Music Streaming Services - friend or foe to the musically gifted?

Am I the only one who finds the heat that Spotify and Apple take for how much they're compensating artists a bit bizarre? Ungrateful might be a better word. It seems that the artists, fans and labels have all had an episode of amnesia- have they forgotten that, until streaming services like Spotify arrived, labels were all being bled dry by file sharing sites (Napster anyone? Torrents?) 

I think the music industry needs to take a step back. Of course, artists need to be fairly compensated for their work but I think they need a reality check on what fair means here. Ask yourselves- what are you paying for on Spotify and Apple Music? Is it the music? Last I checked, I could listen to almost any song in existence on YouTube for free (with the odd advert I inevitably skip) or, like many naughty consumers out there, I could download whole discographies with 0 charge off of any number of dodgy websites out there. 

Music labels and the artists they managed used to be like diamond dealers. Limited supply, expensive supply chain, high demand, high value. With the internet, the barriers for competition have fallen, the cost of production and supply have plummeted. In the music industry of today, diamonds can be made synthetically in someone’s basement and anyone can order them with same-day delivery on Amazon. The economics of the industry have shifted, with value dilution impacting even the most popular and powerful artists out there, and there’s no getting around it. 

What we’re paying for on Apple and Spotify is the way in which we consume our music. It’s the algorithms, the playlists, the radio stations, the suggestions, the experience. That’s the differentiator; that is what has saved the artists and labels and allowed them to make any money at all off of music streaming on the internet. In that value equation, the streaming services are adding more value to the consumers than the artists. The revenue distribution should reflect that.

These companies should be treated like messiahs, not vilified in the media as musical sweat shops. 

If labels and artists want to get more value off of their music being on these platforms, they just need to rethink the value exchange beyond royalties. Music is just one of three products that the music industry pedals. You’ve also got events and merchandise. The benefits of having your music on a platform like Spotify with lots of consumers listening to it is the data. Spotify’s algorithms will work their magic and put your songs in the ears of all the listeners who are most likely to enjoy them. You expand your fan base with that alone, but you can also see who’s listening, who they are, what they do, what else they like to listen to and all of that is gold dust. 

Let’s think of what that means for events; the gigs and concerts. You can see exactly where your fan bases are, where they’re strongest, where they’re growing, where they’re shrinking, where they’re missing. Using that information, you can intelligently plan your tours. It can be a lot smarter than just touring where the hot spots of popularity are. Want to grow your fanbase? You could look at the areas where your fan bases are just developing and super charge them by playing shows with local acts with high popularity and overlapping audience taste profiles. Where is worth investing in bigger venues? What types of shows do different markets prefer? You could even tailor the set list according to local preferences. You could approach sponsors you might not have even thought of based on the types of consumers you’ll be attracting. If your music attracts 23 year old women, not 35 year old men, then you’d probably get more interest out of Smirnoff than Heineken. 

The same logic applies for merchandise- what kind of stuff you make, what fashion companies you might collaborate with, what markets to target, when to target them. Data completely changes the game.

A lot of artists already think this way, many don’t. But Spotify is Absolutely aware of what they’re sitting on with all of this data. They’re exploring more and more ways that they can use their data with brands, and they clearly get what they have to offer record labels. That’s why they’ve become one. On October 20th this year, Spotify announced the launch of RISE and revealed their first artist signings. They’re going to be a force to be reckoned with in the music industry, jam packed with data-driven kick-assery and competitive advantage. But, they can’t sign every artist in the world, so they’ll undoubtedly keep allowing artists to access and use the data from their platform… just maybe not as much of it as those in the RISE family. 

I hope I never have to read another article painting these services as the bad guys. If you don't like them, hop in a time machine and go back to the good old days. They're actually the good guys, and they have a lot to offer if you think outside the royalties-box.