The future of music distribution

I have to stop writing this blog… at least for a while. My intentions were (and they still are) to write things that are useful for aspiring musicans. And I will continue… however, there are some facts that made me reconsider everything I knew.

Three weeks ago I went to IMSTA_FESTA … and I had the opportunity to participate to a seminar held by Young Guru (for those that don’t know the guy, please check him out online - he knows his stuff really well, he produced 10 of out Jay Z’s 11 albums, he was the first to go ProTools years ago, a pioneer of the new technologies). He said at one point that the future of music belongs to streaming. Well, I’d noticed that, but somehow, I said to myself, that there are all sorts of opportunities and it is up to every one of us to explore them.

Then, a few days ago, the legendary Canadian producer  Bob Ezrin (Pink Floyd, Peter Gabriel, Alice Cooper, etc) posted an article called: “Please don’t let this be the day the music died!”. Please read this article, it is extremely important for everybody working in music business.

I started to think about it, and try to put the puzzle pieces together, to better understand what’s happening, why it’s happening, and what can be done about it! I will deal with the first two- “what” and “why” in this installement.

Until now, revenues came from the sales of vinyl or CD. The label and artists had a cut of it (large or small, that’s not important for now).

Then, internet came into the picture and the income of the record labels/artists dropped dramatically, for many reasons: sales of a song instead of a full album, piracy, and many others. In the beginning, internet sales were a reflection of the old ways of doing business, then the business model started to change. That can be a long article in itself. So now, we have the streaming. Let’s look at the revenues from streaming: for 100,000,000 times hit play, the record label/srtists are making between 130,000 to 220,000 dollars; in Canada it’s even worse, only 10,200 dollars, less than 10% they get in US! The Bob Ezrin article should be read by everybody, and we need to take some action. That means the price per play is 0.0018 dollars (0.00012 in Canada) per song.

What exactly does this means? What really happened here?

It’s pretty simple actually: as CD sales started to drop and while record labels were looking for opportunities to make money and were fighting against piracy, the guys at the forefront of the internet - starting with Apple, followed by Google, and all the streaming services and others, saw a huge opportunity, and they build a system where the distribution takes the lion share, without investing a single cent into artist formation. Corporations are looking only at the bottom line: profit, period.

These corporations understood that people are looking for convenience and they are offering just that. However, that is not the whole story!

When people bought a vinyl or CD, they got to play the song as many times as they liked it, and they got the graphic art and all kind of info about the band, producers, the lirycs, etc. While today people get to listen, they do it without all these auxiliaries. But not for long: Apple anounced the “Mastered for iTunes” which actually has nothing to do with mastering, it is just a system that allows them to get the artist’s work at a much higher quality, from which they distribute the songs at the quality the end listener is limited through his devices. Here is the catch: in time, a new generation of hardware will be made, people will buy again, because generally they appreciate the better quality, so other bilions of dollars will be generated right there.

You know, I am probably an old fashioned guy: I like to have my own stuff, my CD’s and vinyls, and yes, I like the better quality of the super audio CD’s ; I can appreciate the difference between 24 bit and 16 bit, and I have the tools to do it, but that’s because I do what I do. The delivery of the tomorrow’s music will be controlled and all the profits (or the biggest chunk of it) will go into the pockets of these corporations, who will impose their will with regulators (you need to have the money to do that, which they have!).

And here is the biggest catch at all: many believe that streaming will basically replace the radio! WRONG, WRONG, WRONG!!! What the streaming companies pay to label/artist will be in the end the final revenue for the music, and it is much lower that what’s generated by CD, vimyl and internet sales combined as of today!

Radio was mostly a means of advertising, the major labels especially controlled to a large extent what was aired, so people listened at home and in their cars and then they went and buy the CD or vinyl. Streaming basically does not replace the radio: it is the means of delivering music to the end listenenrs, who are paying a fixed amount of money per month and they can choose to listen to whaever is in the catalogue of the streaming service. Of course, the majors will be paid better than the rest, as they have huge and very valuable catalogues, so they get better paying contracts. However, even they will take a major hit, as the biggest amount of money goes to the streaming services. But instead of investing in music developing acts - which is what major labels were doing – streaming/internet companies are investing in their network and delivery – which they are doing it anyway, as music is not the only thing they are delivering. Majors will have less and less the financial means to produce like before, to groom acts… we see it already!

When you buy the CD/vinyl you can listen to a song as many times as you want; you can load the song in your digital devices- computers, laptop, mp3 playes, etc; when you tune in a streaming service, you can do the same, but only for the time you pay for the service! The listener will not own a copy of the song! If he decides to stop paying the service, he will have nothing.

If you look at the grand scheme of things, here is my take: being connected will provide access to everything, but, at the same token, that everyting be completely controlled by the service providers and the multitude of catalgoue accessing contracts the manage to make. We kind of all know that everything we do is traceable; what is less clear is the impact on the human spirit and freedom, as controlling everything around an individual transforms him into a complete entity that can be manipulated and controlled.

Going back to music, even the graphic part and all the info included in the CD’s or vinyls will be taken care; there will be a couple of TV screens in every house, so, whoever wants to see it, can do it easy.

I am a bit scared, and I already know there will be guys saying that I’m from the old school. I am quite sure that I will be told: “Well, the market… it’s going to take care of itself!”  Sure, it will, but that’s bull! That is why we choose representatives, governments, to ensure that, overall, everybody has a chance, and the payment for work is within decent limits. And we know how this works, just read Bob Ezrin article – the governments are not really working for you!

I am scared because, the way I see it, the ramifications of this evolution will affect everybody’s livelyhood! Listeners will be controled and have to pay disproportionate for their entertainment, the music creators – no, not only the artists, but everybody in the industry - producers, A&R, managers, recording, mixing and mastering studios, PR companies, graphic arts, tour support companies - they all will be hit tremendously, and made to work for peanuts.

One of the biggest mistakes was done by the guys at RIAA (they represent the majors): like corporations, they cared only about profits, and, in their fight and panic to make profit, they forgot that what really creates value is the music, the artist, and the whole structure that supports him; at least, they knew how this works, while Apple, Pandora and the likes really don’t care about it, but they basically increase their control of the music sales day by day!

The situation becomes more serious every day, and we all have to stop, take a break, think about it and see what can be done to maintain this artist-consumer connection to some decent levels and allow music to be made and enjoyed. There are ways to go around, and it is up to each individual to put the effort and do it. Like every other system of controlling, there are certain limits, and there is one thing that gives me hope: it is about creation and inventivity, and, the same way the streaming companies and the likes increase the control, the musicians can do something taking the control in their hands, using the same technology.

Stay tuned,

Flo Fandango

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