$$$'s In The Stream: Music Economics in a post-#Spotify World

This is the first in my series of articles on the economics of music in a post-streaming world.

My goal is to provide a resource for bands, artists, and labels to use to better take advantage of new information, opinion leaders, and trends in music economics.

Very excited to start the series with this interview, I want to thank Professor Bargfrede for kindly sharing his time and expertise.

Why Professor C. Allen Bargfrede

C. Allen Bargfrede is a Juris Doctor and lawyer but also an associate professor of Music Business Management at Berklee. He has advised artists and music labels and was the co-author of the book “Music Law In The Digital Age.” He was also involved in the report by the "Rethink Music Project" entitled, “Transparency and Payment Flows In The Music Industry (I would strongly suggest that anyone trying to make money in the music industry read this report)."

You can download the report by clicking HERE

The Interview

Thanks for taking the time to answer my questions!

JBH:  It seems like the biggest problem is competing against free (illegal downloads). In other words, it was consumer preference not to pay for music at all. The streaming services make the argument that they have at least reversed this trend (to some extent).

Is it wrong to credit the streaming services with creating better market dynamics for musicians?

CAB: Not necessarily, there has been a lot of pushback against streaming services by artists, but, I still view them as the best alternative to piracy. I’ve seen comparisons between sales numbers and streams and it's like comparing apples to oranges.

We can’t put the internet back in the bottle, we’re not going back to the good old days of CD sales, and therefore, we have to find a business model that works for both artists and fans, which may or may not be the subscription model.

JBH: Do you see a path forward that creates more desire for music investment from consumers (to date, the only example I know of is niche "hipster" vinyl purchase)?

CAB: I think artists have to continue to create alternative products that their fans will want to buy. I also think streaming services have to find a way to differentiate themselves from one another. RDIO failed partially because there was no differentiation. Tidal is trying this by being more artist friendly, and offering exclusives as well has the high fidelity sound option.

JBH: While streaming services seem to draw most of the fire from artists and consumers, it really seems like the Black Box problem is as much to blame as anything (The black box is record labels keeping the figures they receive from streaming services secret - as if in a black box).

Is this accurate, are the labels lack of transparency and/or unwillingness to share digital rights or digital rights information more responsible for the problem than streaming?  

CAB: There is plenty of blame to go around, ranging from the Berne Convention Copyright Treaty which precludes registration to a lack of cooperation from all sides in a very divided industry. The good news is that most parties seem to be aware of the rights transparency issues and more willing to discuss industry-wide solutions. A lot of people are talking about blockchain as a potential solution and I’m eager to see if it can live up to the hype.

JBH: Are the labels effectively "double dipping" by having ownership stakes in many of the streaming services?

CAB: Possibly, but none of those stakes (aside from Beats) has really paid off yet. It was a positive development to see Warner and Sony offering to pay artists a portion of any potential earning earlier this year.

JBH:  Another area that seems problematic is industry consolidation (labels consolidating $'s and marketing around an ever smaller group of artists). This also seems to extend to media coverage of music as well (as in what is left of radio and what music is pushed by streaming services seems to follow this same model).

Do you have any thoughts about ways to counteract this trend?

CAB: I think there’s also consolidation on the distribution side. Now you have several major technology companies as distributors and several major rights holders, all with increasing power in the music industry. It’s becoming an oligopoly on both sides. To counteract this, we need to be sure streaming services are committed to independent music and that artists have adequate training on how to use social media to get their story out.

JBH: Finally, through your research and contemplation, have you imagined a better world (or path) for independent artists and labels?

I do think that to win, you have to start with good music, and the independent labels do a great job of artist development. Many indies now see a significant majority of their income from streaming revenues - if the model can just continue to grow, hopefully, the pie grows for everyone too.

The largest challenge I hear repeatedly now from new and independent artists is finding a way to stand out from the tens of thousands of other new songs uploaded each week.

JBH: Thanks so much for your time and thoughtful answers!

CAB: Best Regards.

HERE is some current information on music and the Berne Convention.

Coming Soon In The $$$'s In The Stream Series: Director and Artist Rain Perry

The next installment in the series will be my interview with Rain Perry the Director of the upcoming documentary The Shopkeeper (about the effect of changing music economics on Austin producer Mark Hallman and on artists) which is making it's festival debut on June 3rd.

You can get more information about "The Shopkeeper" HERE.

Hope that you enjoyed Part One of the series and that it at least starts a discussion.

How did you enjoy the interview? Do you have anything to add to this discussion of music economics? I would  love for a great dialog and some incredible sharing to happen around this topic in the comments section, I will certainly participate. So, leave a comment!