Music streaming and the music industry

Reading this debate in the Observer earlier, prompted by Thom Yorke and Nigel Godrich’s decision to remove (some of) their music from Spotify, has got me thinking about the state of the music industry and its business model. Note the word “state” and not “death”.

Streamtape

The crux of the current argument is that the revenues Spotify and other streaming services provide to artists is not comparable to the previous model. Yorke and Godrich argue this is fine for back catalogue tracks, but not for contemporary music for new artists, who are struggling to support themselves. (I’ll continue to refer to artists during this post, though it might be more accurate at times to refer to record labels)

From reading these articles and others like it over the past few years, a few things strike me:

  • The previous business model worked on a combination of broadcast royalties and individual purchases. Online streaming is usually positioned as a replacement for ownership, but really it is a combination of both, potentially depriving artists of both revenue streams
  • The past is the past, and we cannot go back to the old model. If all labels withdrew support for online streaming, there would still be YouTube, Tumblr, BitTorrent and other means of distribution
  • Mass (commercial) media has been derided as an advertising business, with content provided in exchange for being exposed to marketing messages. With media and content disintermediated, the symbiotic relationship is being cut and new revenue models are needed
  • When radio is compared to streaming; it can be shown that streaming pays more per listener. However, the reduced scale/greater efficiency (depending on your perspective) of streaming means net revenues per artist are generally lower
  • Technology has made it easier for people to both create and distribute music. With finite space in broadcast media, the long tail has become very long in the online sphere. Meaning that the proportion of artists that can thrive on their revenues is getting smaller
  • The idea of a well-remunerated artist is relatively recent. Prior to the introduction of mass distribution in the early 20th century and commercialisation in the 1950s/60s, artists generally had to rely on live performances or patronage to survive. Mozart was one of many artists to famously die penniless. Could this be something that we return to? (A sidenote that I won’t delve into is that this could be another area that the post-war “golden generation” with their big houses and final salary pensions once again trumps against other generations)
  • What is fair reward for an artist? Creative endeavours are difficult to judge in economic terms. A trader might argue he or she is worth a percentage of revenue generated. That could be true for artists, but that would indicate revenue generation is the primary goal for producing music rather than artistic expression.
  • Some people view the music itself as the “loss leader”. The product that drives awareness of an artist, that can be subsequently exploited through other channels
  • However, more revenue opportunities exist nowadays. Modern music is arguably as much about the image or lifestyle as it is the sound, and so we get artists diversifying into clothes, headphones and other accessories. Admittedly, this works better for some genres (pop, hip-hop) than others (folk, for instance).
  • Despite the recent dip in the number of festivals, live music and ticket sales are often pointed to as the primary revenue driver. But unlike online distribution, live events are finite and so revenue can only be increased by playing at venues of a larger capacity (which is finite) or raising revenues to the point of marginal utility (which would ultimately segment your live audience as either the most affluent or the most fanatical)
  • The more concerts (or media appearances) made, the less time available to write or create new songs. Could this make manufactured pop music the most viable music model? Analoguous to the marketing industry, tasks are split between the creatives (songwriters) who come up with the ideas, and production staff (performers) who execute them. Could this be the future, where songwriters and performers are salaried, with bonuses depending on how well things perform?

No-one yet seems to have the answers, if indeed answers are needed. The music industry is being disrupted, and whatever the future may look like, we have to accept that it won’t be the same as it was in the past.

sk

Disclaimers: I work at an organisation that operates radio stations, but I work in a separate division. I currently pay for a Spotify Premium account, and haven’t bought a CD or digital download for myself for several years

Image credit: http://www.flickr.com/photos/runeone/4168247363

The disrupters in the crowd

Last weekend I went to the Latitude festival, in Suffolk. It’s billed as a family-friendly arts festival (it has comedy, theatre, film, literary and poetry stages in addition to music) and the programme was fantastic.

While I personally had a great time (The National, Laura Marling and Rodrigo y Gabriela being my musical highlights), the festival experience took a clear step away from its family-friendly roots, intentional or otherwise. The most extreme example of this is that two women were raped at the festival. This is obviously horrific news, and the organisers need to take serious action to minimise the chances of this happening again.

However, two less serious instances got me thinking about the nature of crowds and communities.

There were a large number of teenagers at Latitude. The excitement of being away from home and in a field with various stimulants and depressants, combined with general self-centred teenage exuberance, meant that a large portion of the crowd was quite boisterous.

Tom Jones fielded this deftly. In a set consisting exclusively of new material (his Johnny Cash American records direction), he was regularly heckled with calls to sing Sex Bomb. He was continually able to deflect these calls in a calm and charismatic manner.

Calm is not a word that would be used to describe Alice Glass of Crystal Castles. She likes to spend the majority of her shows crowdsurfing, and this was no different. However, she took a particular exception to a couple of fans who she felt had inappropriately groped her. After punching and kicking a couple of them, she left the stage mid-set.

The nature of these events is that the music (or noise, in Crystal Castles’ case) is central, but the crowd augment this by providing the atmosphere. And this atmosphere can be positive or negative – enthusiastic crowds can spur additional encores, antipathetic crowds can ruin the event for those around them.

This is also the case with online communities. There is a central purpose that draws people in (such as the content covered or, if it is a research community, a financial incentive), but the enjoyment of the experience is dependent on the community dynamic.

A community with a disruptive troll or two can be destroyed from within. Banning community members should only ever be a last resort, as it can set a dangerous precedent for idiosyncratic rules. Ideally, it requires careful moderation to disarm disrupters and avoid feeding trolls, so that eventually they  lose interest or conforming to the social norms of the group.

Tom Jones seems like he would be good at community moderation. Alice Glass wouldn’t be.

sk

Image credit: http://www.flickr.com/photos/menti/4808191073/ – a shame I didn’t realise Mario was there until I got home

Content and Interpretation

Content and interpretation are the two primary components of a presentation or performance.

The best performances incorporate both. The mediocre contains one but not both. The worst have neither.

Content also requires context.

Interpretation also requires passion.

Both require relevance.

Both need to create a connection.

Both are subjective.

At this moment of reflection, I would grade a selection of the artists I witnessed at the two All Tomorrow’s Parties festivals as the following:

ATP vs FansATP Breeders

To give a few specific examples:

  • When David Yow ripped off his shirt and jumped into the crowd as the first bars of the first song were hit, you knew you The Jesus Lizard were back, and back properly
  • Holy Fuck were my act of the two weekends. Their most recent album is fantastic, and 1.30am on the Saturday night was the perfect slot for them
  • Playing in a well lit Pavilion with Burger King and family amusements on show took away some of the atmosphere, but the quality of Beirut and Deerhunter’s material shone through
  • Andrew WK only has one song, and that song isn’t particulary good. But he is passionate, earnest and really makes the effort to create that party environment
  • !!! are one of my favourite bands and have some great tracks. They blew me away at Glastonbury in 2005, but this performance fell flat in comparison
  • I only saw the first half of Tricky’s set, and hear it got better. But the 30 minutes contained all ambient material that I really wasn’t in the mood for
  • Madlib closed the second weekend, but only produced a couple of pedestrian raps and complained about people not buying his records
  • I may be being hard on some acts. But for acts like Grouper, who play but don’t perform, sets can be quite dull

Ensuring the quality of both content and interpretation is obviously not just restricted to the music stage – it is something to consider next time you are “performing” on any stage, whether a boardroom, conference or park.

I’m going to my third festival of the month this coming weekend (well, at least some of it). After that, I plan to catch up on my reading and writing

sk

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Will Spotify revolutionise the music industry?

spotify-logo1This may sound like a sponsored post, but I can reassure that it isn’t. I unapologetically love Spotify – it is the best new service I’ve used for quite some time. It has completely changed my listening habits. And while I accept I am not the average consumer, I do wonder whether it can represent a major shift in the composition of the music industry.

What it is

For the uninitiated, Spotify is an incredibly simple to use online music service. Based around an interface similar to that of iTunes, it allows you to either search through its enormous back catalogue (all the major labels have signed up) to pick out a specific artist or album, or use the “radio” feature where you can specify a genre or time period (though this doesn’t work so well since Spotify takes the date of a track as the most recent reissue). Arguably the greatest feature is the playlist function – these can not only be created and shared, but open playlists allow anyone to contribute.

spotify-screengrab

With fairly low barriers to entry and high levels of satisfaction among users, it has recently passed 1m users. Still fairly small, but not bad considering it is only available in a few territories (due to licencing issues, which could ultimately puncture plans for world domination).

The API has also recently been opened, so we will be soon be seeing new applications and functions based around the software in a similar way that Twitter has. This also opens up the possibility of Spotify being made available on any web-enabled device from games consoles to car radios to refrigerators.

The business model is a variation on freemium. The majority (including me) use it for free in exchange for around 3 ads an hour. But there is also the option to upgrade to a day or monthly pass, which is ad-free and offers some additional functionality. Furthermore, they recently announced a partnership with 7digital to offer downloads.

The competition

Can, and will, Spotify grow further? I think so, though as a disruptive service it faces some major competition.

Music consumption is largely a mature market. Even with game-changing services it is unlikely that the overall size of the market will increase by any great extent. Listening on Spotify will largely be replacement activity. There are several things it could replace:

Can it replace ownership? CD sales are falling, and being replaced by digital versions. Is there a difference between owning a digital copy and being able to access it through the “cloud”? I would say yes. Spotify giveth and Spotify can taketh away. Despite issues over DRM or hard drive corruptions, there is still something to be said for “owning” something. However, using Spotify as a “try before you buy” will arguably reduce album sales to only the essentials. A streamlined, but high quality, collection is good for the consumer, but not for the retailers.

In the “try before you buy” category, Spotify competes with other online services ranging from Youtube to Hype Machine to Myspace to Last.fm. At the moment, Spotify wins on depth of content, but as yet doesn’t offer the breadth of functionality of these sites. Youtube et al offer a means of listening to music, but this is then wrapped inside the social elements. Spotify can’t yet compete on this front.

Ultimately, I see the biggest loser being radio. I haven’t been an avid radio listener for several years but do appreciate the strengths of the platform – locality, portability, editorial, serendipitous discovery, and original content production among others. These are big strengths but they aren’t insurmountable – all can be replicated. Radio is inherently a push medium – this appeals to some but equally others prefer a pull. If Spotify can evolve, it can offer a very real alternative.

The business model

Unfortunately, the biggest barrier is monetisation. The music industry is accustomed to high revenues through monopolised distribution. This is being eroded but the ability to make money through music isn’t changing commensurately, with the PRS running both Pandora and Youtube (for the time being) out of town. (for the record, I completely agree that artists should be compensated but something, somewhere needs to give).

This coupled with the bizarre truism that growing too fast actually hurts the business makes it difficult, but not impossible, to achieve profitability. This is because more users listening to more music means more bandwidth charges. Credit Suisse estimate Youtube’s losses are at $470m on costs of $711m. Spotify isn’t on a scale anywhere near this, but it is a concern.

However, there are many potential sources of revenue. Many people smarter than me will be working on realising them, but off the top of my head:

  • The three ads per hour frequency is evidently an artificial limit and this could change, though at the moment there seems to be more of an issue filling their inventory rather than expanding it
  • People need to sign in to use Spotify. Sign-ins mean targeted advertising, which will fetch a premium
  • Similarly, adverts can be targeted by particular artists, genres or even songs
  • Display advertising’s effectiveness will be limited as it is less interruptive, but specific call to actions (e.g. accessing an artist microsite, or competition) could prove effective
  • I’ve already seen a sponsored playlist for a film, and this is evidently an area that will be capitalised on
  • The download element will have a better chance of success if it can offer things iTunes et al are unable to
  • Could there ever be paid placements of songs within the stream? Well, payola is a word that exists…
  • Additional premium services could persuade people to upgrade, though I’m sceptical of this.  Firstly, what would be the “killer app” that would persuade people to subscribe to a streaming music service in the way that the Premier League and Hollywood films lay the seeds for people to accept paying for TV in the UK? For me, it would either be unique archive content – not easy – or portability. But, secondly, it is inevitable that they would eventually filter down to the free version lest competitors jump in.

I see Spotify’s success being reliant on a sustainable ad funded model rather than subscriptions. As a service, it is still new and there are several directions it could go in.

The big question is who do they want to directly compete with. Is it traditional radio stations, iTunes, Last.fm or a combination thereof?

Future extensions

In pure fantasy land, ways that Spotify could be made even better include:

  • Portability – most likely through a smartphone. Of course Apple are unlikely to let an iTunes killer onto their phones, but then Google, Palm et al finally have something to offer that the iPhone doesn’t
  • Original content – not necessarily DJs or Radio 4 style comedies, but being able to opt in to news, weather or even traffic updates if there is an in-car version (which could be both sponsored and localised through an IP address) would take away one of radio’s major USPs
  • Recommendations – there is already a basic recommendations page, but this could be hugely expanded either through an algorithm or some form of UGC tagging
  • Statistics – already available in terms of top artists/albums but there are plenty of data geeks out there who appreciate the option to catalogue their habits (though the last.fm plug-in does do this already)
  • Sharing – the playlists are a great idea but being able to “friend” those that have similar music tastes takes it to the next level. Going down the social route, with UGC comments, reviews etc, would create “stickiness”
  • A UGC section allowing unsigned bands to upload material and try to make a name for themselves
  • Integration with user libraries – particularly if the download store takes off. Combining the streaming service with a straightforward playback service allowing you to switch between your music library and the Spotify catalogue would give a one-stop shop for listening
  • Integration with other services – with an open API, Spotify could theoretically be available on games consoles. The next step is integrating it into games e.g. as an alternative to the radio stations within Grand Theft Auto

Summary

This post is probably better suited on a fansite than this blog. But I really, really like Spotify. At the moment I am listening to Edvard Grieg. Previously, I was listening to Scout Niblett, Less than Jake, Nina Simone and the soundtrack to Dexter. Aside from Scout Niblett, I wouldn’t normally buy any of these, yet I am able to broaden my music horizons and investigate new artists and even new genres.

My media consumption habits aren’t anywhere near an approximation of a mainstream average, but I still think radio stations, other websites and even retailers should be concerned. The labels should embrace it – they have already given consent but it represents a tremendous opportunity to both push new content and remind listeners of the extensive back catalogue available in their publishing archives.

Spotify is still a new service, and for all I know the site may remain true to its roots. But it has the potential to be so much more.

For those yet to try it, I wholeheartedly recommend it.

sk

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ATP – always in beta

The Nightmare Before Christmas, co-curated by Melvins and Mike Patton was fantastic. Musically, it was the best of the 7 All Tomorrow’s Parties weekenders I’ve been to. There are few places where you could find a bill diverse enough to incorporate Mastodon, Squarepusher, Rahzel, Os Mutantes, James Blood Ulmer, Junior Brown and Monotonix (pictured below)

See my Flickr for some more photos from the weekend

Aside from the music, I came away hugely impressed by the organisation. Past events have come in for criticism, but by and large these have been addressed.

  • The venue was a bit small and tatty – so they moved to a larger one
  • This venue initially restricted alcohol to the room it was bought in – a “zone” of free movement and consumption was introduced
  • Some acts attracted big queues – a new stage was created in the pavilion with a larger capacity, and second performances were introduced
  • This venue wasn’t optimised for a good sound – the stage was dismantled and the overall event capacity was reduced
  • Security had been accused of being heavy handed – virtually all the security I saw were pleasant and approachable (they even let a chalet gig go on until 5am before shutting it down)

Now if only they could improve the road links to Minehead…

This is the idea of business as a service. This harks back to Russell Davies’ post on the lines getting blurry. Organisations should accept their mistakes but work with their stakeholders to continually evolve and improve.

This isn’t a new concept. Back when Japanification was en vogue, kaizen – continuous improvement – was the big buzzword. As epitomised by companies such as Toyota, a stream of small changes was the key to incremental performance gains. Success would be borne out by evolution and not revolution.

I believe that this notion is so crucial because it empowers all of us – whether chief executive, event organiser or researcher. ATP have shown what can be achieved with humility and dialogue. We should all keep the following question in mind.

How can we improve today?

sk

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Live Nation’s monopoly

The advantage of having a monopoly, or near monopoly, means that you can pretty much do what you like without fear of revolt. If a customer wants the service, they have nowhere else to go.

Take Live Nation for instance…

  • They have been accused of using their dominance to artificially inflate ticket prices
  • The 360 deals mean that they will concentrate their efforts on a few commercially successful acts at the expense of diversity and the long tail, squeezing every last bit of revenue to recoup as much of the outlandish fees paid out
  • They can offer ridiculous “No readmission” policies without providing food or a smoking area. I am a non-smoker, but “pro-choice”. I didn’t realise Live Nation were into health planning.
  • And to top it all, they can introduce priority tickets. The amount you like a band or willingness to queue/wait for a ticket no longer matters – it is all about the phone you have (On the plus side, this may mean that they will no longer be serving Carling)

Is there a concerted boycotting effort going on? Or, like me, are people sucking in their distaste in order to see some of their favourite bands.

sk

Photo credit: http://flickr.com/photos/larimdame/

BigChampagne and measuring piracy


Photo by http://www.flickr.com/photos/sharynmorrow/

Through this Economist article on Internet piracy, I came across the company BigChampagne. Among the data they compile are statistics on p2p downloads.

I can’t fathom from their website how exactly they measure this activity (I presume they crunch IP addresses of seeders and leechers), but it is certainly an area work monitoring. I expect that some very useful findings can be accrued.

So far the talk seems to be about music, but I see their being potentially more scope for TV producers and networks. Music, like radio, is try before you buy. You may hear a track by a band that you like on a compilation, and want to check out some more before you decide. As such, you cannot guarantee that a downloader is a fan of that artist and it brings into doubt the insights that can be leveraged from the location of the IP address, or the other simultaneous downloads.

As a sidenote, the Internet should be thanked for minimising the record label’s ability to con the public into buying the albums of one hit wonders. Though a bit too late for the people that have Babylon Zoo, Eagle Eye Cherry or OMC albums gathering dust in their attics.

However, if someone is downloading episode 6 of a show it is safe to assume that they are investing in the show as fans. While the geographic and cross-taste analysis is interesting, the key is to dig into the reasons why people are watching the programmes this way. Is it because of the length of time it takes to broadcast in their territory? Are legal video players sub-standard? Do people prefer to episode stack, and cannot wait for the DVD?

BigChampagne offers a potential aid to explore these issues. And these learnings can then go on to help companies improve their content offerings to the benefit of all involved – producers, distributors and consumers.

sk

Eco-clubbing at Bar Surya

discoballClub4Climate recently announced the launch of (according to their press release) Britain’s first eco-nightclub. It is located at Bar Surya in Kings Cross, with the press launch occurring next week on the 10th July.

Among their initiatives include the use of poly-carbon cups, charitable donations, low-voltage lighting and a recyclable water system. However, the most eye-catching element of the scheme is the energy generating dancefloor. The Daily Mail have a diagram of how it will work here.

Due to the costs involved in getting this system up and running, this is more than a mere marketing stunt (though as the Mail story alludes to, you wonder how eco-friendly printing 200,000 Boris Johnson leaflets is). In spite of this, the club will need more than its eco-outlook to survive. I’m tentatively in favour of the idea, but there are several elements of this particular scheme that make me sceptical

  • The initiative will get people in the door once. But the primary choice of clubbing venue revolves around where you will have the most fun. The website doesn’t contain any details on the styles of music or the DJs involved.
  • People don’t want to be preached at on a night out. Making people sign a pledge (no. 8) before they are allowed to enter will turn people off
  • Free entrance to those that travel via public transport, walk or cycle can go one of two ways. Firstly, unless they are targeting the upper reaches of society, the vast majority of clubbers will travel via tube or bus to get there (taxis are for the journey home only) and so few people may pay. However, how do you prove you have walked in? And getting a receipt for Oyster card journeys can be a hassle
  • Sadly, the credit crunch means that people will start thinking about the now rather than the future. Will this disrupt eco-projects?

So as far as the PR goes, the venture is a hit. But i think the details may need to be adjusted for it to take off.

If the owners are looking for another PR move, perhaps they could stock some Booty Sweat – the fictional drink in the new Ben Stiller film that Paramount are licencing as a real product during the marketing campaign.

sk

EDIT: I’ve just noticed that Club4Climate have used the Cheeky Girls in a previous PR stunt. Looks like they won’t be going for that more affluent level of clubber

Radiohead setlists

Radiohead at Victoria Park: Tuesday 24th June (when I went)

15 Step, Bodysnatchers, All I Need, National Anthem, Pyramid Song, Nude, Weird Fishes/Arpeggi, The Gloaming, Dollars & Cents, Faust Arp, There There, Just, Climbing Up The Walls, Reckoner, Everything In Its Right Place, How To Disappear Completely, Jigsaw Falling Into Place
- – - – -
Videotape, Airbag, Bangers and Mash, Planet Telex, The Tourist
- – - – -
Cymbal Rush, You And Whose Army?, Idioteque

Radiohead at Victoria Park: Wednesday 25th June (when I didn’t go)

Reckoner, 15 Step, There There, All I Need, Lucky, Nude, Weird Fishes/Arpeggi, Myxomatosis, National Anthem, Faust Arp, No Surprises, Jigsaw Falling Into Place, Optimistic, Videotape, Everything In Its Right Place, Idioteque, Bodysnatchers
- – - – - -
House of Cards, The Bends, Bangers and Mash, My Iron Lung, Karma Police
- – - – -
Go Slowly, 2+2=5, Paranoid Android

Tuesday was incredible, but is it right to feel annoyed at not going on the Wednesday?

I’d rather go into a gig with that element of surprise – not knowing what is going to be played in what order – but that does leave one open to disappointment at what has been missed out. Justified or not.

sk

Loveless yet United By Fate

my bloody valentine lovelessI have tickets to see My Bloody Valentine next Friday. This was going to be their first show together in 16 years. I say “was”. They have now announced that they are playing two “rehearsal” shows at the ICA this weekend.

I don’t really mind too much, but others are irate. They would have gone through the hassle of making sure they acquired tickets to the first show – through fair means or ebay – only to see the aura of that date taken away from them.

It’s all about expectations. Managing them to prevent disappointment. The performance next Friday will not change (in fact, it may improve as a result of the warm-ups). But the perception has.

Contrast this to Rival Schools last night. Reunited, and playing their first UK gig for 6 years. Nothing changed in the lead-up. The anticipation wasn’t affected and the night was euphoric.

I predict the MBV show will still be incredible, but this chink was avoidable.

sk 

Photo credit: Tokyo Lunch 

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