Streaming IS The Future, But Nigerian Music Needs To Turn On The Tap

Last week, Adele’s manager, Jonathan Dickins, was reported as saying during an interview that streaming is the future whether musicians liked it or not. His comments followed news that Taylor Swift had pulled her entire catalogue from Spotify, the world’s most popular streaming service.

Taylor Swift is not the first musician to grow less than enamoured of the service, or with streaming as an income generator for the industry. Last year, Radiohead musicianThom Yorke described Spotify as “the last desperate fart of a dying corpse”, when the group pulled its music off the service. More recently, musician/songwriter Aloe Blacc published an op-ed in which he also expressed grave reservations about streaming as a sustainable source of income. How true, can it be then, that streaming is the future?

Looking at it from Blacc’s perspective, there might be a point about the reward system but I think rather than an indictment on Spotify, it’s more symptomatic of where the industry is, as a whole. Blacc writes –

“Consider the fact that it takes roughly one million spins on Pandora for a songwriter to earn just $90. Avicii’s release “Wake Me Up!” that I co-wrote and sing, for example, was the most streamed song in Spotify history and the 13th most played song on Pandora since its release in 2013, with more than 168 million streams in the US. And yet, that yielded only $12,359 in Pandora domestic royalties— which were then split among three songwriters and our publishers. In return for co-writing a major hit song, I’ve earned less than $4,000 domestically from the largest digital music service.”

If that’s what’s now considered a streaming “success story,” is it any wonder that so many songwriters are now struggling to make ends meet?”

It sounds dire, but that’s 168 million streams versus exactly how much in sales? According to this site, the track sold 237,000 copies when it debuted in July 2013 and only broke the 1,000,000 mark 5 months later in October. Take a look at Billboard’s half year charts for digital singles too. Album sales are down, and have been on the downward trend since 2010. Streaming and subscription revenues, on the other hand, are growing, climbing 51% in 2013 and crossing the $1bn mark (summary here; full report here). The head of Global Trends and Futuring for the Ford Motor Company has also been quoted as saying that “young people prize access over ownership.”

So, what’s the issue? Is Spotify, together with the other streaming services simply ripping people off?

The issue may be that content creators don’t fully understand the service yet. Chances are that many users don’t understand the back-end either (they don’t really need to, in all honesty), so if you’re one of them, you might want to check out this post. Another post suggests that Spotify has not sufficiently controlled the narrative and has allowed content creators and the media replace fact with fantasy.

In the latter post (the Lefsetz Letter), the point is made, agreeing with Adele’s manager, that YouTube is by far the bigger monster, paying far less than Spotify does, closely followed by P2P platforms, which pay nothing at all. The post however disagrees with Adele’s manager on some music being taken behind the subscription pay wall, because that would simply push users to YouTube and P2P, leaving the content creators with nothing.

Does this mean anything for streaming in Nigeria? Probably not in the near future. Unreliable mobile internet and expensive data plans mean that very few people without WiFi modems stream much. Furthermore, given that most of our musicians give most of their music away for free downloads, there is little incentive to explore streaming anyway.

So, perhaps the Nigerian market prefers ownership to access and this is all moot for now. But I’m an advocate for long-termism, and mobile internet will work someday and voice/data bundles will become more affordable for the streaming demographic. What then?

The current industry model will probably need to change in a year or two. Right now, the model for success is giving music away for free, hoping it becomes a hit that leads to RBT revenue and, ultimately, live performances. This sort of ties in with Dickins’s breakdown of how revenue streams for successful artists today –

60-65% of their income is going to come from tickets, 15-25% from tour merch, 10-15% from publishing, 2-4% from ancillary and 2-4% from record sales.” (Here’s the link again, just in case; emphasis in the quote mine).

You can see though that it’s significantly different, in that 70-90% of revenue will come from touring (not “shows”!) and tour merchandise. However, publishing revenues aren’t insignificant either. Enter, COSON (and its pursuit of digital royalties).

If RBTs are going to be the way forward here, then the crazy percentages that the telcos take of the gross revenue (60-72%, before VAS companies split the net with the artistes/labels) need to come down significantly. The music industry should lobby as hard as they can for legislation to support this (shouldn’t be too hard, with so many entertainers gunning for office in 2015).

If, on the other hand, the African market is to become as competitive as the foreign market, then the industry needs to support its domestic music streaming companies. Streaming kills piracy, and if the numbers are large enough (hint, hint, artistes and label execs), it will put money directly in their pockets. As Lefsetz says, “tech is all about scale” and “people who put brakes on the future end up screwing themselves.”

In conclusion, everyone knows that digital is here and analogue is gone. For Nigerian musicians to fully maximise  revenue from digital, given that their largest market is local, they may need to approach the issue a little differently.

This post originally appeared on Rotimi’s blog.

Photo Credit: .scribe via Compfight cc

6 Comments

  • Oluseyi says:

    Once upon a time, a musician made a living by trotting from town to town and playing for tips—the “itinerant troubadour” model.

    Then came the printing press, allowing composers to sell the sheet music to their songs so that consumers could play them at home.

    Then came recorded music, allowing artists to capture, sell and distribute their performances for consumers to play back over and over again. This is when the “music industry” as we think of it today exploded. Rapid technological advancement, industrialization and significant jumps in audio capture and playback fidelity drove a boom in which many customers purchased the same music repeatedly, as 8-track and 90-minute cassette tapes, vinyl LPs, compact discs and eventually in digital formats.

    Digital formats were a double-edged sword, though, because they brought with them such a jump in conveniences but also a loss of tangibility—the album/record was disintermediated from the physical object—and more complicated notions of ownership and “theft”: if downloading a copy of a song doesn’t deprive the original owner, what harm has been done, the consumer thinks. As the support infrastructure to accelerate search, download and playback of digital music has improved to the point that all three become the same thing, in the form of “streaming,” the bottom has fallen out on the sale of recorded music.

    Is this a problem? Given historical perspective, recorded music as a significant income generator is actually the anomaly. We may simply be returning to a norm in which synthesized playback does not command the commercial premium that it has for the past 50 years… all of which is my extremely long-winded way of saying, No, streaming is NOT the future.

    The future of music is experiential. Touring, concerts and live performance, yes. Merchandise sales for popular/favored acts. Licensing to support advertising and marketing, or as soundtracks for television and film (and theater)—again, experiential forms. Streaming will persist, of course, but as a loss leader mechanism for increasing the popularity of acts and songs, a reality that will make it more difficult for pure play streaming providers like Spotify, rdio or Pandora to sustain themselves. Long term, the dominant streaming providers will be integrated plays like Google, Microsoft, Amazon, Apple, Walmart, GLO—businesses that can provide streaming as a value add to increase the appeal of their core, *paid* service.

    (See Amazon Cloud Music, already, and keep an eye on what Apple does with Beats Music.)

    It may take a good 10 years for these trends to play out, but the bottom line is that consumers care far less about music as a product than they do about music as an experience. That will be the key to building sustainable businesses around music.

    • RF says:

      Interesting take. However, I struggle to agree with recorded music as an “anomaly”. It might have been, at a point in time, but it’s been and still is the backbone of the industry. Though revenues are falling, it is still pretty much the highest income earner, if you check BMI and Billboard reports. Streaming revenue on the other hand, has increased exponentially year on year for the past 3 years… I think fewer people will go to concerts and acquire merchandise than will pay for streaming.

      • Oluseyi says:

        Seeing recorded music as an anomaly requires taking a long view—a centuries-long view—and seeing that the business model surrounding recorded music depended on scarcity, a scarcity that technology has obviated. Look at how the industry itself distributed profits: points for songwriting, composition, arrangement and performance were minuscule, while the majority of residuals (not to mention off-the-top percentages for direct sales) were for duplication, marketing, distribution… Yeah, Metallica got rich, but Warner Music got WAAAAY richer.

        Streaming is the same thing all over again: the bulk of the profits accrue to the infrastructure provider. Whereas in the past artists had little in way of alternative to major label record deals, today any artist can, with a little investment, stream their own music on their own site, or turn to SoundCloud or YouTube or Vimeo or… to create a dissemination point around which their fans can also have conversations and interaction with the artist.

        Yes, fewer people will go to concerts, but those fewer people will pay far more—cheap tickets in the US are around $30, while an album sells for approximately $10. And with the concert, depending on arrangements with promoters, the artist gets to keep a much bigger chunk (say, $12 to $18) vs with a traditional recording ($1). And a lot of people who listen to streaming music don’t pay. They’ll happily listen to an ad spot every 3 songs, for “free.”

        In essence, what I am saying is that music has become “content,” and that innovation in business models will see artists exploring different “containers” for that content—sponsored releases, such as Samsung and Jay-Z’s Magna Carter Holy Grail deal, co-productions such as Daft Punk’s work on the TRON Legacy soundtrack (it was basically an album) or subsidized music stores like Amazon’s Cloud Music (it’s a benefit of Prime, which costs $80/year and helps drive more physical retail sales).

        Music is now “value-add.”

      • Oluseyi says:

        Seemingly relevant: http://grantland.com/hollywood-prospectus/the-soundtrack-of-your-life-is-soundtracks-how-the-music-of-frozen-guardians-of-the-galaxy-and-the-hunger-games-mockingjay-defines-2014/

        I should probably put together a proper essay on this, as well as the larger trend of the death of media “ownership” (despite the users like @AndroidNigeria:disqus above), replaced by “access” or “availability.”

  • Truth says:

    I think I belong to the old generation who believe in owning the music rather than having access to it. Many reasons are responsible for my behaviour. Firstly, I don’t like listening to music below 256kbps bitrate (Believe me I can tell the difference between 128kbps, 160kbps and 256kbps). I actually prefer lossless formats for my very best artists/songs/albums. See, I have been buying physical CDs since late 90s and in mid 2000s I decided to start ripping them. I have over 1TB of music (not movies). Some are bought from iTunes and other music services, most are ripped from physical CDs however. I listen to music a lot (I’m that jobless) and my taste in music is very diverse. If I decide to subscribe to a streaming service, my data will be spent on music because I’ll definitely prefer streaming at the highest bitrate. I don’t know if Spotify or others have up to 256kbps streaming, besides it will interrupt playback trying to buffer. Now imagine when I go to a place where there’s no data services (my job takes me to places like this). So for now, I still prefer the hard way, load up my music to my phone (storage is 128GB) and I’m ready to go.

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