Chad Taylor's thoughts on streaming services, Spotify, Pandora, Apple Music etc. Options

[dangum]

Chad Taylor
17 hrs · Edited ·

Taylor Swift opened the discussion but she didn't go far enough.

Spotify and Apple, as well as nearly every single steaming service, has borrowed heavily from the old .99¢ tape clubs when vinyl albums and cassette tapes ruled the day. ‘Join our service, get a large volume of free music, and hopefully you’ll stick around a buy some too!’

Artists weren't paid anything for those deals as they were carved out as promotional tools. Yes, we gave up our royalties but it represented a very small percentage of global music distribution in exchange for building new fans. In the case of Apple, Pandora and Spotify they're not a small carve out or a promotional tool, they represent the majority of the digital marketplace. It's not some small sliver of royalty based revenues, and it's not being run as a promotional platform, except to the extent that our music fueling sales of their hardware - computers, MP3 players, cell phones, headphones, Bluetooth speakers, and even those pesky monthly subscription fees for your digital streaming (conveniently packaged to keep these "transactions" above board)!

In my thirty-years as a professional musician, I've never seen a more upside-down environment when it comes to the exploitation of an artists music for corporate purposes. This is really saying something given the excessive money-grab of the compact disc heyday of record company profitability. In fact, the same methodology of was applied to music catalogs and royalties for the then revolutionary compact disc. Artists were told, ‘this is just an experimental product for us.’ The labels charged music consumers double and cut artist royalties in half. Suddenly the vast catalog of a music label was reborn, revisited, repackaged and sold for record profits - who else bought a Chess Records box set? - I did. In today’s marketplace, digital steaming represents an even great cut into artist royalty rates.

No one could have imagined that the decadent ride of the compact disc era could be replaced by one that would only drive musicians further underground. Steve Jobs did the unthinkable, he stole decades of hard work by fooling record companies into thinking that his iPod was just another media device (MP3 players had been around). Those suckers gave it away, but now they've taken their lumps and they're smart enough to know to get in on the action.

The streaming music providers are both public and private companies that have recently earned multi-billion dollar valuations, based primarily on their ability to deliver vast volumes of content in the form of their music catalogs. The record labels have done nothing to ensure that artists receive fair royalty rates as the labels remuneration has been through equity/stock, and the rapid growth potential of these stocks. Who gives a shit if their artists earn any money as long as the valuations of their own companies/investments increase?

Note that the labels flattened themselves out during the digital downturn, letting thousands of music loving employees (the real backbone of the industry) hit the unemployment lines. So many great people, who helped build careers like mine were simply hung out to dry.

The exchange between the labels and the new digital distributors is fairly simple; the label grants access to its catalog of music to the digital streaming service for a very low "industry standard" rate, in return they'll receive preferred equity in the new content platform. The artists, who are bound by long term contracts, have no say in the deal and the labels have successfully argued that they purchased (intended or not) the right to do this type of transaction.

The record companies are only contractually obligated to get their artists fair market value in terms of a royalty rates for new experimental technology, and even then it can be discounted to seek new methods and mediums of distribution (read Spotify, Apple, Compact Disc or eight-tracks). The labels themselves cut these not-so-artist-friendly deals because they see little to no upside in fighting for higher royalty rates when the real profitability is baked into the stock acquisition.

The labels are not offering artists any of the stock because the record deals were negotiated long before streaming music or stock swaps were a consideration. The only artists in recent memory to beat this system are Dr Dre and Trent Reznor when they sold Beats to Apple (nice job gents - you win).

I gave up on earning any portion of my income through royalties due to this system. I encourage young artists to stay far away from a label system that has no interest in their well-being or for that matter the well-being of music in general. This isn't to say that artist development isn't important, it's just not worth the cost of doing business with a label that can, and most likely will sell you down the river.

The labels themselves are under huge pressure to maintain earnings in a shrinking market, so you can't blame them for seeking these investment opportunities (capitalism is what it is). Regardless, this practice is at the expense of the artists that built their success in the first place. Labels didn't protect their copyrights, negatively impacting artists but the silver lining for the labels was the global enterprise value of the content within their control. There is no silver lining for artists.

If you want to support the arts, get involved when artists offer you direct sales opportunities because at least then you know the most basic details of the transaction.

Streaming music might be easy on the consumer but make no mistake, some emerging artist is suffering while massive corporations are reaping the rewards of the next IPO or increase in market share.

In closing, I'd also say that I'm not complaining. I saw the writing on the wall and was able to diversify my personal interests and financial stability into other fields. It gives me a unique perspective to ponder just how hard it would be to make a living from music sales alone. I see how corrupt and self serving the label system is today, and I also see how it's pretty simple to turn on a streaming music service and get access to nearly everything. You just have to know that it comes at a cost, whether your paying for it or not.

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