Is the Album Really Dead?

I'm conflicted.

I love albums. That's how we've all grown up listening to and understanding music. It's a milestone upon which a band builds its mythology and expresses a grand vision. Albums allow for extended storytelling that couldn't fit in a single song. (Could you imagine The Wall being released as a series of singles?)

However, after I've given most albums a listen, I move the tracks I like to a genre/emotion-based playlist and move on to the next band. Very few albums get a complete repeat listen from me.

This is not uncommon.

The landscape of the music industry has irrevocably changed, and there are compelling arguments in favor of releasing singles instead of albums.

1. The number one listening platform for music among teens is YouTube.

More than radio, iTunes and CDs, YouTube is where the next generation of music obsessives (teens) get their music. It's free, streaming, and instant access to any song you could ever care to listen. With the prevalence of smart phones and 4G wireless, this a better service than CDs or MP3s for these listeners.

As Lefsetz puts it:

You want to know how they listen?

They pull up your track on YouTube. Whether in an authorized version on Vevo or a bootlegged take posted straight to YouTube. And they instantly decide whether they like it or not. And if they don’t, they forget about you. Just that fast. It’s like they’re carrying your album straight to the dumper. As if you walked into McDonald’s, sniffed and left and they threw all the food out and closed the doors. As for listening to all twelve of your tracks, are you nuts! Don’t tell me people have a short attention span, hell, they’re marathoning “Breaking Bad” as I write this. They just don’t have time for what is not exceptionally great, and if you can tell me ten albums from the last two years that are good from beginning to end, I’m all ears.

Listening has changed. It used to be entertainment options were limited. You bought little and played that which you owned. And it’s not only music, newspapers are competing with blogs, TV is competing with YouTube, everything’s changing, are you?

You’ve got to step up your game. You’ve got to focus on excellence.

The album isn't center stage on YouTube.There's no need to buy an album full of mediocre filler tracks anymore. Two clicks and you're listening to the song you want, for free. 

2. We're moving towards an access-based music model where owning albums is irrelevant.

Ownership isn't always best, and the music consumer is beginning to realize this.

Think about all the CDs & MP3s you have that sit around collecting dust. Other than earning "cool points" for having stacks of music lying around (guilty), is there any additional value to having piles of stuff? If it's about having access to your music, streaming beats owning. Streaming gives you an infinite collection that you can access instantly, without having to search through poorly labeled MP3s or polish scratched CDs. Streaming gives you all the access of ownership without any of the hassle.

We systematically over-value ownership for countless other knicknacks, too. The US spends $22.45 BILLION on storage space to keep all of our stuff that won't fit in our house. Everyone I know has a "crap room" that happily houses mountains of junk that "had" to be owned. How often do you dig around in your storage space / attic / crap room? Wouldn't it make more sense to skip the price tag of ownership and only pay when you actually need a Gene Simmons costume?

This is the direction businesses are heading.
 
Entertainment services like Spotify, Steam, and Netflix aren't alone in moving toward access-based services The software industry long since figured out the real value in Software-As-A-Service (SaaS) as a business model. Even items that traditionally were owned are moving to access-based services. Startups like car-sharing service Zipcar allow people all the benefits of having a car to get around without any of the annoying maintenance or registration.

Derek Thomson and Eric Weissmann at The Atlantic elaborate on the Millenial generation turning down ownership:

The typical new car costs $30,000 and sits in a garage or parking spot for 23 hours a day. Zipcar gives drivers access to cars they don’t have to own. Car ownership, meanwhile, has slipped down the hierarchy of status goods for many young adults. “Zipcar conducted a survey of Millennials,” Mark Norman, the company’s president and chief operating officer, told us. “And this generation said, ‘We don’t care about owning a car.’ Cars used to be what people aspired to own. Now it’s the smartphone.”

Expect access-based services to continue growing. Just don't expect people to understand how they work.

3. In an access-based marketplace, profit comes from utilization (listens) instead of album sales.

A Hypebot interview with D.A. Wallach explains how Spotify sets up it's payments:

We feel the metric of success should be based on how many people are listening to your music over a period of years, as opposed to looking at how many units are shipping in one week. People are used to seeing big numbers from a unit-based model, but that’s really front loading what is happening. Comparing iTunes sales with Spotify payments over a two month period of time is not a great way to look at things.

What we are trying to create is a system in which you earn royalties forever for good music, and the time horizon is simply different than what folks are familiar with now. One can actually think about a download sale as a down payment on all future listening that a fan will do. If you took the effective per play rate that I’ve paid for every time I’ve listened to my Dark Side of The Moon CD, it would be trivial compared to what I’d have generated if I’d done all that listening on Spotify. 

This is fascinating.

This new pay structure rewards musicians who create music with longevity over those who create one-off sales. Even if the band hasn't released new music in years, dedicated fans keep royalties flowing to the artists simply by continuing to listen. This is great news for bands making classic albums, not so much for bands relying on hype to make a splash with first week album sales.

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While I don't forsee the complete demise of the album format, I suspect that they may become a niche release strategy (like prog rock concept albums) as opposed to the dominant music paradigm.

Time will tell if this is good or bad.

(For more about new music strategies, see my previous post Electronic and Hip Hop Better Suited to the New Music Industry)

Zoe Keating Releases Her Actual Pay

Add another item to the growing list of why Zoe Keating is one of my favorite artists. Hypebot discusses the numbers with her:

During a six-month period from October 2011 to February 2012, Zoe earned $84,386.86 before taxes.

Here's a breakdown of where that money came from:

....

A good chunk of Zoe’s support comes from her regular and super fans, who she feels remain loyal to her due to their interest in her story.

“They seem interested in my DIY-story,” Zoe told Hypebot. “Or the mechanics-of-how-I-make-music-with-a-cello-and-computer-story; or the classical-musician-gone-rogue-story; or the radiolab-Amanda Palmer-Imogen Heap-Rasputina-connection; or the I'm-a-geek-too-story, etc. The casual listeners might not know my story or anything about me.”

“Casual listeners won't [support], but they never did anyway,” Zoe added in her Google Doc. “I don't buy ALL the music I listen to either, I never did, so why should I expect every single listener to make a purchase? I think that a subset of my listeners pay for my music, and that is a-ok because... and this is the key... there are few middlemen between us.”

As an artist, you are kept afloat by the connection you have with your fans. Nourish them and they'll nourish you.

Piracy Will Never Go Away

Piracy will never go away.

The sooner we accept this, the better off we'll be.

File-sharing methods are developed by those on the bleeding edge of technology. Those who would legislate file-sharing are just discovering text messages. Until politicans stay up until 3am every night buried face-down in code, the pirates will continue to be in the lead. Lockpickers rejoyce at the release of a new "unpickable" lock. Woohoo, a new puzzle! It's the Red Queen from through the looking glass; everyone has to keep running just to stay in the same place.

First, let's get this straight: I do not condone piracy. Artists create beauty and should be compensated for their work. Period.

But piracy is an economic reality. Neil Young goes as far as to say "Piracy is the new radio." We can either learn to leverage this for our gain to build our fanbase or we can thrash helplessly against the relentless tide and hurt paying customers with DRM. The only way to stop piracy would be total draconian lockdowns on freedom of all information which would hurt both consumers and content creators.

Even now, the systems in place to protect content are only for the benefit labels big enough to afford lobbyists. Universal has been using YouTube's Content ID system to issue takedown notices for copyright infringment on crochet lesson videos without music and shutting down youtube channels for unaffiliated independent bands.  Independant artists, however, are unable to use the same system to protect their own works.

 Zoe Keating:

"I actually signed up for Content ID to track all the videos that ALREADY have my music in them. For a very brief window when my account became active (2 days) I was able to use the Content Management interface to search for and claim the audio of videos. I managed to claim the audio for about 20 videos before that feature was disabled on my account. I was told that claiming videos is not a feature that is supposed to be active for sound recording copyright holders and it was a "bug" that I was allowed to do it." 

The landscape of the music industry have irrevocably changed. The old school method of paying $1,000,000 to generate a hit single is being undercut by increased customer choices for music and dratmatically reduced fixed costs.

Remember how the Motion Picture Association of America reacted to the invention of the VCR?

"I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home along." - Jack Valenti, MPAA Cheif.

As much as it hurt the typewriter industry, the development of word processors was a net posititve for society. (Can I get an amen for splecheck spellcheck?) Technology marches on, whether you like it or not.

Piracy will never go away.

The sooner we accept this, the better off we'll be.

The tech industry's solution is software-as-service, where users pay a monthly subscription fee to use this software through the web. Customers love it because you don't ever have to deal with technical crap and you can get to your data though any computer / tabelt / mobile. Businesses love it because it's reliable, costs nothing to distribute to more customers, and provides a stable monthly income stream. (Great blog post by Patrick at Kalzumeus software on why he's giving up desktop applications for web applications.)

The solution for the music industry is streaming, where users pay a monthly subscription fee to listen to anything, anytime. (Here's my strategy for streaming.)

Streaming is new and still getting the kinks worked out, but now that the services exists, they're not going away. Music streaming services may become the next equivalent to Cable TV.

David Lefsetz elaborates:

Do you think you’re paying when you watch sports on ESPN? YOU ARE! Approximately five bucks a month, whether you watch it or not. The key is to make music listening feel free, even if it’s not. We’re on that road, but too many musicians want to kill it, because it’s a nascent business. It’s like killing the iPod because it didn’t work on Windows and there was no iTunes Store. It’s like doubling down on Kodak because you don’t own a digital camera and who’d want to shoot pictures each and every day other than a professional?

We finally have the tool for success, the way out, streaming services, but you want to kill them. You’d probably eat a cookie today rather than forgo it and have twenty tomorrow.

Killing piracy kills the music business. It cuts down on listener experimentation and innovation. Who’s gonna make something that radio won’t play if there’s no free listening and sharing online?

The industry isn't based around getting signed anymore. As DIY musicians, there's no simple formula for success; everyone is figuring it out as they go.  It's not that the goal posts have moved, it's that the goal posts have been taken off the field. The freedom from labels is as liberating as it is scary.

But piracy is an economic reality. We can either learn to leverage this for our gain to build our fanbase or we can thrash helplessly against the relentless tide.

Update: There's a new BitTorrent service called Triblr that is designed to continue functioning even when a BitTorrent tracker is shut down.

"Like many other BitTorrent clients, Tribler has a search box at the top of the application. However, the search results that appear when users type in a keyword don’t come from a central index. Instead, they come directly from other peers." 

"Downloading a torrent is also totally decentralized. When a user clicks on one of the search results, the meta-data is pulled in from another peer and the download starts immediately. Tribler is based on the standard BitTorrent protocol and uses regular BitTorrent trackers to communicate with other peers. But, it can also continue downloading when a central tracker goes down."

So hackers/technologists become craftier in response to crackdowns. No surprise there. Piracy isn't going anywhere, so build your band's business models to accomidate this.

Spotify Takes Another Shot at Pandora

Spotify added a radio feature where you can build stations based on your favorite artist. Unlimited stations, unlimited skips, and access for both free and paid subscriptions.

I don't see any remaining competitve advantage for Pandora that Spotify can't match. Spotify is going to be the new heavy-hitter for the digital music marketplace.

My Crash Course for Streaming

What Do We Do About Streaming?

There's been quite a raging controversy over Spotify over at Hypebot as musicians across the industry chime in with their opinion on the streaming service. 

Zoe Keating, Cellist and brilliant DIY musician, talks about how independant artists are treated unfairly.

         That’s it. That’s my complaint: fairness.

If Spotify would level the playing field and make the distribution equal to all artists. I would lay off (since I am sure that my constant complaints are a total priority for them!). Now, if Spotify was to make those royalties algorithm-based, they’d have my full nerd support. For example if, thanks to their 'related' algorithm,  people listen to small-artist X after listening to large-artist Y, then I could see that a particular play, not all of them, of artist Y could be ‘heavier’. However, if people end up at artist Y by searching for them directly, the play-weight should reflect that. Data, do it with data!

But just to pay tracks from major labels more because they are major labels, that is so OLD. Where is the revolution in that?

Four indie labels have already withdrawn from the service. Sam Rosenthal of Projekt, the most recent label to pull out, issued a public statement explaining the label's decision bluntly:

For a stream on Spotfy.... NOW READ THIS CLOSELY..... on average $0.0013 is paid to Projekt's Digital Distributor. 5000 plays generates around $6.50. In comparison, 5000 track downloads at iTunes generates $3487. To be clear: I am not suggesting that every stream would have been a sale at iTunes. Believe me, I understand the reality of the music business. I am providing that as a comparison for you. Let's look at this another way: To earn the U.S. monthly minimum wage - $1160 - 892,307 plays a month are needed at Spotify. This is not a viable number for artists.  

Spotify responded to Projeckt by changing the subject:

Spotify does not sell streams, but access to music. Users pay for this access either via a subscription fee or with their ear time via the ad-supported service [just like commercial radio] - they do not pay per stream. In other words, Spotify is not a unit based business and it does not make sense to look at revenues from Spotify from a per stream or other music unit-based point of view. Instead, one must look at the overall revenues that Spotify is generating, and how these revenues grow over time.

Spotify is generating serious revenues for rights holders, labels, publishers and the artists that they represent.  We have paid over $100m to rights holders since our launch, and the overwhelming majority of our label partners are thrilled with the revenues we're returning to them. Spotify is now the second single largest source of digital music revenue for labels in Europe, according to IFPI.

But is this current royalty structure sustainable? According to Spotify's filings in the UK, it lost $42 million on licensing fees in 2010 alone despite a five-fold increase in revenues from the previous year. 

What does all of this mean to an independant artist? Is streaming worth the loss in income so more fans can listen to your music? Can you ever break even on streaming? Is it better to just ignore the whole deal?

Here's how I see things playing out:
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1) Streaming services are similar to radio in that both benefit major labels with more money and muscle than independant bands. 

When it comes down to corporation-level negotiations, a DIY artist will always be at a disadvantage. Self-sufficent bands don't have legal departments, lobbyists, consultants, piles of cash, or a fanbase ranging into the millions that can be used in negotiations. If Spotify can't sign a DIY singer-songerwriter it's no big deal, but if Spotify doesn't have access to the entire Universal Music catalog, the streaming service will be severely crippled. The streaming service has to make that deal.

As such, these large entities leverage their influence and power to ensure that they maximize their benefit from negotiations. Organizations not at the table miss out.

It sucks, but I don't see a solution to this problem without either a PRO stepping into negotiations or a coalition of DIY artists forming their own right's group.

2) There's no turning back, the cloud is here to stay.

For better or worse, streaming services figured out how to monetize piracy. Judging by the success of Rdio and Spotify, businesses have made their services more appealing than piracy. Unless there is a game-changing method of piracy to replace BitTorrent, the ease of use of the cloud will continue to draw in customers. (Piracy in Sweden is down 25% since the Spotify's introduction.)

Businesses won't give up this revenue stream without a fight.

3) Streaming is marginally better for indie musicians than radio.
Radio was a passive music experience, with a song selection heavily influenced by who had the most cash for promotion.

Streaming/cloud services/piracy enable an active music experience by allowing curious fans to give new bands a try. It won't pay much, if anything, but it does benefit smaller and niche bands that wouldn't get much airplay on traditional radio.

A minor win.

4) Streaming an album is a moral dilemma.
As a fan, it was absolutely awesome to hear the new Mastodon the day it came out for free on Spotify. Now I've got no qualms about throwing dollars at Mastodon, I've bought every studio album because they're that gravy. But. having spun the album a few times, there wasn't any reason for me to buy the actual album anymore.

This is a mammoth moral dilemma.

Instead of Mastodon seeing my entire $10 for a digital download (minus iTunes' cut), the money is instead spent on a subscription to an intermediate who only offers the band a fraction of the $10. The middleman (streaming) scoops most of the profit off of album before it ever hits the band.

Owch.

How do we cope with this?

5) Delaying and limiting releases to streaming is an effective compromise.

By delaying release of new material to streaming services, we ensure that super-fans who are willing to pay for a "brand-new" album actually pay for the album, while not excluding casual listeners who may convert to a sale later down the line. This is the same method of price discrimination that movie companies use; movies don't come out on DVD/Netflix until months after they've left the theaters. This ensures that movie-buffs willing to pay a price premium to see a movie in theaters actually pay.

For the same reason, any b-sides, rarities or limited-edition material shouldn't be released to streaming services as this would discourage willing fans from paying at the cost of providing the material to casual fans, who really won't care about "extra" material.
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What are your thoughts on streaming?

Spotfy is Beautiful

I've only had it for 24 hours and already I'm a raving convert. Spotify is the promise of cloud music delivered.

From the Hypebot article interviewing Spotify's CEO:

Has Spotify, as some have said, helped eradicate music piracy in Sweden? 

Lagerlöf: Yes it has. Or to clarify, it has eradicated music piracy almost on its own. Sweden was the home of Pirate Bay. They even had their own political party and made the prime minister in national television declare "Off course the youth shall be able to download music for free".

Three years later, The Pirate Bay is not mentioned by anyone anymore. Spotify is, on the other hand, mentioned by almost everyone - including the old Pirate bay fans. 

This did not happen because some new radical law or brutal police force were implemented. Neither because a confused prime minister changed his mind again and embraced the music industry. It all happened simply because the users found a new legal service that they actually thought was much better than the old Piracy one. Now, some time later, when they have

invested their time and effort in making playlists etc. and would like permanent and unlimited access to it - they are starting to pay for music. For the first time in their lives - music is worth paying for.

 That's the core of the issue. Piracy was faster, better, and easier than any legit offering, so it won. Now, for $5 a month I can hear anything I want instantly with no DRM or glitches.

Spotify is another reason I'm optimistic about the future of the music industry. I was giddier than a twilight fan at a premier when I first tried this service. It's intuitive, simple and it works.


It's a great time to be alive for a music fan.