Can Musicians Live in a Free, Streaming World?

One industry exec offers his thoughts on the new music landscape

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Miles Davis. Harry Chapin. Bon Jovi. They’re all in a nondescript office building near Manhattan’s Madison Square Garden. No, it’s not a time machine. It’s a room housing the master recordings of some of their live performances: Davis at the Newport Jazz Festival in 1967, Chapin playing Avery Fisher Hall in 1974, and Bon Jovi tearing up the stage in 1988. They’re just a few of the many live recordings owned by Concert Vault, an archive that is now fighting a race against time to digitize the vast collection—some of the tapes are so old that the engineers get only one attempt to convert them before the fragile, brittle material falls apart—and monetize it too.

Today’s tour guide is George Howard, the COO of Concert Vault (and sister companies Daytrotter, Wolfgang’s Vault and Paste) and a firm believer that music can be profitable if provided to listeners through a subscription model. After we interviewed him for a piece about attempts to fill the music-industry gap between DIY and old-fashioned labels, Howard invited TIME to check out the goodies at Concert Vault’s office—about 90% of the archive’s holdings are in secure off-site storage but the ones here in New York are in the process of being converted—and shared his thoughts about the current state of the music industry.

Do the recordings in this archive exist anywhere else?

None of them. That’s very counter to Internet logic, where music wants to be free.

Why is it so important to you to have exclusive content?

My fundamental belief is that since the rise of Napster, music has been on this downward trajectory of value, an inverse relationship between access and value. The more access that people have to it, the less scarce it becomes, the less value it has. It’s very clear to me that’s happened. Anybody who thinks it hasn’t is crazy.

A lot of people have played a role in that. It started with the music retailers in the ‘80s, who realized they could make more money selling the space on their shelves than they could selling the music. That was sort of the beginning of the end. Then you saw the race to the bottom on the pricing of CDs.

So record stores would rent out the shelves and the record companies would get the money when the product sold?

It was less complex than that. The record store would say, “If you want us to carry your CD, you pay us.” All that did was disincentivize the record stores to keep titles on the shelves. That led to the dawn of record stores that only carried Top 40 stuff. Then there was that moment, like, hooray, now everything can be available at any time because there’s no cost of goods to keep them online.

The problem with that is, everything did make its way online. For a little while, there was actual competition around who had the better online catalog, and then there became parity. And at that point, music lost all its value. Because then people weren’t deciding they wanted to listen to music. They were deciding they wanted the technology that was giving them the customer experience. Which, from a customer standpoint, I completely understand.

Do you think there’s any way to stop that downward valuation?

We’re doing it. It’s been about a year and a half now, since I sat down with the founder of Daytrotter, who for five years or so had done an advertising-based model, the same model used by Pandora and Spotify and everyone else. I said, we’re changing. We’re going to make people pay.

(MORERevenue Up, Piracy Down: Has the Music Industry Finally Turned a Corner?)

Do you see those streaming music services as your competitors?

We have a totally different market. It’s easy to throw stones, and anybody that’s fighting the good fight, I give them credit. I just think that the unintended consequence of what these companies like Spotify have done is that they’ve really enforced the fact that music has no value in their customers’ minds. We’re competing only so far as that we disagree.

Do you think making a living will become easier for artists if streaming services start to require users to pay for a subscription?

Artists need to stop thinking about streaming royalties as ever being material revenue. It’s never going to be. And I say that not to say the payouts can’t be big. But if you’re an artist getting a big payout from one of those streaming services, proportionally, that will still be immaterial to the other money that you make.

There’s a great business matrix called the “customer journey.” You listen to something on Pandora or the radio or whatever, and you think, “That’s interesting.” In the customer journey the next step is trial and consideration. So then you go to Spotify because you can listen to that song over and over again. On the first one, because it’s non-interactive streaming, the artist payout is something like .0003 cents per song; then you jump to Spotify-land and that number goes up by an order of magnitude, now it’s .003. Still nothing. But from an artist’s perspective, if they can make the next jump in the customer journey—I call it passive, which is Pandora, to active, which is Spotify, to passionate—that’s purchase and repurchase.

So you don’t have to choose.

They work together, but only if you think about it that way, and most artists don’t get there. It’s like a red herring. And we don’t help, people that are pontificating about the rate issues and the future of music. You’re not helping the artists because you’re getting them concerned about something that is wholly immaterial.

You need to educate them more on moving it over to some value-adding place for them, and then these things get contextualized differently. Right now the context is all around, “Well, if enough people are streaming, even though it’s fractions of fractions of pennies, they’ll bloom into something.” No, they won’t.

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How long do you think it will take the music industry to realize that?

I think it’s sooner than people think.

Has the number of hardcore music listeners, the people who make those purchases, changed?

It’s changed in our favor, and I think that’s evidenced by vinyl. Vinyl’s been such a nice bright spot of growth. Vinyl signifies the fact that people want to hold their music. I teach at a college and I see that this is what they want.That shows me that they’re tired of music being commotidized to a degree that it doesn’t mean anything. That’s not to say college kids want to pay for music, because they don’t. They will pay for other elements. We have a million people on our email newsletters. I would quantify all of them as hardcore music listeners.

Is there any relationship between access to free music and the growing number of listeners?

Sure. Of course. I think the only good part about the ubiquity of music is that it does occasionally have that moment where it snaps you out of the miasma of stuff floating around and you go, oh wait, I used to like music.

(MORE: Illegal Music Downloads Not Hurting Industry, Study Claims)

How does piracy affect things?

I send out my share of cease-and-desist letters. We’re aggressive because we value the music. We don’t want to de-tether that music from the overall experience. The big buzzword in music streaming sites for the next year or so will be curation. Everybody’s going to talk about curation because that’s going to be their apparent competitive advantage: you can get everything everywhere but we’re going to tell you what to get. It’s much easier said than done.

You have to have somebody who has opinions.

That’s just it. You have to have somebody who has a point of view. Frank Zappa used to use the phrase “conceptual continuity.” I think that’s what people’s brains want. You want to be turned onto something. We all do. We’re all searching for that moment that we all had when we were 15 years old when we heard music that changed our lives. You’ll never find it but it’s a good quest.

4 comments
fridayfracas
fridayfracas

“conceptual continuity.” 

"You’ll never find it but it’s a good quest."

"I call it passive, which is Pandora, to active, which is Spotify, to passionate—that’s purchase and repurchase."

"Moving it over to some value-adding place for them, and then these things get contextualized differently."

"Music being commotidized to a degree that it doesn’t mean anything. "

"They will pay for other elements. "

"does occasionally have that moment where it snaps you out of the miasma of stuff floating around and you go, oh wait"


Such speculative nonsense being treated like it's the Oracle at Delphi by Time.  Meanwhile, there's an eco-system fix that has been created by members of the securities exchange community, but members of the arts and entertainment community and tech community won't even bother to look at the slide deck for it:  http://bit.ly/NewEcosystemforCopyrightedWorksslidedeck 



ellak365
ellak365

I guess it's always important to use a streaming service that you know pays well. I use Torch Music, which uses youtube videos so I know it's legit. Anyway, I love it and I'm so glad I have it. I'm so happy to get home and turn  on my playlist on my computer and just relax with my favorite music. Has anyone heard of it? You can check it out at music.torchbrowser.com (it's really difficult to find!) 

mcreadyblue
mcreadyblue

Greedy record labels would rather music of the greats disentigrate into dust before they would let fans have it for free.