How About Standardizing The Technologies That Enable Artist Compensation?


posted by on Marketing, Music


Update July 6, 2012: I found a great article by Eliot Van Buskirk (@listeningpost) from January 2012 entitled “One Big Database Could Save The Music Industry” that outlines at least one proposed technical solution. Another solution would certainly be a set of standardized APIs across the software platforms involved, which would facilitate the passing of attribution data more seamlessly. This would certainly speed up payment to artists, and would make it easier for audits of labels and other middlemen to show exactly how many digital plays have been consumed. 

Opportunity Out Of Chaos

Salmon bass and audio equipmentI am concerned that the music licensing/compensation issue has created a polarized debate, but I don’t see a lot of discussion of how to fix the model. I think we all agree musicians (and producers and engineers, for that matter) should be fairly compensated for creating music. We also all agree that there is an increasing amount of music available to consumers for cheap or free, and that is unlikely to change. How do we reconcile these conflicting ideas? Because my business background is in software marketing, I always see things in terms of the opportunities created by technology advancements, bounded by the disorganized nature of the marketplace, especially in new or changing businesses. The music industry is certainly in flux – both in terms of production and compensation. That makes it both frustrating and exhilarating.

One thing I find interesting is how the opinion of the musicians (producers) differs from that of music consumers, and also from that of  industry commentators (who are not creating music themselves, but make money indirectly from  musicians and the creation of music.). We all have different points of view because they are informed by where we make our living. I think there is money to be made in nascent and confused markets, more than in organized ones, and that factor, to some extent, is preventing a model that is more streamlined and thus fairer to the musician/producer.

By bringing down barriers to both the creation and sharing of art, technology advances have resulted in the exponential growth of the number of hobbyist artists creating and distributing art for their own satisfaction and self-expression. This is true not only in music but also in publishing of the written word, movie-making, and photography. Along with some really awesome artistic content, there is also a lot of crap out there. But… everyone can be an artist, right? Art is all subjective, isn’t it? Isn’t it just a mater of visibility, rising above the noise? Just find your niche, and you will find someone who will pay for your art…. right? This is the perspective that daily keeps me from quitting making music.

Different Players, Different Agendas

Enter the music industry pundit. The proliferation of hobbyist musicians, aspiring musicians, and of musical content itself has created a whole new career path for people who love music, but are not inclined to create it: the music commentator/blogger/marketer/tastemaker. There is a very real need for the trusted filter to help the consumer differentiate the talented from the untalented, the professional from the amateur, and the persistent and dedicated from the slackers. The problem with art has always been, of course, that sometimes (often) great art is created by amateur slackers who are completely inconsistent. The dream of every artist will always be to find a way to make their art 7 days a week and make a living doing it.

I’m not sure the new cadre of tastemakers and talent-finders have figured out just how to find and spotlight talent, but they certainly are going to increase their value and make money on both sides (from the artists AND from consumers) if they can gain a reputation as kingmakers. The labels and their scouts used to create stars, whether they were talented or not. The barrier to entry was who you knew, and how malleable you were as talent that could be shaped to feed the popular taste. Most artists quit when they didn’t get anointed and chosen, but a small few persisted, and succeeded. And that was back when spending a lot of money on marketing actually worked. I think Madonna has discovered you can’t market the shit out of crap anymore. So what to do?  This model is increasingly unpopular among all the stakeholders.

The Economic Value of Art

This leads to the driving conundrum in the art business model. Art is a funny thing in contemporary society. We seem to value it (through economic compensation to the artists) only when it is validated by popular consensus. The value of an artist’s labor is not dictated by supply and demand, or by some other metric like how much pleasure or utilitarian humanistic gain created, like other career paths such as engineering and medicine. After all, music creates tremendous value to those who listen to it – everything from pleasure to life-changing revelation to relief from pain and depression. However, much like other common goods that are valued by society as a whole, they are not often valued by individuals because the model has been established that they are available low-cost or free. I do see music as like water, or healthcare, or schools, or roads. It’s not free. If it went away, we would be poorer as a society. Yet we expect its ubiquity and convenience.

I don’t think anyone actually trying to make a living making music will argue that it’s easy. The current model is not working well, and is creating real hardships for my friends who have been in the industry for many years.  Studios are closing, artists die penniless (even famous ones), and young people are not supported in pursuing art as a career. I don’t buy the argument that new revenue streams are really supporting artists. Most of my indie musician friends are trying the hardest they can to exploit these revenue streams, but it’s an uphill battle. None of them can subsist on their music-related revenues alone, all have second sources of income. Labels and promoters have always been better at understanding the 360 degree merchandising deal than indie musicians have been at exploiting it.

Using Technology To Make The Model Transparent

Which brings me to my biggest gripe with this discussion. No one seems to be actually talking about how to solve the problem. When I worked in the telecommunications and software industries, it was really obvious that standards cannot be created by stakeholders with disparate interests. Whether this is true about creating a standard video format, a standard for sending information as bits, or a standard model for fairly compensating producers while still facilitating convenient consumption, it takes a single influential player to step up and lead.

Apple did this with iTunes, but the model was changed under their noses, and I don’t see them stepping up (yet). The reason they could take the gamble with iTunes and standardize in the past was largely because they had other revenue streams to support them in case the iTunes thing didn’t work out. I don’t see Spotify/Pandora/Rdio working too hard to change the model because they are still essentially startups, and their revenue models are still evolving. I don’t see SoundExchange, essentially a government entity, as positioned to be the central voice of reason, but perhaps that will change as they continue to gain a stronger position as a player within the streaming compensation model. I certainly don’t see artists organizing themselves effectively (my apologies to all the organizations trying to do this) enough to make their voices heard as a single entity and boycotting the means of production. I don’t see the software makers like Avid working to integrate across production all the way through distribution in order to facilitate the tracking needed for fair compensation. I don’t see ASCAP or BMI leading the charge and championing the streamlining of musician compensation. I certainly don’t see labels stepping up, although eventually they will be out of the model completely unless some creative record label executive (is that an oxymoron?) figures out some incredibly amazing pivot move to find and attract the best indie artists, sign them, and create a working model everyone else can follow.

Music As A Viable Career

Unlike making the decision to become an engineer or a doctor, making the decision to become a musician is much more difficult today. Aspiring artists are bombarded by conflicting messages:

  • you don’t have to be talented, just be persistent, all it takes is hard work
  • follow your passion no matter what
  • if your music is any good, you will eventually rise to the top and become visible
  • you won’t make money no matter how talented you are, do it because you love it and be happy you get to be fulfilled
  • see, Amanda Palmer did it, so can you
  • go get a real job that society values (this is what most of our parents say)
  • because you are driven to make music anyway, just surrender to that and don’t worry about making a living

I am an aspiring musician – well actually, I have been a musician for 30 years, I am just recently aspiring to make a living at it after 30 years in the business world. I’m trying to follow my artistic passion as a second career, spending the capital I acquired in my first career in a much less demanding and cluttered industry. Frankly, I wonder daily if my talents wouldn’t be better used trying do something where there are less people like me to compete against – like perhaps helping software companies talk to each other to create and standardize the technologies that enable the musical artist compensation model to function. There are so many more talented musicians than me out there, it probably would help to have one less of me around flooding the market with my own sounds, trying to find my niche and get compensated doing what I truly love to do.

Whether one more musician joins or leaves the ranks doesn’t matter in the long run, however. What matters is helping the market and supply chain for music become more transparent and efficient, so the producers of content (musicians) are valued and their goods are fairly valued. We are all better off in a society that figures out how to value art enough to support the art makers.

I would love to hear your thoughts. Just be up front about which kind of stakeholder you are. Your opinion will be influenced by whether you are a music producer, consumer, or tastemaker.

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