#fairstreaming

I have said it before; streaming is here to stay. The possibilities of the technology are far too great to snuff it out, and if only the major music labels had embraced digital music instead of trying to kill it twenty years ago, the music biz might still be in the hands of those with a passion for it, instead of tech companies and ponzi-scheming investors. 

There is a common call right now for “major artists” to pull their music from the streaming sites, in hopes that the vacuum created by that would force the streamers to re-think their royalty rates in favour of the owner of the content. 

This will never happen.

Why? Well, the big stars don’t want to say this, but they don’t own their music. Their record companies do, and many of these companies have paid handsomely over the years for this music in the form of advances and tour support. The artists don’t really have a choice in what happens to their catalogue of recordings. The major labels have cut equity deals with the streaming companies in exchange for licensing their catalogue at criminally low royalty rates. So, while the artists scratch in the dust for royalties, THE RECORD COMPANIES ARE STILL GETTING PAID. 

Indie artists, like myself, and thousands of others (and a few stars, such as David Bowie, Van Morrison, Frank Zappa; who own the majority of their master recordings), can pull our music if we wish, but it just pushes us farther down the long tail in terms of cultivating a wider audience. I see the necessity to remain grouped in the “bigger pond” as it were; as such I have elected for only certain titles to be available for streaming. These are “loss leaders” that will maintain my presence in the stream and hopefully, if users dig the music, they might venture beyond this website or eventually to chriscawthray.bandcamp.com , and then possibly to a live show (provided I can afford to be on tour).

For many indie artists, recordings are produced not only for expression and continuation of one’s artistic vision, but to be sold to fans (in this order) to fund a/ the next recording, b/ tour expenses, c/ cost-of-living. When albums could be sold for $9.99 at iTunes and $15-$20 at a gig in hard copy, a/ was almost guaranteed, b/ was like winning the lottery, and c/ was still a long-term goal, but possible.  Under the royalty rates of streaming audio (and assuming it continues to erode and ultimately obliterate traditional sales), none of these things are possible. Making records will not only be incapable of turning a profit, it will be unsustainable as a break-even activity. Sooner or later, the streaming services will not have a deluge of new material for their subscribers, or (more likely) artists will seek co-funding options to make records (such as corporate sponsors interested in rendering the artist’s voice into nothing more than a paid spokesperson) that will corrupt and corrode the music itself.

FAIR STREAMING, A PROPOSAL

How do we re-work the streaming service to pay artists fairly, and pay them so that they may continue to create? One option I have read is this:

a/ All songs played once for free b/ user then has option to buy the song for $1 for unlimited use or c/ rents it for $.10/play

This model would serve users in that they could sample music for free before committing to purchase it, and it would certain pay artists a fairer share, but to me it cuts at the heart of what is great about streaming services: unlimited access.

My proposal is as follows, and I have not done the calculations for exact dollar amounts but, hopefully you can appreciate the system nonetheless:

1. First 1-5 plays of a song by a specific subscriber (minimum 30seconds to protect against accidental clicks) pays the copyright holder the “A” level royalty share. The “A” level would be conceivably the highest per-stream rate, and subsequent rates going proportionally lower.

2. Plays 6-10 pay out at the “B” level royalty rate.

3. Plays 11-100 pay out at the “C” level royalty rate.

4. Plays 101_unlimited do not pay any royalty rate at all.

In my opinion, this pay-structure would best model the traditional system of purchasing a hard-copy recording, which was the best model for generating income for the artist, as it gave the artist the income at the initial procurement stage. Subsequent income came from radio play, which in its traditional form is also withering at the hands of the streamers.

With this pay structure, an artist is encouraged to create new music, and promote its release because there is a financial incentive to attract new listeners, as they are the most lucrative royalty rate. This promotional activity and general “buzz” is good for the industry and the third-party advertisers involved in the streaming business models. Dump-loading content into the long-tail is of no use to anyone and serves to drive music’s nosedive into worthlessness even faster. So, with the lucrative “first plays”, artists can still have strong “opening day” sales numbers, and consumption can be better understood, differentiated and capitilized upon.

The subsequent Plays levels would deliver lower and lower incomes until the title itself ceases to generate income from the listener who has listened to a particular track 100 times or more. It is quite likely that most consumers of hard copy music rarely listened to most albums in their collection more than 100 times, and single songs would only generate 100+ plays for the strongest “hits”.

The gradual tapering off of income generates profits for the streamers (eventually, they are delivering certain songs royalty free to certain subscribers), and encourages the production of new music by the artist. It does not limit the traditional catalogue profitability (for example: Led Zeppelin as a high-school boy rite-of-passage) since the royalty rates are tracked by individual subscribers; so each generation of new listeners to classic tracks would result in a wave of “A” level royalty rates.