$$$'s In The Stream

This is Part Two of my series on Music Economics. The idea of the series is to investigate how musicians can make money in a post-streaming world. My goal is to help explore a better path for independent musicians.

If you are a musician, please liberally share this series with everyone you know, it can only be helpful if it starts a wider discussion.

Part one was my interview with C. Allen Bargfrede one of the men responsible for the most extensive study done on the economics of streaming to date. You can find that interview by clicking HERE.

For part two, I could not be more thrilled to have had this interview with Rain Perry.

Rain is an award-winning songwriter who appeared on the CW series "Life Unexpected." She has released many albums, has her own record label, and is now the director of a documentary feature about music economics called "The Shopkeeper." 

Here is the trailer for her movie.

The Interview

Get ready, this is a good one. Rain's documentary uses Mark Hallman's legendary "Congress House" in Austin Texas as a specific example of what is going on in music for most bands and producers today.

JBH: Hello Rain thanks for doing this, I will ask a few and see where that takes us, First, I am obviously curious about how you decided to focus on Mark Hallman's production at the Congress House, did you record there yourself? Or was it something else?

Rain Perry: Mark is my own record producer - we’ve done three albums together. We were talking about the Congress House one day and he mentioned that it had been open for over 30 years. I thought something had to be done to celebrate that. So he decided to have a party, and there was some talk about someone filming it, and the next thing I knew that person was me and it wasn’t just filming the party but making a movie about Mark as microcosm of what’s been going on in the industry. Mark’s story is perfect because he’s been there through the whole arc - the rise and fall of the industry. And he’s still at it and trying to figure out how to make it work now that music is free.

JBH: Second, I am very interested in music economics because one of the projects of my blog is trying to find ways to counteract music consolidation and create new paths towards profitability for independent artists. So, how have you made Precipitous Records work in the current environment?

Rain Perry: Thank you for doing that! The answer is: I haven’t. Like everybody else, I’m trying to figure out how to have a viable career now. I did crowdfunding campaigns for my last two records, which worked well in that they paid for the production of the albums. But making a living at it? No, I’m not. I’m a wife and mom whose husband makes the money, which I supplement by teaching and doing house concerts and finding other ways to subsidize the ability to keep recording music. 

JBH: I have read a number of pretty hefty studies on streaming economics. Near as I can tell the biggest culprits are:

1) Competing With Free - once millions of people became accustomed or at least aware that they could download music for free (illegally) it became much harder to get people to pay fair prices for music. 

2) The Black Box Problem - Streaming services are often tagged as the problem, but from everything I have read recently, it is still a 70-30 split but labels don't a) share the split information with artists and b) often pull the same nonsense of writing contracts to exclude artists from reaping the rewards of digital rights or making digital rights a hostage of recouping.

In some ways, streaming arguably at least generates revenue from listening (ads) in ways that were going extinct before streaming. But, obviously, it is not good enough for most artists. Have you imagined a path forward for a workable streaming model or an alternative to streaming? 

Rain Perry: I think you are right on the money. The truth is that people paid for music in the old days because it was the only way to get it. Once people are used to music being free, how do you go back?

Regarding the black box problem - my advice, don’t sign with a label. Truly independent artists who release their own music don’t have this problem. If I sell a song on iTunes, I get all 70 cents. I also get the whole label portion of my streaming revenue (but we’ll get to streaming in a minute). This is one place where indie artists have a big advantage over artists signed to a label. And honestly - considering that labels now expect an artist to have already built a massive social media following before they ever sign them - now more than ever, I can’t see why an artist would ever want to sign with a record company. So they can promote you like crazy on YouTube? That’s cool, but you will never see any income from it.

Okay, streaming: My streaming numbers are not that impressive, but I’m making them public because it’s instructive. I use this statistic in the movie. Between 2010 and 2015, I had just over 309,000 streams on Spotify, Pandora etc. For that, I received $36.28, or 0.00012 per stream. And keep in mind I get 100% of the payout from Spotify and don’t have to split it with a label. Now, artists who get millions of streams get a larger percentage, but it’s still a fraction of a penny per stream. So, no, the argument that Spotfiy at least generates some revenue - their main selling point to artists - is, for practical purposes, just not true. 

(And if you want to truly geek out, which I think you do, here’s some more math: Billboard recently changed their album charting formula to include streaming. Because a stream is technically a “listen” and not a “purchase,” they needed a method to try to quantify it and came up with this: 1500 streams equals one album download. Setting aside the question of a person ever listened to all the songs on an album 1500 times, let’s apply that math to my numbers. By this formula, 309,000 streams is equal to 206 album downloads. If I had sold 206 albums on iTunes, I would have made close to $1500. But with streaming I made 2.5% of that.)

In my view, Spotify operates on a Mafia model. They offer “protection” from pirates, but in reality, they are pirates themselves.

I would love to see a mass protest by artists, but unfortunately, all the major labels are invested in Spotify so there’s nothing many artists can do. They signed contracts that allow the labels to distribute however they want.

It’s a strange time for the public, also, because they can’t just have all their music in one place. Taylor Swift is on Apple Music but not Spotify. Beyonce’s only on Tidal. And now iTunes has announced that they’re no longer going to sell downloads within two years. What’s a consumer supposed to do?

JBH: Does the documentary cover possible futures?

Rain Perry: The documentary is about celebrating great musicians while showing what’s changing about the music business, and getting the audience to think about what that means. My plan is to have spirited talkbacks after the screenings where we discuss the future. There are a lot of smart musicians all around the world dealing with this. I’m going to consolidate that conversation and see if we can come up with workable solutions.

Personally, I think the key is A&R. One of the biggest changes that has occurred in the past 10 years is that as music sales have shrunk, labels no longer have robust A&R departments, or great record men like Ahmet Ertegun, hunting obscure music scenes for amazing bands. People are signed based on their social media numbers, and that is a loss for the public. Plus, everybody can make a record now, so there’s just way too much music for the average person to process, and most of it is mediocre. I find it totally overwhelming. Add to that the closing of record stores and music magazines, which used to function as a filter, and it’s very hard for high-quality music to rise to the top. 

I host house concerts at my house. I am very selective about who plays there, and as a result, I have a hardcore group of music lovers who will gladly pay $25 apiece to hear singer-songwriters in my backyard. They trust my taste, even if they haven’t heard of the artist.

I believe that is the key. A great song can change your life, and that will always be true. There’s a reason kids today are still listening to rock bands and singer-songwriters from the 60s and 70s - they were great. So whoever can figure out a way to brand themselves as the distribution model that actually pays artists and is very picky about the artists they distribute - I think there might be a market for that. Those deals would have to be exclusive for it to work.

Taylor Swift, Beyonce, Adele, Radiohead: they’re all so in demand that people will actually pay. Now, of course, all of them became famous before the rise of streaming music, so they had a whole apparatus in place to promote themselves. It’s different for a band starting out. But still - under certain conditions, people are willing to pay for music.

There could also be a pricing problem. Maybe 99 cents or 1.29 is too much. Maybe in today’s market, people would buy music if it were 50 cents a song or 25 cents a song. That’s still a whole lot more than .00012.

What I don’t think will work is the charity model - the idea of “pay the artist even though you don’t have to because you think you should.” Some superfans will totally do that but it’s not sustainable.

JBH: What artists were you able to talk to in the documentary? I know I saw Ani DeFranco in the trailer, who else did you talk with?

Rain Perry: Ani DiFranco, Iain Matthews, Tom Russell, Eliza Gilkyson, Sara Hickman and many more very talented and entertaining people…all artists who’ve recorded at the Congress House. We see Carole King in archival footage, but she rarely grants interviews and declined.

JBH: Do you see a future for the good old ways of production (like Congress House)

Rain Perry: I always think the answer is no, but Mark says people are coming in. He sees artists with a sense of freedom from trying to make albums that will sell. They raise the money elsewhere and come in to make the best record they can.

JBH: At first, my thinking was that we were dealing with a chicken and egg problem (Consumer/Spotify). But, when you talk about the pirates (Spotify) "crying pirate" it got me to thinking that it might really be a "fortunate accident" kind of collusion. 

One of the ideas that C. Allen Bargfrede discussed was the use of Blockchain technology, another friend of mine talked about albums as Apps, and you raised the idea of forum shopping. 

Do you think that it will ever be a viable option for artists to collude against sharing (I think this might have been the premise behind Tidal originally)? And perhaps more important, do you think tech might allow artists to put the lock back on the box?

Rain Perry: It won't happen with artists who are signed to labels already that have deals with Spotify. Artists would have to leave their label and would have to have a good reason to do it.

Also, there will always be musicians willing to give their music away for free. Musicians are notoriously bad at standing up for themselves. But I think if somebody can create a model that attracts really great artists, Consumers might change their behavior. They would have to really love the music.

JBH: I really appreciate your time, thanks so much for doing the interview, I cannot wait to hear your answers (I really care about this stuff).

Rain Perry: Thank you! I appreciate the opportunity to talk about this.

What a pleasure that interview was, I seriously am looking forward to seeing the documentary. 

Part 3, Coming Soon

Part three will be about using Bitcoin and Blockchains as an alternative to the traditional means of music delivery for artists (and the person I am interviewing is an expert). It should be out next week. After that, I am planning a discussion with several independent labels, several Vinyl only labels, and also some independent artists.

How did you enjoy the interview with Rain Perry? Are you excited to see "The Shopkeeper?" What are your thoughts on the subjects raised in parts one and two, start the conversation and leave a comment!