Music Streaming Consultation Response
My name is Drew McNaughton and I have been producing music for the last 30 years, mostly electronic in the earlier years and more recently a blend of acoustic, electronic and spoken word. I am submitting evidence which is my perspective on the current economics of music streaming, how it has evolved to where we are now and where we could go in the future in order to bring about positive changes to the distribution of music for the benefit of creators. I want to do this as I hope my views and concerns will be heard which I feel are similar to other musicians and artists in my situation and which I hope will enable the government to take positive steps to benefit the community of artists, as the big music corporations and streaming platforms are already clearly benefiting.
The Dominant Business Model
I would like to answer the first point you want us to address by providing an example of how the dominant business model of the platforms that stream music have fundamentally affected the music supply chain. My first and perhaps most significant example is Apple Music. Apple for many years has been adapting to the changing ways that music is listened to. Their iTunes software and iPods these synchronised with allowed listeners to carry a huge amount of their music collection around with them. However when online distributors started making music available to listen to via platforms such as internet radio (LastFM being an example) and then streaming services like Spotify (the logical progression from the upheaval instigated by Napster) Apple changed its business model to include streaming by launching Apple Music. From the very beginning the business practices were typical of Apple. Its aim was to get Apple users locked in to its service and they tried to achieve this by offering a 3 month free trial of Apple Music. This would be enough time for a typical user to build up a collection on their device which would match any music collection they already had either physically or on other streaming services. Pre-existing iTunes purchases were also naturally included. Thus they would be invested in the service and want to continue using it via the paid subscription. However this meant in practice that Apple were making the whole catalogue of released music available for free to users of their devices, a hugely substantial number, thereby undercutting all the other outlets including the physical products in music retailers, rival streaming platforms and even their own very successful iTunes platform was rendered virtually obsolete. This would have serious repercussions for the whole music industry especially for independent record labels with relatively small catalogues. Only the mammoth music corporations would be able to survive and even thrived due to their large catalogues and copyright ownerships of historic popular music. This unfortunate situation has continued since then. The independent record labels and the artists signed to them or who have decided to self-publish have been left with miniscule income from streaming platforms as the number of physical sales and downloads have plummeted.
Changing Patterns of Listening
The power of the platforms to shape consumer listening patterns has also changed the way in which music is discovered and accessed. Earlier musical listening discovery came from sources such as word of mouth in your community or conventional broadcasting which would originate in a person’s own musical taste passed on to another to try. Now however the streaming platforms largely use data analysis of audience listening patterns to provide suggested listening. The algorithms are programmed by people but the output is essentially only known by the one person it is calculated for, the individual platform user. Not all platforms rely on this however and still employ people to curate recommended listening for users of the platform. A notable instance of this is Bandcamp. Bandcamp’s ethos has also gained them a good reputation in the sector of music creators that are still trying to be innovative and experimental. The large streaming platforms tend to be dominated by formulaic production, composition and promotion (mainly based on image) which conform to stereotypical genres, especially in the areas of pop and electronic music.
Economic Impact on the Music Industry
The real impact of music streaming has to be viewed in a holistic way as it has dramatically affected how artists derive their income. Due to the reduction in physical sales and downloads artists tend to now get the greatest proportion of their income through performing and this has been the dominant model of the artist’s professional viability in response to the changing patterns of music consumption. The impact of the Covid lockdown has been extreme for many musicians who up to that point were able to make a living as a professional musician from performances. People during the lockdown still wanted access to music of course so the amount of music streaming increased by a massive amount. This shows how important music is to many peoples’ lives however the burden has been most heavily carried by the artists while the streaming platforms have had a boom in business. Although this may seem to have been to the benefit of the economy in reality it is the corporations and their shareholders who have reaped the rewards while the creators of the material have been most adversely affected. Again out of all music platforms Bandcamp stands out as having made the most effort to keep the balance of benefit in favour of the artists by having regular fee-free Fridays. Spotify made an attempt to help artists by allowing them to have a link on their artist profile for supporting the artist financially in a direct way. Many artists however chose to use this link to provide their fans with the details of charitable organisations helping musicians during this crisis which was very altruistic of them. Therefore the Spotify offer in these cases was really of no personal benefit and this was the only offer of support as far as I’m aware.
I don’t think that the problem of piracy should really be addressed until the issue of proportionate and fair compensation for artists in the current situation is resolved because piracy and copyright are based on increasingly outdated practices of physical copying and distribution. These days the practices carried out by streaming platforms are almost on a par with piracy.
Changes to Make a Sustainable Future
I would like to make some suggestions about how the current form of remuneration for artists from digital streaming services could be changed in the future to make the music industry as a whole more sustainable. I especially feel that the platforms need to start valuing the actual producers of the content they are benefiting from (and I might even go so far as saying exploiting). As mentioned before Bandcamp is a good example of the business practices that are enabling ways of making it fairer for artists but they have a relatively small user base in comparison to Apple Music or Spotify and it is these which really need to start making changes that will be of benefit to creators across the board. If they are not willing to engage in that process of their own volition then it should be the role of policy to put them on the right path.
One possible solution could be to look at the way that the revenue per stream is calculated. Currently it appears that the income for the artist is determined on the basis of whether plays are on a premium service or a free service. For a start both of these should really be equal as they both have substantial revenues either from subscriptions or from advertising. To the end recipient like myself it is very difficult to actually work out how the amount earned is arrived at and it is usually just fractions of a cent per stream, in other words a miniscule amount. I can only assume that the overall proportion of revenue which is to be divided up between the artists is done on a per stream basis, as clearly the artists who have the most streams are getting a higher proportion of the payout. I think if we were to look at alternatives which are based on a fairer model then there must be a way of lessening the gap between the highest paid artist and the lowest paid ones. Therefore a system which is more like a salary could be implemented where there are tiers for artists which are perhaps determined by stream amounts but not directly proportionate to them. The tiers would be calculated so that there is a scale based on the overall number of artists on a platform rather than streams and the lowest tier should naturally enable all artists to be given a fair proportion relative to the artists in the highest tier even though there will be only a few artists in the highest tier. This is only one option but surely others could devised for consideration.
In conclusion, as I mentioned before the impact of music streaming should be looked at in a holistic way because it has a wider impact on the livelihoods of artists in other spheres including live performances and so in considering policy changes to the streaming sector these knock on effects and how to ameliorate them should also be considered.
Renard, Stan & Hallam, Cory. (2018). Technology shocks and the restructuring of an industry: a social network analysis application for the music business. International Journal of Technology Intelligence and Planning. 12. 173. 10.1504/IJTIP.2018.10017339.
(PDF) Technology shocks and the restructuring of an industry: a social network analysis application for the music business
PDF | The music industry has seen aggressive mergers and acquisitions in the past 180 years, favoring an oligopolistic model insisting on controlling... | Find, read and cite all the research you need on ResearchGate
(PDF) Technology shocks and the restructuring of an industry: a social network analysis application for the music business • www.researchgate.net