A couple of stats for the day. EMI just posted £1.8bn losses for their latest quarter and Warner announce that they are likely to withdraw their music from free streaming sites such as Last.fm and We7. The public reaction to the first has been understandable – something along the lines of ‘how can a company lose that much money and not do something to stem the flow?’, whereas the reaction to the latter has been (at least on twitter), aghast and angry. I’ll look at both.
Warner’s decision has made a lot of folk angry, and I need to step out of my label-manager boots for a moment and try to see this from their point of view. You see, lastfm subscribers were sold the idea that this was a way they could listen to all the music they wanted to without hurting the artists they love. The advertisement revenue would cover all of the royalties necessary, the listeners could hear what the wanted to, and everyone would be happy. It’s quite obvious that a huge number of people chose to use streaming sites because they acknowledged that filesharing hurt the industry and the artists, or at least if they didn’t agree with that assumption, realized that it was illegal and that their favourite bands wished they wouldn’t do it. They’ll probably all go back to illegal filesharing now, seeing as the quaint notion of wanting something enough to go and buy it seems so alien now. The problem for artists and labels is that the music-licensing laws that we all still work under were mostly written in the age of radio, where the idea was that the revenue lost to radio-play (because if you can hear music on the wireless, why would you buy the record?) would be made up by the station paying for the use of the tune (because playing music brought them listeners, which made them attractive to advertisers, who paid them for airtime). However, the copyright laws that apply to digital reproduction and distribution are a cobbled-together series of contradictions and dead-ends, mainly because suitable definitions haven’t yet been decided upon for what they actually are. Musicians say ‘you’re playing my music for your own profit, I want compensation’, streaming sites say ‘we’re shunting packets of binary code from place o place, your beef is with the people who make players to convert that code to music, go hassle them’. Meanwhile, artists are put in a situation where their potential fans hear a song they really love, want to hear again and again, and so log into their lastfm account and do just that. How much does the artist make out of each play? US $0.0005. Or, correct me if I’m wrong here, five US cents per ten-thousand plays. To be featurd on digital streaming sites you’ll have to pay an aggregator to represent your bands to the company, which will cost 15-20% of revenue. Could you please stop and consider that as a revenue stream? Compare it with, for example, an hour’s worth of busking. Now, a lot of folk will say that it’s good promo, that it equates to sales eventually. Perhaps it does, perhaps it doesn’t. Radio play has always done so, but you don’t get to choose what you hear, and when, on radio. Anyway, Warner have made their decision. I’m not sure if they’re right or wrong, but I do understand why they’re doing it.
I’ll write about EMI in a while, but the bit above has exhausted me for now.