drip drop

Learn to Quit Worrying and Love the Stream

This excerpted interview with Patrick Carney, the drummer for the Black Keys, in Digital Music News is revealing in a really unfortunate sense. Much like actors talking about public policy, musicians talking about business gets a bad rap; some people presume that they just don’t bother to get the details right—just reaching for the McNuggets, if you will. I don’t believe this is at all true as a general matter; I’ve heard from plenty of musicians who have an excellent understanding of the markets they sell their work in. Carney doesn’t do much work to roll back the stereotype in this interview, though.

First, he has this to say: “the idea of the streaming service - like Netflix for music - I’m totally not against that, it’s just that we won’t put all of our music on it until there are enough subscribers for it to make sense. There are only about a million-and-a-half Spotify subscribers, I think, but if there were like, 200 million -“
I’m really not sure why large scale is the only thing that “makes sense” here. It sounds like he may in fact be “totally against” a Netflix-like music service, he just knows that if it has 200M users, he won’t be able to stand his ground. He’ll have to distribute through it because it’ll be the dominant platform. If he is concerned about the price he can charge for his music, though, I think he has the pricing economics completely backwards. Apple is today’s dominant distributor, and they’ve been able to dictate terms to the labels because of that; 99¢ single-track downloads have done as much to erode the traditional profits of the music industry as all the Napsters in all the land. Whereas Spotify, though popular, is still very much on the weak side of the negotiating table; some think they’re having trouble raising more funding at the valuation they want precisely because investors see them as captive to the labels, who will simply raise prices to eat any surplus earnings that Spotify manages to bring in (TechCrunch). You can be absolutely sure that Spotify at 200M users would be less generous with the labels; hell, they might even pull a Netflix and go get some content directly.

There is a hint of the real conversation here, which should involve how a fan’s lifetime streaming royalties stack up against the download royalty for a particular track. 66 plays does sound like a lot, but it’s not really that high; as an example, the highest play counts in my iTunes library, which dates back to June 2004, are in the 40s. Those counts definitely miss some plays, and they’re certainly going to get to the 60s sometime soon; some of them are less than two years old, so they’re moving at a brisk clip. These are my most favorite tracks, to be sure, but the distribution is pretty smooth, so the rest of the tracks will also get to ~66 in due course. If Carney’s right that 66 streams = 12¢ to the labels, then 66 isn’t the relevant number for this math, but since the number’s unattributed, I can’t really check who’s counting what; it does seem like the number could be larger.

Whatever the number of streams to one download, the larger point here is that consumers can’t be forced to download by holding out on streaming, and even if the latter does cannibalize the former somewhat, it seems likely that that effect is offset by the revenue from streamers who never would have downloaded. I certainly fall into that category with respect to the Black Keys; they make a good track now and again, but I have no desire to own, especially when I can so often hear said good track sprinkled around any number of TV ads or shows (which they seem to have no problem doing). Ask any mobile app dev or freemium web service: the audience difference between free and 99¢ is orders of magnitude. Getting any incremental revenue from free users can absolutely add up, and in many cases it’ll be revenue you wouldn’t have seen any other way.

As it turns out, Carney’s own comments aren’t even initially what got my goat. Digital Music News tweeted the link to their post with this pull quote: “Musicians don’t like Spotify because 1,000 plays earns you a hamburger; 1,000 iTunes sales could maybe pay your rent.” The problem is that the quote comes from the comments to the post, not the post itself. Now I believe in the potential for valuable commenting communities as much as anyone, but I think the presumption still has to be that a quote followed by just a link to an article is attributable to either the writer or the subject of the article, especially for sites that style themselves as “News”. Here it’s particularly a problem because the false 1:1 equivalency of streams and downloads is totally facile and misleading; musicians are only getting as ripped off as the quote implies if they only expect their fans to listen their work once after buying it. While that’s certainly happened to me and every other music fan out there, I’m willing to bet every last one of us felt that we were the ones who got ripped off in that transaction. By choosing that pull quote as the introduction for the article to anyone coming through Twitter, Digital Music News has given the impression that either they or Carney are willing to wander through the ridiculous in the course of this discussion. The error is compounded by the fact that the article is an excerpt of an audio interview, so if I just read the article, the natural conclusion is that while I didn’t see the quote in there, it was said somewhere else in the interview, which I may or may not have the time or ability to listen to all the way through.

Also FWIW, as pointed out in the comments, Sean Parker did not make his alleged $2.5 billion on Napster, regardless of whether or not that was a scheme to “figur[e] out ways to steal royalties from artists”. Napster was never given an opportunity to generate any significant revenue streams before they were sued into bankruptcy; Sean Parker owes substantially all his wealth to his involvement with Facebook.