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Thursday, October 20, 2016

Are Streaming Music Services Really the New Record Labels?

Written by Jonathan Robinson for Musictank — In the wake of the release of so many streaming exclusives from high profile artists like Frank Ocean and Beyoncé, it looks to some as though streaming services are poised to further subvert the old media status quo by positioning themselves in an increasingly label-like role.

Much has been written over the course of this year about exclusive releases on streaming platforms, with Frank Ocean’s Blond the latest of a number of high profile, profitable exclusives, with Beyoncé, Kanye West and Rihanna, among some of the industry’s biggest-selling artists carving exclusive deals on services such as Tidal and Apple Music.

Back in 2014 our Artist Economics of Streaming think tank debate heard from a stellar panel including Billy Bragg, Spotify’s Mark Williamson and Beggars’ Simon Wheeler. Session chair, Keith Harris, asked whether Spotify was, in effect, replacing much of what record labels traditionally do, in particular, floating the idea that streaming platforms might morph into a distributor-turned-producer model, akin to Netflix/ House of Cards.

Fast forward to 2016, this in hindsight was perhaps a prescient question, given how much more label-like some of these streaming services have become, not least in their ability to woo top-selling artists’ exclusives.
Comparisons are often made between the release strategies of the film and music industries, whose approach to windowing new releases is significantly different. The former is often hailed as having been highly successful in its ability to control and monetise each release stage and format in a way the music industry hasn’t itself managed.
Of course the film world’s single biggest advantage is in having a primary release format that is a ‘live’ public experience – a cinematic screening – which holds sway over a procession of subsequent release platforms and formats, typically (and in order of maximum return) DVD; pay-per-view; video on demand; broadcast TV.

Such has been the success of this strategy that despite the onslaught of piracy, cinema audience figures in the UK have remained strong over the past 25 years, partly encouraged by innovations in the cinematic experience, with huge investment in digitisation radically improving how films look and sound. Without that windowing of cinematic releases, thereby guaranteeing sustained demand for the cinema experience, that investment would likely not have happened with audiences drifting away, to consume film in other potentially less-profitable ways.

Enter Netflix, and more recently, Amazon Prime who now challenge that model, destabilising the status quo of the ‘old media’ distribution model, with same-day, multiple format release strategies, and with content in which they’re made massive financial investment…Netflix’s £100m royal biopic The Crown and Amazon’s £160m investment in the BBC’s Top Gear team appear to dwarf Apple Music’s $19million investment in Drake’s Views release. . .

Granted, Apple worked with Drake’s labels to unleash what was a massive marketing campaign – traditionally a core label function, not an end-to-end label service, but could this be the start of services such as Apple Music, Deezer, Spotify, Tidal and others making further land grabs in the label space, particularly when looking at current speculation on further consolidation between rival platforms?
Should Spotify secure a deal with SoundCloud, this would see a near-perfect alignment of two digital platforms, fusing one that’s made much of it’s artist-friendly ethos with another boasting a 125m+ catalogue, a large chunk of which is from emerging, independent artists.
Not for the first time, speculation of this possibly signaling the end of the label as we know it are, of course, extreme, however these new routes to market are heaping pressure and increased scrutiny on label business models and their continued evolution in light of technological advances, recently articulated in Bas Grasmayer’s Hypebot post, here.

But this market disruption does highlight the music industry’s disjointed approach to release strategies, not all of which appear to be for long-term benefit. Contrast Adele’s windowing of 25 that favoured locking out streaming services for a period with a physical release, with Drake’s Views Apple Music exclusive, both potentially frustrating consumers who have become pawns in the battle for streaming supremacy, at a time when simply converting the average ‘three-CDs-a year-buying-joe-public’ into a £120 a year streaming service subscriber has been a continued uphill climb, albeit one that appears to have found its stride. But at least these were time-limited exclusives, unlike Tidal, some of whose exclusives have remained within its walled garden of subscribers, frustrating a music-buying public, before leaking onto Torrent sites… So just at a time when mass market streaming really is starting to gain some traction, we further alienate the customer…

But at least these were time-limited exclusives, unlike Tidal, some of whose exclusives have remained within its walled garden of subscribers, frustrating a music-buying public, before leaking onto Torrent sites… So just at a time when mass market streaming really is starting to gain some traction, we further alienate the customer…

The other loser in this arms race is new music. What perhaps gets lost in the hyperbole of advocates of disintermediation is that whether talking about a Netflix or an Apple Music, although their levels of investment in talent are undeniably huge and impactful, the majority of that investment goes to talent that has already cut through; talent that has been nurtured and developed; talent that’s now at the top of its game… and up until now, typically thanks to the investment risk born by ‘traditional’ core industry, be that film, TV or music.

What happens next is anyone’s guess, but for music’s sake, continued mutual co-existence between labels and digital platforms has to be infinitely more preferable than the destructive short-termism of tech-led exclusives.

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