Swift Manipulation And Byrne’s Fire: Introduction

Swift Manipulation and Byrne's Fire

Taylor Swift
Photo by Jana Zills
License: CC BY 2.0

Taylor Swift made a splash this week when she pulled all her recordings from the Spotify music streaming service (see: Taylor Swift removes all her albums from Spotify and other streaming services in The Next Web).  This weekend David Byrne wrote a considerate article about streaming services and the music industry (see: David Byrne: ‘The internet will suck all creative content out of the world’ in The Guardian.) Swift’s action has opened the door for further criticism of Spotify by people who are tangentially related to the immediate story, seeking to grab a moment of controversy to put their own two cents in (see: Spotify Can’t Succeed if It Keeps Screwing Songwriters in Wired).

There are a few points in these stories that bear some closer examination to understand what the real fears are, and what these (and other) artists are overlooking.

Swift Manipulation

Taylor Swift’s action has been notably underscored by an article published by the Wall Street Journal (see: The Future of Music Is a Love Story, un-paywalled copy via Taylor Swift Archive [Ed. Note: unfortunately the link is no longer active.]), in which she wrote:

Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.

This statement deserves closer examination as it contains a number of assertions that assert causation where there is none.  “…art is important and rare.” is a perfect example. There is a lot of art out there.  In 2010, there were 75,000 CD’s released.  That’s over 1400 per week on average.  And, that’s only what is reported by Nielsen Soudscan (from a Quora post referring to a Billboard article).  Now, if you take into consideration the number of releases that are self-released, or published on netlabels, that number is likely to double or possibly triple.  No, music as art is not “rare”.  As an artist recently commented to me recently, “we are living in a time when there is cultural over-production.”  I couldn’t agree more, we have so much cultural over-saturation that we are slow to adapt and change with it as the artists are changing.

As for the “important” part of this statement: just because something is a piece of art it’s importance is not automatic.  If all art were important, the 75,000 release in 2010 would all have been major selling pieces of art, and yet I can guarantee that there is less than one percent of that work that is even remembered today, merely four years after it came out.  The importance of a piece of art has nothing to do with the artist impression of their work.  Rather, it has to do with what the audience for that work thinks of the work, whether they assign a value of importance to it.  Fortunately for Swift, she has a managed to find a large audience that believes her work is important.

Next Swift makes a statement that is even more dubious: ” Important, rare things are valuable. Valuable things should be paid for.”  I will concede that valuable things should be paid for.  However, as I stated above, the importance of a piece of work is not determined by the artist, it is determined by the audience.  We know there are thousands of lesser know classical composers.  Why are they lesser known?  The audience and scholars have determined that their work(s) are generally less important than Bach, Mozart or Beethoven.  That leads us directly into the value of an artistic work.  The lesser known classical composers work are not nearly as highly valued as those of the afore mentioned better known composers.  That is the way the market works for artists.  The better they are known, the better their works are judged, the more value they have.

And, this example of classical composer’s work is disproof of the rarity theory that Swift espouses.  The lesser known composers works are more rare in performance, recording and publication.  That hasn’t raised the value of these works.  If anything, the rarity of them has no correlation on the value of them.

The final part of Swift’s statement is this: “It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is.” I can neither agree nor disagree that “music should not be free”.  Why?  I think it is a bit presumptuous for Ms. Swift to make such a large statement that doesn’t take into consideration the intent of the artist.  I have run into quite a few artists that don’t care about money or charging for their work. Part of the reason for this is these artists believe that the moment money is introduced it affects their work.  It’s an extreme belief, but it’s not a completely uncommon one.

As for the point about “…individual artists and their labels will someday decide what an album’s price point is.”  They do that now.  The price points are decided by the music industry, and no one else.  I recall a few years ago an artist tried to lower the price of his CD by making the packaging as absolutely minimal as possible.  The result?  The CD was more expensive than his previous CDs.  Why?  Because someone in the music industry said that it was a special production run, and required special handling for the packaging.  That’s the kind of control the music industry has over setting their price points.

If Taylor Swift truly believed that she should be able to set the price points for her work she would leave the industry and become an independent artist.  Then she would have complete control over the pricing of CDs, digital downloads, and could negotiate the rates that she got for streaming from various services directly.  But she doesn’t want to do that because that would require a number of other things that we’ll talk about later in this article.

There are few other statements that need to be considered in this article:

Piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically, and every artist has handled this blow differently

First, there is no evidence that piracy, file sharing, and streaming have a linked effect on music sales.  That is, each of them may have individual causes, however the overall effect of each of them should be considered individually as no one has demonstrably shown that the three are directly related.  Moreso, while the rise in these three activities correlates to the decrease in sales, the causality is still widely debated, there is no definitive proof of causality.  In fact, in some cases the causality has been noted to be the inverse of what artists and the music industry have stated.  For example: BitTorrent Piracy Boosts Music Sales, Study Finds.

Now, Swift isn’t completely oblivious:

In mentioning album sales, I’d like to point out that people are still buying albums, but now they’re buying just a few of them.

But, she skirts the point of what is happening overall in the industry.  CD sales are down by 15%, streaming is up 42%, but here’s the surprise item: vinyl sales are up 40% (Nielsen Soundscan Mid-year Report for 2014, via LA Times.)  So, some purchasing has shifted from CD’s to Vinyl, and some people just want to stream music.

And then there’s this part of the article:

They are buying only the ones that hit them like an arrow through the heart or have made them feel strong or allowed them to feel like they really aren’t alone in feeling so alone.

And:

The way I see it, fans view music the way they view their relationships.

Is this an article about the music industry and musicians rights, pricing and business deals?  This was published in the Wall Street Journal, a mainstream business newspaper, not Seventeen magazine.

But, enough about Taylor’s attempt to manipulate people by mixing the romantic image her fans have of her with the music industry and trying to paint a rosy picture for everyone.  There have been others that have jumped on the bandwagon of Swift’s moves to further their own agenda, and in the process have unveiled an important fact or two that Ms. Swift fails to mention.

In Wired, David Israelite writes (Spotify Can’t Succeed if It Keeps Screwing Songwriters):

Spotify’s response to Swift’s abrupt catalog retraction came with an air of sarcasm and the statistic claiming they pay “nearly 70 percent” of their revenue “back to the music community.” Unfortunately songwriters only receive around 10 percent of that revenue,…

That is a point that should be examined carefully.  A business that pays seventy percent of its revenue back to another industry is walking on a fine line.  After handling all the overhead for operating their business that doesn’t leave a lot of profit to work with in terms of growing and sustaining their business. This is a clear indicator that Spotify is doing something very right with its business model, they are operating very efficiently, or they are covering up how much the gouging of the record industry is hurting their business extremely well.

And, what about that seventy percent?  Where is it going?  It’s not going back to the artists, and it’s not going back to the songwriters.  Apparently it’s going back to the labels, who are using it cover their operating expenses, but certainly they have more sources of income to cover their overhead: digital downloads, CD sales, Vinyl sales, and, in fact, they frequently charge artists upfront for their studio and production costs.  So, they aren’t really hurting.  The problem seems to be that they aren’t distributing the proceeds from streaming revenues in an equitable manner to the artists and songwriters.

Mr. Israelite goes on to state:

…and publishers can’t even negotiate a fair market royalty rate for their songs. They are set by the government through consent decrees created in the 1940s that tech companies are fighting to uphold.

That is simply because the streaming services are, for a large part, the same as terrestrial radio.  The only difference is that instead of having a DJ decide what songs are played, the listener gets to decide.  But, they aren’t buying the music, they are listening to it on the equivalent of a digital radio.  The rates that were determined for terrestrial radio certainly have the same applicability for a digital radio.  If the songwriters really feel otherwise, they should take this issue back to Congress to take action, as that’s who set up this deal in the first place.

Oh, and why was this deal okay for 65 years, but now in the last 5-10 years it has become no good?  I wouldn’t look at the new services as being the issue, I would look at the larger music industry as being a source of the problem.

So much for the opportunist taking advantage of Taylor Swift’s news cycle.  Let’s move on to an article that is far more considerate of the problem, and consider some of the points that are made.

Byrne’s Fire

Swift Manipulation And Byrne's Fire

David Byrne
Photo By Fred von Lohmann
License: CC BY 2.0

David Byrne’s article in the Guardian (see: David Byrne: ‘The internet will suck all creative content out of the world’) is a much more thoughtful article, despite the misleading title (which is taken out of context).  From the beginning, Mr. Byrne makes the point of discerning between the artist and record industry:

Spotify is the second largest source of digital music revenue for labels in Europe, according to the International Federation of the Phonographic Industry (IFPI). Significantly, that’s income for labels, not artists.

This is the one of the things that Ms. Swift and Mr. Israelite tend to overlook (as I pointed out) the money in streaming services is going to the labels, instead of the artists and songwriters.  If there is anything that I can deduce from this fact is: artists and songwriters should not be pointing fingers at the streaming services, they should be following the money back to the labels.  That’s where there needs to be change to balance out the equation.

One of the points on which I have to disagree with Mr. Byrne is this one:

…though my guess is that, as with most web-based businesses, only one will be left standing in the end. There aren’t two Facebooks or Amazons. Domination and monopoly is the name of the game in the web marketplace.

One of the things that the Internet is actually exceptional at is allowing their to be space for as many services providers as there are people to think them up.  Just take a look at Ello, a new social network that has recently started and shows all signs of being able to carve out it’s own niche without issue.    But there’s already a whole slew of other social networks: Twitter, G+, LinkedIn, Diaspora, just to name a couple, and there are lots of others that are designated to more niche users.  As for competition to Amazon?  Overstock, eBay, AliExpress, just to name a few.  And then consider that many retailers have sites that people do order from: Barnes & Noble, TigerDirect, NewEgg, Wal-Mart, Sears, etc.  I think Mr. Byrne could do a little research in this area.

This makes the point he is trying to make a bit dubious:

The amounts these services pay per stream is miniscule – their idea being that if enough people use the service those tiny grains of sand will pile up. Domination and ubiquity are therefore to be encouraged.

I don’t see where that logically follows.  What difference does it make if an artist has 20,000 plays on Spotify, or if it’s 5,000 plays on each of Spotify, Pandora, iTunes and Google Play.  Assuming that all services pay the same amount per-stream, 20,000 plays is still 20,000 plays.  The incentive to chose one service over another is based on factors such as (a) the size of their library, (b) the rates they charge users, and (c) special features (like Pandora’s predictive selection service).  Basically this means, primarily, the incentive to become the dominant service is based on standard market competition. (There is something that does muddy this water a bit, which Mr. Byrne brings up a bit later.)

Here Mr. Byrne points out the single biggest part of the issue:

The major record labels usually siphon off most of this income, and then they dribble about 15-20% of what’s left down to their artists. Indie labels are often a lot fairer – sometimes sharing the income 50/50.

This is where the horrible figures from people like David Lowery have come from.  The fact is that the labels are soaking up so much of the royalties from the streaming services that the per-stream rates going to the artist tend to be under a penny.  This brings up two questions:

  1. How can the labels continue to defend their position when it’s documented, as Mr. Byrne pointed out, that streaming royalties are their second largest source of digital revenue?
  2. Why do artists continue to look at these services when they know the labels are taking the vast majority of the revenues?

These are the points artists should be up in arms about, and yet instead they all act like there is nothing wrong with their labels behavior.  Do these artists have Stockholm Syndrome?  Next Mr. Byrne makes a statement that is quite provocative:

In future, if artists have to rely almost exclusively on the income from these services, they’ll be out of work within a year.

This refers to the fact, as I mentioned earlier, that streaming services are growing, while sales of CDs and digital releases are down.  The concern is that if streaming services completely displace digital sales, the revenues earned from streaming will not equal digital sales.  That is a valid concern.  But this is still a point I believe goes back to the two questions I asked above: streaming royalties are the second largest source of revenue for the labels.  That being the case, it seems the labels need to even out the share of the profits that are going to the artists.  Streaming services like Spotify are paying the labels a large percentage (some might say disproportionately large) of their revenue to the labels.  If anything, maybe it’s time for the artists to align themselves with the streaming services to re-negotiate the payout to the labels so they (the artists) receive appropriate compensation.

Another question worth asking…  Are streaming services designed to take the place of digital purchases?  My answer would be no.  Streaming services are basically on-demand radio service, the same way the cable companies have on-demand video service.  Not every movie that gets released goes to on-demand or pay-per-view service, and I find it unlikely that most users for streaming services are playing whole releases from an artist, just as radio stations (with some exceptions) don’t play whole albums.

There’s another point that Mr. Byrne makes:

I can understand how having a place where people can listen to your work when they are told or read about it is helpful, but surely a lot of places already do that? I manage to check stuff out without using these services. I’ll go directly to an artist’s website, or Bandcamp, or even Amazon – and then, if I like what I hear, there is often the option to buy.

Unfortunately, that is a difference that Mr. Byrne probably doesn’t see because it is a difference in how generations approach their use of the Internet.  Many users these days don’t want to go surfing to a bunch of different locations to find something.  They want it easily accessible, and they want to acquire it quickly, if an artists potential audience has to surf two or three websites to determine that they want to make a purchase the sale will likely be lost.

Mr. Byrne also doesn’t understand (and admits) discovery services:

I also don’t understand the claim of discovery that Spotify makes; the actual moment of discovery in most cases happens at the moment when someone else tells you about an artist or you read about them – not when you’re on the streaming service listening to what you have read about

The idea that someone “tells you about an artist” is what happens now when a friend looks at another friends playlist.  And, as I’ve come to understand, nowhere near as many people read about music these days…and from what I’ve learned, the people who do read about music (such as the reviews on this site) are a hardcore group that get most of their music from a very diverse and fragmented music press.  They don’t seem to be reading RollingStone and Billboard these days.  So I’d offer a bit of advice to Mr. Byrne: spend some time with teenagers and college students, that’s the best way to get some insight into how the majority of people are using these services to discover music.

But, aside from this bit of a diversion into understanding the new landscape that artists are dealing with (and that is really what Mr. Byrne is trying to do here, he’s questioning things to try to understand how artists are supposed to work with them) he uncovers a huge issue with services like Spotify:

Musicians are increasingly suspicious of the money and equity changing hands between these services and record labels – both money and equity has been exchanged based on content and assets that artists produced but seem to have no say over. Spotify gave $500m in advances to major labels in the US for the right to license their catalogues. That was an “advance” against income – so theoretically it’s not the labels’ money to pocket. Another chunk of change is soon to follow. The labels also got equity; so they are now partners and shareholders in Spotify, which is valued at around $3bn. That income from equity, when and if the service goes public, does not have to be shared with the artists. It seems obvious that some people are making a lot of money on this deal, while the artists have been left with meagre scraps.

My assessment of this statement is: it is a huge reason to mis-trust the labels.  It’s already documented above that streaming revenues are the second largest source of digital income that the record labels have (in Europe, and I would be it will soon be shown to be true in the U.S. and elsewhere).  The labels are taking a large portion of the revenue from streaming services, and not distributing a sufficient amount back to the artists and songwriters.  And now they are taking advances and equity that are outside of the payment structure for the artists.  This is what it takes for artists to finally get suspicious of the labels and their deals with the streaming services?

To my point of view, this says to me the writing is one the wall: the labels are going to use the streaming services as much as they can, and they will take every advantage available to them to profit from these services without paying the artists.  How much more clear does it get?

The industry is using this equity as a method to gain control over the streaming services.  They see it as another distribution channel, the same as they see iTunes, Amazon, Google Play, etc.  They have basically put their finger in the streaming services, are siphoning off as much profits as they can without distributing it to the artists, and making certain that if there is any chance of them succeeding and going public, they will have a controlling interest in them.

There is a fair amount more to this article but much of it is an examination of questions, and fairly rhetorical in nature.  So, I’d like to close this article with my thoughts on one final point.

The Future

Towards the end of the article, Mr. Byrne states:

I don’t have an answer. I wish I could propose something besides what we’ve heard before: “Make money on live shows.” Or, “Get corporate support and sell your music to advertisers.”

I don’t think those are the only solutions to the problem.  The real issue is that the system of big record labels is broken.  It’s well past time that the labels are seen as a no-man’s land for artists and they are advised to stay away from them.  I do understand that they have a strangle hold on a large portion of the business side of the music industry all the way from production and recording facilities to distribution channels.  And, as has been pointed out in Mr. Byrne’s article, they are making deals now that I interpret as a precautionary move to control the emerging distribution channel.

So, what is an artist to do?  Honestly, the simple answer is: stay independent of the music industry.  But this means that it will be a different road to travel than many artists have traveled in the past 50-70 years.  It means that the artist has to look at their job as not just creating music, not just creating their art.  It means that they have to run a small business.  There is precedent for this approach: Frank Zappa, Phish, STS9, String Cheese Incident, and many other bands and artists have taken the reins on their own, they have directed their own career.

The artist is going to have to be able to clearly define their own goals and objectives.  They are going to have to look at all the services that the major labels provide now (like distribution, marketing and promotion) and figure out how to do it.  Artists can hire a service to do distribution, they can hire legal assistance to negotiate contracts, they can hire managers, accountants, PR people, etc.

The bands I mentioned above went this route.  They have sources of income from their digital downloads that are outside of the major labels.  They had fan bases and followings long before any record label wanted to have anything to do with them.  This put them in a stronger position to actually use the major labels to their advantage.  Phish certainly expanded their audience by having CDs produced by a major label, but it was really a deal that they were able to negotiate in such a way to be to their advantage.  Frank Zappa famously owned all of his masters, something that was unheard of when he negotiated with Warner Bros.  That enabled him to take his recordings to Rykodisc later when he wanted to do CD re-masters.

These are the kinds of stories that I think will become the norm in the future.  The major labels will grow weaker and weaker, and the artists will find themselves in stronger positions.  However, they have to get out of this mindset that the end objective for their career is to sign a record deal.  Once artists understand that they are free to work as they want to work, to achieve the level of success they want to achieve, then we will see a return of real artistry that has been lacking in past couple of decades, and artists will find that Spotify or another streaming service can actually provide a reasonable income, even if it’s only a part of the overall income.

Advertisements

Posted by George De Bruin

2 Comments

  1. Excellent post!

    I don’t know Taylor Swift, just want to refer to the David Byrne part of your post. I followed the link to this interview in an earlier post of yours and it made a bad impression on me. I felt this saturated guy drew flawed conclusions on a subject he seems to barely understand.
    However.

    You made strong and valid points (IMO) :
    “If there is anything that I can deduce from this fact is: artists and songwriters should not be pointing fingers at the streaming services, they should be following the money back to the labels. ”

    “Do these artists have Stockholm Syndrome? (otherwise) they have to get out of this mindset that the end objective for their career is to sign a record deal. ”

    “If anything, maybe it’s time for the artists to align themselves with the streaming services to re-negotiate the payout”

    “There is precedent for this approach: Zappa” – even Stones and Beatles I add. Well, their action led to a lot more. Remember when ‘independent’ wasn’t a style tag but meant a concious decision by artists to release under fair conditions? That was back in late 70’s.
    Since the beginning of ‘house music’ (mid 80’s) this genre is in hand of independent labels and, to my knowledge, artists do well.

    I really never understood the point of signing a label/publishing contract that exceeds 50/50. Not in the past, not nowadays.

    Disclaimer: I don’t use those mentioned streaming services.

    As a side note a lyric quote from David Byrne – Music For the Knee Plays (1985):
    In the future everyone but the wealthy will be very happy
    In the future everyone but the wealthy will be very filthy
    In the future everyone but the wealthy will be very healthy
    In the future TV will be so good
    That the printed word will function as an art form only

    Cheers,
    deeload

    1. I would disagree with putting the Stones and Beatles into this category. The Stones were on London Records (part of Decca), and The Beatles were on Capitol / EMI. By the end The Beatles were able to form their own Apple Records, but for all intents and purposes it was just their imprint of the EMI label, not really an independent label. Same with the Stones.

      Zappa was, to the best of my knowledge, really the first to push hard to be an independent artist, treating Warner Bros. mostly like a distributor. He ran all his own recording sessions, paid the performers, paid for the studio time, paid for the mastering, etc. He would take the final product to Warner Bros. and they would accept or reject it for distribution. To the best of my knowledge the only release Warner Bros. rejected was Lather, not because of the music but because it was designed to be a 4 album set. Warner Bros. only did 4 albums sets in their special products division which wasn’t where they released new pop / rock albums. Zappa took Lather and split it up into 4 or 5 separate albums which the label did release. Lather was reassembled posthumously and released on 3 CD’s, with some pretty extensive liner notes.

      FWIW – Byrne isn’t as flawed in his understanding and logic as you might think. And, he is a supporter of Creative Commons (he contributed work to the first Wired CC compilation). The thing about Byrne is that he understands the music business very well, and he understands the social impact of these events. On the business side I think his view is a bit obscured (a can’t see the forest for the trees scenario). The technology side of things (like the music discovery features of Pandora and Spotify) comes down to the generational point I made in the article. I’ve noticed as I get older that different generations tend to use technology differently, and sometimes it’s necessary to understand how the use of the technology is changing or the technology is changing how people are using it.

      Thanks for the well thought out comment. There is lots of room to talk, debate, and have a major discourse on these issues. I think a mouthpieces like Ms. Swift and Mr. Israelite are doing more damage than they are good, while David Byrne (despite having a few gaps) is trying to build a better understanding where things are going, and asking some major questions along the way that no one is really answering – yet.

      George

Comments are closed.