Welcome to Penny Fractions, a not-quite-weekly newsletter on the music business. Next week, I’ll be hosting another reader call that you can sign up for here if interested. A reader asked about accessing linked articles that require subscriptions, so to address that to try and do a better job of linking to stories that anyone can read in the main text, and in the links section, I’ll specify if a subscription is required. Otherwise, if you enjoy this newsletter, please do continue to recommend it to a friend or support via Patreon. Now let’s revisit what’s become a favorite topic of this newsletter: User-Centric Streaming.
Updates on the Model
User-centric streaming, the streaming platform model where a subscription goes proportionally towards musicians, continues to gain increased industry awareness. I’ve written numerous times about the idea since 2018 and held a steady skeptical but supportive stance. Over the last few months there’s been an uptick in consideration of the idea, so here’s another check-in.
Last summer during its 2019 conference, the Musicians’ Union, the United Kingdom’s largest music union, endorsed a motion put forward by the classical musician Matthew Whiteside stating that the union would support the idea of user-centric streaming. Whiteside cited that user-centric streaming could address issues of fraud, poor payouts, and help move the business to more closely mirror classical music-centered streaming platforms like Primephonic and IDAGIO (which pay artists out according to song duration) as reasons to abandon the pro-rate model.
The Finnish Musicians’ Union commissioned a study on user-centric streaming in 2018, but the Musicians’ Union stepped up its support over the last couple of months, marking the largest public gesture since Deezer last September announced it was looking into the model. In June, the UK Labour Party followed suit by supporting for the idea with the union chalking up this win to successful lobbying on their part along with Tom Gray, currently the director of PRS Music and the Ivors Academy, who created the #BrokenRecord to address issues in the current streaming economy.
However, it would be a misnomer to say that either Gray or the union view user-centric streaming as a catch-all solution. The Musicians’ Union in a short FAQ wrote:
Is user-centric royalty distribution the answer?
This could be part of the picture, for sure. User-centric means that a subscriber’s £10 per month would be paid out on the music they personally streamed. At the moment, it is perhaps not well understood by music fans that the money they pay doesn’t go to the music they listen to. In fact, as much as 70% could go to the owners of rights in the music they never listened to, and this is after the platform has taken their share (around £3 per user).
Do we need to get labels to agree a 50 / 50 deals for all artists, including those who signed prior to the advent of streaming?
The MU would argue that this is a significant piece of the jigsaw puzzle. Getting record labels to reopen signed contracts when they are under no obligation to do so won’t be easy but it is crucial if streaming royalty distribution is ever going to get close to fair.
On top of expressing support for the idea, the Department of Digital, Culture Media & Sport in late July put out a report stating that it should investigate the streaming economy. Now, the Ivors Academy and the Musicians’ Union are continuing to call on the government for that push. The #BrokenRecord campaign and the call to #FixStreaming from the Musicians’ Union shows increased mobilization around an idea that in many ways is attempting to turn a casual understanding of artists’ financial struggles into political change. This feels markedly different from the previous few years where user-centric streaming remained hidden in research papers and in the suggestions of a handful of artists.
Mat Dryhurst, via his ever-insightful opinion on such topics, decried what he sees as “streaming fatalism”, where all ideas of music’s future contort back towards a streaming-only world. User-centric streaming is indeed streaming fatalism, where the horizon is only streaming. That’s why I think it’s worth going back to Whiteside's original proposal where user-centric stepped towards a different conceptualization of how music streaming currently works than an end goal in itself. Even IDAGIO’s model is fraught by trading one metric (plays) for another (time listened), but at least space is re-open for other innovative ideas. Dryhurst’s concern appears to be that such an obsessive eye on Spotify can distract smaller scenes from reconsidering this entire current system.
I’ve written and commented on alternative political economies for digital music and will continue in the future, but if a labor-led coalition is going to try and enact some change to the streaming status quo, why say no? Even more so when in the United States the last big piece of music legislation continues to reveal unfortunate holes. A single solution for the crisis in recorded music isn’t likely to be found but rebuttals and new directions need a more coherent vision forward, which can be seen in the Musicians’ Union and Gray’s campaigns. User-centric streaming wasn’t designed to solve all economic injustices in the record industry but likely isn’t going to make it any worse. Or if/when things do get worse, the finger of blame shouldn’t point to musicians who sought to make the system they were handed ever so slightly better. Plenty of executive suites across the industry can rightfully shoulder that blame.
Variety reported at the end of July that all three major labels are in no rush to get employees back to the office in 2020. In fact, quotes from the leaked emails imply that the labels are even tepid about returning back immediately once the calendar switches. Personally, I can’t imagine why folks would rush back to the office in the middle of winter.
Throughout the pandemic in the United States, a number of groups of independent music workers and owners have emerged, and I wanted to highlight two. First up: Music Worker Alliance, a New York City-based musicians group with members across the country, is looking to “improve our working conditions and amplify our voices in the political and economic decisions that affect our lives” according to its website. Solid goals! In recent months they’ve rallied a lot to support extending the current unemployment benefits. Also, in June, a number of independent talent agencies formed the National Independent Talent Organization to advocate for these small businesses, which are severely affected by the ongoing pause on music tours.
A Note of Financialization
The last couple of weeks have been fairly busy for Merck Mercuriadis, a former superstar music manager and the founder of the Hipgnosis Song Fund. The company bought up the publishing catalogs of R&B super producer Rodney Jerkins, synthpop icons Blondie, and Barry Manilow, where Hipgnosis purchased the singer’s recording, not publishing, royalties in a rare move. Mercuriadis even received a glossy press release...I mean profile in the Guardian, as well.
The other bit of intriguing news is that Round Hill Music is suing Tunecore and its owner Believe. Music Business Worldwide goes super deep into this lawsuit, which is worth reading. I wanted to note that MBW’s reporting never mentions that Round Hill Music is a private equity firm, whose business model isn’t all that different from the Hipgnosis Song Fund. What sparked my interest in covering private equity within the record industry is the shadowy influence it’s held on the record industry over the decades; and what new contradictions may arise with its growth in music publishing.
6 Links 2 Read
Universal Signs Two Major Deals in China – as it Launches New Label with Tencent Music - Music Business Worldwide
These deals help explain a bit of what the Chinese government was interested in regulating when Tencent came under its eye last year. Universal’s deal with NetEase Cloud Music should provide a better arrangement for the platform, no longer bound by Tencent gatekeeping American music. Then within months of purchasing a minority stake in Universal Music Group, the companies create a joint venture label. The Chinese government’s message to Tencent appeared to be don’t hinder domestic competition, even if it's still by far the largest firm, but do continue expanding and intertwining with international firms. Good to know that financialization will have a musical output.
I’m still mulling together my thoughts on Microsoft potentially buying TikTok and just the whole concept of TikTok being strongarmed into American corporate hands. Personally, not a big fan of the entire saga!
Live Nation Is Stuck in a Pandemic. What Now? / Live Nation Revenue Down 98% Due to Pandemic Shut Downs - Billboard (Subscription Required)
Counting down the days to the financial collapse of Live Nation likely isn’t a great use of one’s time despite the dire headlines attached to the company. The stock market’s already perversely accepted the company may fall face first over the next year, holding back another early March style stock-free fall. Despite all this, it’d be nice if anyone in government were to examine the live music market, which will likely be shut down for a year and still see its biggest player unscathed, while thousands of smaller actors in the space struggle.
How Struggling Indie Venues Are Lobbying Local Governments for Support — And Getting Some - Billboard (Subscription Required)
Now speaking of those smaller players, while the government refuses to offer more relief for Americans, music venues continue to lobby for help. The article observes that while the federal government stalls, city governments have attempted to help but certainly won’t be enough. Local support of music venues right now is necessary and in a moment of investment could be an interesting way of stabilizing that sector...but right now everyone needs federal, not just local, assistance.
Let’s break this down. Artists pay for playlist placement. Not for genuine fan engagement but rather to catch the attention of Spotify’s all-knowing but seemingly obtuse algorithm, so an artist’s music can be pumped into its playlists. That’s the “dream” of Spotify success. No wonder major labels gleefully sign deals with the company exchanging lower royalties to maintain cozy promotional relationships. Labels can accept lower payouts, as long it’s major labels content in all of the banner ads and advertising slots. Just another system where average artists never get heard and seeing money bleed further out of their pockets.
Digital Services' Appeal of Publisher Rate Hike Headed Back to Copyright Royalty Board: Sources - Billboard (Subscription Required)
The legal back-and-forth over the Copyright Royalty Board ruling that would require streaming platforms increased payment towards songwriters continues to be met with resistance from said companies (Spotify, YouTube, Pandora, Amazon, etc. I harp on this case often because righteous demands that streaming platforms pay higher rates should account for the decade-plus resistance to any form of payment increases by these firms.