How the future of music streaming might look.

Music streaming providers have been under fire for a decade due to low streaming rates, inequity among master owners and rights holders and ultimately, inefficiencies and outdated practices that benefit the few at the detriment of the many.

However, these music streaming providers are now under review.

In the past four years, various Governments have begun their investigation of the general impact that these tech giants have on the market. On one hand, it’s largely driven by the evidence of economic impact that the music industry has. On the other, it comes from the sheer outcry from artists, rights holders, small businesses, large corporations, investors, tech subsidiaries and more about the inequity of these systems and the need for reform.

Most recently it is the Economics of music streaming parliamentary inquiry sessions in the UK. Where hundreds of evidence reports have been submitted. It’s also the Music Modernization Act in the United States. In Canada, it’s studies on the economic impacts of these platforms,  and recommendations from national trade associations for DSPs like Spotify and Apple Music to contribute to the development of our landscape in the same fashion that Radio Broadcasters have been forced to do for decades. A bill that is now under review.

Meanwhile outside of the public sector, there are mixed feelings among those most impacted by these streaming services.

Labels are divided.

Begger’s Group recently spoke out in their submission to the Digital, Culture, Media and Sport Committee siting the challenges independent labels face with the platforms. For example, how slowly revenues flow, the role that algorithms play and the vice grip that Spotify has on the market. Still, the world’s most successful independent label group admits to how much social benefit comes from these platforms.

Meanwhile, Major Labels like Universal, Sony, Warner have seen more success than ever and more and more understand the value of the long game on catalog that was once considered defunct. They bought in early and they have reaped the benefits in unimaginable ways.

Artists have a love-hate relationship with the platform.

Those that are doing well – whatever their context of “doing well” is – see Spotify as a way to have a career without the burden of gatekeepers. Through services likes TuneCore, Indie Pool and Distrokid, they can upload their music and leverage their social media engagement toward success. At the very baseline, it empowers them to soar in ways that were far more challenging prior. Personally, I see the platform as a crucial equity piece.

Even beyond social equity, these platforms have opened up the market and increased participation from consumers.

For artists that have longstanding careers that transcend the physical-to-digital-to-streaming centric landscape, they’re less enthusiastic.

It has swallowed up physical revenue streams (with the exception of vinyl, maybe) and it if they’re unable to convert from a complimentary online source (e.g. Instagram), they’re in trouble. Still, even the oldschoolers and the technologically not-savvy are connecting with new fans through it all and the platforms are breathing new life into old catalog.

Yet, regardless of the position these artists take, there are some realities they all seem to accept.

• Artists and songwriters have no voice in the discussion about the future of DSPs and non-disclosure agreements keep those that are connected through their labels at bay.
• Master owners and songwriters and being paid the lowest rates in all of media broadcasting.
• The consumption behaviour of their fans is out of their control.

The list goes on.

And it is a conversation that artists and creators can easily feel powerless in. I believe it’s because platforms like Spotify are not simply tech companies contributing to the music market. In so many ways, these giants are the market.

It’s not simply a matter of moving mountains, it’s a matter of moving the entire tectonic plate.  

However, these sorts of things do shift and when they do, the entire world changes. Which brings to questions – what will the streaming world look like when the new realities take shape?

Increased Rates

 It’s almost as if the rate of pay from these platforms was plucked from the air by Daniel Eck himself with little rhyme or reason beyond maximized profits. There is amassing pressure from almost all sides of the conversation (except perhaps from the DSPs) to move toward a more standard broadcast rate. The current rate sits at $0.00331 per stream. At a proper rate it could reflect nearly 10x if we compare to other subscription broadcast services like SiriusXM.

Diluted Consumer Attention

If royalties are to be paid on a song-by-song basis, if playlist algorithms are only becoming more sophisticated, if Spotify continues to not discriminate between album, EP and single – the pallet is only going to get broader. That’s because DSPs are not about the artist, the master owner, the licensor. They’re about music consumption through discovery and subsequently, continued listenership and subscription. Now with the addition of discounted rates for increased chance of “discovery”, these platforms are only going to focus their attention more so on what earns them revenue. That is singles based on sonic value – regardless of who the act is. It creates a tremendous barrier for genuine audience development.

Further Investment in Legacy Catalogue

UK based, Hipgnosis, is leading the pack on this right now. They’ve already acquired catalogues from the likes of Dylan, Nicks and Shakira and they’re moving into new investment round to continue their aggressive, acquisitive model. That’s because streaming has revived the value of old catalogue ten-fold. Why do you think there are so many classic rock movies in theatres? Classic music will never lose its value. It means massive investment back into the industry as people continue to consume these legacy acts.

The emergence of a representational voice for artists and songwriters

In Canada, we used to have the Canadian Independent Recording Artists’ Association. I was the Executive Director of it for some time. If you go to that website now, (www.ciraa.ca) it’s actually been purchased by the Canadian Independent Music Association (CIMA), a representative of independent labels in Canada – which really shows their hand if you ask me.

As it stands, there is not a collective voice for artists that are not signed to a label entity. And those that are signed, do not truly have their interests represented. For years it has been overlooked and accepted, but now, considering that independent artists make up a massive percentage of rights holders within DSPs (and also happen to be the most neglected), something has to give.

In Hipgnosis own contribution to the Digital, Culture, Media and Sport Committee’s hearing, the acquisition giant speaks to just how crucial it is that “artists are represented by their peers and not their labels” for the future of the entire industry.

A future that I believe, will be more independent than ever.