Warner to quit free streaming?

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.



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3 responses to “Warner to quit free streaming?

  1. Think you’re confusing last.fm with Spotify. A high proportion of the music on last.fm can’t be streamed online, but will only come up on rotation on last.fm radio. What can and can’t be streamed on demand is entirely up to the artist and/or record company. Many artists choose not to upload their entire back catalogue, but just a representative selection of their music.

    Artists I know typically upload entire albums, but then only make a couple of songs streamable on demand. To take a non-random example, you can only stream two of the eight tracks from Karnataka’s album, and they’ve chosen two of the most instantly accessible ones.

    Bands like Karnataka very much see last.fm as a promotional tool rather than a revenue stream; since the major labels seem to control access to the radio stations, it’s a way to get their music heard.

  2. Ok, fair point. But Spotify are no more generous with the revenue they gain from artists’ material, so let’s just apply the same comments to them. In terms of publicity, I am becoming more and more skeptical about the value of all this publicity. The established view in the industry towards licensing tracks for use on advertisements, feature films etc, has always been to demand full price, because to do otherwise would be taken as a precedent, which would then be used as leverage for licensers to pay less next time, next act. The danger of devaluation of the music is ever-present. Making it free, or as near as dammit, comes with similar dangers. I can see Karnataka’s viewpoint on this, using the site as a way of giving a free sample to a growing public, and limiting what is available for free is an established tactic, we do it too. But at some point, buzz has to be turned into revenue, and a culture of free music on demand does not help that happen. Nor does it enforce the concept that music is of value. There are a great number of gimmicks and tactics being used to great effect out there to convert that publicity into cash, but I worry that the dignity of musicians and the value of music is being eroded by the majority of these. I think that’s regrettable, not just from sentiment, but from the cold, hard conviction that it’s a really bad strategy, long-term.

  3. Some good points here, but there are many other things to take into consideration. In several markets now (most apart from the UK I believe), spotify have more than 10% of their userbase signed up as Premium subscribers. At this point, Spotify stops paying artists per stream and start paying out from the revenue generated from the premium subscribers.

    Upselling from a free basic product is the future for music that is seen as a commodity of culture, rather than a a prized possession. I treasure all of the music I purchase, which is why I buy vinyl, but your average pop music fan does not. Monetizing the way in which these pop fans consume their music will ultimately fund the major record labels. I wrote some words on this here http://igrammarstone.com/2010/01/10/the-perceived-value-of-music/ not so long ago, let me know what you reckon

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