Artists, Music

Why we will always steal

If you’re attached to the blogosphere you have by now heard some of the myriad discussion going on because of an intern and a teacher. At issue is the legal vs ethical (sometimes called moral) and the socially acceptable process one uses to grow their music library, how you rationalize your advantage (aka access) and/or legitimize it. Not to mention the generational obfuscation made more apparent due to technological advances. It’s unfortunate that we’re having this discussion. Not because the subject matter is not important or valid, but because the remedy to this problem speaks to generational perceptions about morality. It’s easy to sit on one side of the fence and bemoan the lack of support one gets for all their hard work and against a system (like popular search engines) that makes finding and obtaining free stuff as easy as making mud pies. Or, to coyly snicker about the prevailing trend of society that makes getting/taking items for free an acceptable fad “everybody’s doing it”. Undoubtedly human nature is what it’s always been, often lacking the control mechanism to resist taking advantage of a nameless, faceless owner of products (especially when wearing the internet mask). Such was the case in London last year when during widespread rioting people that normally would not walk into a store and out with unpaid for items did so because for some, the prevailing mood and trend (however short-lived) made them willing to risk getting caught because so many were doing it, making it appear that the odds were in their favor to walk away unscathed.

In reality we’re all ” sticking it to Da [proverbial] Man”, when through our actions we carelessly regard others by design or default, the outcome is invariably the same. We’re inherently selfish and self-serving, and as social trends and mechanisms continue to obscure respect for the property of others through terms like “Freemium”, we’re not getting better neither is this seeming advantage to obtain all at “no or below cost” a greater expression of the freedom we claim to fight for in every war, but we are worse than those we call enemies if in impunity we take without purchase that which under threat of punishment we would be obliged to buy.

Music Business

Spotify isn’t good for you

This article appeared on the Trichordist recently 30 April 2012

If you remember the old “Life” cereal ads, they featured kids who didn’t want to eat Life cereal because it was “good for you” so who would like that? Test it out on “Mikey”, the hyper critical eater—”Give it to Mikey, he hates everyhing!” And surprise, surprise, Mikey likes it.

So it is with Spotify. Mikey may eat it, Mikey may even proselytize about its wonders of valuation, but Spotify is not only not good for you, it’s actually bad for you. The good news is (maybe) there’s something every artist can do about it. Unless, of course, they listen to “Mikey”.

Here’s the proposition: From a financial point of view, Spotify’s payable royalties are neglibible–marginally better than a pirate site. (See “Streaming Price Index“) Spotify is, of course, a licensed service and it is encouraging to see investment pouring in to its coffers. Make no mistake–we’re happy it exists. The unfortunate thing is that Spotify is another example of reacting to massive piracy with a business model that in the long-term is nearly–although not quite–as unsupportable as the piracy it promised to help fix.

Spotify”s model is essentially a variation on Web 2.0, or as we say around the Trichordist, The Man 2.0. With the usual Web 2.0 company the users provide all the content and the tech oligarchs (or wanna be oligarchs) get all the money. (Like with Facebook, Flickr, YouTube, Google, Wikipedia, Instagram in no particular order.)

Except with Spotify it is the artists (and not the users) who create all the value and get none of the profits. Like other Web 2.0 darlings, the tech oligarchs build the platform, create none of the content and will get the lion’s share of the profits on Liquidity Day. Spotify is just a couple compass points away from oligarch status—call them mini oligarchs. In the meantime, Spotify profits from the artists and pay a laughable royalty in return.

So in the words of a famous revolutionary, what is to be done?

First, consider whether there is any benefit from being a Spotify stockholder. We think we will see that there is not much financial benefit. Then we consider how you can keep your music off of Spotify, even if you are a major label artist. Then we consider how you can force the company to pay a fair rate.

What if Artists Were Stockholders?

So who makes money? First and foremost—Spotify employees starting with Daniel Ek. These guys get a steady paycheck and have equity in a dark future for artists.

Next, venture capitalists who are the 1% of the 1% don’t forget. These VCs, especially Silicon Valley VCs, are some of the richest people in America who nearly single handedly brought you the stock market crash of 2000 when the last tech bubble popped in a frenzy of irrational exuberance.

It is pretty common stuff for these people to personify the long simmering rivalry (largely one-way) between Northern and Southern California. The Internet was a force multiplier that weaponized that hatred. This, of course, results in screwing artists. (See the embarrassing post “Kill Hollywood” by elite VC Paul Graham of Y Combinator, the home of digital chickenfeed: “How do you kill the movie and TV industries? Or more precisely (since at this level, technological progress is probably predetermined) what is going to kill them?” Search for the word “artist”—no matches found.)

And of course, another group of Spotify stockholders are the major labels who extracted equity ownership in the company in return for licensing catalog at ridiculously low royalty rates. The fairly consistent rumor is that the labels own 18% of Spotify, which at its most recent valuation of $4 billion is worth $720,000,000.

Here’s the twist—because the deal with Spotify is for the entire catalog of each label and not of any particular artist, it is doubtful that any artist will ever participate in that 18% equity. If you think of that 18% as being subject to the 50/50 net receipts allocation (the issue in the Eminem case), there’s a very easy fix to this.

Spotify can allocate another 18% of its equity to an artist stock pool. Artists would not need to own that pool, but it could be held in trust for all artists who ever have participated in Spotify and all artists who will participate in Spotify before the “liquidity event” that would turn that stock into cash—an IPO or acquisition, typically. All other terms of stock ownership could be on the same terms as the labels. And, of course—an artist would be appointed to the Spotify board with full voting rights to vote the full 18% block of shares.

These don’t have to be new shares—Daniel Ek and Spotify can hand them over from previously issued stock to give to Spotify’s artist ”partners” an incentive to stay with the company.



When Access Feels Like Ownership


by Franklin Purnell

Remember the days when you used to lug your record collection from place to place that over time could fill a small bedroom? The advent of cassettes and CDs, not to mention VHS’s and DVD’s that we kept on shelves before being transferred to boxes in the garage didn’t change things much either but you were proud of your collection and investment.

Come Mp3, downloads, hardware capable of storing thousands of tracks on a device the size of your finger, WiFi and whala!! Music streaming. No storage, no shelves to rearrange, no garage sale, no boxes to fit all that old music into while you relocate just the press of a button and all the tunes you’ve paid for access to at your fingertips, arranged in neat playlists to suit the mood of the day. The tunes of the past? No problem, somebody else took the time to upload all those old tracks onto a hard-drive maybe in someone’s garage that they’re calling a cloud. Hmm

So what’s the difference if you can access music 24/7 on multiple devices without the responsibility of actually owning it? Awesome huh? except our lives have become full of stuff we have access to but don’t actually own, it just feels like ownership. We just make endless payments to some company with a web address that we visit virtually or speak to someone sometimes in another country. We tell our friends that we own our cars, our homes, our furniture, vacation homes, until we miss a payment and then the real owner takes it back.

So what will total access to music without actual ownership look like? Well, stop making payments and your playlist info will be deleted, all the music you’ve savored over the years will disappear. Of course technology could make it possible to reconstitute what you’ve lost I’m sure. But just think of the implications, endless payments for access or streaming, how many albums over time will that amount to? The audiophile thinks nothing of the thousands spent on Records or CDs but the average purchaser that doesn’t necessarily consider these purchases as part of the house budget might differ. I like the idea of portability, building a song list of music that I like rather than having shelves full of CDs, records, or cassettes that often feature one or two songs out of ten or twelve that I listen to. Maybe over time the long tail of endless subscription payments may equal or exceed the amount of money spent on a personal CD/record collection. The ability to opt out of a subscription sounds good but leaves open the eventuality of having to rebuild a new song list from scratch. Sooo, about that download baby, now we’re talking storage again, yet this time my whole collection is in my living room, unseen, but heard through a device about the size of my hand.

Frankly, I prefer control over my purchases versus the concept access, unless its a gym or a club, let’s be real, access is just that, [access], not ownership. Additionally, I like the idea of not having to plug into a network just to enjoy music. In short, I want my privacy and real ownership. Making a playlist or just random listening that’s personal is a freedom I want to retain and not loose to a communal arrangement of access that only feels like ownership.

Music Business

Gospel Music Business

In the changing world of music what are the implications for the world of gospel/christian music. The present music business model serves all players regardless of genre. Music is music and people are inclined to purchase the tunes that resonate with their life experience. One thing is certain, the status quo of business as usual has changed and right now there is a frenzy of sorts to maintain a viable financial structure. Undoubtedly, the size of the money pie has increased but so have the hands that want a piece

CD Sales are slowly but surely being dwarfed by downloads and streaming is fast becoming the new radio. Some industry insiders believe the transition from “ownership” to “access”( as the millennials grow up) will alter the current model to the point that its quite possible a once 40 billion dollar industry will become a memory to be stored in the museum of “good ole days”.