While I have never and will never defend the RIAA (they should be disbanded), it is clear that the streaming economy is not sustainable (in its current form) and that weāve become accustom to racing to the bottom for every market we disrupt. I think this headline is a bit overstating the problem considering that the streaming economy, instead of passing on cost increases to customers, is instead cutting prices in an attempt to grow as fast as possible, leaving a large wake of destruction (sure a few are raising their prices a bit, but it obviously isnāt enough).
This is a hyper competitive strategy weāve seen in tech for how many years now? Would you defend Google and Amazon for dropping data storage prices and offering almost free services in order to further disrupt those markets and then force the smaller startups caught in the squeeze out of business?
Weāve done this again and again as consumers and users deciding that the only thing worth paying for is worth paying as little as possible.
If I am a cheese maker and my milk costs go up, do I a) eat the cost increase and in some cases cut my prices to entice more cheese consumption or do I b) pass this milk increase cost on to my customers? Now how does the music-tech industry handle this? Well in many cases, by cutting the monthly price for music or finding someone else to subsidize that cost to keep the prices artificially low (ad markets, VC money, or carriers). All the while the tech industry invests nothing into artist development, marketing of artists, promotion, production, recording.
The world cannot simply be funded only by Kickstarter campaigns, t-shirt sales, and advertising.
So I guess Iād ask Coryā¦why do you never talk about those issues? There are millions of jobs that go well beyond the RIAA or record labels that are affected by the revenue declines in the music industry. Iām not defending the music industry or how the royalty systems are set up, but Pandora is no angel here either and neither is the tech industry.
ādespite the fact that companies like Pandora already give virtually all the money they take in to the labelsā
Cory, these streaming companies are for profitā¦not charity. They were funded by VCs and in many cases went public or are looking towards itā¦and many of their founders have gotten wealthy off the work of other peopleā¦those people are not just artists, but producers, songwriters, sound engineers, instrument makers, etc. Sure, Pandora and others pay a lot in royaltiesā¦it is the cost of doing business and the business they are in.
Before the advent of āfreemium,ā every company Iāve ever worked for or was a founder ofā¦we had costs. In one of my companies, the tech I built and sold had a certain margin and market forces being what they were, if my costs went up, I had to pass those costsā¦I didnāt cut my prices or complain that my costs were too highā¦I simply adjusted.
Iāve been a proponent of streaming as a tech for over 10 yearsā¦and I am a member of more than one service that I pay forā¦but I seriously doubt the sustainability of streaming and the market weāre creating by wanting everything for almost no costā¦and I feel this way about more than music. Weāve somehow made this decision that ad markets are how we are going to sustain all the businesses of the Internet and thatās a very dangerous position to be in. Thereās only so much ad money to go around and eventually someone is going to have to actually pay for something.
Out of curiosity, what revenue decline? The music industry has posted record profits for several years running.
I wonder what the honest answer to radio revenue going back to the artist is. Iād like to see commercially driven streaming sites (including YouTube) pay radio rates and get some more money flowing. Of course, then you want to play a numbers by station/service pay schedule as well. And also archival and personal usages.
Iād like to look at history and learn from its lessons about how to treat the creative/entertainment peoples of the world, but itās never seemingly been an easy trade for them to ply. So how do we plan to make it better?
I generally like the idea of Patreon (and other subscription type services to a particular artist/collective).
Traditional radio stations pay a single flat yearly fee for broadcast rights, which works out to much, much lower cost than the individually tracked per-song fees that internet radio pays. Beyond that, those flat fees get paid to industry groups with limited-to-no per-artist tracking or remuneration.
So the race-to-the-bottom internet radio is actually paying more money directly to artists (and in ways that can be audited by those artists) than traditional radio ever did.
Historically, artists have not be given remuneration for radio play because it was presented as a way to promote their albums and concerts. Somewhat ironically, internet radio which is a far superior sales method (If you liked this song just click to buy the album and concert tickets) does not get the same promotional consideration.
I donāt mean to be snotty, but using a , instead of ā¦ makes your content more readable.
Also I feel itās unfair to compare finite commodities with cultural commodities, although you make a good point about VC, in that streaming services exist to make a profit, but the monetization strategy can prevent a streaming company from offering something desirable. I like the content on Netflix, Hulu and Crackle, but I dislike commercial interruption, so I only use Netflix. Of course Netflix streaming is a fraction of the cost of cable so I feel that even months where I watch maybe 1-2 movies are balanced out by the marathon sessions that sometimes occur, but what I canāt take is the expectation that people want to be spending their time wholly consuming a video advertisement (I forget who said first, āI can accept ads, I can accept buffering, but I cannot accept buffering ads.ā).
The whole model is very new and itās difficult for people on both sides to manage these new relationships. Iām interested to see the next ten years of streaming 
Iāve got a friend who is in a band that has been together for several years. Weāve been discussing how things are changing, and heās got a pretty good handle on how to move forward. Theyāve seen a decline in revenue from sales, and a modest increase in revenue from streaming. Most of their $$$ comes from shows and merch. This is the new model. You canāt sell music anymore, because todayās consumer doesnāt respect IP like in the past. Todayās artists have to accept the new reality and join it. Album releases are free - they exist to generate interest and sell tickets to shows, t-shirts, etc. Any artist who wants to sell music has to recognize that a physical version of their album will need to have value beyond the music their fans already have. Photos, posters, booklets, stickers, an entry code to a secret websiteā¦ Trent Reznor grabbed onto this years ago, and has been wildly successful. Of course, he had a solid fan base in the first place, which was/is a distinct advantage - No question of whether I will pay for his next release or not - I will. But I will download all the songs first.
Edited to add: RIAA should vanish from the earth forever. They suck.
Itās disingenuous to compare Spotify et al to radio though - theyāre designed and used by many as a substitute for iTunes, i.e. a substitute for owning music. They represent active listening to specific releases & tracks chosen by the listener - not (for all that mainstream radio has tiny playlists) accidental often background listening to music only broadly (at best) chosen by the listener.
Thatās why their royalties are still tremendously undercutting real musiciansā revenue.
Itās also misleading to suggest that the issue in this post has much to do with streaming revenue in general - this is about pre-1972 music which, from what I can gather, has a special status with the RIAA, who are most definitely among the villains in this equation. The artists wonāt benefit from the special royalties the labels want here - but that doesnāt imply much for recent artists with decent contracts who are still seeing very little from streaming services which have, one way or other, arranged a situation where something very unlike radio produces royalties for artists which look very much like radio.
Donāt hold your breath waiting for an answer. The begging bowl model of supporting musicians has been a cause cĆ©lĆØbre on Boing Boing for many years despite the complete lack of logic or experience of any editor here in the actual music business in any form or fashion.
When I see headlines like this, I increasingly wonder if Cory really sees the world in the cartoonish good-versus-evil moral terms he draws. The good guys are 12-year-old girls with 3D printers and Raspberry Pis, and the bad guys are sinister suits conspiring in smoky back rooms with their NSA handlers.
Check out the great film āThe Zero Effect,ā Cory, and pay close attention when Ben Stillerās character says āThere arenāt āgood guysā and ābad guysā - thereās just a bunch of āguysā.ā It might add some gray to your palette.
It is some amazing capture of regulation and the apparatus of the state which allows in particular the RIAA/MPAA senior members to make these shell company loan payoff scams to intentionally defraud investors, artists, and almost anyone else involved by turning even the most profitable venture into a steaming wreck of a loss on paper.
In post industrial America what else does the US export? Heavy machinery, software, and recorded artworks, no surprise they do what they want when they can special order the best laws money can buy.
Revenue decline to the artists, because the middlemen have structured the deal such that they take an ever increasing chunk of the pie.
If copyright lasted less than forever (and it does for all intents and purposes) and if fair use was was more robust (meaning judges could quickly throw out copyright cases on the basis of fair use)
Then what amounts to a horrible mess of litigation on behalf of artistic non-producers and non-patrons wouldnāt exist.
How the hell does copyright in and of itself encourage continued production when it lasts 70 years after the death of its creator/forever?
I know, personally, that Iād rather be rich now and give my work to literally the universe to use as it pleases after I die, than ensure my great-great-great grandchildren donāt ever have to do an honest dayās work.
In fact, Iād rather fade into obscurity and be forgotten by history than know that my children or grandchildren never did anything for themselves because they inherited an idea from me that was never their own.
Yes, but unlike an ageless corporate āpersonā you are apparently not speaking loud enough to be heard. Try turning up the volume by a few billion dollars and you can be heard and obeyed by elected/purchased representatives too.
Unending copyright was never to benefit grandchildren, it is so corporations can continue to live off of the rent from long dead artists. Bringing up grandchildren in copyright law is like the corporate farming giants holding up the family farm when begging for farm subsidies, there are a few that benefit but it is mostly wealth transfer arrangements to the ultra wealthy.
That phrase, ābreaking the lawā is so 20th century! Everyone should know by now that the law only applies to those people too poor to own their own congresscritters, and those people hardly count anyway!
Revenue in the recording industry is down half of what it was in the 90ās yet consumption has gone up. The loss is somewhere around $20 billion. It has not recovered.
I think it is completely fair in that for the sound engineers, studios, carpenters, electricians, caterers, music software developers, etc. who all have tangible costs and are part of the picture that isnāt generally seen are all part of the same system, but in many cases are ignored as all the attention goes to labels and artists in these arguments.
Weāve consolidated power at the top by supporting freemium and cheap models for certain markets where the only people who can compete are the majors like Netflix, Amazon, Apple, etc. Even Spotify is propped up by somewhere between $250-$500 million in VC money on the way to their IPO. So while the model is very new, economics is not and the winners are already clear.
There are many costs that go into making an album whether or not you are on a major label, and those are real costs. For tech companies costs are going down, with the exception of royalties, but the materials they stream is what they use to make the sausage. Without that music or those movies, what is Spotify? At least Iāll give some credit to Netflix and Hulu for getting into the business of making new content, although itās really just a way to cut costs as in the future they will own the content and the service you watch it onā¦and they could get to a point where we go back to the model like television where you have to subscribe to multiple services to get the shows you want to watch.
So how about expanding beyond the artist? There are many people who go into getting an album made and people like producers or songwriters or studio engineers donāt go on tour and donāt sell merch. How do we tell them to just accept the new model? How do we plan on supporting some of the best studio technology and some of the better recording studios out thereā¦tshirt sales? Weāre losing decades of investment in sound quality and craftsmanship by accepting that āthis is just how things are from now on.ā
I have a very close friend who is a famous record producer. Heās worked over 40 years and produced over 120 albums, both major artists and smaller ones. He worked very hard crafting the sounds and songs of generations and then in the past 5 years both his royalties and production jobs vanished. No one can afford his services anymore as a producer. He doesnāt really have a way to just accept the new reality and join in.
Agreedā¦this is not the novelization of the future, we live in the reality of the present.
I worked in tech over 20 years, mostly startups, and I also am a published writer about tech. A little over a year ago I started working in the realm of music licensing and royalties. Iāve met a ton of people and dealt with recording execs at all levels. It is a complicated system and sometimes maddening. Even people within the system often shake their heads in dismay. When you are within the system you see unravelling decades of laws and business practices isnāt as simple as tech has had starting with clean slates and building new things.
It really isnāt even copyright (the cause celeb at boing) thatās the issue, itās agreements. There is an ever dwindling piece of the pie and everyone is doing their damnedest to claim their bit to survive, and the future is very clear only in that we donāt know where the money is going to come from in 5 years. Someone very smart and very high up in the industry once told me, āLabel execs donāt think beyond their next bonus check.ā Iāve found that to be true.
In this thread it was remarked that the labels have had profits the past few years (this is after losing $20 billion in revenue over a little more than a decade). What people donāt see is that these new deals that have brought āprofitabilityā are short term deals and many are fueled by VC money. Spotify has no clear model for profitability, and is clearly focusing mainly on their IPO, not building a sustainable business (the problem of tech - build fast, exit faster, let the next guys work out the business). But if you look at the actual economics of streaming, two clear things start to emerge:
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At the current conversion rates, if we donāt see more paid accounts at realistic rates, there is no way (even with the economics of scale) will you be able to support the entire music industry. Iāve been working on this for almost a year and I donāt see it happening.
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Supporting the music industry on ad revenue, much like we support almost all of tech, is not simply enough revenue especially when it is based on someone elseās system and you are just getting a cut of it.
I find it interesting that there are no studies or blog posts about just how much our tech fueled society is driven by ad dollars. Almost all of Googleās revenue is ad-based. The problem with propping up all our tech with advertising is weāre not sharing any costs as consumers, and if the economy takes a dip, ad rates take a dip, and now everyone in that chain is hurt.
I think boing and Cory would do better for their readers in holding up some other issues beyond just copyright, the EFF, Disneyland, and the RIAA to talk about and a bit more examination of our values as a society and the models weāve created that have spawned a world where we value the cost of nothing and want everything for free.
Society cannot simply survive on donations.
Your comments are some of the clearest Iāve seen on this topic.
