The following MBW blog comes from Kim Bayley (pictured), CEO of the UK’s Entertainment Retailers Association (ERA). ERA represents the interests of members who include an array of physical and digital music retailers, such as Deezer, Spotify, SoundCloud, Amazon, HMV and Google. (MBW is proud to be a forum for open debate, but that doesn’t mean we have to agree with every single thing argued within these columns, obvs.)
The ancient alchemists famously sought to turn ordinary metal into gold – ie. to turn something worthless into something valuable. Today’s digital services have arguably achieved something similarly magical with music.
While recorded music wasn’t exactly worthless in the first decade of the 2000s, it was certainly worth less.
It’s hard to believe from the vantage point of 2019, but from the market’s historic high in 2001, in the following 10 years, the UK recorded music business lost over half of its value.
It was effectively all downhill. Music was no better or worse than it had ever been, but music fans no longer saw any value in paying for it.
Enter, a new generation of streaming services. Recorded music – which had been on its way to becoming valueless – suddenly became valuable. Spending on recorded music in the UK and the world has increased for four successive years.
That growth is almost entirely attributable to the innovation and investment of digital services. Music is no better or worse than it has ever been, but music fans suddenly see value in paying for it.
None of this is meant to be triumphalist or meant to downgrade the contribution of artists and songwriters and labels and music publishers, but I feel obliged to point it out in response to a worrying and unnecessary rise in negative rhetoric about digital services.
“When the head of the US music publishers’ association declares publicly, “Spotify and Amazon have declared war on the songwriting community”… this is clearly a debate which has got out of hand… an insidious rise in name-calling is on the rise.”
Some of that is, of course related, to US commercial disputes.
As the representative of a UK trade organisation, I hesitate to get involved in US controversies, but when the head of the US music publishers’ association declares publicly, “Spotify and Amazon have declared war on the songwriting community”, or, “These big tech bullies do not respect or value the songwriters who make their businesses possible”, this is clearly a debate which has got out of hand.
It seems that an insidious rise in name-calling towards digital services and an apparently wilful dismissal of their contribution is on the rise more generally.
Tim Ingham, Editor of Music Business Worldwide, recently wrote in his normally insightful column in Rolling Stone of money “being kept by… streaming platforms, rather than landing in the hands of labels and artists”. Again and again in the piece he writes about streaming services “holding on to” or “keeping” money – which, he implies, somehow rightfully belongs to artists, songwriters, labels and publishers.
This is quite clearly nonsense. Does the industry think digital services should build and operate their services for free?
It is true that the proceeds of the streaming revolution are currently being unequally distributed, but arguably it is in the opposite direction to the one implied in Rolling Stone.
“Tim Ingham, Editor of Music Business Worldwide, recently wrote of money “being kept by… streaming platforms”. he implies that somehow this money rightfully belongs to artists, songwriters, labels and publishers. This is quite clearly nonsense.”
Despite their incredible success in persuading music fans to adopt streaming – there were 255m users of paid streaming services by the end of 2018, according to the IFPI – digital services themselves have yet to benefit, with virtually all of them still loss-making.
On the supply side of the industry, however, these are happy days indeed. Record companies and music publishers are solidly in profit. Shareholders in music companies are benefitting from soaring valuations.
The world’s biggest music company has apparently seen its valuation triple. The former head of Sony/ATV Music Publishing received a reported bonus of $100m. It’s like the excess of the Nineties all over again.
And yet. Music is no better or worse than it has ever been. The picture is the same; it’s the frame which changed – the frame provided by streaming services.
It would be naïve to expect the record industry to be forever grateful for the efforts of streaming services. I fully expect this brief reminder of the unequal distribution of streaming’s dividends to generate shock, horror and even contempt in some quarters. But the music industry should be wary of being too dismissive of the services which arguably saved it.
History tells us that left to its own devices in dealing with the challenges of the digital age, the results for the music industry were not too pretty.Music Business Worldwide