Money in the recording business is getting more and more each year. Warner Music Group has seen streaming income overtake downloads.
While Spotify is struggling to turn a profit from streaming, the labels are not. The free ad-supported tiers of streaming still make the labels money. The paid subscriptions model will also grow as IT companies are all about scale. This is what WMG CEO Stephen Cooper had to say and to me it is an important quote;
“The rate of this growth has made it abundantly clear to us that in years to come, streaming will be the way that most people enjoy music. Not only that, we are also confident that streaming’s ongoing expansion will return the industry to sustainable, long-term growth.”
Of course the main issue here is how are those streaming monies being filtered down to the creators.
The labels have large market power to negotiate because they have accumulated a lot of copyrights over the last 40 years. However the same artists that created those works get sweet f.a. The reason behind that is that the artist has sold or signed away their copyrights to the record labels for a fee. This normally happens before a song is popular, so the fee and the percentages the artists agree to are not representative of the market power that song might have in the future. Of course years later, the artist can re-negotiate their terms however the contracts are still stacked in the labels favour.
Even Universal Music who is pushing for no “free-tier” streaming service has seen substantial growth from streaming monies vs download and physical sales. Seriously, piracy equals zero revenue whereas streaming regardless of free/subscription offers a revenue stream. The more listeners these services get, the more income the labels get.
But the labels are greedy. If they reduce their music license fees, the streaming services can then reduce their monthly fees and more people will subscribe.
My kids love Spotify. They have grown up with it. For them, there is nothing else. Of course they don’t mind getting nostalgic with me and from time to time they ask me to play some vinyl or a CD. My kids also love Apple products so when I told them that Apple is trying to shut down the free-tier on Spotify and on YouTube, the first thing they said to me is “THAT’S DUMB”.
The public likes to be legal however we also want the legal alternative to give us what we want conveniently and for a low price. And finally in music we started going in that direction. Then came the “EXCLUSIVES”.
Suddenly, fans of music couldn’t hear everything on for the price they pay. And the end result is always piracy. People will pay for music again however it will be a long process. The label execs only think about the NOW. They are not interested in the long-term.
Back in the Eighties, not everybody paid. The recording business was challenged. We listened to the radio and we dubbed cassettes from already dubbed cassettes. We watched MTV. Eventually, people started to pay for music and the recording business grew exponentially. Greed set in and then a grenade went off in 1999.
Remember Napster. It showed the recording industry that the majority of music fans favoured access over ownership. A compressed file was deemed worthy by billions of people around the world. While the recording industry fought tooth and nail to go back to the old ways, technology companies managed to drag them kicking and screaming into a new way. Here we are 16 years later and access to music is a legitimate business.
But the recording industry want’s to ruin it all again.