Artist L&D

14 – 07 – 2022

Despite what the DCMS Parliamentary inquiry might say, it’s an amazing time for new music creators

Recent comments from high-profile, former major label artists and the DCMS Parliamentary Inquiry have once again launched royalty rates from streaming services and the state of the music industry at large into the headlines. Our CEO Conrad Withey explores both sides of the argument in his latest opinion piece, originally posted on LinkedIn.

A break in August is always a good opportunity to reset and take a step back from the day to day. It’s also given me a chance to consider with a bit of distance the results of the UK Government’s enquiry into the economics of music streaming. I was really annoyed when they were published but rather than rant on Twitter I have tried to take a more considered look back at it now.

On the face of it I should be totally into what the MPs are doing. Instrumental, the company I run, has one clear purpose and that is to change the music business to the benefit of independent artists. We help high performing talent we’ve found through our tech to access funding, audience building expertise and marketing support without being forced to give up their copyrights. So anything that is aligned with our mission should be welcome.

Don’t get me wrong, there are some important issues being explored - such as the disparity in remuneration levels for songwriters vs. recording artists, the value gap on user generated content (UGC) hosting services and the continued dominance of the major labels - but I have some significant issues with the way the whole thing has been presented in the media and onto the general public.

If you took the headlines literally (and pretty much everyone I have spoken to about this who isn’t working in the industry does) you would never consider starting out trying to build a career in music. And yet our experience at Instrumental over the last few years, talking to hundreds of young, independent artists all over the world, is completely at odds with that. They love streaming and they are building careers that they control and that pay really well.

The data backs up our experience. Industry research organisation MIDiA has, over the last few years, consistently reported that independent artists are the fastest growing sector of the global music business in terms of value. There is something significant going on at a macro level that is being completely missed in this inquiry and that presents a very different, much more positive perspective.

I’ve thought a lot about this, because I have no intention of getting in the way of artists getting a better deal, but I have come to the conclusion that the committee report and coverage misses out an important discussion around the benefits streaming has brought to the global artist community. And I think I know why.

The bottom line is this - everything that has changed in the music industry has changed because of technology. And, as with all new technologies and the business models they spawn, the kids work it out first and everyone else plays catch up. That is what is happening here. The new generation of musicians, artists and creators get it and are successfully getting on with it - but they are the quiet majority when it comes to broadsheet news coverage, because they do not sit within the established music business.

The people making all the headlines and capturing the attention of MPs are the noisy minority who are still trying to work the old way. They don’t get it. They simply don’t understand how to build a career in the modern music business and are angry about it. They nearly always fall into one of three categories which I will come back to below. Before that though - let’s look at some of the facts about streaming that the committee didn’t discuss - or if they did I didn’t find it and it certainly wasn’t reflected in the news coverage - that I think is important to explain to the wider public:

We’ve moved from a despotic regime to a democracy - which is AMAZING!:

The internet and streaming have broken down all the barriers to entry and effectively removed the 100 year long dominance of gatekeepers. Until recently it just wasn’t possible to start a music career on your own let alone actually make money from it independently. You had to catch the eye or ear of a label and hope to get a record deal that would fund the recording, distribution, sales and marketing of your music and lobby radio stations to play your songs. Only a lucky few made it this way. Everyone else just had no chance (or I guess they could queue up for The X Factor - until this year anyway).

Now anyone with a laptop can do all of those things for free. Bedroom recordings, free or near free distribution and social media are all you need to start out in the music business and literally millions of people are doing that everyday all over the world. As Lee Parsons, CEO of Ditto Music, wrote an article for Music Business Worldwide in January “there’s never been a better time to be a recording artist”.

The majors aren’t the power they once were:

The committee came to the conclusion that the major labels were a big problem and controlled too much of the music business. That’s true to some degree when you consider their vast historical catalogues which make up a huge share of streaming every day - because we all love classic tunes. That’s probably never going to change.

BUT, outside of catalogue, things have changed. The majors have to compete now with a wide range of new options for successful new artists - including companies like ours. The early stage of practically every new music career is now done independently, on DIY platforms, so the majors do not have the advantage anymore of being the gatekeepers.

Anyone can find success from literally anywhere at any time and recently TikTok has accelerated that process even more. It’s great news for artists and it is keeping the majors keen - a point made by David Joseph (CEO of Universal Music UK) in the hearing when he said: “I have never seen a more competitive environment between labels, do-it-yourself options, deal terms and platforms. Honestly, it is the most competitive environment, with so many choices." And if you take an artist out of the traditional music business (major labels and publishers) and build a career directly through streaming platforms and social media you won’t hear any of the complaints highlighted in this report.

The music business is now about access not ownership:

I think this is THE seismic shift that the MPs and many of the unhappy artists have missed when explaining streaming. Music is no longer about ownership. Streaming does not grant you any rights to the recordings you listen to. Past music consumption did. When you bought a record, or a CD or downloaded a track you effectively bought out, upfront, your right to listen to that album or single as many times as you liked - as long as you didn’t scratch the plastic or lose your computer with the downloaded music on you could just keep on listening indefinitely.

Streaming is not that. Streaming music is more like radio. You hear a song once and then it’s gone. Just like when you hear a song on the radio. If you want to hear it again someone has to pay for it again. Either the listener pays for it out of their subscription, or someone else pays for it through advertising or in the case of radio the broadcaster pays for it.

What’s interesting about radio is that it pays far less than streaming. A radio play on the UK’s biggest station, BBC R2, for example on the breakfast show, will reach 1m people and will earn about £400 for the label/artist. Whereas if 1m people on Spotify UK hear a song once (which is the exact same experience) you will earn around £2,500. But you rarely hear complaints about what is earned from radio.

Streaming is a reliable income stream:

The other wonderful thing about streaming is that, if your music does find an audience, it is a gift that keeps on giving. While in the past you may have had a short team win income wise when a single or album was released, that momentum was impossible to maintain (for all but a tiny, fraction of a percentage of all the records released) because the retailers kept changing what was on shelf to accommodate new releases. These days there is no restriction to how much music can be released and supported by the “stores”. It means that music is continually available to be discovered months or even years after launch.

It also means that once it is discovered and loved by an audience it will keep on paying you because as long as it's played, you get paid. The result of this is artists can build something akin to a salary - a body of work that gets regularly added to, that has consistent streams, will pay you a consistent amount of money each month. That’s amazing. In the old music business you got an advance for an album and would never see another penny from those recordings ever again.

Reliable income streams are changing everything for artists because you can leverage them to secure cash flow as advances, sell your catalogue and cash out or if you do decide to sign up to a label you can command a significantly bigger advance than was ever possible before because you can prove what you are already worth.

Old school music media is just a vanity metric that means nothing:

Other than the daytime playlists of the commercial stations and BBC Radio 1 (which literally only happens if you are already smashing it on streaming) every other bit of media coverage is worthless. It will make you feel good, it will get a tiny percentage of the cool crowd talking about you but it will make you absolutely no money at all.

It’s the great juxtaposition of our times and it really does confuse MPs. Nothing that mattered before, matters any more. The Brits, TV performances on Graham Norton, great reviews in the Guardian, 6 Music airplay, The Mercury Music Prize, NME covers etc etc etc. They are totally meaningless as a measure of artist income streams and as Dan Cairn’s said in last week’s Sunday Times “Any notion that, in 2021, television might be a source for music discovery is for the birds”.

This is where we come back to the democratisation point made earlier. These were all key gatekeepers in the past and they could make or break careers. Now they are the last layers - the cherry on the icing on the top of a cake. They are lovely to have after you have built everything else, but if you get them WITHOUT having built your fan base first (on social media and streaming) then they sadly mean nothing.

They are actually quite damaging to a new artist because, a little like we heard from Nadine Shah in the committee, all those things can come your way and make you believe that you are “successful” but your pay packet will tell you otherwise. Unfortunately the vast majority of the people hearing, watching or reading that media don’t really care about it. It was completely different in the past when you only had about 20-40 albums in the shops at any given time. Then, what you had seen on the TV or heard on the radio or a good review in the newspaper massively influenced what you bought because there actually wasn’t much choice. Now though you can go onto streaming platforms and all the music ever made is there. So you can find what YOU actually like - you don’t have to just pick from what other people want you to like.

I know which world I prefer, but it is a bitter pill for older artists to swallow when everything they thought was important now isn’t.

It’s now all about building engaged audiences:

Which brings us to the next key point. The business is now entirely about building engaged audiences and fan bases that will keep listening to your music, sharing it with other people and that you can upsell from streaming (which is effectively free for the fan) to other things like live, merch and so on.

The artists you aren’t hearing from in these committees and hearings are the ones who are good at this. They are digital natives who get it and as I said earlier, are getting on with it. They haven’t got time to complain because they are too busy owning their careers and taking charge of their futures. Or they have realised that their music has failed to build a fan base and moved on. They know that this is ALL THAT MATTERS and so if it doesn’t happen, c’est la vie. Music can still be a lovely hobby but it won’t pay the bills.

No stream is the same as another:

This is continually missed in all the commentary out there. Streaming is unbelievably complex because every single platform pays artists different amounts of money depending on their business model (e.g. ad funded vs. premium subscription vs. family pack vs. user generated) and where in the world they are. You earn completely different rates on Amazon in the US vs YouTube in India vs Spotify in Japan vs Deezer in France.

This is tough for the MPs to deal with because they are not digital natives and they are used to artists selling music in bundles (albums) which all pretty much cost the same (say £10). You knew where you were in those days. It really isn’t like that now. So a country music artist who streams almost entirely in the US on Apple will be making so much more from 10m streams than a Punjabi folk singer hitting that same level on Saavn.

The crowd is the new Simon Cowell:

It’s interesting how much concern there is over the value gap on platforms like YouTube and TikTok in regard to UGC because right now it is literally the A&R function of the global music business. Every big deal being done is coming out of talent blowing up and being shared by users of those two platforms (and really mostly TikTok).

The fans have taken over the business of finding and judging talent and are, in effect, the new Simon Cowell. It’s no wonder he’s shelved “The X Factor”. Dan Cairn’s recent piece in the Sunday Times said: “The age of family viewing, of Top of the Pops and the singles chart, has given way to a personalised pop culture where individuals discover and access music digitally and make their informed choices there — or have them made for them by algorithms that home in on users’ likes and dislikes. King Cowell has been superseded by Almighty AI.”

Also historically the music business has been very happy to give content away for free if it drives sales - think MTV back in the 80s and 90s. That’s what UGC is now - is content you earn very little from but that extends your reach to new audiences - the crowd.

Streaming beat piracy:

Finally, let’s not forget that streaming music BEAT piracy. Go back 15 years and the music business was in the toilet and it looked like artists might never be able to make a living from records again. In Sweden, where Spotify started the streaming revolution, piracy was rife. It was the home to Pirate Bay and so many other such “services” and they was practically no legitimate music business.

But the fact that streaming services came to offer a better experience than bit torrent downloads with none of the associated risk meant that in the end, piracy was largely eradicated and new generations of talent are able to build careers and incomes in the way we’ve discussed above.

We’ve become very used to the fact that streaming has saved the business but while we lobby for them to pay more we need to bear in mind that without them sustaining their own viable business model we could very well head back into the bleakness.

Of course the artists who are upset about streaming aren’t lying. They genuinely aren’t making much money from it, but if you dig into the background a bit you typically see that they have more fundamental problems:

  1. They are on old school record deals that they can’t get out of.
  2. They are independent, but don’t have a big fan base (which you could also read as their music just isn’t popular enough).
  3. They are songwriters.

The first issue is historical. Old record deals aren’t, with hindsight, a great deal for artists - but they were appropriate for those times. The beef though is with the label you signed up to not with the pay through from streaming. Majors do seem now to be looking at historical unrecouped balances, wiping them and paying through to artists which would be a breakthrough for heritage acts.

The second issue is the elephant in the room for some artists. They just aren’t very popular. If your music is too specialist for a wider audience it doesn’t matter how many people on 6 Music say you are great and cool - you won’t make any money. With the whole business being democratised that’s the flipside. These artists are like dinosaurs and they will die out. That’s just the way it is - they aren’t a rationale for changing the entire new music economy.

The third issue is an genuine issue. Songwriters just aren’t paid enough. And I think the groundswell of support around that will be enough to see improvements soon. If it were down to me I would legislate for songwriters to get a bigger share of the recorded music income for any covers created from a composition. There’s a real value gap there - I mean a cover is literally about leveraging an existing, usually famous song to create a new recording. Everything about that process leans on another person's IP. I’d give 30% of master income from covers to the song writers. It’s still a good deal for the covering artist and will begin to close the gap.

For now though we at Instrumental will focus on the potential of the new streaming economy, working with the artists and creators who are making the most of it and adapting to the ways to build a career in the 21st century.

Forget #brokenrecord and let's get behind #changetherecord.

Follow Conrad on LinkedIn.

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