The finger on the red button, or The Awful Truth about Apple, Google, Spotify and the rest of the music streaming universe

These are insanely difficult times for musicians. In fact, without giving their own consent to this, the latter, together with independent labels, were drawn into a “dangerous quagmire” of musical streaming, controlled mainly by technology companies. As for deductions to copyright holders for streaming their music, this still remains an unsolved mystery. No one is devoted to the secrets of how royalties are calculated or assigned to various performers in the streaming ecosystem.

In what other industry will suppliers offer their product to distributors, not knowing for sure how much they will receive for it?

Nevertheless, at present, most musicians and independent labels are involved in the streaming world of Apple, Google and Spotify, as if this industry is their only way to make money. But this is not so.

Many people wonder why Apple is shifting priority from iTunes to Apple Music. Obviously, the company was forced to take such a step, discovering the world of streaming in order to preserve the prestige and dynamics of the market for the ecosystem of its devices. Without streaming music, this ecosystem would not have been sweet. Apple's success is built on absolute control over distribution channels, and Apple Music is a gaping hole that does not comply with the company's current policies. But taking into account the fact that most of the content presented in the iTunes catalog was available on the streaming services of competitors, the position of Apple looked somewhat outdated. The market itself was working against the ecosystem of "apple" devices when iTunes, with its paid downloads of content, began to sag against the background of music streaming, which became the dominant model.

However, for Apple, Google, Spotify and all other streaming services, the impact of their activities on the fate of musicians and independent labels never mattered. While these companies are only hinting that economies of scale will ever be able to make a profit for the participants, the harsh truth of life shows the opposite.

“Streaming makes life difficult for iconic artists who sell 1,000 copies of each album,” the famous British guitarist and composer Matt Stevens told me. “If 1000 people listen to an album through a streaming service 10 times, we’ll probably earn a few cents compared to a thousand sales of digital versions of the album, which creates a model that will pay modest expenses for sound recording. Currently, with downloads this makes sense in the long run, but now is not profitable. If we move on to streaming music, this part of the revenue will completely disappear, and we will have serious problems. ”

In fact, we are in the very “heart” of a perfect storm. After the storm is over, we will witness the demise of the commercial music industry.

It all started with the Napster file-sharing network and the participation of listeners in the exchange of compositions. The music industry panicked, and the selfish public came to the conclusion that music should be free. Musicians and independent labels passively watched how Spotify, Rhapsody, MOG and other streaming companies built services with such low levels of fees paid to copyright holders that for the latter, the activities of the services did not differ much from piracy. This, however, does not apply to the main investors of these services, among which the well-known large labels stand out. For example, Warner, Sony, and Universal are among Spotify's key partners.

There were discussions about “royalties for copyright holders”. Please note that no one talks about “royalties to musicians”. Copyright holders are primarily investors. So the model of streaming services to a large extent provides that investors return their own money.

In addition, the musicians were misinformed about the results of such services. Time and time again, they heard that streaming companies will someday increase authors' fees for using their music. In reality, as was proved by the community of The Trichordist, which advocates for musicians, royalties decrease with the growth of services. Only the profit from the subscription is growing, which can not be said about the deductions for the musicians themselves.

The greatest irony is that streaming services do not generate revenue. This does not mean that investors do not earn incredible amounts of money on them. Due to the amazing complexity of licensing and building these organizations in the image of the Ponzi financial pyramid, money can be said to flow like a river. In the case of Spotify, giant monetization is seen as an IPO or takeover of companies. If any of the above happens, then all enterprises - including the main investors - will receive a lot of money, and all that remains is a gnawed skeleton that will eventually collapse to the ground.

Obviously, almost all insiders of streaming companies see this model only as an unstable structure with short-term prospects. They all participate in this for the sake of the possibility of quick profit and do not mind for this to press the famous "red" self-destruction button .

Those who are unable to leave this business are doomed. You will see the fast withering away of the remaining companies. Once George Carlin said the famous phrase: "The game is falsified, but it seems that no one notices it."

My advice to musicians and labels is this: you should move away from streaming services and look for other opportunities available to them, for example, Bandcamp and PledgeMusic, which, judging from the outside, preach relatively honest rules of the game. Another option is to create your own infrastructure. I know at least a couple of teams that are trying to build a business “in fairness”. Their streaming concept is focused on the performer, which eliminates the possibility of any fraud in order to obtain benefits for individual players.

The big question that musicians and independent labels need to ask themselves is: why do they allow these companies to determine the value of their music?

While streaming companies are promoting the myth of mass availability, offering great opportunities for mass adoption, the truth is very far from that. It is up to you to create your own audience and related ecosystem with the help of communities, social media, virtual events. Do not forget about the “non-digital” methods of attracting fans, which include concerts, tours and a kind of “creative guerrilla warfare with a tactical bias” regarding real locations that are somehow related to music. None of these things is affected by the fact that your music is on any streaming service. You can direct people interested in what you do anywhere to give them access to your music.

Inevitably, musicians and labels will eventually struggle alone with streaming services and eventually lose this unequal battle one by one. Now is the time to plan your future, developing your own model today, regardless of the activities of these companies. Bring back your independence and make sure that your music benefits people who really value it, and not soulless streaming companies seeking to take you a penny.

About The Author: Anil Prasad is the founder of Innerviews: Music Without Borders, the world's first online music magazine, created in 1994.