The Evolution of Music: The Fan Economy Era
Michael Pelczynski
Chief Strategy & Impact Officer at Voice-Swap; Founder at Forms + Shapes
Music streaming undoubtedly reinvigorated the music industry. Like every format before it, there is a cultural and commercial transformation that accompanies technological innovation.
It redefined how fans listen to music, how digital piracy’s been addressed since the early 2000’s, and ultimately contributed immense value to music listeners, artists and rightsholders alike. Streaming leveled the playing field of access to the world's music. Discovery — of an artist, song, genre or zeitgeist — has become a commonplace experience on digital streaming services. On many of these services, listeners look to algorithms to measure the common threads among their collective behaviors, expanding their desired musical identity.
However, a decade later, streaming has also obstructed the industry from creating an environment that drives deeper connections between the fans and the artists they love.
Portions of every listener’s monthly subscription fee goes to artists they don’t even listen to.
Algorithms have the ability to push a listener’s attention into echo chambers. The cultural impact of the format has influenced songwriters to shorten song lengths, further devaluing longer format works. Many artists feel pressured to create music in pursuit of quantity of plays and commercial success, which is often at odds with the quality of a fan base and creative freedom. A singular playlist slot became more valuable than fan affinity or love affair with a body of work.
Recommended by LinkedIn
Why? Because music streaming’s foundation is built on something called ‘pro-rata’.
Over the past four years, SoundCloud has dedicated efforts to solving this complex, fundamental issue with a holistic solution. It not only reshapes the bedrock of how artists are paid, but also lays down a foundation for a fan-powered economy that rewards genuine connectivity between artists and their most avid fans, giving artists more access to and ownership over their audiences. Above all, this solution reconnects value to fan affinity -- which already exists but is undervalued. Of the technological innovation over the last decade, this is the economic innovation to meet it.
This report is using in-market user centric licensed artist & fan data. This report will give readers full disclosure and insight into the impact of Fan-Powered Royalties thus far, the commercial opportunities the model creates, and the value of our committed efforts in further developing a fan-powered SoundCloud.
– Michael Pelczynski, Vice President, Strategy, SoundCloud
Manager, Partner Engineering, Music Publishing, EMEA
2yCongratulations Mike & SC team! Making an impact!
I help businesses grow rapidly and perform at their best with marketing strategy and execution
2yWhat you’re doing is fascinating, Michael Pelczynski, and you’re focused in the right place where economic creativity must be applied to disruptive technology to move industries forward. Consumers rule and we chase the markets. We build new models to advance our missions through observation and critical thinking of the systems. So many artists are focused on streaming payments and don’t broaden their gaze to see the full picture now and throughout the history of the industry to understand the market, it’s players, and it’s potential. They don’t see that Spotify is so underwater in its model it’s unprofitable as it pays out 70% of revenue to rights holders and 90% is captured by the top 1%. 80% of artists with 22 million tracks have fewer than 50 followers and the majority have just a handful of plays. This essentially mirrors the same market as the peak of physical media sales in the late 90s as well as the $0.99 iTunes download. Consumers have always mentally budgeted around $100-$150 a year in spending on recorded music. They spent it in 1998 on just 4-6 records a year, today it’s a streaming membership. Or, patreon payments. Those are the record sales today. Streaming royalties are the next step in small fan bases.