for $25. The regular price for 6 months of service is $113.94. I took it.

Only now, they wouldn’t accept my terms not to auto-bill my credit card. After much insisting, they finally told me that there was no way to have a subscription without it being automatically renewed and billed. I could pay by check, but the service would auto-renew and a new check would be due unless I called to cancel.

So, like your typical idiot consumer, I made a mental note to cancel my account right before the “six months for $25” deal expired, and I forgot. I spent a year paying the $18.99/month like a chump. Had I only taken 20 minutes out of my day to call Sirius XM and threaten to cancel my account, I could have been paying $4.17/mo. instead of $18.99/mo.

Folks, if you like Sirius XM radio and you’re not paying $4.17/mo., put that 20 minute cancellation call on your calendar right now. You can thank me later for saving you a few hundred bucks a year.

I’m not ashamed to admit I probably would have gone on paying $18.99/mo. like a chump had my debit card not fortuitously expired. This required Sirius XM to call be to update my billing information, and that’s when they began to really lose me.

The customer service nightmare began, as it often does, with an underpaid customer service representative in a foreign country where labor is cheaper.

I gave my updated payment information and then asked to have my subscription taken off of automated billing and renewal. I told them straight up that I wanted to stop auto-renewal because in the past I had received attractive offers to rejoin when I let my account lapse. Again, I was informed this was not possible. Even though satellite radio is a luxury, Sirius XM portrays its company as a utility when explaining why every subscriber is forced to auto-renew. And their policy is not to notify monthly subscribers before their subscription is auto-renewed. The policy glistens with slime any way you look at it.

“If I could not stop auto-renewal,” I told them, “I would like to cancel my account.” That’s when the barrage of offers started coming. 60% off, 70% off, all the way back down to six months for $25.

I insisted that unless there was a better offer, I would like to cancel my account and see if I can get a better offer after canceling.

The rep then asked if I would like to finish out my current plan. I said sure, seeing as there were only a few months left and assuming I had already been billed the annual fee. What I didn’t realize was that I was still being billed monthly, this monthly billing was part of a year-long block of billing time. So with a few confusing words, the rep convinced me of finishing out the year with Sirius XM (my “current plan”) and then having my service cancelled. I settled last month’s fee, agreed to pay out the remaining four months of my plan, and then my account would be cancelled.

It occurred to me that I had just accomplished what I was told was impossible — to continue to get Sirius XM service without my subscription being auto-renewed! Success!

Then I got a call on Friday that would be the beginning of the end.

You know it’s one of those calls when you get the awkward 2-second pause between saying “Hello” and hearing the rep saying his or her call script. When I heard the rep was from Sirius XM I couldn’t believe it. Here I had already cancelled my service, and they were calling me to renew. I didn’t mind that I had already received a couple of letters in the mail from Sirius XM offering me the $25 for 6 months deal. But calling me on the phone, direct telemarketing, was just over the top.

I told the rep that it wasn’t a good time and to call back later, but I had my mind made up. Finishing out my plan was not worth it if I was going to be harassed by customer service. I would answer their call and cancel.

They called once in the morning and once at night for four straight days. I admit, I didn’t pick up because I wanted to see how long they’d go for. Finally, this morning, I picked up and got yet another surprise.

Even though I had updated my billing information the previous month, Sirius XM was calling me to update my billing info because the card they had on file was expired. This despite taking and successfully processing new billing info last month. And what happened to the “plan” that I was finishing up? If I was being billed monthly, what the hell was the “plan” the last rep was referring to in any case?

At this point I couldn’t tell the difference between their mistakes and their scams. All I knew was that I wanted out. I updated my billing info (for the second time) and was transferred once again to the cancellation department.

I understand the game. When you call to cancel your service contract, you run the gauntlet of incredible deals meant to coerce you into doing anything but cancel. It starts with the magic question: “May I ask why you are canceling?” From there, your conversation branches off in one of two directions. Say you can’t afford it and they will offer you discounts until you can (at least for the next six months, after which you’ll be auto-renewed at the unaffordable rate). Say you have a problem and they’ll throw the same deals at you, and maybe add on a month or two of free service for your grievances.

I explained that my problem was that I found it unethical that Sirius XM was bait-and-switching its customers, auto-renewing subscriptions for premium fees after getting cards on file at introductory rates. I thought they were being predatory by not clearly disclosing that their business model was to sign you up for $4.17/mo. and then begin billing you $18.99/mo. six months later with no notification. I told the rep that I understand the need for promotional deals, but the sheer number of different proposals, and the universal nature of their deceit, had finally gotten to me. Finally, I told the rep that I knew Sirius XM didn’t care and probably wouldn’t listen to my concerns but maybe, just maybe, she could talk to her boss and relay my concern that Sirius XM’s predatory billing practices are unsustainable.

In most situations, there is nothing you can do to change a corporation other than to not patronize it. Luckily, I can do something more than just cancel my support for the satellite radio monopoly. This blog gives me the platform to let others know: Sirius XM needs to change its billing practices, because more customers each day are realizing they’re complicit in unethical business practices. We see the switch behind the bait. We see through the false empathy of the customer service training. We understand your business exists solely to make a profit and has long since parted with any intention of fostering the greater good of musicians and their fans.

We understand that Sirius XM fights against musicians to pay a lower royalty rate on the music they exploit. We understand that digital devices and connectivity would have killed the satellite radio business model already if not for the enormous (and potentially flagging) support Sirius XM buys from automakers.

Today I cancelled my Sirius XM subscription. I will miss the occasional discovery of a new artist. I will miss the ability to turn on CNN to hear up-to-the-minute descriptions the latest thing to be blown up and/or engulfed in flames. I will miss it on long drives when I most need musical surprises to break up the monotony.

I won’t miss relinquishing control over the terms on which a company takes my money. I won’t miss the incessant attempts to bait-and-switch me back as a customer. I won’t miss feeling complicit in the exploitation of all the artists on the station, whom Sirius XM lobbies against paying. I won’t miss the customer service hold time, or the feeling of having my concerns ignored.

Today, and for as long as people Google “Sirius XM sucks”, this blog will be there to remind the Sirius XM corporation and its employees: The legitimate value of your service is being undermined by the exploitation of your customers and those who made the music that gives your service value. You will profit in the short term, but the business will be unsustainable in the long term. Tomorrow’s headlines are “Sirius XM Goes Way of 8-Track”.

Four Skills Musicians Need to Make Money

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(photo CC-BY jerik0ne)

If you’ve ever asked the question, “How do I make money from music?” this is for you.

Tens of millions of musicians want to make money from their music. Only one percent ever do. Why?

Ask most musicians how they plan to make money and they all say the same thing: I’m waiting for my music to be discovered. I’m waiting for a good manager, a good booking agent, a good label. I’m waiting for my moment, my big break.

Musicians would not be this passive if making money was the primary reason they made music. Almost all musicians would like to make money from their music, but it’s not why we make it. We make music because we have to. We have to express ourselves. We have to communicate something and connect with people. As Henry Rollins once said, “I’d rather be heard than paid.”

But we can get paid. In fact, we have more opportunities today than ever. But waiting for opportunities to come remains a losing strategy. Opportunities are made — our moment will only come if we create it, and only then if we’ve developed our skills to rise to the occasion.

There is a simple formula to making money in music and many other creative endeavors. The greater your skills, the greater your opportunities. Conversely, more opportunities allow you to further develop your skills. Amplifying this feedback loop is the way to succeed.

So what skills does the musician need to tap into the music economy? They boil down to four broad categories, and it’s no longer enough to be competent in one or two. There are simply too many musicians in the world trying to make money from their music. It used to be you could be a master of one of these skills and that might be enough to get you “discovered” and exploited. Today, we must be competent in all four skills, and masters of at least one or two to truly have a shot at making our own breaks and earning significant revenue from music.

Composition

There are more musicians creating more music than ever before in history, and most of history’s recorded music is accessible to anyone with a computer. The bar has never been higher for novelty and originality — it’s the old chestnut of “it’s all been done before.” As we learn more about composition, we realize the challenge is to create an original expression from musical building blocks that seem to have already been combined in every imaginable configuration. And yet out of these seemingly infinite combinations, we put our own spin on the patterns of popular chord progressions, lyrical motifs and song structure that emerge. We create by taking our influences and making something new of them.

Composition is truly an art in and of itself, and too many musicians simply brush it off to focus on performing and recording. Many musicians fail to make money from their music because they are not songwriters. They channel their influences so directly, nothing original emerges. They sell the song short.

The old adage “writers write” applies to composition as well. One must first write songs to write good songs. What album would you rather listen to: the first ten songs a musician wrote, or the best ten songs chosen from the first 15 songs the musician wrote? By the time you are writing great songs, you will have written many.

Composition not just “where the money is” from a copyright perspective, composition is the art of music that gives rise to the other skills: performance, recording and entrepreneurship. You are getting paid for your labor to create something completely intangible, so the profit margin can be enormous. But it’s also highly competitive with a significant “right place at the right time” component. To cut through the noise of more musicians writing songs than ever before, your song needs to be performed, recorded and “shopped” at a professional level.

(photo CC-BY M. Pratter)
(photo CC-BY M. Pratter)

Performance

Performance is the Holy Grail of revenue for musicians. It’s always been where the highest profits have been for the musician themselves. This has only become more true in the Digital Age as selling access to recordings has dried up as a primary revenue stream. Post-scarcity music distribution shows that sharing songs is not stealing, and the only thing a musician loses when their song is copied is a single opportunity to charge the listener a fee that most would not pay. In turn, they gain an opportunity to make a fan, which is far more valuable in the long run. In order for this equation to work optimally, the composition has to be great, and performance has to be a part of your plan, because it’s where fans show their most value.

Touring and T-shirts are nothing to scoff at — even though gas is more expensive and ticket prices have not increased by much, the profit margin is usually greater than sales of any recording. When a fan is at your show they are the most charged up on your music than at any previous moment. They want to leave with a T-shirt and talk about how awesome the show was, marketing your band and paying for the opportunity. It takes great performances to put them in that state.

The same advice for composition applies to performance: perform, perform, perform. Book any gig you can find. Performing is a process of “paying your dues”. There will be awful shows and huge mistakes, but eventually so much of performing will come naturally to you.

To the extent that performance is a challenging skill to learn, working on your show is a fun challenge (unless you have stage freight). What’s more of a challenge are the logistics of putting on a live show that looks and sounds great, not to mention the huge sacrifices that must be made to tour. As the age bracket gets older and older, there are fewer and fewer musicians who find touring manageable. Locked in a traveling vehicle killing time for most of the day, away from family and friends, is not how most people want to spend 200 days of the year. Touring makes it hard to have a normal life, normal relationships, a normal home and job. But performing musicians are not normal, and it’s a big part of why people are so attracted to them. There are plenty of us who feel that hour on stage makes all the sacrifice worth it. And with a properly managed tour, a we can come home with some money in our pockets, having made fans we can count on to support us not just when we come to town, but also in between releases and show dates.

The internet has enabled musicians to book their own shows and tours, but many have not mastered performance. It’s an art in and of itself, a combination of equipment, stage presence, focus, charisma, mystique, emotion, crowd interaction, and a host of other factors. They’re difficult skills to teach, but come naturally as you play more and more shows. To maximize your opportunity to create value from your music, performance is critical to the overall strategy.

Recording

By now you probably see the pattern: the internet affords you incredible new opportunities, but they can’t be taken advantage of unless your skills are well-developed. Recording is no different in this sense, but it is very different from composition and performance in how one develops the skills.

That’s because unlike composition and performance, which are accessible to anyone with an instrument and an imagination, not everyone can record whenever they feel like it. To be sure, home recording technology has completely transformed the way musicians record, and more than ever have the ability to record themselves. But it’s a small minority of musicians who can produce, engineer, mix and master their own recording at a level of quality consistent with professional releases. It is getting easier as the tools get better and listeners being appreciating a wider spectrum of audio fidelity.

Today, every musician should have some way to record at least demo-quality recordings at home. A big part of learning the skill of recording is learning how to perform under the magnifying lens of the studio. There is also the task of “getting a sound” in the studio, a process often wholly unique from its analogue in developing the sound of one’s live show. And there’s no better way to get what you want from the studio you’re paying than to play them a rough idea of the sound in your head.

Every musician should have some way to demo songs in order to work out as much of the recording in advance as possible. Even when done at home, recording a song or album is a big production. It only happens once, in the sense that the recording you make is the recording you’re stuck with until the end of time.”

Ultimately, most musicians will find themselves paying a professional to create a professional-level recording. Your closest fans may accept less, but it’s hard to build a substantial audience around music that is recorded poorly. Fans want to listen to your music all the time, the better the recording, the more attractive it is to listen to over and over again. A chance to be heard is a chance to be paid, and you increase your chances with a great recording.

Entrepreneurship

Most musicians intuitively know they need to write and perform great songs, and record a great version of them to win fans. Entrepreneurship is the art and science of building a business around those fans, and the compositions, performances and recordings they want.

It used to be musicians waited to be discovered and signed by a label. The label would provide the business services to run their careers. Nine out of ten failed, and those who succeeded were often ruthlessly exploited, but it was the only game in town until the internet disrupted it all.

Independent labels can still make good partners for bands that grow their businesses beyond several thousand fans, but increasingly musicians are making their own income directly from fans. Though the Digital Age has made this possible and even easier, but it is still not exactly easy.

Entrepreneurship requires waking up every morning ready to tackle the tasks that lead to accomplishing your goal of making money from your music. It requires understanding and development of the skills needed to accomplish your tasks. You must set specific goals that lead to making money.

In the pursuit of making music, composition, performance and recording come naturally. In the pursuit of making money, entrepreneurship must be learned. You will draw on your natural abilities to be social and network with people, and develop those relationship-building skills if you lack them. You will become a master at exchanging value, the fundamental concept that underlies all business. Marketing and PR follow from the skills acquired in building these connections, and are critical for getting people exposed to your compositions, performances and recordings.

This ultimately leads to building enough fans to finance your business, either directly through crowdfunding or by attracting a working partner who believes in your business, such as a manager, booking agent, producer or promoter. Do it yourself does not mean do it alone, and entrepreneurship is all about making the personal connections that will sustain your music as a business.

(Note: If you’re into learning these skills, you might like the Band as Business course I co-produced.)

Ad-Sponsored Music Piracy is a Mythical Threat to Musicians

David Lowery, musician with Cracker and Camper Van Beethoven supports Trichordist and is angry that recorded music doesn't pay like it used to. (photo: Clinton Steeds CC-BY)
David Lowery, musician with Cracker and Camper Van Beethoven supports Trichordist and is angry that recorded music doesn’t pay like it used to. (Clinton Steeds CC-BY)

A small but growing number of formerly well-compensated musicians are rallying around a new empty catch phrase: “ad-sponsored piracy”.

As far as I can tell, this idea gestated in the bitter womb of The Trichordist, an echo chamber for musicians who are too scared of changes in technology to discuss solutions. Instead, they spew dangerous propaganda about the “new exploiters” of musicians, namely technology companies. Though they continually remind readers that they’re “fighting for the artist”, though there seems to be no sort of plan or strategy other than complaining.

Look, I think we can all agree all types of businesses exploit people on a fairly regular basis. But I believe I’ve made it clear that technology companies are more ethical that the business forces that dominated music in the past. They are far from perfect, but at least they’re trying to find solutions.

The Trichordist went way out on a limb, grabbing screenshots of ads from major corporations being displayed alongside free music downloads of popular artists. This shock-and-awe tactic is presumably to incite fans to petition the advertisers to pull their ads from these sites.

Unsurprisingly, this attempt has backfired horribly. When the Dead Kennedys and Lou Reed posted the aforementioned Trichordist posts on their Facebook pages, their fans were quick to point out how stupid the posts were, and how out of touch Trichordist and the artists (or more likely, their embittered management) were for posting them.

Eric Kennedy wrote on the Dead Kennedys page: “…that shit is from a year ago, and I can pretty much guarantee that site doled out more viruses than songs. Stick to reposting whatever Black Flag is posting on FB in the future.”

Jay Conner added: “It is utterly astounding that somebody directly involved in the industry on both the business and artistic sides could be this uneducated about how internet advertising works. Particularly since he, you know, runs a blog dedicated to the internet and its ethics.”

Here’s the problem with so-called “ad-sponsored piracy”: it’s a mythical threat. It’s a fake problem cooked up by butthurt musicians who saw their market share crumble when the music business model shifted away from charging for access to recorded music.

I don’t have to get long-winded to prove it. Anyone with a basic understanding of how Internet advertising works understands that these ads appearing on these sites does not equate to companies sponsoring the site or its contents. It’s doubtful they even know where 99% of their ads appear.

And even if they did, anyone with a basic understanding of copyright law and how the Digital Millennium Copyright Act works knows that any site that makes available copyright infringing material must remove it immediately at the request of the rights holders. Reed and the Kennedys can play the victim all they want, but if they feel their copyrights are being infringed, they do have legal recourse to deal with it. Instead they are just complaining, and their fans are totally turned off by it.

Furthermore, even if we assume these sites were committing copyright infringement, most people understand that copyright law — and much of society, really — has been hijacked by corporate interests. In reality, free access to music is a good thing for most musicians because a chance to be heard is a chance to be paid. Pre-Internet, very few artists were heard, a minority were paid, and a tiny minority were paid fairly.

In fact, I think Lou Reed and Dead Kennedys would actually benefit from having their music available as a free download, largely by tech-savvy young people. If you look at the artistic merit of both these artists, I think popular opinion would agree they’ve been on the decline creatively or at least nowhere near the work they’re widely known for. Let’s say nine out of ten kids might come along and download “Walk on the Wild Side” and they hate it, or they like it but not enough to be curious about discovering more Lou Reed tunes (purely hypothetical, because kids stream music these days). One out of ten is going to love it so much they’ll seek out more, and along the way there will be plenty of opportunities to pay the artist far more than what they would make selling the track on iTunes to ten kids. That’s the new business of music, and it’s a much more fair shake for musicians than one given by the labels, lawyers and lobbyists of the past.

As for the Dead Kennedys? I’m sorry, but they’re not the Dead Kennedys if Jello isn’t in the band. He’s on record calling the band a ‘cash scam’ and that’s what the band is purely about now: making money. The art is gone. Forget musicians, fans are being exploited.

So you see folks, the myth of “ad-sponsored piracy” is really just the product of desperate musicians at the end of their careers. The primary purpose of copyright law is to create a rich and thriving culture — economic compensation is a part of it, but not the whole. Why would we deny thousands of musicians the right to be heard and to be paid just so washed-up artists like Dead Kennedys and Lou Reed (more accurately, their buisiness teams and labels) can squeeze some more dollars out of a good run that happened decades ago.

If The Trichordist were serious about fighting against musician exploitation, they would be fighting against the corporate corruption of copyright and fighting for Internet freedom. By their rationale, even Spotify qualifies as ad-sponsored piracy because of its almost non-existent royalty payments in the face of hundreds of millions of dollars of ad and subscriber revenue. But Spotify pays 70% of revenue to artists, just like iTunes. Somehow one is morally bankrupt and the other perfectly legitimate. It’s absurd. I’m no great champion of Spotify, but put up against iTunes they look like Mother Theresa. And like I said, music downloads are approaching their high water mark and will be all but a memory as a new generation grows up on streaming, so the myth is already hopelessly outdated.

In the future, I would like to see The Trichordist discussing some actual solutions instead of throwing tantrums. Talk amongst yourselves. I’ll give you some topics:

Building a culture of entrepreneurship among musicians
Crowdfunding as a way to finance an album without signing an exploitative contract with a label
• Marketing as discovery, not as manufacturing popularity or generating music sales
• Music for music’s sake, not as a product but as a service
• How digital services for musicians democratize the industry
How digital technology dramatically cuts the expense of music production and marketing

Musician Exploitation: Who’s Really Responsible?

PlacidoDominco-IFPI-CC-SA
IFPI chairman Plácido Domingo bellowed as Rome burned.

Hang out for a few minutes and I’ll tell you why Grooveshark may be more ethical than Spotify.

Brief History Lesson

By suing Napster and its kin out of existence, the music industry elite created a “soft landing” for its multi-billion dollar business of selling access to recorded music. They couldn’t kill so-called music “piracy” (also known as song sharing), so they killed the nascent technology companies that tried to build a business around it.

To what extent have musicians benefitted from this business model? Until access to music became free, it was our primary revenue stream. But too often we got such a small piece of the overall pie. The record business was never particularly ethical, with its exploitative contracts, shady accounting and history of corruption.

Free access to music wiped these ethical dilemmas off the table with one click of a mouse, giving us a new debate over the question of whether music should be free to access and share.

Notice I didn’t say “free music”. Music isn’t free to produce or market, though costs have dropped considerably any way you spin it.

At the time of Napster, music suddenly was free to access with an Internet plan and a computer. It took the industry hundreds of millions of legal and lobbying dollars to finally stop the bleeding. In 2013, the slow death of physical media has been largely offset by the rapid growth of digital after a precipitous $3B drop.

The corporate music industry would be quick to tell you that suing innovative digital music companies and individual file sharers was all about protecting musicians’ revenue, that they saved our bottom lines. This is the same industry that coerced us to sign exploitative contracts, that price gouged and price fixed consumers, that bought off radio to play the same songs on repeat.

Nobody’s perfect.

But musicians are starting to wise up as they see the bottom line on their streaming revenue reports. To be fair, Spotify (and iTunes) pay roughly 70% of its revenue to artists (more accurately, “rights holders”, which are primarily the labels who exploit the artists’ copyrights). A lot of the negative reaction can be chalked up to failures in long-term vision — as the decibel point moves right in our royalties, the multiplier grows exponentially. But the current streaming royalty system clearly favors the big four major labels over the short and long term, because it is harder for independent, unsigned and emerging musicians to compete with their massive back catalog of perennially popular music and marketing budget to match.

Some musicians are coming around to bridging the art/business divide and becoming entrepreneurs themselves. They’re sick of having to rely on someone else exploiting their rights for increasingly less money. The Internet allows direct fan patronage in the form of crowdfunding, tipping, or selling both virtual and physical products from one’s own website. Home studio production is getting cheaper and better. Licensees are hungrier than ever for the latest music. Marketing is as easy as creativity > strategy > click. These aren’t empty catch phrases like “downloading music for free is stealing” and “piracy is bad”, these are realities clear to any musician working in the field today.

Yes, there will always be artists who dare not sully their art with business concerns, but they are an increasingly lonely breed. The new musician adapts to the meager streaming royalty stream not by petitioning for higher royalty rates from Pandora, but by embracing business models with far more promise than selling access to recorded music. If only the record business elite would step off. But there’s billions at stake and they like their yachts. Who can blame them? They’re the last generation of the American Dream and they don’t want to wake up.

occupy-london-article
What would Jesus stream?

Occupy the Music Industry

Revolution is blowing in the wind among musician culture, and the industry elite can smell it. The chairman of the International Federation of the Phonographic Industry is acclaimed opera singer Placido Domingo. In the IFPI’s 2012 annual report, Domingo titled his introduction, “A digital world that rewards artists and creators”.

Really? What about “a digital world that rewards the gatekeepers between artists and creators”. That’s really what the IFPI is concerned about. It doesn’t represent the interests of musicians, it safeguards the commercial exploiters of musicians’ recorded music copyrights. Let’s tell it like it is — the money trickles down through the cracks in their multi-billion dollar pavement. The markup on music remains artificially high to justify the expense of major label production and marketing. They also need to even out the variance from gambling on bands like derivatives traders.

What’s concerning is to see musicians jumping on the IFPI’s bandwagon, supporting the suing of technology companies, demonizing their own fans for sharing music. I mean, what do these musicians think is going happen? Are we going to all of the sudden roll the music industry back to 1996 when a CD cost $14.95 and you were forced to buy 9 crappy songs for every hit single?

“Of course not,” these skeptics will tell you. They love new technology, it just has to be applied fairly to musicians. Technology companies, they say, are even worse than the exploitative record labels, because they want to use your music for their own gain and pay you nothing!

It’s not even remotely that simple. Of course, there are plenty of digital music companies exploiting musicians’ copyrights. But it’s precisely because we’re still working within the model of copyright exploitation established by the labels.

Grooveshark is an exploiter. Spotify is an exploiter. And on the face of it, Grooveshark would appear to be screwing artists far worse than Spotify. Google has decided to blacklist them from certain search functions under pressure from the IFPI and its minions to fight so-called “piracy”. But Grooveshark has only been convicted in the industry, not in the court. They’ve literally been blacklisted from the industry for daring to question the status quo of corporate-hijacked music law and technology.

Corporate Hijacking of Music Law and Technology

The majors and some indies have refused to license their music to Grooveshark. As a result, the majors are trying to sue Grooveshark to death just like Napster or all of the other -ster’s they shut down with copyright infringement lawsuits. We know how well that worked — unauthorized song sharing only grew more popular. The industry’s well-documented and cyclical fight on piracy is the same kind of endless war the US is engaged in overseas. The industry has been fighting it for 100+ years and the only true goal has been to co-opt the developments of independent innovators rather than truly eliminate piracy, which is quixotic. (See the book Pop Song Piracy.)

Spotify and its ilk only use officially licensed music. But what happens when the legal system is broken? Copyright is supposed to protect our right to profit from our labor and to express one’s personhood. It’s also supposed to promote social and cultural welfare, and benefit the greater good by making creative works accessible to the widest possible audience. The cost for access is supposed to be high enough to incentivize creators to keep creating, while low enough to prevent a large deadweight loss, depriving the least amount of citizens from access to the work. These are the moral and economic foundations of copyright, and they’ve been hijacked — just like the political process, the food supply and our media — by large corporations.

In 2011, the four major labels controlled 88% of the market share for recorded music. That’s enough to make the Monopoly Man jealous. These labels own the rights to the vast majority of the music we listen to, and use their enormous legal and lobbying resources to keep it that way. It’s not some sort of conspiracy, it’s standard American capitalism, and the American way of music business is increasingly the way of the world.

Don’t Bring Back the $14.95 CD, Bring Back Napster

People rallied around Napster for two reasons. One was that it made it possible to access all of society’s recorded music for free. The second was that many music consumers knew they themselves were being exploited by major labels almost as much as musicians were. They witnessed a history of major music industry settlements for price fixing, price gouging and payola. They heard the stories of great musicians suffering because a label coerced them into an onerous contract. They paid $14.95 for one good song.

The music industry was incapable of embracing a world where all of society’s recorded music was available for free, even if that’s clearly what consumers wanted. (Most people at this point will say, “of course that’s what people wanted, people want everything to be free” to which I reply, “Yes they do.”)

As a quick aside, I believe music is closer to a necessity than a want — closer to food, affection, sex, shelter, etc. than a new TV or a Snickers bar. As a society we should endeavor to provide free and fair access to music — a Right to Music — on a humanitarian level. (Follow the link for more.)

Free access to music is good for musicians for one simple reason: An opportunity to be heard is an opportunity to be paid. Anyway, the best musicians make music in order to be heard first, paid second. The motivating factor of copyright and the potential of being the 1 in 10,000 musicians that become a rock star have been greatly exaggerated. If copyright law evaporated tomorrow we’d still be making music. That the music industry lost half its value and we have more artists creating more music than ever before is testament to this fact.

David and Goliath.
David and Goliath.

Grooveshark vs. Spotify

This all relates to the Grooveshark vs. Spotify ethics question, because Grooveshark is pretty much the only company of its size that believes access to music should be free (or nearly so.)

Spotify, and the dozens of other streaming services (many of them restricted to certain geographical regions because of licensing rights restrictions) believe that the way to save musicians is to increase payments to the labels that exploit them.

Sound familiar?

Let’s contrast two opinions, the first from IFPI chairman Domingo:

“…policymakers better understand that the internet does not make music “free”.”

Here we have a straight-up threat by the IFPI to stop funding politicians’ re-election campaigns if they don’t pass legislation protecting major labels’ ability to exploit musicians’ rights for maximum profitability. Spotify et. al. would agree with this statement. As we’ve observed, just because the Internet provides free or near-free access to music, that doesn’t make the production and marketing costs of music zero (though costs have inarguably dropped significantly).

Storm the Gates

It seems we are left with two solutions. The one proposed by the IFPI is to protect the gatekeepers by charging a monthly subscription fee for access to music.

I have no problem with this business model, nor do I think should musicians.

I had no problem with it back in 2000 when Napster brought us the technology and proposed the exact same business model. But too many salaries built from exploiting musicians were on the line, and they were sued out of existence. It wasn’t done for the musicians. It was for the executives, the lawyers, the lobbyists and the other business associates at the multi-billion dollar multi-national corporations. Any musician who thinks these companies have their best interests in mind are deluded. It’s not entirely black and white — I’m sure there are plenty of employees who do good and mean well. But even the legends that deserve our respect, like David Geffen, eventually had their ethics compromised by commercial forces. A cursory glance at music industry history clearly demonstrates why gatekeepers between the artist and fan are a really, really bad idea from an ethics standpoint.

Musicians had no choice but to put up with it to get paid. This is no longer true.

That’s why I like option #2 — free access to and sharing of music. (Free as in freedom not free as in beer.)

Let’s contrast Domingo’s threat with Grooveshark SVP Paul Geller’s vision on where the music industry out to be headed:

“…I think that we have to be creative about how to get more money into this ecosystem, because I don’t think anyone sees those numbers [streaming payments] and is really inspired by them, I think people look at them and say ‘well this is a soft landing for the music industry,’ it’s ‘hopefully we don’t have to lay off too many people.’ And that’s why I think that Grooveshark is out there trying to be creative about how to infuse the industry with more money in ways that I don’t think are commonplace right now.” (from Digital Music News)

Grooveshark’s technology and innovation was neck and neck with all the other streaming music sites a few years ago, prior to having to dedicate an enormous chunk of their time and revenue to fighting legal battles with the majors. They recently rolled out some nice new features to compete with the Spotifies, but it’s clear they are living in a legal and fiscal nightmare. Their CEO Sam Tarantino admitted as much while doing an interview for Grooveshark’s new Broadcast feature. I can only surmise by statements like the one above that the people at Grooveshark truly believe they are fighting the good fight. And why shouldn’t they?

Grooveshark does pay artists, it’s just that they haven’t reached a licensing deal with the majors because as of yet they’re unwilling to bend over far enough. To Grooveshark, the majors are just trying to extort them and screw musicians anyway.

If you’re an independent artist or label, you can register your music with Grooveshark and they will pay you a share of their advertising and subscription revenue. These payments may be even smaller than what Spotify can offer, but Grooveshark is also much smaller, and draining their pockets just fighting to exist. Legally, they are in the right, because the DMCA allows for a safe harbor to exist for copyright-infringing, user-generated content, provided the company removes this content upon request and the platform has other significant uses beyond so-called “piracy” (really just unauthorized sharing of songs… does that sound so bad?)

Nobody knows right now if Grooveshark will give out and sign away their seemingly sinking ship to the majors, or if they’ll keep fighting the good fight until the courts deliver a predictably narrow, safe harbor-eroding decision. Law was never good at keeping pace with technology.

Toward a Two-Way Music Industry

The majors would like to continue collecting 88% of the market share for recorded music (and then pay a fraction of it to musicians because they signed exploitative contracts at low points in their career). How does consolidating wealth in media gatekeepers accomplish the IFPI’s mission of achieving “A digital world that rewards artists and creators”?

Stayin’ Alive

This fits into the larger context of corporations and governments trying to kill Internet freedom. Ask yourself, “Why wasn’t radio two-way? Why couldn’t the listeners also be the broadcasters? What about television?” At a glance this seems to be a technology and cost issue, but it’s not that simple. There are powerful commercial forces that ensure these technologies are developed in a way that maximizes profit for corporations, creators and consumers be damned. That’s why we have a long history of gatekeepers in all creative industries, not just in music.

The Internet changed all that with one simple feature — the consumer is now also the broadcaster. Large corporations have spent the last 15 years trying to litigate and legislate their way back to one-way media. Discouragingly, they continue to make gains every day.

This is why I believe Grooveshark may be the more ethical approach on balance. Spotify may talk a good game on paying artists. They may be expanding the pie we take our little piece of. And we can’t rush to conclusions that just because a single stream payment looks small today doesn’t mean it will add up in the long haul. Ultimately, any discussion of musician’s revenue share is taking place within the context of what their revenue share will be after the technology company takes their 30%, and then the label takes its majority share. Spotify and the IFPI are really only innovators in repressive legal maneuvers and artist exploitation. They’re profiting from a 15-year-old idea Napster first realized.

How can I say Spotify and the IFPI are exploiting artists when they’re trying to collect more money for them? Because it perpetuates the old model of exploitation on new technology. It’s repeating the same cycle of co-option that happened with the phonograph, with radio, with cassettes and with CDs. It’s a smokescreen to prevent you from thinking like an entrepreneur, from adapting to free access to music, from finding new opportunities to profit without the gatekeepers and stealing their market share. They desperately want to continue the same systematic exploitation and price-fixing that the record industry has been guilty of for the last 100+ years.

Grooveshark is more ethical because it rejects this corruption. They aren’t saints. They’re certainly pariahs. They haven’t figured out how to improve upon tiny streaming music payments, but they’re trying so hard they’re sacrificing their personal lives, their livelihoods, their reputations and quite possibly their sanity.

The vast majority of musicians will see no significant increase in revenue until the major labels lose their market monopoly, and their revenue share drops considerably. In this sense, Grooveshark is using loopholes in the DMCA to kick the IFPI in the nuts — pretty much its only defense against the obscene legal might of the industry elite.

As a musician, do you really think the IFPI or Spotify (if they can stay in business) are going to solve your revenue problem? Of course not. They’re looking out for #1: the record industry elite.

The solution for musicians is to start looking out for #1 too. That means building a culture of entrepreneurship. That means direct patronage from fans via crowdfunding and tipping. That means cutting out the gatekeeper and giving fans exclusive access to products that are still scarce. Selling access to music is no longer viable, and only by corrupting copyright do corporations make it so. The ethical foundation of copyright is sound, but it has been corrupted.

The greatest lie told by the IFPI is not that their mission is driven by musicians (they have musicians in mind, maybe, but certainly not a priority). The greatest lie told is that they are somehow going to bring musicians back to a world where they were fairly paid for their labor, where they are free to express their personhood without exploitation, where society can access and share music freely, and where more music of higher quality and greater diversity is listened to with greater frequency.

That world never existed. But it can today, with free access to music as the great equalizer.

The only way to fairly solve the musician revenue problem is for musicians to reject the century-old system of exploitation and fight to keep the Internet free so we can build a new culture and economy of direct fan patronage and musician entrepreneurship.

Until that happens, I’ll be rocking out to Placido Domingo on Grooveshark and waiting for the next Napster.