U2, Taylor Swift and the future of music - TechCentral

U2, Taylor Swift and the future of music

Duncan-McLeod-180-profileSongstress Taylor Swift, 25, and U2 frontman Bono, 54, have very different views of the streaming music phenomenon that is upending the music industry’s business model.

Late last year, Swift pulled her songs off the world’s leading online music streaming service, Spotify, claiming the Swedish company does not pay artists enough in royalties. “I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists and creators of this music,” Swift said about her decision.

Streaming music — where consumers pay a small monthly fee, typically less than US$10, for unlimited access to millions of songs — has divided the industry right down the middle. Some believe it will save the industry from piracy; others say the model means less income for artists.

Spotify CEO Daniel Ek was quick to respond to Swift, writing in a blog post that the company has paid more than $2bn to songwriters and recording artists since 2008. “That’s $2bn worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify.”

Bono, who, it must be noted, made his fortune on the back of the sale of music on physical formats — tapes, LPs and CDs — has taken the opposite view of Swift.

In a New Year’s Day blog post on U2’s website, Bono wrote that “for-fee services like Spotify are slowly turning people who are used to getting their music for free into paying $10/month for a subscription model”.

“These payments don’t add up to replacement for income from physical or digital sales at the moment, but I think they can if everyone — record companies, artists and digital services — sits down to figure out a fairer way of doing business.”

No one quite knows where the model is headed. But for consumers with access to affordable broadband, streaming is very compelling.

Take Rdio and Simfy, two of the international streaming services that operate in South Africa. They charge just R60/month — or less than half the price of a new CD — for unlimited access to more than 30m songs from the desktop or through their smartphone apps. For desktop access only, the price is just R25/month.

At those prices, there’s little reason for consumers to download music illegally.

Plus there’s the opportunity for discovery. Rdio, for instance, allows its users to keep tabs on what their friends are listening to, or to find new music by clicking through to similar artists to the ones they like.

By the same token, these services make it much easier for musicians to get noticed. And while they arguably won’t make much money from streaming, it could help kick-start their careers and get them playing to bigger audiences.

Indeed, some proponents of streaming believe it empowers musicians and their fans to connect like never before, in the process making the big record labels less relevant.

Taylor Swift ... not keen on streaming (image: Eva Rinaldi)

Taylor Swift … took on Spotify (image: Eva Rinaldi)

For now, revenues from streaming are still small next to physical music sales. But as more people get connected to broadband, and as they realise the value streaming offers, it could do to CDs and MP3 downloads what CDs did to vinyl and tape.

Critics of streaming, like Swift, fret that offering consumers an all-you-can-eat music buffet for a tiny monthly fee will hit artists hard. But to fight piracy, most may have little choice but to sign on. Indeed, streaming is one of the few areas where the music industry is showing strong growth.

And, after all, shouldn’t musicians make most of their money by touring? The idea of selling recorded music is a fairly new concept in the human story. Is it one that must necessarily prevail?

Why not give the music away (or sell it at very low cost using the streaming model) in an effort to get more people through the turnstiles at live performances?

As one wag on Twitter put it: “People have been listening to bards in taverns for centuries. That format may prove very resilient.”

  • Duncan McLeod is editor of TechCentral. Find him on Twitter
  • This column was first published in the Sunday Times

14 Comments

  1. Vusumuzi Sibiya on

    >>For now, revenues from streaming are still small next to physical music sales. But as more people get connected to broadband, and as they realise the value streaming offers, it could do to CDs and MP3 downloads what CDs did to vinyl and tape.

    With the combination of brand integration where more artists are now also using endorsement deals in their music videos and other merchandising, there will be more value realized. Previously ad revenue was mainly for networks but now artists are also tapping into this revenue by including very visible branding in their music videos and the networks are being compelled to play the videos as the songs become increasingly popular; plus there’s other options with even more views on YouTube.

    >>Why not give the music away (or sell it at very low cost using the streaming model) in an effort to get more people through the turnstiles at live performances?

    We will most definitely be seeing more live performances and that is where most of the money will be made in the immediate short-term but ultimately brand integration will be the biggest revenue opportunity for artists.

  2. What they don’t tell you is that while Spotify ionly pays an artist a fraction of a cent for each song streamed, an artist like Swift made upwards of $500,000 a month from Spotify.

  3. That anyone would ever Pay for “Little Miss Pay or Die’s” albums is a Hoot …One Penny for twitwitt is One Penny too much fo that Little Pig ….

  4. Greg Mahlknecht on

    The problem is that all the models that people discuss only work for established artists. Streaming might in theory help users discover new artists, but in reality that isn’t what happens.

    The most compelling idea I heard was on last week’s TWiT podcast; cheap all-you-can-eat music streaming is probably doomed to turn in to Netflix; when albums become a year old, or are from smaller labels, they go straight-to-streaming, while there will exist a “premium” part of the market where the most popular new stuff makes most the money before latching on to the long-term trickle income of streaming.

  5. Vusumuzi Sibiya on

    The models are still far from perfect however piracy in the digital environment is forever coming close to perfecting itself.

    >>there will exist a “premium” part of the market where the most popular new stuff makes most the money before latching on to the long-term trickle income of streaming.

    I’ve been increasingly finding that the most popular new stuff is by and large also discovered early enough by the piracy world and they always move hastily to make as much cash as possible as well.

  6. Greg Mahlknecht on

    I see piracy more as an ongoing nuisance rather than a threat to the industry. I don’t think it will dictate the direction the industry takes. Just because it’s easy to pirate something doesn’t mean everyone will go and do it. Music and TV’s very much instant gratification content, and piracy doesn’t come close to the legal options for the average viewer/listener in this regard.

  7. “Streaming might in theory help users discover new artists, but in reality that isn’t what happens.”

    Maybe not for you, but I’ve personally discovered tons of great artists via bandcamp.com and grooveshark.com. If you only ever stream the same music, and turn off all the recommendation engines, of course you’ll never discover anything new – it’s all about how you use it 🙂

  8. Vusumuzi Sibiya on

    >>Music and TV’s very much instant gratification content, and piracy doesn’t come close to the legal options for the average viewer/listener in this regard.

    Not everyone will go and do it – but it’s the very people who say that they want to pay that are always pointing out how much simpler and more convenient some piracy options are.

    This game has become very much a Tom & Jerry situation and no sooner as you arrive at what you think is a viable legal option then its doomed to fail because of something new in the digital piracy space. And unlike Tom & Jerry, however – its not particularly amusing to those of us that are adversely affected by it in the industry 🙁

  9. The problem with streaming commentary is that the metrics are out. People talk about a pay per stream and reflects the old download model mentality and is not the way to measure music streaming.

    So the streaming model is getting a large number of consumers to pay a reasonable amount monthly for music and then being unlimited in what and how much they listen to music. Then monthly, based on % of what was listened to, the majority of that money will be paid out to the labels and artists and composers.

    In South Africa we only have the paid subscriber model. (Not the free ad supported model they have in USA etc) This means that if we got to a million consumers on streaming services at R60 a month there would be around R42 million paid to the music industry monthly depending on the label deals with each streaming company. The payout to labels/artists is based on % of listenership so it means that if an up and coming band got a bit of radio play and managed to get 0.5% of listenership for the month they would earn R210 000. If a larger profile SA artist launched an album and for 2 months got 3% of the listenership then they would have earned around R2.52 million. (Figures above all incl. vAT)

    The paid music streaming model is sound and its now about it getting scale in the consumer market.

  10. Vusumuzi Sibiya on

    >>The paid music streaming model is sound and its now about it getting scale in the consumer market.

    From your explanation it sounds absolutely great and I would most definitely agree that it has its place in the marketplace.

    You have made similar consumer listenership comparisons to radio patterns and that is all very well but radio has been largely freely available and we have previously had a paid radio service in the form of WorldSpace available which wasn’t successful.

    Essentially getting scale in the consumer market will more likely be on a free ad supported model and those are the figures that we need to know.

  11. I refer to all access on-demand streaming services which Simfy and Rdio are, these are very different to pure radio like Worldspace. (Radio referring to basically DMX Dstv style sit back and listen to playlist music experience.)

    Scale in the consumer market does not need to come from the free ad supported model if we can get reasonable prices and the convenience is higher or just as much as piracy with better catalogue and file quality. We must be careful of making assumptions in Africa based on north american/european market characteristics and strategies. Africa has always tracked differently, especially when it comes to mobile based digital services and products.

  12. Vusumuzi Sibiya on

    >>This means that if we got to a million consumers on streaming services at R60 a month there would be around R42 million paid to the music industry monthly depending on the label deals with each streaming company.

    We do have music streaming services that have already launched and your figure working from a million consumers is hypothetical. Why would a mass market consumer in Africa go for paid streaming at R60 when they can get DStv with DMX at around the same price?

    I do get that there are added benefits of mobility, personal choice, etc. that comes with the streaming services but the paid model would only be taken up by a small niche and the free ad supported model is what I would view as being the most ideal for the African marketplace.

  13. I spoke of a million consumers in South Africa for R60 and not the rest of Africa. Pricing for the rest of Africa would be different and suited to the local market.

    Simfy/Rdio are far more than the DMX service and I suggest you try either of them for a free trial to understand the difference and why it would be compelling. I compared DMX to the Worldspace service you mentioned.

  14. Vusumuzi Sibiya on

    My point was that you are still using hypothetical figures when there are streaming services in the SA marketplace already.

    What you should be giving us is the actual figures of how these services are performing and how ecstatic industry stakeholders are about their potential in SA – which is what I’m guessing we would all know about if they were indeed something worth writing home about.

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