Wednesday
Apr082015
April 8, 2015 Music Industry Needs A Sea Change, Not A TIDAL Wave
Over the last 20 years, the listening public has spoken loud and clear: We’re not paying for what we can easily get for free. So Jay-Z and his cadre of superstar partners responded with a $20-a-month Spotify-style streaming service whose main selling point is uncompressed audio. Huh? TIDAL, which is about 10 years behind the curve, confirms just how woefully out of touch some in the music industry still are.
With the motivation to buy music at an all-time low, real change in the music industry, it seems, will only come when we adopt a sustainable, ecological business model based on collaboration, engagement, and a new value proposition for music.
That means initiating a genuine collaboration between the technology and music industries. Despite movement in this direction, we still hear complaints that the two don’t really work together. The fact is, we’re interdependent; music needs tech to grow and tech needs music to survive. If we truly joined forces, asking how we can help each other grow, what great innovations could be born?
One simple development could be improved performance metrics. As it stands, the Billboard Hot 100 weights sales at 35%-45% and streaming at only 20%-30% in calculating chart rank. Yet in the digital economy, likes, favorites and followers are like spending money for the masses. It seems, doesn’t it, that incorporating audience engagement into the ranking algorithm is as important, if not more, than casual plays or, the ultimate like, a sale.
Streaming has been woven into the fabric of daily life; it isn’t going anywhere. Purchasing large volumes of music simply isn’t realistic for the average consumer. A 64 GB iPhone doesn’t hold a fraction of my music library, and storing it in the cloud means both paying a subscription and data charges each time I access it. So like most consumers, I stream (legally) all the music I want. It’s simply a stronger value proposition.
If artists and labels want to continue selling product, we have to do so with an equally strong, or stronger, value proposition than streaming. That means we need to ask ourselves, what special benefit or feature can we add to our releases that will make them viable?
In the end, the music industry’s survival depends on whether we are up to the challenge of thinking outside the box we’ve imposed on ourselves.
Reader Comments (4)
"incorporating audience engagement into the ranking algorithm is as important" ... Exactly.
But Facebook and Twitter, etc. keep fans' contact info from the artists. You can't effectively engage fans if you don't know who they are, or how to contact them away from any particular web site.
a mix of audio coin and arena. say an audio coin is worth $0.01 and you have 1000 artists for example purposes. On the media player which cannot be minimized to the toolbar, but instead a consistent opacity of 10% while a song is playing and 100% when an ad is to be shown, you can generate $100K in advertisement revenue in a given month, which is then split to a per stream amount in audio coins. The fan gets 1 audio coin for streaming a song and 2 coins per social network share up to 3 streams and 5 shares making the maximum audio coin a fan can get for a particular song is 13, which is stored in their profile bank. Conversely, the artist gets 1 audio coin per stream and .2 coin for every share so the artist can make a maximum of 4 audio coin per fan, per song. A fan is limited to only making audio coin on a certain amount of songs per month, where as artists will make the sum of streams and shares and be distributed for cash value in the native currency on the first of every month to a maximum of 60% of the total audio coin. The remaining 40% would be invested in an interest bearing account that would be distributed quarterly as dividends. This 40% is the artist buy in to the service for shares in the company. The beauty of it is that the amount of the buy in is solely dependent on the success of your music and marketing and not an up front cost to upload songs. The fan makes audio coin that can be redeemed for music and merchandise purchases, but not redeemed for cash value.
I apologize for all the math and convoluted workings for hypothetical yet realistic services. For reference, visit arena.com and audiocoin.eu. I'm not affiliated in any way with those sites - just referencing where the proposed model idea came from.
"But Facebook and Twitter, etc. keep fans' contact info from the artists. You can't effectively engage fans if you don't know who they are, or how to contact them away from any particular web site."
That's true, but a service like Radioairplay does let you do this;
http://www.radioairplay.com
I won't use facebook for exactly the reason you cite - why should I bother if I can't close the loop? But with the service above, I have gained fans with whom I can maintain contact with, as they let me build a db of fans who have all opted in to actually being a fan. I can send mass emails, see who and where they are, and point them to my soundcloud, or wherever else I want. Their cheapest package was well worth it, and I will be using them again soon. Very exciting, and a service that allows me to interface with facebook without all the frustration.
Hi Michael --
Great headline & article.
My team and I strongly agree that a sea change is needed, which is why we run our own service to fill the void. It's an ad-free music video discovery blog we call the vt full of indie artists who are doing amazing work.
Later this year we're launching a subscription club for a full streaming service & indie zine to go along with, sort of a digital love-child of MTV and Rolling Stone magazine. Our financial model is radically different, basically communism for artists, and we've gotten a heck of a lot of support from across the music industry.
We've kicked off a pre-order subscription campaign and have already begun signing up subscribers. We don't want just anybody. We only want die-hard music fans. People who go to shows frequently and spend too much time on Spotify making playlists.
More details:
http://www.thevtblog.com/subscribe
Happy to talk more anytime.
Best
Nick