The Music Industry's Biggest Problems

As the music industry splinters into new niche markets almost daily, there is one thing everyone can agree upon whether your a musician, major label executive, or savvy indie label president- the music world is in a BIG mess. Don’t get me wrong, the industry is booming with new possibilities if you know how to work it properly, but everyone experiences growth and pain in different ways. Majors are still gasping for air since the piracy punch to the gut, indies battle for their share of the marketplace, and musicians fight the daily grind to be heard; but regardless of your individual problem the industry as a whole has two massive pills of mess on their plate: streaming & globalization.

Let’s go ahead and acknowledge that downloading has had both a negative and positive effect on the industry; but with the birth of downloading comes the explosion of new technology and emerging grey markets. Even though downloading and piracy continue to be the largest obstacle blocking industry professionals from making a dime, when these issues are solved, streaming and globalization troubles will inevitably move to the forefront. As the current downloading/piracy problem will eventually be resolved, it is important to look to where the industry is going, where it will end up, and how to be proactive and plan for the future. Condition yourself for the now, plan for the future. Address these issues:

1. Streaming

Despite being vastly different, people still confuse “streaming” and “downloading”. To quickly address, downloading is when you purchase an individual song or album in a digital format. You own the song, you purchased it, and you can play it however you see fit. Streaming is listening to the song/album where you can stream music, but more importantly you can do it for free (or little cost in some cases), as long as you have a device for streaming. Use Spotify as an example. People in selective countries can use Spotify on their computer and listen to songs all day. You don’t have to purchase a song, rather you stream it. Problem with this formula, if you want to be mobile and ride around in your car, or go jogging and listen on your iPod, you clearly can’t take your computer and access Spotify. Accessibility is the primary problem. Well the means to stream are becoming very much accessible now (ie: phones, cars, etc…) which could eliminate the need to download (ie: pay for the music). As a user I wouldn’t disagree with this model one bit. Why in the world would I download a song at $1.29, when I can stream the entire album for free anywhere I want?

Streaming isn’t necessarily illegal rather it is a bit of a grey market. Because it isn’t illegal, consumers argue streaming services are functioning as an essential means of marketing/promotion for musicians. Bullshit. Marketing and promotions is essentially an investment a musician makes in order to control the markets in which they are exposed. When marketing and promotion works properly, the musician will see a return on his investment. Streaming does NOT provide a return on the investment. Billboard recently ran an article by Robb McDaniels on this very topic. Tell me if this songs sounds like a good return on investment: “It takes 150 to 200 plays of a song before the content owner earns royalties on par with a single download.” That is 200 plays = 1 download people! “Content owners typically get paid 70 cents per download and half a penny per stream.” It doesn’t take a financial advisor to figure out this will presents some cash flow problems. Further, I seriously doubt someone is going to listen to the same track 200 times; but if they do it may take a 6 months. Wow, 6 months and 200 streams to earn 70 cents. Yeah real savvy marketing/promotions Mr. Consumer. Thanks for the tip.

The current business model of streaming services is an industry raping that far outweighs what major labels did. Tell me is this seems beneficial to a musician: The streaming service will charge a fee (typically monthly) in which it is split 50/50 with the copyright owner. Keep in mind many musicians do not have exclusive rights to their music, so the copyright may be held by numerous parties therefore cutting in the minimal profits. So a user who pays a $10 monthly service fee and stream 500 songs in a month, only $5 is going into the pot to divide equally among the 500 different artists they streamed. This model sucks for everyone involved except the consumer. The problem with today’s industry, everyone is greedy. Labels try to squeeze every dime out of a project and subsequently consumers feel as if they are entitled to take for free. “Good deals” are molded when everyone benefits and right now it is lopsided. My advice to the industry as a whole is to put the downloading/piracy issue on ice for a brief moment to quickly address the streaming problems of the future so we don’t pass problem after problem onto each new generation.

2. Globalization

American labels can freak out all day about piracy issues and the battling homegrown musicians can fight for a piece of the market, but the slow, steady, silent killer is music globalization. Immigrant musicians (non-American) musicians are quickly taking over the American music market, all in the while, global music markets strengthen, and the homegrown labels are too blinded by their own arrogance to see this happening. Frankly, I love it! Labels, musicians, and music professionals need to be elusive, they need to think globally, and they need to expand. Becoming diverse will quickly become more important than regional popularity. Up to now, musicians and labels have been grounded. As more international musicians enter the American marketplace, the already limited number of spots dwindle even further, making the competition much more fierce. Fierce competition means you need to think more efficiently, and being more efficient is thinking global. Musicians, beat the trend before everyone tries to capture a piece of the world market. Go global now and establish your niche before the competition follows suit.