More thoughts on streaming

It seems like everyone’s talking about music streaming these days.1 Alex Ross had a piece in the New Yorker in September on how it creates problems for classical music, but it was Taylor Swift’s much-publicised decision to withdraw her music from Spotify that made it mainstream news.

Given the rise in popularity of streaming services over the past couple of years, it’s easy to see streaming as the future of music. The appeal is clear: you can listen to whatever you want, whenever you want, and the cost is low (although if you pay for a premium service, as many do, it’s far higher than the typical person spends on new music in a year).

Business analyst Ben Thompson, on a recent episode of his podcast Exponent, highlighted the problem with this approach: music by its nature is intimate, and in the act of listening there’s a relationship created between listener and performer.

The problem with Spotify is…when you buy an album, when you go and you download it from iTunes, or you (heaven forbid!) drive to a store and get a shiny plastic disc, there’s a reciprocal act there where you’re giving away something that’s important to you, in this case money, to get something that is very valuable. And I think…that act of reciprocity…deepens the bond, and I think it increases the value of Swift’s music, not by the $12.99 that it costs, but by the act of actually buying it. And Spotify whoops that all away. …

Me listening to someone on Spotify is effectively worthless. And people sell that as the allure, “You go on Spotify, you can listen to anyone you want,” but I’m not committing to anyone. Music has that value of, it reaches people deeply, and services like Spotify take away that reciprocal nature. That’s fine, that’s perfect for the artist of the week who’s gonna have one hit song I’m gonna never listen to again. Like, I don’t want to commit to them either. But for those two or three artists that are really meaningful to me, Spotify denies that connection. And I think any artist who is in that position, like Swift, should think very seriously about doing exactly what she did. Make it worth something. Make it harder to connect with me. Because once you do, it’ll be worth that much more.

When you can have anything, everything is less meaningful, and something that’s clearly everybody’s can’t be uniquely yours.

The profits from digital goods tend to concentrate. A few people will succeed enormously, and gain most of the profits, while the remainder is spread amongst everybody else. For a musician on a streaming service, this is a problem: if people can listen to your album for free, why would they buy it? Spotify estimates that the average pay per stream is between US$0.006 and $0.0084.2 And though Spotify has now paid out two billion dollars in total, the bulk of that has gone to performers of megahits. In Spotify CEO Daniel Ek’s response to Taylor Swift, he estimated3 that she was on target to earn six million dollars for her record company over the next year. I would not like to be on the other extreme of that average.

Of course, piracy comes into play here as well. In his post, Ek attempts to argue that piracy, not streaming, is hurting music sales. Why would someone buy your album if they can download it for free? And if they’re going to listen to it for free anyway, a small reward from Spotify is better than nothing at all, right?

Maybe not.

The utility of guilt

Numerous studies have shown that the greatest pirates are also the greatest purchasers.4 Someone finds music that they like—an experiment is free, so what can it hurt?—then wants to support that artist and pays for subsequent releases. So maybe they didn’t pay for the first few albums, but now they know they like it they’ll buy everything else. Free music is excellent for discovery. Discovery leads to loyalty, and loyalty leads to sales.

Substitute legal streaming for piracy, though, and the motivation to switch to buying music diminishes. There’s no guilt because the musician is getting paid, right? So you feel better because some amount of your money is going to the artist you like, and you get to keep discovering new things. Besides, you’ve already spent a fortune on your Spotify subscription this year.

Not everyone who pirates music will go on to buy a lot, but some will. Streaming services pay artists for their work, but they also create disincentives for listeners to buy music. And with such pitiful payouts to the non-megastars, is it better for many musicians to withdraw totally from these services?

So who wins in the Spotify ecosystem? Well, Spotify do well for themselves, obviously. As do the big record labels, those who have a wide enough variety of popular artists that chances are something they’ve released is being streamed right now. There are artists who’ll do well too; those who can take advantage of streaming in the same way that OK Go took advantage of YouTube.

But for smaller labels and independent musicians, streaming may be a worse alternative to piracy. It certainly benefits Spotify to have an enormous catalogue, but does it benefit the musician to be part of that catalogue? Musicians need to think about what they may be sacrificing in return for exposure, and decide whether the money they’ll receive from is worth the lost album sales.

So what’s the alternative?

A thousand true fans

The internet is a good place to be independent.5 The sheer number of internet users—2.92 billion at the time of writing, according to Google—means that being a successful artist is not a matter of reaching everyone, but of reaching the right audience. The popular figure at the moment suggests that to make a living, an artist needs to reach a thousand true fans.

Finding those fans is hard. Nurturing that relationship is hard. An artist who wants to go it alone will not only have to write and/or perform strong material in a unique, interesting way, but to be their own publicist, to engage with fans on social media—in short to make themselves something worth being a fan of. Because a true fan is more than just an admirer; a true fan is, as Kevin Kelly described it:

someone who will purchase anything and everything you produce. They will drive 200 miles to see you sing. They will buy the super deluxe re-issued hi-res box set of your stuff even though they have the low-res version. They have a Google Alert set for your name. They bookmark the eBay page where your out-of-print editions show up. They come to your openings. They have you sign their copies. They buy the t-shirt, and the mug, and the hat. They can’t wait till you issue your next work. They are true fans.

It’s definitely possible to succeed at this level. Ben Thompson has written about it, and is living proof himself. Jonathan “Song-a-day” Mann has made it work with a simple premise that he’s stuck to for years. Amanda Palmer calls her somewhat idiosyncratic approach the future. It works. Part of it is the sense of belonging to a community. Part of it is helping out someone whose work you like.6 But most of all it’s finding something that’s perfect—absolutely perfect—for you.

I’m optimistic. I don’t think the future holds an end to manufactured superpop, but as ever those of us who don’t like it can ignore it. And for those of us with specialised interests, it will be far easier to find music that fits those interests; just as it will be easier for those musicians to reach us. Music lovers will have to keep buying music, but music lovers never had a problem with buying music in the first place.

And whither classical? Specialised interests are surely more easy to come by in a centuries-old, detail-obsessed art form than in any other, and surely this will be better than having so many musicians focussed on the core repertoire. Musicians will have to do more to promote themselves, and get better at it, but finding the audience will get easier.

As I see it, streaming is a superb way to discover new music, but a poor vehicle for building a real fanbase. If musicians want to make a living, they’ll have to keep selling music—and that’s good. Spotify may be the future, but it’s not the whole future. For musicians, selling music directly to fans has never been easier, and never been a better prospect.

1 I had my own piece a while back, but reading back over it, I’m not sure I was particularly clear. As I think unclear writing is a symptom of unclear thinking, consider this a rethink.

2 Those figures are a year old; musicians may now be making double that!

3 Somewhat disingenuously: her sales were spiking due to a new release, and he followed that trend line to a rather inflated conclusion.

4 Leading to many observers wondering what the industry hopes to gain by locking up its best customers.

5 It’s an interesting paradox that it’s also an excellent place to be a massive business. This is explored in some detail on another episode of Exponent.

6 And, if you’re a member of a small group of fans, your contribution makes a clear difference.