Friday, April 3, 2015

The New Business Model: Spotify

It's definitely no secret that the music business has been shifting throughout the past 15 years, but what does still seem to remain a mystery is which solution is going to prevail as the best way for artists to continue develop new material and, well, get paid for it?

May have cracked the case on
consumers 'new' attitude toward music
I think many artists/musicians might agree that Napster was to 'blame' for introducing the idea that a potential listener might be able attain art (music) without paying for it.  Obviously, at the time many people were up and arms about this idea, including both fans and musicians alike.  Some argued the positive:  More exposure is simply better.  A listener that is able to attain the music for free might be more likely to "try out" the artist as one of their potential favorites.  In turn, they learn more about the artist and become attached in a way that may not have been possible had they not been able to test out the sound of a particular artist.  More importantly, they might do one of the only things that seems to get an artist paid nowadays (at least a major label musician) which is to actually go to a live show.  More than money, for the musician, this is a chance to make a more eternal connection to a fan.

But then, some argued the negative:  Exposure isn't the full reimbursement for time spent, or better yet; emotions spent.  Some people simply want a collection of songs and just because they download yours for free doesn't necessarily bring any additional benefits.  Regardless it was illegal.

To me, I felt this was, more than anything, a chance to re-analyze our consumer.  The fan.  Rather than ask pro/con questions about giving music away for free maybe the better question is WHY the fan wants it, and is WILLING to take it for free?  Is it possible that our consumers attitudes toward music creation, and dare I still call it: "art" has now changed?  And might it have happened before Napster cracked the case wide open?

Why and when did this shift happen?  Without research and without any real basis for an argument you might say this all happened around the time that record labels were doing what I call:  "Hire for Single."  Nowadys this would be called a "Development Deal." But "Hire for Single" worked differently in the early 90's.  My definition of this, was when a record company would hire a band/group/artist based on a single song they were interested that the artist had written.  At that time, people would buy records for a single song.  Why?  Because if they wanted to listen to that song over and over they had two choices:  Buy the 12 song record for about $13.99 or pull out your overdub tape and record it off the radio (In hopes the DJ didn't attempt to ride the 12 second lyric-less ramp of your favorite song talking about the stations latest promo.)  Simple as that.  Here's the other kicker.  You had to listen to the radio A LOT (maybe 2 or 3 hours) to get a chance to hear that favorite song because then, Top 40 radio played an amalgamation of hits from ALL different styles.  There was competition.  There was open mindedness.  Let's say most people opted to buy the CD if they loved a song, many times only to find out the other 11 songs on the CD were nothing but fluff more than likely produced by someone else and even sometimes was overtly different in terms of lyrical or musical content altogether.  To me, this is where the notion that a group might "Only have one good song" was created.  And to be clear, YES, I am blaming the record labels.  Mostly for pushing through a radio worthy single to sell a fourteen dollar record and fully understanding while doing so that the artist would more than  likely fall off soon after never to be seen again.  Then, it was a proper investment.  You could make a lot of money off of one song.  But this put many artists as a group in a danger zone with their fans.  Why do consumers want music for free?  Because they don't TRUST that they are going to receive a great all around product.  The music, just like large canvas painting, is an investment in their eyes.  It is also a reflection of personal taste.  If, as a sample (a radio hit), we deliver a certain taste in order to sell records, only to deliver a lower quality or different taste all together once the money is exchanged we run into a problem.  We gave them a good reason to be skeptical before buying.  Bad move.

But, back to our question:  "which solution is going to prevail as the best way for artists to continue develop new material and, well, get paid for it?"

Spotify is one of many streaming services.
As online resources for bands have evolved we have seen MANY artists somehow break through the overpopulation and be offered opportunities.  YouTube, namely has stayed consistent as a common vehicle to both stream videos, but in a lot of cases also stream simple audio.  As usual (and rightfully so) the labels have pulled back on the reigns and cried copyright infringement as people are posting songs they don't own for free streaming.  Still, there is something lurking here that works.  Streaming songs but not "owning" them is quite possibly what our consumer wants.  The chance to test the waters in a controlled and quality environment.  So what is the new business model?  I think at this juncture it might be safe to say that music streaming based on a Freemium approach will bring back a lot of what we lost over 15 years.  Here, we can restore the the almighty payment that artists have been missing as their music continues to get exchanged for free.  Also, maybe over time, confidence in music can be restored among those "fans" we always talk about.  Non-committed access to an artists catalogue gives the fan a chance to test those waters with a nominal investment.  Better yet, they don't even need to commit to ONE artist in particular.  The benefits to streaming services could go on for days, but most importantly the chance to restore interest in exploring music and to me, that is what they offer.

Will these services become the way that potential listeners consume music?  Maybe.  But for now, we can at least continue to restore the relationships these investors have in the music we are creating.  If you are an artist, give them a chance to stream your music by getting on Spotify or another service and continue creating whole hearted records that you believe in front to back.