Stormy Weather: Does Cloud Computing have a license to kill the music industry?

Spotify has revolutionised the way I consume music. £10 a month gives me every tune I want and if your music isn’t on Spotify I’ll ignore it. I won’t even bother to find it on the torrent sites, I’ll just move on and listen to something else. As a paid up subscriber I’m not subjected to endless commercials; I can stream music from the cloud everywhere I go via the Spotify client my iPhone and with so much choice on the service, being bored is a distant memory. That’s where I am as a music consumer now. There are four iPods somewhere in this house; I haven’t picked one up in years.

So I’m a happy customer; I’m spending money and I’m staying on the right side of the law. What’s the problem? None for me obviously, but for crowds of delegates at MIDEM there’s a big one. The Music Industry is struggling, yet again, with how it distinguishes between ‘ownership’ of music and ‘access’ to music, and crucially, who gets to the keep the money earned from the use of its copyrights.

So what exactly is upsetting everyone? The primary issue that artists and their managers and record labels have with Spotify is that, in their opinion, the royalties paid per play to the artists and performers is pitifully low, especially now that Spotify’s paying subscriber base numbers 3 million. At first glance it would seem that Spotify is being extremely tight with its money, but not everyone sees it this way: Glassnote Record’s Daniel Glass has plenty to say in support of the service. 

And of course the now well-known counter argument to the Spotify stinginess is that the amount paid per-listen on Spotify is greater than the worth of a daytime play on BBC Radio 1 per-listener. But there’s a problem in comparing these channels: it suggests Spotify is like a radio station, albeit one that plays requests on demand. That’s clearly not the entire picture. Spotify has replaced my CD and MP3 collection completely, I only use iTunes for podcasts and app purchases now. Yet on the radio, George Ergartoudis gets to choose what I hear…

And there’s that word again: rights. Nothing excites the delegates at MIDEM more than a discussion over who owns what and what on earth they allow people to do with their property. The Music Industry old guard is being very vocal on the issue of piracy again. Witness U2 manager Paul McGuinness complaining that Google serves up as many returns to pirate sites as it does legitimate sites. He points out that Google is not just a neutral librarian on the net, it makes money from serving up adverts together with its search results. Google is, in fact, one of the most successful advertising platforms the world has ever known; shouldn’t it rank lower or even ban those who break the rules? And how come Google gets to earn from promoting piracy?

Piracy was what the (now dormant) SOPA bill was all about, and was never far from anyone’s lips at MIDEM this year. But bored of the same tired arguments against piratebay, bittorent sites and the infamous Megaupload, the industry has turned its attention to those who actually do stay on the right side of the law. Legitimate businesses, but business playing by rules that the industry wants to change.

For example, online data ‘lockers’ . You upload your (legitimately obtained) music to a web service that stores the data and they give you access to your tunes wherever you are. In the age of Cloud Computing that seems innocuous enough; you wouldn’t expect to pay Universal Music Group every time you accessed your music from a hard drive in your lounge, so why should you pay them to access it across a cable that’s just a bit longer? Or from a drive you’re renting rather than one you own? Some quarters of the music industry think you should pay them for this right (possibly as it’s having such a huge effect on sales); the web industry is not quite so sure. And of course, there’s not even consensus that the data you bought is yours in the first place! The music industry says your download is a purchase but you have no rights over the data beyond what’s carefully written out in their terms and conditions. Isn’t that a license then, not an end sale? Witness the incredible spectacle of Eminem suing his own record company Universal over the contractual status of online sales, and then reflect on what effect that will have on every record company if he wins…

The storm in the computing cloud is looming; the Music Industry, which has suffered so hard from the fall in CD sales, has failed to see Digital Sales revenues make up this shortfall. And as consumers move from ‘owning’ music to ‘accessing’ it online for next to nothing the growth in even that revenue stream is losing momentum. This could be the knockout punch to the idea of ‘selling’ music, and where does the money come from if we can’t charge our customers? And if we can’t charge our customers, how do we survive?

At MIDEM, there was a lot of debate but no one seemed to have the answer, at least not yet. But there were many voices, many positions and one thing we can all bank on is this issue will run and run and run until the cash runs out. I’ll give the last word to Kevin Roberts of Saatchi and Saatchi speaking at the show’s Visionary Monday conference:

 “I haven’t got a clue as to what business model is going to work… We live in a ‘VUCA’ world – a world that is volatile, a world that is uncertain, a world that is complex and a world that is ambiguous.”

Make of that what you will. But I bet it won’t be money.