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Most of the 'creator economy' is doing fine, it's musicians who need help
The economics of streaming are wildly unequal: a YouTuber makes a staggering 20x more per stream than a musician on Spotify
"Without music, life would be a mistake" -Friedrich Nietzsche
In short: I think things are broken for artists and listeners alike, and I want people to at least understand the problem in more detail. We’ve given writers new and better opportunity through tools like Substack, video creators of all sizes unprecedented revenue sharing and distribution through YouTube, podcasters an array of distribution options and promotional tools. But, as we’ll show, music is the one content type and musicians are the one creator who have the largest unsolved challenge online. They are still trapped in gatekeeper hell - financially and culturally.
An industry which tries to cling to the past does not get the right to complain of a 'lack of decent business models.' Perhaps if they spent their time innovating instead of fighting a changing world and treating their own customers like criminals and indie artists as unwelcome outsiders, we could feel sympathy for them… The music industry is no longer some special or unique entity, they are now part of a hyper-competitive market and just like others in similar situations they do need to actually deliver on what people want if they hope to survive. Perhaps it’s time they stopped banking on irrelevant strategies and wake up to the world they live in.
Why should my opinion matter on this one? I believe I have a diverse perspective here as someone with a (likely) rare combination of interests: writing music, running ad-supported sites, developing marketing/distribution strategy for all types of content and working on tech that powers monetization for millions of creators. I also of course have strong opinions on the practices of the (completely dystopian) American music-industrial complex and how the machine manufactures artificial culture - in case you haven’t read my thoughts on this before here is a good primer.
Part 1: How bad are things for musicians, really?
Let’s dig into a bit of how the economics of streaming are broken, why the industry refuses to work on it, how the deck is stacked in favor of chosen pop stars, and the difficulties of independent musicians in modernity. I made the below meme the other day on Twitter illustrating the discrepancy in economic incentive for different types of creators and decided it was a good launching point for a more detailed piece on this subject. And away we go.
Per 1K views/streams, I calculated the following estimations am seeing in the wild (not ivory tower research reports) for video, text and music monetization via platform ads/rev share:
$17-18 paid to YouTuber (niches of course vary but it’s around this as average)
$2.50 to blogger via ad network (looked at avg numbers from a few of my sites which are definitely in the mid-range of costs to run ads on - this varies too but had real data via live content so using it as reference here)
$0.85 to musician via streaming on Spotify (while this also does vary, I used numbers from my own music which should be representative of a small indie artist who publishes independently - my Distrokid reports have more than enough data to get a good sense of where this # sits). Separately, labels take a large rake as we’ll go into in a bit.
Even if these numbers are not perfect, they are contextually correct to compare with each other. You can see how this works out at the most granular level in the meme above. Without question, musicians have the most difficult time directly monetizing their work online. It’s blood from a rock, the staggering numbers required to eek out a living from publishing to Spotify or Apple music are so high it’s unreachable for the vast majority of artists. As it stands right now, music is being valued as a passion not a profession, and the market (everyone reading this) is sadly for the most part complicit.
Even for popular artists streaming is of course the smallest % of their revenue pie (with live shows being the highest grossing). And it’s not like a musician spends less time on their work than a YouTuber or blogger. Maybe the opposite: that last post you read on your favorite blog perhaps took someone 2 hours, that last album you listened to might have taken an artist 2 years of intense creative work, time in studio, sleepless nights editing (not to mention post production/mastering). The creation process is of course never easy for anyone, but getting heard or making even a modest living is seemingly impossible for musicians. It’s difficult to argue with the numbers, in fact I don’t think there’s a real case to be made.
Part 2: Why are the incentives for media type tiered like this?
Major platform ad/rev sharing: why it’s so different
Pre-roll YouTube ads are perhaps the best place for brand awareness …anywhere
Through combination of un-skippable ads combined with hyper-targeting capabilities, remarketing, and by far the best measurement video marketers have ever had, it’s table stakes for every brand to show up here. And so, prices are at a premium, and creators make a good living (55% cut, which is a really good deal with all that YouTube provides in terms of tools, hosting, findability, and frees users up to create instead of constantly hunting for sponsors).
Text creators have relevancy and targeting on their side, even if ads are skimmed
The Google Display Network (GDN) is so incredibly good at getting your brand in front of your key audiences via demographic and psychographic targeting, it’s almost an easy button to reach the publishers of the web at scale (both indie and mainstream). Even if ads are skimmed that’s okay, because these can serve as awareness (and marketers can now also measure the impact of unclicked display ads on conversion). But, unlike YouTube ads, these are still skippable and banners nearly always go at a lower premium to video.
Music ads …well, those are a bit of a guessing game and more critically, subscription rev share is terrible
It’s of course harder to target ads on music than text and video, for a variety of reasons obvious and subtle. Also, the existential issue is with large labels taking their rake from Spotify +outsized earnings. Much more on this follows, as of course this is the art form and sector that badly needs help here.
Streaming is winner take all: the top 1% of artists and their labels earn 77% of all recorded music income [source]
MIDiA Consulting data shows a more extreme imbalance towards superstar artists than previously even the most pessimistic thought. “The music industry is a ‘superstar economy,’ that is to say a very small share of the total artists and works account for a disproportionately large share of all revenues.”
“This is not a Pareto’s Law type 80/20 distribution but something much more dramatic: the top 1% account for 77% of all artist recorded music income.”
In other words, the exact opposite of the Long Tail…major labels would clearly prefer and keep things this way, which is for sure a reason discovery is so poor for unknown artists on Spotify. The cartel must be protected.
Spotify caters to labels, not artists -a former insider explains
Former Spotify executive Tristan Jehan squarely blamed record labels for taking most of the money from streaming. Imbalanced artist contracts and huge upfront payments end up dramatically reducing the amount that musicians earn.
“The artists are paid low amounts [from music streaming], but the blame is on the labels,” Jehan said. “Today, streaming is a big chunk of global music revenues, and I think the future is positive, and that streaming is going to help artists in the long run. But that model is not reflected today in artists’ contracts.”
From there, Jehan emphasized the large portion of total revenue that streaming companies pay to record labels: “Companies like Spotify return 75% of the revenue to the industry, but they never pay directly to the artists, but to the labels. The problem is that today, artists still only get 10-15% of the revenue, and the labels keep the rest.”
Labels of course don’t exist in the realms of YouTube or independent bloggers. Those platforms killed the analog middle men (even if any new digital middlemen were created, like web hosts, they’re far less nefarious and cut is rounding error of what it once was). But in music, labels persist as a real world incantation of a textbook villain. I even took the time to previously write an op-ed for music industry trade Hypebot on this very topic: that labels actively try to destroy or neuter any new emerging music tech.
Oh, and lord help you if you’re an indie artist not on a label attempting higher rates for revenue per stream (explains why as an indie artist I’m paid a fraction of Spotify’s supposed average - although I’m a non-profit artist and donate any revenue to St Jude anyway so it’s not a big deal to me personally, but is for artists who are trying to earn a living. Also, I’ll spare you a separate rant how Spotify doesn’t even acknowledge creative commons artists exist/have mechanisms for cc/non-profit work -there is a massive community of us simply ignored by them).
But what about piracy -they must recoup those “losses”
Record labels favorite punching bag when it comes to not doing what’s best for the internet (artists and listeners alike) frequently comes down to pointing the finger at “piracy” But the thing is, the experience of streaming music is so much better than piracy at this juncture, it’s become a nonsensical pillar to stand on. Data shows this pretty clearly:
Further, as my friend Mike Masnick at Techdirt explains:
…the reason that music piracy is down and revenue is up is because the industry has finally started allowing more innovation into the market. Not surprisingly, this is exactly what we’ve been arguing for years. If you let the tech industry create useful new services that better provide the public with what they want, you get services and products that people are willing to pay for. And when that happens, infringement decreases, because the legitimate and authorized services are better than infringing. It’s why music infringement fell off a cliff in Sweden when Spotify launched there, despite also being the home of The Pirate Bay. Notably, when music infringement plummeted in Sweden, other types of infringement did not similarly drop.
In other words, for all the complaints about these new services, and the many, many attempts to hold them back or neuter them, letting new services grow and thrive seems to be the best “anti-piracy” measure that the record labels could have used. And yet it still thinks it needs to focus on punishing fans and limiting services.
Discovery is also a rigged game -far more with music than images, video or text
One thing that stands out to me time and time again is, in fact, the deck is stacked against unknown artists. I have my own music on Spotify and SoundCloud, and SoundCloud (which was built for indies) does a much better job providing me consistent, organic streams and surfacing my art to new listeners who are interested in my genre. Spotify does almost nothing to put my tunes in front of new listeners. I get something like 10,000 plays on SoundCloud for every 1,000 on Spotify, which is of course a much larger site. Something feels wrong about that, esp when you compare to YouTube which surfaced my new videos as a creator from day one.
There’s a great post on Medium outlining ideas on how to fix streaming inequality on Spotify, and a key point mentioned is fixing curation/discovery (which I think is totally broken, even on SoundCloud, my preferred streaming service, where it could also be better).
No matter how royalties are distributed, income distribution among artists will remain skewed as long as the process in which listeners discover music favors the top 1% of artists. Royalty distribution is a result of song plays, but song plays are the result of curation.
Every major music service uses a strategy or variation of strategies to assist in music discovery and recommendation. Among these are hand-picked playlists, acoustic analysis, attribute tagging, textual analysis, and collaborative filtering. Each strategy lies on a spectrum at varying degrees of human analysis and machine analysis.
Human analysis involves great care and is used most often in hand-picked playlists. These songs are selected by “curators” whose jobs are to find songs that best fit together, like a radio DJ. But this method moves slowly at scale. Hand-selecting 30 million songs would be a near impossible task, even with crowdsourcing, and it would still not accommodate for individual listening preferences or changes in listening behavior within a short period of time. Machine analysis, in contrast, scales well but the quality of results can seem inauthentic or questionable, since computers don’t understand all musical attributes and the cultural context behind music.
The results from some experiments here reveal that commonly used filtering approach is prone to popularity bias. This has some consequences on the discovery ratio as well as in the navigation through the Long Tail. (source)
In addition to collaborative filtering, the medium in which Spotify recommends music — through a playlist — further exacerbates popularity bias.
Part 3: Ideas to improve new and existing streaming services
Beyond the simple will to embrace a technology, user-centric approach and seeing all artists as stakeholders, listeners as open-minded, excited to be exposed to new creative works and killing the HiPPO (highest paid person’s opinion) mindset, I’ve a few actionable ideas that have to do with product and thinking in systems about addressing key issues (as I’m still unsure how to fix the deeper rooted organizational and bureaucratic dystopian nightmare of that sector).
Fixing discovery-making it work like other content types already do-would be a huge step forward
Indies matter. Their work is of high quality and important. It’s just not promoted appropriately, and there is no good mechanism to accomplish this.
It dawned on me the other day. The fact that I can publish a single story on LinkedIn (which was actually just a copy-paste re-post of one of my columns) taking a total of 60 seconds, and it’s given 40K views due to the platform deciding to amplify the story via their pulse product …it took me years and several albums of songs published to a major streaming platform to achieve the same visibility LinkedIn provided in a single day —perhaps just a few hours.
Similar on YouTube, creating and sharing videos has baked in amplification. Video, text, images (especially images, Imgur and imgflip are 2 of the most popular image sites online) all have reasonable chances of being discovered and shared. And to clarify, I don’t mean “go viral” so the whole internet sees, that’s not what I’m asking: I just mean discovered and surfaced by a platform for users to potentially find, and any/all content is considered. Streaming platforms are the ONE type of media site where this is rarely the case - we need to ask how can we fix that so it’s also democratized, just like text, images & videos have become.
Changes in music thanks to the internet which reinforce importance of the above:
30k+ songs are released every day. it’s tough for everyone. most songs, even great ones, receive very little attention outside of ‘name’ artists
labels are in theory now dinosaurs/middlemen, if the technology was better. (Spotify is not a growth driver for small artists in current form, rather they reinforce hits/known musicians)
connections to (and thus features on) indie blogs and playlists matters a lot for those in the know
relentless appeal to a very specific niche audience can now win an infinite content world — with discovery
100s of thousands, perhaps millions are actively making music in home studios that is more creative and interesting than major labels, software has come a long way
labels have conditioned people to believe mass enculturation of music is ‘natural’ or good, but cracks are starting to form
no one who is passionate about the art form is really ‘happy’ with the state of streaming or pop music
The 30K / day uploads is by far the most fun opportunity — if it eventually follows literally all other media types online. This excites me in the same way millions of YouTube videos a day uploaded excites all of you — there’s so much great, creative video out there, and YT actually does a good job surfacing it. I find new YouTubers literally every day most of which are not stars or celebrities or ‘known.’ It could easily be the same for music. We just choose not to let it happen because of major labels, gatekeepers and allowing streaming platforms to dictate our listening lives. Addressing this would vastly improve surfacing works of unknown artists and exposing listeners to new, creative works.
No music platform yet takes advantage of the Internet’s superpower (inevitably one will do so in a way that changes everything)
In Think Twice: Harnessing The Power of Counterintution, Michael J. Mauboussin postulates that a diverse crowd will always predict more accurately than the average person in the crowd. He takes social scientist Scott Page’s diversity prediction theorem (collective error = average individual error — prediction diversity) a step further to identify the three conditions which must be in place to know when crowds will predict well.
diversity, aggregation and incentives: Each condition clicks into the equation. Diversity reduces the collective error. Aggregation assures that the market considers everyone’s information. Incentives help reduce individual errors by encouraging people to participate only when they think they have an insight. The web brings diversity, aggregation and incentives together in a way that is instantly accessible.
But what exactly does this allow for as a marketer, an artist a business or anyone else looking to spread their ideas? If you think about it, this is one of the core ways we derive value online and is a superpower of the internet. Consider:
The most interesting social areas of the web (especially but not exclusively horizontal networks) have diverse userbases.
Popular platforms aggregate by design — or if they don’t — external parties are building technologies on top of them to allow for easy aggregation.
There are multiple incentives for participation — social validation or personal branding, a passion for the subject matter or desire to build permission with an audience.
The next great music startup will use these key tenets that power everything from Facebook feed algos to Google search and YouTube content recs. They work for all other media. Music is not special. Working these elements into products from a content filtering perspective to customize suggestions for each user in a way that does not simply continue to re-surface what is most popular, I believe would provide a different (and better) experience vs music industry incumbents pulling the strings at Spotify and elsewhere who make political decisions as opposed to what’s best for the user. Most streaming products are quietly biased to the equivalent of the Rotten Tomatoes critic score instead of a pure audience score (which we know is far more accurate).
To move forward, we ultimately must leave the culturally stuck tastemakers and prev gen execs behind. Let diversity, aggregation and incentives (the wisdom of crowds) decide new artists we hear. Spotify may have parts of the first 2 in their algo, but their incentives are always biased to be label-driven, not user.
Exposure is the first step to solving this. Awareness of high quality indie music is a David vs Goliath move against big labels. Once widespread enough, they have no defense here. It’s a reason I spend so much time curating music from unknown artists (and would take the Pepsi challenge against Spotify’s algo any day). I believe with every fiber that indie/unknown musicians are higher quality than what is put out by paint-by-numbers labels, which motivates me to put in work showing people. Once you see the matrix on this one, you can’t unsee it (and that’s a good thing in this case). Effective streaming algos would see it, too.
Part 4: My (optimistic) take on what happens next
The words hymn writers and liturgists put on our lips in worship affect us profoundly: they teach us what to think and feel, the more effectively as they are put to music so we can hum them to ourselves whenever we are inclined.
-Gordon Wenham’s The Psalter Reclaimed
For me, personally I’ll continue to forgo having a label and publish all my music for free under a Creative Commons license. I still think it has never been a better time to be a fan or creator of music. For fans, the selection continues to widen and your ability to build an amazing library has never been easier. For producers software like Ableton puts studio-quality tools at your fingertips. Let’s hope the technology platforms do the right thing and don’t ruin their products by bending to the whim of clueless labels stuck in the past.
For years, both the music industry and the newspaper industries have enjoyed uninterrupted monopolies on their respective content that would reach the world.
Both systems used vastly overcomplicated and biased management and editorial decisions.
Both systems were highly profitable, hard to break into and closed unless you had the right connections.
Prior to mass adoption of the Internet:
A small group decided what was “worthy” for both music and news
Quality was sacrificed for what would sell
It was cost-prohibitive for individuals to have influence on a mass scale
There were several levels of gatekeepers
Both the music and news industries internally felt indestructible
Technology as the enabler of artistic freedom of expression
Enter the digital age, where the walls have come crashing down and everyone has equal footing.
Anyone can now publish news in any format they would like and distribute for next to nothing
Anyone can create music in their home studio with cheap digital equipment that rivals the studios of old and then distribute globally for next to nothing
Users can succeed in distributing information, music, pictures and any type of content all on their own without needing the approval of gatekeepers and editors
Power to decide cultural aesthetic no longer held by the elite few
It is a beautiful era we’re living in as user generated creativity rises to power, and a modern renaissance is taking place as content is produced by independent people both for and equally as frequently not for profit/as works of love.
This is the way information was meant to be shared, and is certainly the vision of the original creators of networking technology. Independents have been given new life due to amazing new tools. Now everyone can post their content for millions of people to access, and in many cases people do this without any pay as pure labor of love.
The content you are reading now is completely free, with no benefit to me other than being able to share my ideas and be able to connect with you. Some people would question why I would do this, but unfortunately they do not understand the deep passion I have for the subjects I write on. Some can’t understand that not everything is done for profit, as a recent Twitter user went viral for pointing out (in the face of an increasingly ‘try to monetize everything’ world).
While streaming platforms are of course for profit, I wish they would understand the essence of what art actually is deeper. No great artist is making works with the intent of enriching others (or even themselves). With that, helping the cohort take this off their plate even a little and allow them to have even slightly better, predictable revenue (just like YouTube does) would make the lives of many artists measurably better and less stressful. We all win in this scenario: we’d end up with more (and better, more creative) music.
Digital music and news endgame is similar
Centuries ago, when the printing press was invented, I am sure many scribes were put out of work. I am sure that they fought hard with the government at the time to stop the spread of the printed word, but their leaders saw just how effective this new technology was and allowed it to thrive. With the advent of the printing press, a new industry was born. The same exact thing is happening today, except the printed word are analogous to the scribes, and the printing press to the web.
The industrial revolution also put many out of work, however at the same time it created a brand new, booming economy of jobs. We’re in the same place now – while traditional newsrooms and newspapers are still shrinking, blogs, social media and online publications are still booming. It is simply the natural progression.
In the music industry, the power is shifting to the independent artists slowly but surely, even with behemoths like Spotify acting as gatekeepers 2.0, I believe in time the open web or new generation of products/services will ensure new artists who refuse to play political games or sell out their art to “fit in” with a desired style get a fair shot. Here I feel no remorse for anyone – the music industry has shifted to putting dollars and bets behind bland talent/work that is dull, uninspired and takes no chances because that’s what was safe. But in music and all else, safe is not interesting.
What the future holds…
The future is certainly a mix of the traditional and the new for media, and independents and major artists for music, however I pose the following question:
What can these massive institutional organizations have to gain by putting roadblocks in front of societal change/new technology and ultimately going against the evolution of their art form in the digital world?
They will only succeed in upsetting fans, frustrating up-and-coming artists and ultimately creating mass ill-will with people who could have been their best customers. Also keeping incentives broken for the art form only succeeds in reigning in the volume and variety of work published. There is no logical reason to not address them. Creating a dystopian pop artificial scarcity world will ultimately be met with the same disdain large swaths of the population are having for other once trusted institutions that have been exposed to be rotten to the core.
The scorched-earth strategy big labels (and even some of the streaming players) have taken abusing the DMCA, suing their own customers, taking obscene rakes, holding back new technologies and manipulating algos in favor of elite decision makers must not be allowed to continue. I don’t know if/how the economics of streaming music ever work out well for indies. Perhaps they don’t have to, as creatives are now monetizing in all kinds of different ways. But we must hope the industry moves past some of the practices shared in this post to ensure the best possible musical renaissance of the future, which enriches all our lives and makes the world better. This one is too important to ignore if you agree that music is an integral part of the human experience, and source of love and energy.