Major labels are enjoying surging streaming revenues: industry site MBW recently calculated that Universal, Sony and Warner generated more than $1bn from streaming in the first quarter of 2017 alone.
What about independent music companies though? A panel at the Midem conference today tackled the topic of what indies need to do in order to make the most of streaming.
The panel included Raoul Chatterjee, director of content partnerships for Europe at SoundCloud; Roberto Neri, MD of Downtown Music UK; and Thaddeus Rudd, co-president of Mom and Pop. It was moderated by Zach Fuller, media analyst at Midia Research.
Rudd kicked off by defining what ‘success’ is in the streaming world. “What began to be obvious, the amount of money we were making on streaming from the first self-titled Flume album, all the while we were selling 280 or 300 albums a week according to Nielsen SoundScan… but he was playing to 9,000 people in New York, and we were killing int on Spotify,” he said.
“That was the beginning of us understanding, just through circumstance, the power of streaming: the economics exceeding sales, and when you are making a lot of money that month from streaming on Spotify, obviously much larger numbers of people are hearing the music, so the end result is the acts are getting much bigger live, virally.”
Neri gave an independent publisher’s view. “We capture income from just about every source, so we’ve been able to adapt, particularly at Downtown because we’ve invested so much in technology, to these changes,” he said. “We’ve been very ready to exploit our catalogues on these streaming services, but also ensuring we’re being paid… we are well equipped to collect the money.”
Chatterjee warned against generalising about independent music companies, before turning his attention to the streaming market. “You have this range of services: probably the most level playing field we’ve ever seen in the music business,” he said. SoundCloud is “generating quite a lot of revenue now for quite a lot of artists, labels and distributors” through its advertising and subscription businesses, he added.
What does a success story look like on SoundCloud? “Chance the Rapper is probably the most successful artist that has used SoundCloud in a way that is best-in-class,” said Chatterjee. Chance was one of the first artists to sign up to SoundCloud’s premier program, and recently played an invite-only gig for his top SoundCloud fans in Chicago.
Fuller wondered whether this kind of independence is going to become even more common: the removal of the distinction between a ‘DIY artist’ and an ‘independent’ (as in signed to an indie label) artist?
“All our artists are DIY artists at Mom and Pop, in that they come from the cultural underground, or at least the left of centre,” said Rudd. “It is a partnership: we do 50/50 ventures, it’s not really signing so much as partnering with an artist and their team… It’s changing the process of what it means to be a DIY musician though.”
How so? “The current conditions require artists to be ambitious and savvy in terms of spreading their music. I wouldn’t say ‘marketing’ their music necessarily, because Courtney Barnett doesn’t ‘market’ her music,” he said.
“But that music is going to spread and be shared differently, and that’s an opportunity. It’s made artists that might have been bespoke and niche and cult have the potential to reach many more people.”
Neri talked about how publishers are making use of the data coming out of streaming services, suggesting that indies are not necessarily hamstrung compared to major labels. “It’s not about majors and indies. It’s about the equipped and not equipped. The new and the old,” he said. “It’s about capturing the right metadata and working alongside these streaming services.”
“We should celebrate innovation and thank all these companies: SoundCloud, Spotify, Apple etc, because they’ve transformed our business. I don’t think any of us on the panel – maybe Raoul! – were savvy enough to create these systems that have changed our business and brought more people into it,” said Rudd.
“Mom and Pop and most labels would say they’re format-agnostic and platform-agnostic, but take a step back and champion Apple for growing to 27 [million subscribers]… At Mom and Pop the revenue from Apple Music in one year has become incredibly large compared to what it took Spotify to reach that point, and it’s replaced erosion on the sales store.”
Fuller moved the conversation on to windowing and exclusives. “I have no perspective on windowing at all! It’s not relevant to our artists. It’s great for Chance the Rapper and Frank Ocean to get exclusives, if it works for them, it’s not my place to comment,” said Rudd.
“I would point to Apple and Spotify and even other services less relevant in America like Saavn or Deezer as amazing opportunities for any music fan to never be, like I was a decade ago, ‘what $13.99 CD can I afford to buy this week at Tower Records?’ But to encourage exploration.”
Has the $10 model for streaming subscriptions capped the amount the keenest music fans can spend – especially if they used to spend a lot more every month?
Chatterjee suggested that hi-res audio – “super premium” – could have a role to play here in generating more revenue from people who are willing to spend more. “Beyond that it’s the connection between the artist and the fan,” he suggested. “Find their true superfans and give them reasons to connect with them over and beyond the streaming.”
Neri: “Piracy is almost non-existent, which we should celebrate. It has been important for us. What the price point should be? There are 20 million subscribers in China currently paying $1.50 a month, and that’s working there. I’d love to see more people go into the paid subscription model,” he said.
Fuller asked the panel about the impact of curated streaming playlists at services like Spotify and Apple Music. “We have to identify great songs more than we maybe had to. Every album that we all think is a great album, we still need to identify some great songs,” he said. “But at our label, we’re committed to albums, and artists who are there for careers… The album is still relevant for creation, but yes, songs are more important.”
(To clarify: songs are more important than they were in the past for many independent labels: Rudd was not saying songs are more important than albums.)
What about YouTube? “We’re not a pop label, so for us the videos do not accrue the amount of plays that become financially interesting or even for marketing,” said Rudd. “On an observational level, I can remember a time when we used to send our videos to MTV and beg them to play it, and they’d sell records.”
“Now we put them on YouTube or Vevo and beg them to front-load them with impressions and stuff. But we’ve arrived in a place where there aren’t really video gatekeepers any more… and the momentum and focus has shifted to the streaming platforms… Videos are no longer the most satisfactory way to listen to music.”
Chatterjee noted that YouTube is “incredibly important” for younger music fans, noting that the grime scene in the UK has an important visual element “that would have been incredibly difficult to get across to its audience without YouTube, and some of the blogs out there… they wouldn’t have got played on mainstream radio, but they have a very voracious fanbase, and using platforms like YouTube and SoundCloud has been incredibly important for them.”
How is streaming affecting the creative process of musicmaking? Rudd talked about it “requiring a lot of our artists to be open-minded to some extent about when the recording is done or isn’t done”. For example, songs finished after the deadline for releasing an album can still be included in the campaign.
“It gives many types of artists a ton of freedom, which is great. And it gives us a rhythmic cycle that can be different for every artist.” He noted that two weeks ago, Courtney Barnett put a new track out through digital services, alongside a super-limited-edition vinyl release in Australia through her own label.
But looking towards the topper, popper end of the streaming market… “Things move very quickly… three songs with a pop act and an electronic act and a rapper all together which is kinda the template for global hits right now, a lot of them go very quickly,” added Rudd. “These tracks, without radio they’re often several-week events, but they can come and go very quickly.”
Music Ally’s Midem 2017 coverage is supported this year by Music is GREAT, the British government’s campaign to promote UK music exports.
The UK and British Music are represented through the British Music at Midem stand, with the Department for International Trade joining forces with music industry associations AIM (Association of Independent Music), BPI (British Phonographic Industry), MPA (Music Publishers Association), PPL (Phonographic Performance Limited) and PRS for Music.
Together, they will support over 150 UK music businesses and member delegates as they seek to pick up on the latest trends, connect with international companies, sign deals and develop trading and export opportunities.