How About Standardizing The Technologies That Enable Artist Compensation?

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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  1. Solveig, ten years ago I set my sights on learning the entertainment industry and how it makes money. I had a small record label, as well as an entertainment booking company, but I had talked myself out of pursuing music myself for any reason except that I loved writing and performing songs. That was affirmed, and how, by my experience taking a band to a Nashville showcase on Music Row at the famous Castle Door. What an apt name! Anyway, I also got one of my songs some airplay on WSM, the Grand Ole Opry station–first time for an indy artist in a while (decades) they told me. And of course SoundScan ignored the spins (short but telling story there). Anyway, my point is you nailed it here–but the actual industry itself, from everything I read then, experienced then, and read since has always been a profit-leaker for artists, from writers to performers. And the leaks went to the Big Dogs if you had a career, and to the producers if you were trying to have a career. I met some great and honest people, and they worked right alongside some shallow and dishonest folks. As I used to put it, “95% of the music ‘industry’ (and that MAY be a low estimate) is about Other People’s Money–so you hope to find the 5% and work with them one day.” The Digital Rights methodology and implementation were left out of music for far too long, missing the ideas of price reduction supporting a decrease in thievery (which the VHS movies back then had figured out), etc. That seemed to be the calling of the day, “What is in it for me?”, except it wasn’t the artists–it was all the cogs of the Great Music Industry Machinery with their hands out.
    A fix? The horse is out of the barn now, for the easy one. Apple, in my opinion, got it right but about five years later than it was needed (hats off to them, anyway, for realizing it). In an Internet-enabled public, five years is a lifetime. And, so, a fix, to me, is to first dismantle the dominance of the six media companies that deregulation has allowed to dominate 90%+ of all our media (and thus the market for artists’ work). Make radio stations locally relevant and truly competitive again, so that the products they seek create opportunity for risk–music is NOT marketing and research spins, it’s at best a path to a common bond in the the human heart that we all share. You make such a great point in your assessment that music is of value based on popularity and not individual taste–which means that the drivers of popularity–music, TV, movies, etc.–are the true vehicles of reaching the consumer’s ears and ultimately their wallets and pocketbooks.
    The other steps I’d suggest as a fix are to form alliances within the music community of musicians and writers that DO get it. Even ASCAP and BMI do not really fully support an artists’ revolt, and yet I think that is what is needed. Should our hope to be “on the radio” or “in the movie/TV show”? Or should our hope be to find a new market together as musicians, one that we control. Rap had that opportunity, hence it’s dramatic rise, because it was popular with both the writers/performers as well as with the audience. It’s analogous to finding a new continent, and those that pioneered there earned the most money per hour in growth vs.any other segment for many years.
    So, we band the musicians who WILL revolt and want their market more accessible, and we work to turn the tide with our users while we get a voice to dismantle the Muzak Generators of Clearchannel, etc. From a small seed, a nation springs, so ultimately please consider that we can get a musicians nation that our consumers WANT to participate in. Thanks!

  2. Solveig,

    This is an incredibly well thought out, insightful article. As you say, “We all have different points of view because they are informed by where we make our living.” So I’m glad you’re sharing your viewpoint as an artist with a software marketing background.

    I’m a co-manager, publicist, marketer, and industry commentator. I’ve worked in music venues, creating relationships with other business to promote shows, trying to sell both tickets and beer to make a profit, and making life as easy as possible for touring artists while they were working with me. That, along with countless conversations with clients and musician friends, is where my viewpoint comes from.

    I think no one’s talking too much about the solution to the problem because it’s not really one problem. It’s a myriad of problems. And no one person has the expertise to diagnose and develop the solutions. Thus, it’s been a very slow process.

    The marketing people think this is a marketing problem.
    Tech people think it’s a tech problem.
    Musicians think it’s a talent problem.
    Politicians think it’s a government problem.
    Economists think it’s just the economy.
    And so on. But it’s really an “all of the above” problem.

    Maybe we need a team or think tank with different areas of expertise to identify issues and propose solutions. I don’t think the people from different camps are working together well enough to innovate.

    What do you think about that?


  3. Wes –

    I agree with your perspective that each different type of participant (marketer, musician, technologist, etc.) views the problem (and solution) from their own perspective. As technology has been a major part of creating the problem/opportunity, however, it can be a major part of the solution. If we had ease of use and ubiquity in the code that tracks an author and composer’s contributions seamlessly built in to the music creation and distribution processes, it sure would help. Labels and services would not be pointing the finger at each other about who owes the artist money. ASCAP and BMI would not be claiming it takes months to track royalties down for an artist.

    I totally agree that we need a team with different areas of expertise to identify and propose solutions – that was the kind of thing I was referring to when I talked about developing technology standards for interoperability between software and platform providers at all levels. This could take many forms, but one that I have seen only briefly discussed but believe would be very helpful is music software API creation, standardization, and promotion.

    My concern is that, at least in my experience in other tech industries, while technology may be the solution, politics and economics are usually big players, sometimes slowing what is an obvious technical improvement or fix. Committees generally don’t resolve issues and create standards without a single strong stakeholder stepping up. Usually that is the stakeholder with the most to lose (or gain) by standardization. Labels (who still seem to make the most money in this whole chain) don’t seem to get the digital distribution technology details. Distribution platforms are tech-forward, and could be major influencers, but they seem focused on trying to stay afloat inside their own narrow business model rather than looking at the industry as a whole and taking a leadership role. I would love to see any of the stakeholders at least call a summit, anoint some participants, and have some closed-door working meetings to move toward a solution/solutions. Software providers/coders seem notably absent entirely from the debate.

    The dialog is really healthy, in any case. It helps to highlight the issues and refine them, so others can build and take things to the next level. I am appreciative that I live in a society that values diverse perspectives. While the marketplace is not 100% transparent, it is pretty darn amazing, and I have faith that someday my children or grandchildren will be able to look at music as a career option that could provide them with a comfortable middle class living.

  4. Great insight (as always I must say 🙂 )
    The hardest things for me as an indie artist making a living as a songwriter is:
    – It costs money to record a quality album, ie to create quality content. CD releases help me tour but I don’t recoupe my initial investment. In other words I loose money creating quality content.
    – Since I don’t have much marketing fire power, mainly due to the fact that I only make money doing gigs which is enough to make a living, how do I get myself heard above what you call the “hobby musicians” ?

    Thanks again for your great articles.

    Eric John Kaiser
    “Parisian Americana” made in Portland, Oregon,USA

    1. Thanks for your comment, Eric John. Right off the bat, I would say that if you are gigging enough to make a living, you are already above the crowd of hobbyist musicians. Congratulations! And thanks for the kind words. There are at least two approaches: optimize what you are currently doing, or seek new forms of revenue from the existing creative content (eg. licensing, custom songs, private events, selling high-margin items other than your CDs). #1 is safer, #2 could be more profitable in the long term, but takes investment of time and maybe money. I think if you are already creating CDs that people buy, but not recouping your investment, that could be due to a few different things. Income is a function of volume and margin. Basically, you are not making a high enough margin or selling enough units from your recordings to break even – is that right? Are you making money from selling merchandise at gigs – in addition to CDs? Are you crowdfunding or directly funding your recordings yourself? Are you selling CDs directly to fans or is some other distribution channel making a margin? Do your recordings have long term revenue (Zoe Keating makes a lot of her revenue from old releases)? It’s a complex equation that I think differs for every muscian, but I think the good news is if you have a reasonable income stream, you are already head and shoulders above 90 % of the musicians in this country. For you, it’s a matter of how can you optimize or squeeze more revenue (or cut more costs, or create new opportunities for revenue) out of a formula that is already working to a large extent. If you sit down and analyze where most of your money is really coming from, I bet you can come up with some ways to increase that, and perhaps decrease your efforts and costs in areas that are not as profitable. That’s just my topline impression, but I think you already have a lot going for you!

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