I love music and some of my closest family are expert/professional musicians. I want them to be successful and thrive – and have seen how hard it is to get ahead in an industry where the effort put in is barely registered by those who get the benefits, so I appreciate what Taylor Swift is trying to do, but believe she is “tilting at windmills” as far as streaming music is concerned.
Mega-star Swift came out recently in an open letter against Apple Inc. for using her and other artist’s music royalty-free while they establish their new music-streaming service, Apple Music. I have considered her arguments, but if I make a comparison with other forms of business, I am compelled to disagree. For instance, if I spend years learning and many thousands of dollars on training and on buying machinery to set up a workshop producing furniture (for example) but it is ugly and no-one wants it, it doesn’t matter how much I spent, I’m just not going to get paid.
If I love furniture and go ahead and produce what I want for my own pleasure, that is art. If I love furniture, but deliberately find out what will meet people’s wants and specifically write music for them to buy, that is design. By the same token;
If you love music and write and produce what you want for your own pleasure, that is art.
If you love music, but deliberately find out what will meet people’s wants and needs, then specifically write for them, that is design.
The Music Business is about design
In the old days, the negligible cost of reproduction allowed massive incremental profits as sales increased, and those profits were always captured by the distributors. A few canny managers managed to use the power of the artists to bargain better deals, and some became very wealthy – along with their manager/s.
Taylor Swift is using her own power to negotiate a more favourable deal from the distributors – digital means there is no incremental cost in increased sales.
Apple forced the distributor’s hand so they had to sign up for the original iTunes, because mp3s via iPods would kill the market for hard copies, and therefore the profit available to pay their shareholders.
As always, the elastic part of the price equation is the producer (musician), but it is still simple supply and demand, no different from farmers who sell a commodity into an auction system. Your audience “bids” by buying, or streaming. Farmers sometimes have to accept a price that does not cover their cost of production.
That the royalties from streaming are miniscule just raises the stakes – like a farmer of a furniture maker, you need to influence demand. In marketing, you can either pay for advertising and get to say what you want, or use Public Relations (PR) – which is essentially free advertising where you hope your message is correctly conveyed – be it through your website, social media, music critics, free gigs, word-of-mouth, or in this case being part of a streaming system someone else owns.
If I want someone to put my furniture on display in their store, it is unrealistic that they should pay me for doing so until it sells – it’s called “on consignment” in retailing, and frequently used to build brand presence. Apple’s streaming music service is a cost for them – even if they are the richest corporation in the world – and therefore they need to recover it.
In the business of music, producers (musicians) rely on distributors to increase awareness and demand, and in the long run, increase the value of their products. This is reflected in the number of times a song is streamed, and the incremental profit they are paid by the distributors.
I don’t think that Taylor should have an expectation that her products should be promoted for free, any more than Apple or Spotify should get to use them to make money without paying her. Her argument is wholly around philanthropic principles, not those of business, although she is a renowned businesswoman.
I applaud her championing of the struggling artist, however in this case the sticking point is the amount, not the principle.
That is the probably-uncomfortable truth.