The algorithm is your new boss

MBW Views is a series of exclusive op/eds from eminent music industry people… with something to say. The following comes from Will Page (pictured), author of Tarzan Economics (recently retitled ‘Pivot’) and the former Chief Economist at Spotify.

There’s a new sheriff in the music industry, and it’s not your A&R executive nor your playlist editor selecting today’s top hits. Indeed, it doesn’t even have a pulse. It’s the TikTok algorithm, and it’s your new boss. Its feedback loop filters the killer from the filler one swipe at a time.

To justify TikTok as the new boss, back at the start of 2020 Sensor Tower, an app-intelligence company, had it level-pegging with Spotify at 75 million US monthly active users. Today, Spotify’s at 90 million whereas TikTok’s just surpassed 150 million

Be it bringing a second life to an old Fleetwood Mac classic to breaking new acts like Bella Poarch who’s amassed 100 million followers, the speed and suddenness at which hits happen on TikTok excites fans but exposes an industry pain point. The sluggishness of the payment system that follows success. 

Oftentimes, TikTok virality catalyzes a surge on streaming platforms. But there’s a significant lag between the time that spotlight shines and when the artist inside it gets paid. That means a new artist could find themselves caught in a credit-crunch: watching their streams explode today but waiting on the check to arrive, well, at some point.   

Let’s put some markers down on when that some point will come. Let’s say a song spikes on Spotify on my birthday: March 13. 

Spoitfy will report usage to the labels in mid-April, and pay the label in May. Typically a label pays artists 90 days after the end of Q2, on 30th September. From winner to dinner, that’s just over six months. And pity the poor songwriters, who’ll be waiting for that check to arrive till early next year. 

For artists and songwriters, this time lag has real consequences.

Anthony Brown, CEO at Breakr, a marketplace that connects artists to influencers, spoke at SxSW 2023 about how an artist he manages went from hundreds of social media followers to millions within 18 months, but because of delays in getting paid as an independent artist he was unable to capitalize on that sudden success and build on the momentum.

“I’ve seen that inflection point from near obscurity to getting courted by the majors, and I’ve seen how the delays and payments have affected him personally,” Brown said.

The abruptness of a TikTok-fueled viral hit means artists experience a lag between achieving cultural significance and getting paid for it. That is the nature of music today. To solve the problems this delta causes, artists need options to build on that sudden momentum in real time, not six months’ time. 

But, if we scan the music industry landscape, there’s a lot going on that gives us not only optimism, but confidence that the music industry is moving with the times, by reducing the time to pay artists.  

Some artists are working on solving this issue themselves. Grammy-nominated producer and DJ Jennifer Lee, aka TOKiMONSTA, has first-hand experience of this delta between making it and getting paid for it. Previously, she overcame this by ceding control of her copyrights to her label for an upfront advance, rather than waiting for the check in the post. But that has its own issues.

“At the time that I put that album out, it was the most I’ve ever gotten paid as an advance,” she says. “But an advance is essentially kind of like a loan. And you do have to recoup that. I will never own those songs”. Today, Lee has co-founded her own label, Young Art, and offers a real-time protocol to artists via blockchain technology from Sona, which she co-founded with a team of web3 technologists. 

Audius, another player in the web3 music space, is offering similar payment speed but as a blockchain-powered streaming service.

“Blockchain” and “crypto” at times have of course been massively overblown for marketing purposes, but one of the most fantastically unique aspects is their transparency and speed. Utilizing a blend of players like Stripe and Coinbase, Audius is able to pay rights holders transparently in just fifteen seconds – that’s less than half the time of a TikTok reel – and that’s something that is genuinely not possible anywhere else.

Other companies are working on offering a similar real-time payment model, but on the more traditional music rails, too. HIFI’s Cash Flow, for example, pays artists their royalties in real-time based on beat-by-beat earnings data, allowing creators to access the money they’ve earned right as they earn it from their existing revenue streams without having to change their business partnerships or sacrifice rights and optionality. 

Major labels, to their credit, are also working on solutions to speed up payments. Sony Music launched an ambitious “Artist Forward” initiative in 2020, which included an industry-leading Cash Out Now and Real Time Advances features for artists who have chosen a more conventional major label route. To date, artists have withdrawn over $50 million using this feature.  

For artists at all career stages, whether an artist who recently broke out or a TOKiMONSTA paying it forward to the next generation, the abstract and seminal algorithm needs to be fed in real time to build momentum and level up. Players across the market have taken note and are ensuring that artists have the real time resources that will allow them to answer the door when opportunity knocks, or TikToks.Music Business Worldwide

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