How Streaming Music Continues to Fail Artists

Streaming services could get fans as close to their favorite artists as they get at SXSW.
Streaming services could get fans as close to their favorite artists as they get at SXSW. That’s Alabama Shakes in 2012.

Perhaps it’s the news cycle, the launch of the next-big-thing or just simply boredom with the topic, but it sure seems like we’ve forgotten the meme of artists getting ripped off by music startups.

Nearly all last year this was a huge topic with artist like Thom Yorke and David Lowery menacing pitchforks at Spotify and Pandora. One of the major problems with the streaming services is they can’t have a frank and honest conversation about how much they pay for their content.  Because of their confidentiality agreements, they are bound to not discuss the financials of their deals with major labels. I’m sure it’s frustrating for Daniel Ek to pay out a billion dollars for the rights to music only to hear David Byrne call Spotify evil.

In December Spotify posted an extensive site that breaks down everything from the formula used to determine payments to specifically how artists are compensated. While the site lays it all out nicely, it kinda buries the real message to artists. The unsaid message goes something like, ‘We paid out a crapload of money for the music. But we don’t pay you directly. We pay the label, so go talk to them.’ Also it shows how future growth will make those moderate sized payments grow to gargantuan numbers, which you need to squint really hard to see.

Fair enough. At least when you consider music playback. But I don’t consider that enough and neither should artists. You see, streaming services really should be vibrant active communities of fans who love their favorite artists. But today, they most definitely are not. They are primarily flat, with stale boilerplate content and the charm of a filing cabinet. Even the recently launched Beats Music had nearly the same execution of artist pages as all the other services, (although I have seen some screenshots of a nice implementation of Topspin’s artist commerce in the app, so I’m assuming that the features will roll out soon).

What streaming services must do is find a way to authentically connect fans to the artists they love. And they should provide ways for the artist to directly speak to fans on their platforms. It’s one of the trickier problems for artists today. Fans are listening everywhere from Pandora to Spotify to Soundcloud to iTunes. But unless the fan reaches out directly through social channels or the artist’s website, they won’t know what the artist is up to. And if they’re not paying attention, a fan can miss it on those channels too.

Let’s take a “use case” as we say in product development. Let’s say I happen to be walking through Billy Reid on Bond Street and I ask the well-coiffed dude behind the counter what was that beguiling song emanating from the speakers. “Oh, that’s Lord Huron. Great band.” I pull out my smart phone, download it using my favorite streaming service and dig into it for the next week. But when I finally get around to checking out the band’s Facebook page for concert dates, sure enough they played in Seattle two nights before. Fail!

My service knows I like the band, since I’ve played it incessantly for the past few days. And since I have the app downloaded it also knows where the hell I am. So why can’t it suck in all the concert dates and let me know that I’m about to miss the band in a super small venue (The Crocodile in this case)? And maybe I couldn’t get to the Crocodile, but I should be able to buy a poster or a tee shirt, right? Maybe I want to connect directly to their @lordhuron and read all their updates while I listen. And why can’t it look at all the other verified @artist tags that Lord Huron is following to give me a list of bands that I might like?

Let’s keep in mind, my use case is of an, um, older demographic. There’s a whole generation of fans who crave direct connections with artists and their needs have yet to be defined. There is so much discovery work that needs to be done to figure out what those products and offerings should be. We’re just getting started on what the best product will look like and what people will need.

Services need to shift the way they are thinking about artist engagement. It’s not just a place where fans listen to music. It should be a place that unites the information and offers from artists to create a unified solution for the fan and also be a platform for artists to market directly to the fans that care most about them.

The bad PR streaming receives right now is because they haven’t scaled enough to make up the revenue difference in flagging physical and digital sales, and these services are hot so they become the punching bag. But the services do have the superfan, the ones that live and die for the artist. They might still buy all the band’s CDs. They make it a priority to see the band when they roll through town. They might even buy a $1500 ticket to take a cruise or travel long distances to see a festival.

Solving this problem should be one of the top priorities for every service out there. Until the day that happens, we’ll be talking about the micropayments for plays and waiting for scale. I’m sure this is discussed at every service, as we used to talk about it all the time. There have been a few early initiatives, like Spotify’s integration of Topspin commerce into their desktop applications or Rhapsody linking Bandpage’s Experiences within their apps, it hasn’t been focused on mobile and personal, which are the two key ingredients for the fan to take action. Addressing those valuable modes will power increased engagement and, hopefully, revenue.

Trust me, I know all too well the jammed up product roadmaps that services must juggle. There multiple competing projects all the most urgent priority. But completing this work will go a long ways toward changing the conversation and building new value for both artists and streaming services.

Links for the Obsessive

The GuardianWhy David Byrne Is Wrong About Spotify

MediumWhat Streaming Music Can Be

WSJ (Requires $$$): An Ode To Joyous Streaming

Hypebot: The Barriers of Music of Music Listening: Past And Present

Viacom BlogMTV’s Music to the M Power

Post-cociousDavid Byrne Tells Streaming Services To Get Off His Lawn

Ellen DeGeneres

The Beats Formula For Streaming Music’s Happy Ending

Close your eyes. Good. Now let me ask you to imagine something. A product that has every song ever recorded, available for you on the devices you use everyday wherever you are, regardless if it’s at home, work, the gym or even places where you don’t have a connection, like the subway or on an airplane. Sounds pretty sweet, right? Any song you can think of, available at your fingertips.

At its crux, that is the promise and marketing pitch for every all-you-can-eat music service that has come out in the past decade. It’s a pretty cool product. And lots of consumers gave it a shot. Only problem is nobody wanted it.

Okay, okay, I’m being a little provocative. When I say ‘nobody’ what I mean is only the most hardcore music nerds—those people who obsess over their playlists and the perfect collection—were willing to pony up the $10 a month. Certainly not the number of people who’ve signed up for other access products, like Netflix or Hulu, or even other music products, like the satellite radio giant Sirius/XM.

Which made it kinda strange when Jimmy Iovine and Dr. Dre’s Beats By Dre headphone juggernaut bought the failing MOG subscription service and planned to relaunch it. Great, just what the industry needed. Another subscription service. But they had another idea.

Jimmy and Dre, along with Chief Creative Officer Trent Reznor, decided that the streaming services had it all wrong. Nobody wants 20 million songs. Music fans want 20 awesome songs for what they were doing in a particular moment. They want them picked and sequenced by someone who knows lots about music. And the company thought that most of all, they want the stamp of approval from a music legend. Like someone who produced one of the greatest rock records. Or an artist/producer who redefined music. Or the lead singer of one of the most innovative bands of all time.

In a nutshell, that’s the Beats Music product. Music designed for the way you listen brought to you by music people you trust. And while the product launched two weeks ago falls well short of delivering those lofty goals, the positioning is so different than the zillion or so other companies now crowding into the space that it might work. Maybe. If Jimmy and Dre can market it like they did headphones.

You see Jimmy and Dre turned headphones—which used to be either a cheap commodity, or a high-end specialty item—into a must-have cultural icon that people would drop $300 without blinking an eye. Why? Not because of quality. Not only because of quality. There have always been high quality players and Beats By Dre headphones don’t always win the best headphone bakeoffs. It’s because everyone you look up to is wearing them. Like Super Bowl champions. And celebrities. And the hottest rappers. When they first launched, it had the stamp of approval of Dre. When he’s recording the next superstar, Beats were the headphones he used. And you could trust him.

So it’s that combination: a differentiated product with an imprimateur that consumers trust, and the marketing muscle to sell it to people who have never heard of Spotify, Rdio or Rhapsody. Beats Music says they’re going to get behind it in a big way. How big? Well, they started with a Super Bowl commercial featuring Ellen DeGeneres. But the company is promising to do much more. And they’ll have to if they want to have a lasting impression, because compared to headphones, marketing streaming services is a tough sell.

So will it work? Can Beats Music extend the Dre-pire and sell the value of streaming music where all the music nerds failed? Yes. If Beats can continue to improve the product so it delivers on the promise of ‘music so right it’s like magic.’ If they can make it effortless to subscribe by adding it to your cellphone bill for cheap. And if they can market it with the sheen and style of Beats By Dre, we will have the hit that the music industry so desperately craves.

More for the obsessively curious

Podcast: Can Beats Music Crack The Mainstream

Spin: Is Beats Music All Its Cracked Up To Be

NY Times: Algorithm For Your Personal Rhythm

Hollywood Reporter: Ellen DeGeneres Reveals Her Super Bowl Ad

NY Post: AT&T Delays Big Push as glitch hits Beats Music

Broken Bells To Streaming Fans: We’re Breaking Up

Broken Bells, the project of super producer Danger Mouse and Shins frontman James Mercer, released its second record today. You can go buy After The Disco on Amazon or iTunes. But if you’re one of the many people subscribing to a streaming music service like Spotify, Rdio, Rhapsody or the new entrant into the space, Beats Music, you are out of luck.

Ten bucks a month won't get you the new release by Broken Bells.
$10 a month won’t get you the new Broken Bells on Rdio.

You see the band (or their management) decided to ‘window’ the release, that is allow a time when only people in retail outlets have exclusive access to the record. Why do they do this? The reasons vary. But the prevailing one is that there’s a belief that subscription services are affecting retail sales of the releases. So they believe if fans can’t listen to it on Spotify and the likes, then the fans will be motivated to buy it and then everyone will be happy, right? Not so much.

You see, this infuriates customers of services. They’re paying real money for access to all the music. And when they can’t get a new release by an artist they love, those people at the services hear about it. And while some understand the intricacies of the windowing strategy, most don’t care and rightly so. ‘I subscribe to Rdio. I can’t play it on Rdio. F’ Rdio.’ Need proof of this: look at the Rdio ‘reviews’ on one of the most infamously windowed records, Taylor Swift’s Red

It’s my contention that windowing eats away at the value proposition of streaming music services. Customers sign up expecting that they can play anything released. When that doesn’t materialize the customer asked what the hell they’re exactly buying. Reactions to this problem range from mild irritation to quitting the service.

Let me also point out that the timing of Broken Bells windowing could not be worse. On Sunday Beats Music bought a Super Bowl ad featuring Ellen DeGeneres for their brand new subscription offering. The company is throwing down serious marketing dollars towards the launch. A bundle for a $15 family plan service with AT&T just started. If anyone deserves a pass on this inane business strategy, it is Beats Music.

Artists and management have a bunch of popular misconceptions about streaming services and releases. Let me try to debunk a few of them.

Streaming services are free and I don’t want to give my art away for free. 

While it’s true that Spotify and Rdio have sizable free audiences, Beats Music and Rhapsody are 100% paid customers. So why not hold the release back from the free services and only have it for paid customers of all services?

While I’m no fan of freemium services, the theory goes that every free customer is someone who may one day be so blown away by the experience and value that they’ll end up plunking down their credit card. Removing new releases eats into the value proposition for the service and makes a prospective customer question whether they should subscribe.

What’s the difference between a $10 subscription and a $10 CD?

Customers of streaming are worth a whole hell of alot more than $10. Some services report that their best customers have been with them over two years. That’s $240 in revenue over those two years. Sure some of these people used to be heavy purchasers and they’re getting great deal. But the idea is to build this product with such great value that you’ll grow a huge base of streaming customers who will be around forever. Since Broken Bells self titled released in March 2010 and now, I’ve spent $470 in subscription fees to have access to all the music. If I loved Broken Bells and bought both records, that would have been $20.

Hey, I’m just selling the record on iTunes. They can go buy it if they want to. 

Yeah, that’s true. But let’s be clear about the music consumer in the digital world. It’s a crappy experience. You could be a heavy iTunes downloader and it’s great. But from my years doing product research at Rhapsody, it’s clear that the customer is cobbling together an experience from several different services. Outside of iTunes or Amazon downloads, fans also use a bit of Pandora, maybe use a streaming service, some have a catalog of music. The reasons for this are all over the place, including that the experiences vary widely in ease of use and cost.

But when an artist or management decides to hold it back from streaming the message is clear: I don’t approve of the way you’ve chosen to listen to music. Please change your behavior.

And it might work. A few hardcore fans might go buy the record. Most won’t. Who gets most hurt by this?

The fan.