With yesterday’s IFPI Global Music Report and its press conference featuring Universal Music, Sony Music and Warner Music, we know that major labels are happy with the evolution of music-streaming. But what about independent labels?
They had their say today at indie body AIM’s Music Connected conference in London. Immediately after Merlin CEO Charles Caldas’ keynote speech, a panel convened to discuss the impact that streaming is having on their businesses.
The panel included Michelle Brook from Ignition Records; Paul Hitchman from Kobalt; Kristine Bjornstad from INgrooves; Adrian Pope from PIAS; and Simon Wheeler from Beggars Group. The moderator was Chris Carey from Media Insight Consulting.
So, streaming: “It’s the main way we make money, and it has been the main way we make money for the past few years,” said Wheeler. “We’ve all been focused vey hard on trying to create the opportunities in an on-demand world, where there are lower barriers to access for all of our artists and all of our repertoire… Independents generally over-perform in this marketplace, so I think it feels very positive for the future.”
“The challenge for everyone is to maximise the opportunity,” added HItchman, citing the particular headache of making the most of the millions of lines of data coming out of streaming services, as well as the challenge of getting on to prominent playlists.
“The data that streaming services give us is very important, and playlisting too, but another great thing about streaming is it gives us the opportunity to be flexible with our release schedules,” said Brook. “There’s loads of things that any label, or even any artist or manager can do with streaming.”
Pope: “We’ve got a long history of peak and trough culture of marketing, built around cycles… in a streaming environment you’re in a much more liberated space. But the challenges are how do you put that into practice in your budget, because you’re not necessarily getting the same return monetarily in the old days… It’s an ongoing engagement, and tickling things along the way,” he said.
Bjornstad talked about Norway. “We stopped budgeting physical four years ago. It’s all about streams per day, it’s about being flexible, and it’s actually easier to plan how to run a campaign, and easier to plan how much money you will get in, because you can see the long tail much earlier,” she said.
“And it’s easier to export. The Norwegian music industry has never exported as much as we are doing now. Same with the Danish, same with the Swedes… Lukas Graham, Kygo: All of these acts coming out of small countries that would have never happened without streaming. And that money goes back to invest in the market.”
Wheeler agreed that the return on investment in artists comes back over four or five years, rather than an earlier spike around an album’s release.
“We’re in a transition phase. At mass scale you might actually get that return on investment in the original period of time. But we’re a ways off that,” said Pope, although Wheeler was unsure whether the ROI will ever compress back to that first six months that was common in the physical era.
Is there a risk for the indies if deep pockets are needed to break new artists in the streaming world? “I’m not sure if we’ve said that deep pockets are what’s needed here,” said Wheeler. “Once the money is flowing through, being able to take an artist to market is arguably easier today than it ever has been. Being able to do that successfully and cut through the noise is more of a challenge… Good music and creative thinking, creative campaigns, all these things can be put together without having hugely deep pockets.”
Hitchman suggested that the marketing costs can be spread over a longer period of time, in line with the revenues that are coming in from streaming. “Don’t spend it all up front!” he said. “In the independent community we’re used to ongoing campaigns, and managing that in line with how something becomes a success,” added Pope.
Brook said there will always be opportunities. “As a marketer, there’s loads of great tools that we have access to that can embed streaming within our marketing campaigns. That doesn’t necessarily equate to advertising. There’s loads of things you can do in social,” she said, praising Kobalt’s recent Laura Marling pre-save campaign as a good example of this kind of embedding.
The conversation turned back to streaming playlists: can a release be successful without playlist support from Spotify? “Absolutely!” said Hitchman. “What Spotify and Apple are looking for is fan engagement with music anyway. You have to try to ignite that fire… You’re looking for a virtuous circle where you’re creating engagement that gets picked up by those platforms, which leads to playlisting.”
Wheeler. “Not everyone is only listening to music off a playlist. In fact, far from it. Across our entire catalogue, somewhere around 10% of our plays on a certain large streaming service come from playlists! Which means 90% of them don’t… If you base your campaign around being on specific playlists on specific services, you probably haven’t got a very good campaign. And as soon as your track comes off those playlists, you probably haven’t got anything at all.”
Bjornstad talked about a Norwegian label that has focused on building its own profile in Spotify, including its own playlists, which its artists are choosing as their ‘artist pick’ in their own profiles, which she said is driving a growth in followers for the label’s playlists.
“We’re getting back to the 80s when labels had brands!” she said. “If you consolidate that into a label list, and make the artists feed in to that, it’s easier to control.”
Brook talked about how Ignition works with new artists, as their fanbase is growing. “There’s definitely a challenge, because you’re working with such a smaller fanbase, so you need to do more to move the dial,” she said. “I try to focus reach over reward. Using platforms like Vevo or YouTube where there’s no logins or subscriptions needed… and once we have the audience, we upstream them into Spotify, Deezer etc.”
Carey brought up the issue of YouTube and the ‘value gap’, asking the panel what their perspectives are on the criticism of Google’s video service and its payouts.
“One of the best and simplest ways of explaining the value gap is how Charles Caldas put it at a conference last year: ‘YouTube has roughly ten times or more the users than Spotify, yet Spotify pays us ten times the money each month that YouTube does’… You’ve got so many more users on YouTube but earning so much less money, not only per use, but on an aggregate basis,” said Wheeler.
“The whole industry’s got to face this. It’s not just us in the independent music sector… if we want to live in a world where there is this inequality, companies like Apple or Spotify or any of the premium services will quite rightly be saying ‘hang on a second, we want the same deal they’re getting’. And I don’t think we want to go there.”
What would happen if YouTube improved (or was force to improve) its rates more reflective of the other players? “I don’t think it’s as simple as that,” said Wheeler. “There’s so many different uses on YouTube: it’s about management of repertoire as much as what you’re getting paid… There’s this idea that this is promotional in some sense. If it’s promotional from a recorded-music perspective, we were looking to be selling an album: a CD, a vinyl, even a download. But in an on-demand world, that argument starts to make less and less sense.”
“There’s still this idea that there’s this promotional use: i.e. you don’t get paid. And I’m still struggling to see what is the endpoint here. If it’s someone listening to something, they’re listening to it already [on YouTube]. Are they going to go and have another listen on another platform?.. That logic just doesn’t hold.”
“I don’t think we should be trying to force the industry into just one model,” warned Hitchman. “There should be lots of different types of models… and we should be trying to monetise all those different ways that people are enjoying music… It’s not a question of trying to shut it [YouTube] down.” But rather a question of trying to make sure the royalties it pays are fair for the value of the music.
The conversation turned to premium windowing on Spotify – a part of its recent deals with Universal Music and Merlin.
“Having the option to do it is interesting… We have so many streams of our music coming from premium users: having premium usage of up to 80% of our streams coming from some artists. That to me says we have less problem with the amount of free usage than perhaps some more mainstream repertoire… but every album and every artist is going to be looked through its own particular lens,” said Wheeler.
“I’m not going to say ‘oh, let’s put everything behind the paywall’,” continued Wheeler, suggesting that the danger there is of throwing a spanner in the works of Spotify’s conversion funnel from free to paid users. “It’s going to be nice to try, but it’s about getting the balance right. We certainly don’t want to kill that funnel of free users coming in to being subscribers.”
Pope agreed. “I would hope we’re not going to have loads and loads and loads of windowed projects, because it doesn’t necessarily answer all the questions,” he said.
He also fielded a question about the culture of the streaming services, and the opportunities for independent artists. “Niche on a global basis isn’t small,” said Pope. “Not on the scale that we’re talking about. Which is why you go back to the idea let’s not just rely on Spotify or Apple or Amazon to provision those. Let’s get stuck in ourselves.”
The panel were also asked about the charts, and whether Ed Sheeran’s recent clean sweep of the UK chart shows those rankings are broken in the streaming age.
“It depends what we want the charts to be. I think the charts are one of the music industry’s biggest marketing tool, so it needs to provide that role, and if it isn’t providing that role, it needs to be adjusted,” said Wheeler.
“The album chart? It’s important that we keep the integrity of an album, and the moves around playlisting and how they count takes some really considerable thought. If it’s going to be the album as a body of work from a specific artist – which is how we’re positioning it – then we have to be very careful that we don’t undermine that.”
The panel continued with the question of what’s coming next after streaming, if anything. But Hitchman offered a different lens through which to view that topic.
“We should be thinking of streaming as a baseline… but we can still encourage a lot more innovation and there’s a lot more innovation to come in terms of the value of music. We can build on that baseline,” he said. “If we can engage the world’s music fans through audio-streaming, then that is the baseline we can build on… and grow many other revenue streams.”
“We’ve all learned how to change fast, so that if there are any big changes coming up, we are more ready to take them on. We are more flexible, we are more dynamic. The big streaming services change their way of doing things every month, so you have to adapt!” said Bjornstad.
The final question came back to playlists. Are indies getting a fair whack on the big Spotify and Apple Music playlists? “By nature of indies, our music is more niche, and it kinda fits in to certain types of playlists,” said Brook, although she admitted that there is more of a battle for the slots on the big playlists like New Music Friday. “It’s difficult, but it’s worth a try!”
“I think indies have the same opportunities as the majors,” agreed Bjornstad. “If we bring them the tracks and talk to them in their own language. The way they program their list: you need to know that before you pitch that. Focus on data and drivers, and the track itself. Is it a good track? Does it fit in to any of the lists?” She admitted that techno and metal are two of the tougher genres in terms of fitting in. “But you can still work with your fans to create engagement and bring that data to Spotify… and then they will have a second look. There aren’t any shut doors.”