December 22, 2016:David Lowery talks digital scepticism and music-streaming’s future

David Lowery started the year in the headlines for leading one of two class-action lawsuits against Spotify over mechanical licensing. They have since combined with the other lawsuit taking prominence.

That has left Lowery free to continue with touring life with his two bands, Cracker and Camper Van Beethoven, but through his activism and The Trichordist blog, he remains closely engaged with the issues that sparked those lawsuits – and with the wider questions of fair streaming royalties.

“It’s pretty clear that the courts are going to do something with this: there’s going to be some sort of action. The NOI system for licensing streaming mechanicals in the United States is essentially broken. If we want to have streaming services that have more than a few million tracks on them, we can’t have that system,” says Lowery.

“One way or another, this court case should solve that problem. It should eventually establish a precedent, or have the Copyright Royalty Board or Congress will fix it. Whether that ends up being better for songwriters or not is unclear. The class-actions did start the ball rolling: we just don’t know where it’s going to end up… The fact it hasn’t been kicked out of the courts yet is positive for me.”

Lowery thinks that one outcome might be a revisiting of past proposals for solving the issue: to allow the PROs in the US – BMI and ASCAP – to issue mechanical licences for streaming as well as performance licences.

“There are some issues with that, but it would be better than what we have now: that’s the nature of compromise! So we could have something that looks more like the way GEMA works, or PRS with the mechanical rights body in the UK,” he says.

2016 felt like a year when some of the issues that Lowery has been talking and blogging about for years received a wider airing in the media: including the political scene around big technology companies.

People are a lot more aware, and a lot more sceptical, of your classic ‘digital utopian’ talk. There’s a lot more of ‘okay, well we’re not really seeing the benefits’ responses. More people are seeing that this is just old-school politics where you get your people in various executive branch departments, or members of Congress, to protect your rights as a company,” he says.

“Silicon Valley used to be more immune to that sort of criticism, and they no longer are. Some of that’s coming from us, but it’s a general trend that’s out there. More journalists are sceptical of the claims made by these companies. There’s a lot more coverage of the fact that there is very real, old-school back-room lobbying by the technology firms like Google and Facebook.”

Lowery has been keenly following and participating in the debate around safe harbour and the “value gap”. He thinks that the arguments for removing safe-harbour protection from services like YouTube have been better articulated in Europe than in the US so far.

“In the United States, it’s an unfair competition argument that would need to be made, because of the way our courts work. Spotify, as much as I criticise them, are licensed on the recording side. They are good players in the ecosystem: if something shouldn’t be up there, it’s gone or it never gets up there in the first place,” he says.

“But they’re competing with YouTube which is a bad actor, right? The safe harbours, in my mind, weren’t intended to be used as a backdoor sort of licensing model, but that hasn’t been as clearly defined and discussed in the United States.”

How does Lowery feel about the development of the music industry in 2016 in other ways? Certainly for the big labels, it’s been the year when streaming – and specifically streaming subscriptions – made a real impact. But from the point of view of an artist and an activist for artist and songwriters, Lowery sees the other side of the debate.

“I don’t see it trickling down to a lot of artists yet,” he says, before noting that when he has analysed data from a pair of “large aggregated catalogues of independent recordings and songs” he has seen that the decline of the 15 years has levelled off for some rightsholders.

“We’ve lost 70% of our recorded music revenues since 1999/2000, so we’re starting from a fairly low base. But if you look in aggregate at stuff, it looks like it’s either levelled off or is coming up, and that streaming is significant in that,” he says.

“If you’re a performer, or an indie label of a certain size, it’s getting better. But I think we can pretty confidently say that for producers and songwriters, their overall revenues are still trending downwards, if not as steeply as before.”

Lowery still sees non-interactive streaming services like Pandora as a problem: “That side of the business, which is still significant, really pays a pretty dismal rate to songwriters,” he says. “And for on-demand streaming, we’re back to having to fix mechanical licensing: how it’s licensed and the rates that are set.”

He also draws a distinction between the challenges for emerging artists and songwriters, and those (like himself) who have a back catalogue and a history.

“I’m a legacy artist, and we had songs that crossed onto the radio. So as a performer/songwriter who’s a legacy artist, you can really argue with a straight face that all of this social media and these technological innovations have extended our careers,” he says.

“I’m having a good year, and as an incumbent in this business, there’s something about the structure of the market which cements my advantage in place. We’re managing to activate our email list, social media and all that, and keep touring. And I think the same is true for a number of my peers.”

“If you’re an incumbent who can make money on the road still, it may not be better than before, but it’s certainly not as bad as it is for everybody else. My worry is for the younger artists: including the fact that they’re competing with 50 years worth of other musicians touring.”

Songwriting lawsuits aside, what does Lowery make of how 2017 has shaken out the music-streaming market? One concern that has been floated by a few people this year – PRS boss Robert Ashcroft for example – is the prospect of a streaming ecosystem dominated by Apple, Google/YouTube and Amazon, where even Spotify and Pandora could get squeezed out or swallowed up.

Can the pureplays survive? “That does bother me. If you were to make a wager on it, you would probably bet on Google, Apple and Amazon being the only ones to survive. That’s a good possibility,” says Lowery, although he is keeping an open mind about the consequences.

“Apple seems to pay more: we’re getting evidence now through royalty statements that they’re certainly paying a higher rate on average than Spotify. On my catalogue it’s close to a [US] penny a spin, all rights included. Spotify is still down at half a penny,” he says.

“So in some ways, is that such a bad world, if Google or Amazon or Apple dominate, if our rates are higher? But in the longer term that concerns me.”

To explain why, Lowery looks back to the 1980s, when MTV essentially had a “monopoly” on music videos, and then YouTube’s emergence over the last decade, when music has helped it build its platform amid controversy about rightsholders and creators’ share of the proceeds.

“We could have fought YouTube more, but as artists we’re constantly sticking these things up on YouTube and building the platform. That’s a monopoly we created there,” he says.

I specifically worry about a YouTube, Amazon, Apple sort of triopoly. What happens if that remains entrenched? Do each year they come back and go ‘here’s our deal’? It might be good right now, but maybe four years from now they cut those rates in half.”

Lowery also highlights a recent story that he thinks didn’t get enough coverage in the media: that Rhapsody reported a quarterly profit.

“It raises the question of whether these streaming services could survive if their cost structures were different, if their executive pay was different. If Napster / Rhapsody with an on-demand service can somehow make a profit, maybe Pandora and Spotify can,” he says. “Or maybe not.”

Photo credit: Velena Vego

Stuart Dredge
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