As a music podcast producer of five years I have quite a few DJ and musician friends on Facebook. Recently, an article on Digital Music News has been doing the rounds and provoking much comment amongst my music community. The piece was written by a Grammy-nominated composor, keyboardist and recording artist by the name of Armen Chakmakian and features a screen capture of his quarterly royalties statement for public viewing. He points out that “14,227 performances of music (almost every track 100% owned by me) generated $4.20” and then remarks “someone’s making money, and in true fashion with the music industry, it’s not the artists. Business practices like this are one of the reasons I jumped ship and only write for television now.”
What Armen Chakmakian’s royalties dividend tells us is that people have come to value services that allow them to easily access and navigate all the music out there on the web more than they value the music itself. They don’t value music less in the sense that it brings less pleasure or comfort to them than it did before, but less by virtue of the fact there is no longer any need to pay much or anything to acquire music now – given that a great deal of it is now floating around the web in the same abundance as oxygen floats around in our atmosphere. It is no longer scarce. Nowadays, the monetary cost traditionally associated with the acquisition of music can be easily avoided by those who so desire to. The only cost is the time and effort it takes to find the stuff. It’s not always easy to find and there is often no guarantees on the quality of the audio. Napster, the first p2p digital music sharing service made it much easier to find music, but couldn’t solve the problem that you might not get what you thought you were getting (because of erroneous metadata on the part of sharers). This is where Spotify and other commercial music streaming services create value for music lovers. They not only provide a quick and easy way to access and navigate a wealth of music, but they can also guarantee the audio quality of their content because it is streaming from their own purpose-built music databases. Further value is provided by the fact that you don’t need to store the music on your own device and therefore take up precious storage space, which wasn’t the case back in the day of Napster and isn’t the case for people who still acquire their music directly from others sharing it.
The reason why, then, that recording artists like Chakmakian only make a few bucks out of royalties from commercial music streaming services like Spotify, despite the fact that his recordings are being played tens of thousands of times a quarter, is that only 25% or so of Spotify’s users are prepared to pay anything for its service – and even the ten million or so who are prepared to pay for it are only prepared to pay $10 a month. That’s only one hundred million dollars. Spotify has 20 million songs, which would mean only $5 of royalties per song, if it could spend all of its revenue on paying recording artists, which it obviously cannot. Furthermore, when it comes to buying and downloading music as opposed to streaming it (which is effectively renting access to it), people aren’t prepared to pay much more than £8 for an MP3 album and 80 pence for a song. Again, this is because with a little effort we could find it for free somewhere on the web. These prices actually represent what we’re willing to pay in order to avoid having to make that effort. Not much.
As much as musicians lament their own unfortunate predicament brought about by the advent of the internet and the internet technologies of audio coding formats and P2P file sharing, or at least accuse them of exploiting it, clearly they are wrong to accuse Spotify and the like of exploiting musicians. In fact, they are currently the only way recording artists like Chakmakian are able to get any royalties at all for online ‘performances’ of their works. Music streaming services provide free or very cheap instant access to a huge catalogue of good quality digital music and lots of people value that.
It is what people are willing (or not willing) to pay for access to music streaming services that ultimately constrains the revenue feeding back to the creators and/or owners of that music. This might piss musicians off but it is a fact of reality. And no amount of saying people should be prepared to pay more to listen to and buy music is going to change that – obviously. When you think about it, the fact that ten million people, in a digital world where most music can be acquired for free, are prepared to pay $10 a month to listen to music is an astonishing achievement of free markets. As the quality of services like Spotify improves and the market continues to innovate who knows if people will be prepared to pay even more.
The value of any given piece of music, then, is determined by those who choose to listen to it. It is not determined by the amount of labour and effort, physical or psychological, that went into its creation. Value is subjective and exists only in the minds of human beings. Musicians, more than anyone, should understand this given that plenty of people greatly value the output of Justin Bieber and the like (here I reveal my valuation of said output!).
Although it’s much harder these days to earn a decent living selling records than it was, say, twenty or so years ago, it is much easier and cheaper to make music, and expose it to a huge audience. Therefore, surely far more musicians are known to the world than was the case a few decades ago. This must increase the odds of being ‘spotted’ by a record label, a venue that is looking for a live act, a company that makes commercials or video games etc. Indeed, this is exactly how Mr Bieber found his way to fame and fortune, and no doubt more will follow. Those musicians that innovate and find new ways to make money out of making music in today’s digital world will do much better than those who continue to bemoan the reality that, if they put their music on the web for sale, then it can and probably will be copied an infinite number of times and shared an infinite number of times. Or, if they only allow access to it through streaming services, then they aren’t going to make much money at all.
Even if musicians believe that copying and sharing is implicit ‘theft’, the only way for them to prevent it is to keep their music offline. But doing so is to effectively silence your music to society’s ears and what would be the point of that?
You might expect the consequence of widespread illegal downloading of music and paltry royalties from streaming to be the death of the music industry. After all, if the perceived value of music is less than the cost of creating it, then musicians should logically stop creating it. Yet paradoxically there is more music being made now than ever before. This is because the distribution costs are nearly zero.
Something similar is happening in publishing. E-books are slashing the cost of buying books, yet more authors are publishing than ever before. The paradox is again explained by the removal of barriers to and costs of publishing. Self-publishing enables established authors to earn more royalties than the traditional route, and allows many authors to be published who previously could not be published at all.
Self-employment and entrepreneurship are also growing in the UK. Imagine how they might explode if barriers to setting up a company could be removed.
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Good point, yes, publishing is being radically changed by technology also. It’s fascinating, really. The traditional publishing houses are struggling to adapt whilst innovators come into the market and take advantage of their hesitancy. I remember being quite sceptical about e-readers, but I received a Kindle as a gift and now I wouldn’t want to be without it.
Back on the subject of music, I think overall the Internet has had a positive effect on music as an art. I’ve discovered so many artists that I would never had done without the Internet acting as platform for sharing music. I’ve bought a lot of music after having downloaded it and realised I liked it. And I’ve seen how artists/bands/DJs can quickly build a fan base through youtube and social media, which otherwise would be a much more costly and time consuming task.
Yes, I can imagine it must be so demoralising to have a great idea for a new business only to realise how many hoops you have to jump through to start your business. I guess many are put off by the cost and difficulty, which is a sad thought. At least with the Internet there’s no such barriers. Anyone can ‘open up’ a business and if enough people find value in it, then it becomes part of the web. The real world should be the same. Hopefully one day it will be.
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