On Streaming and Piracy

By · Illustrations Stallio (CC) · Date 03/03/2016

Technology is changing the recorded music business, as it is changing all businesses. 10 years ago, music piracy was seen as the great threat to the future of music. It’s since been largely replaced by music streaming—in the minds of many musicians, not much of an improvement. For classical musicians in particular, this seems a knotty problem: classical music is a highly specialized art form, and so of course will never appeal to a mass market. And without a large audience, the revenues of music streaming don’t amount to much. But there are opportunities in the interconnected world too. The digital market is more than just an amorphous popular audience, and many of the complaints and worries about online music consumption stem from fundamental misunderstandings about how digital economies work.

The paradox of digital economies is that they best serve two completely opposite types of business: enormous, monopolistic corporations, and tiny, highly focussed shops run by at most a handful of people. The large corporations run by serving a huge number of people, making their product free or very cheap to draw in as many users as possible, and generally earning revenue through advertising. The small ones have proportionally fewer customers—customers who have particular desires or needs that are too numerous for the big businesses to meet, or that run against the big companies’ interests. These businesses make their money through direct sales. The analyst Ben Thompson has made the analogy to the rainforest: massive trees at the top, taking most of the sunlight, but extremely fertile undergrowth.

In music, streaming is the mass-market product. Users pay a small fee (or nothing at all) for access to a gigantic catalogue, and can let that catalogue play without any real distinction in the quality of the music they hear. When you have access to everything, why give special attention to anything?

The problem with services like Spotify is that they’re currently great for both casual music listeners and devoted fans, but bad for musicians with limited appeal. Spotify’s most recently released figures for royalties paid to musicians are between $0.006 and $0.0084 per play—fine if you’re the kind of musician who gets 100,000 plays a day, but not so good if you get just 1,000.

Even worse, listeners’ fees aren’t paid directly to the musicians they hear. Instead, all listener fees are pooled together, then divided out proportionally to musicians based on their total number of plays, so a pop musician who gets 1,000 times more plays worldwide than a solo flautist gets approximately 1,000 times the payout. A listener who listens to 100 songs in a month pays about $0.84 to the musicians they hear; the rest of their $10 fee goes to more popular musicians, and to Spotify. Moreover, longer pieces like symphony or sonata movements are worth less than short pop songs, because payouts are made on the basis of the number of times the track is played, and in the time it takes one listener to hear a Mahler movement, another has played a Taylor Swift album. On Medium, one critic quipped that this is “like you bought a CD and the store told you that you had to listen to it 1,000 times, or they will give your money to Nickelback.”

Tidal, the “musician-led” streaming service, has failed because it addresses neither the mass market nor specialized customers. Because it’s more expensive than the competition, Tidal is less appealing to the mass market, which trends towards the equivalent service that costs the least. At the same time, their “specialist” features—higher-quality streams and exclusive albums—are not enough for most specialists to be interested. Higher-quality digital files are still, to many listeners, just digital files, and the exclusives are neither many nor varied enough. (If you sign up for an exclusive Martha Argerich album one month, you’re unlikely to stick around for an exclusive Jay-Z album the next.) In other words, it’s neither interesting enough to music lovers nor cheap enough for the mass market, and so falls between two stools. Despite the fanfare of its launch, Tidal limped into the iOS App Store’s top 700 downloads; one year and three CEOs later, it made a splash only because Kanye West literally begged his fans to use it.

So if streaming is the future of music, and a musician-led streaming service is doomed to failure, then what’s the solution? Much as with technology companies, there are two ways for a musician to make a living on the Internet: musicians with mass-market appeal, who must appear on streaming services, as it’s in their interests to be easily accessible to as many listeners as possible; and musicians with a small, passionate audience who, to make a living, will have to have dedicated listeners who are prepared to pay for their music. Many artists complain that they are underpaid by Spotify, but Spotify already pays 70 percent of its revenue to musicians—well, to their labels at least—so a significant increase is impractical.

Professional musicians who know that their music has limited appeal should think very carefully about whether their music belongs on a streaming service at all. Small record labels should do the same. Few people are in music, least of all classical music, for wealth or power, but giving music away for next to nothing is a surefire way to never make a living from it. Instead, musicians can continue doing what they’ve been doing in one form or another for centuries: selling their music.

There are two prominent objections to selling music without providing it to one of the big streaming providers: firstly, there’s some evidence that streaming helps mitigate the risks of piracy, so musicians who choose not to use streaming are open to those risks; and secondly, withdrawing from streaming services necessarily limits a musician’s possible reach, because fewer people are able to access their music easily.

Responding to piracy by letting your music be streamed seems to me like responding to a burglary by giving away all your possessions. Streaming may mitigate the risks of piracy, but it also hurts sales. The people who pirate the most music tend to spend the most money on music. When people pirate music, they know that the artist isn’t getting paid; when they stream music, they think the artist is getting paid. So a music pirate who grows to like a certain artist may be more likely to support that artist in future by buying their albums than someone who encounters their music on a streaming service.

And there are other ways to fight piracy. The author Neil Gaiman boasts that he convinced his publisher to let him give away the audio version of his award-winning children’s novel The Graveyard Book for free. His claim is mostly true. The audio of the book is on YouTube, through recordings Gaiman made doing live readings during the promotional tour. So it’s free, but the experience is far from ideal. A variety of microphones and locations mean inconsistent audio quality. But nobody needs to pirate it since the whole book is available for free. As a free-with-limits version, it’s become basically a promotional tool for itself.

On reach, for artists (or anybody) with a small audience, the key is not to be available to everybody, but to become known to the people who will be interested. Communities form on the internet around specific interests; just look at the new music community on Twitter, or the Elitist Classical forum on Reddit. (The name of the latter is ironic; the forum exists for sharing lesser-known works.) If you’re a musician who wants to reach a new audience, all you need to join these communities is a social network account. There are, too, traditional routes like advertising and magazines. And as the world grows more interconnected, just as for niche artists, there is more room for new magazines based on niche interests to emerge. You’re reading one right now.

Classical music is an urban art. Musicians need a high level of training, as composers, as performers, and need to connect and work with other highly trained musicians. On top of that, more complex music, by its nature, appeals to a smaller proportion of people. Thus, the larger the population, the more people that can write, play, and understand (or at least enjoy) complex music. In the early Industrial Age, as it left the control of the Church and royalty, classical music flowered in the major cities: Vienna, London, St. Petersburg, New York. The populations of these places, and a general social taste in the upper middle classes for “refined” art, meant that an economy for these musicians could be sustained.

But no city will ever have a population near the size of the Internet. According to the most recent statistics, there are 3.17 billion Internet users, up from 2.94 billion in 2014. These numbers are hard to grasp, but to attempt to put them in context, the difference in numbers from 2014 to the end of 2015—0.23 billion (or 230 million)—is equivalent to the populations of the UK, France, South Africa, and South Korea combined (give or take a few million). That’s only the growth, a year-over-year increase of just eight percent.

So even though the percentage of people interested in one musician’s music may be tiny, just a fraction of a percent of the total population of the Internet is still a large number of people—more than enough to provide a viable living. But that can only work for musicians who are looking in the right place. Classical music is not a mass-market field; it’s a niche, in which thousands of tiny sub-niches exist. Maybe you’re interested in female composers, or post-war serialism, or plainchant, or 18th-century string quartets. For every one of these interests, there are other people online who share it, and around every shared interest a community can form, and in every community, there is room for professionals to do their jobs. And though technology is changing the music business, music itself is changing only in the way it always has: a slow, shifting landscape of influences and reactions and new ideas.

To be sure, it’s won’t be easy for most musicians. In a market bigger than any in history, competition will be fierce, and composers and performers who wish to succeed will have to demonstrate not only great control of their craft, but a fierce degree of independence and originality. But the future’s bright. Originality and craft are modern composers’ stock-in-trade. The audience is there, for those who can find it. ¶