The Streaming Music Dilemma

Taylor Swift made headlines earlier this week when she made the decision to pull her back catalogue off Spotify. Her label had previously used the windowing model to protect revenues – basically holding back the release date of new material on streaming services until after the physical CD release.

That approach is well-known in the film industry where demand for new blockbusters will encourage people to pay premium prices to see the movies in the cinema before they finally arrive on Netflix some months later or wherever.

In this case, it appears that the label would have been happy if Spotify restricted new material to  those with a paid subscription. But that runs counter to Spotify’s business model in which non-subscribers have equal access to the (ad-supported) tracks across the service these days. So “Swift Hates Freeloaders” may actually have been a more accurate headline in this case.

It makes zero difference to me as a consumer but I think that she’s got it wrong.

I should set out my stall at this stage. I’ve had a paid subscription to Spotify (and before that, the legal reincarnation of Napster) for a number of years. Personally, I’m more than happy to pay for the service because it’s one that I brings me a huge amount of value. But it’s true that every consumer has to ask hard questions about whether supporting a distribution platform that is leaving its competitors behind is actually taking advantage of artists in some way.

My answer? No. As much as I agree with her argument that good art justifies payment, the industry model has changed – for good. The industry cannot continue to rail against the fact that scarcity is a fiction when it comes to recordings that are predominantly digital.

This isn’t to say that the current solution can’t be improved of course. But for those that find the current lie of the land unpalatable, I still don’t see a happy outcome on the horizon. Not in terms of income derived directly from recorded output. Indeed, looking at Mark Mulligan’s analysis, the existing subscription price for streaming music services will have to fall still further from the existing £9.99 monthly subscription charge to remain viable, thereby cutting further into musician’s revenue.

I’m convinced that over the medium term, we’ll move to a far more decentralised model that will, on balance, prove to be more equitable for artists who will distribute even more directly to their fans. But even if you’re judging art by financial rewards, the game remains the same. You need to build a fanbase. In the modern attention economy, the worst result of all is that you get ignored.

As Mark Mulligan wrote in another excellent post about the Tyranny of Choice, “Choice is fantastic but too much choice begets paralysis”. And Nilay Patel had an interesting analysis earlier in the year on Vox when he argued that

“Taylor Swift does not understand that the internet killed scarcity”

She, Thom Yorke and a number of other established artists are of course in a privileged position in many ways as outliers within the industry, with engaged and passionate followings. No-one likes to see a pricing abuse caused by monopoly. But the reality is that Spotify really isn’t the enemy here. If you want to listen to music for free, you simply go to YouTube. Research shows that that is where the younger listeners are spending most of their time in any event. Streaming services are still earning money for the acts.

As a consumer, I want choice. I may be in a minority but I’m happy to pay for it. Although there is a part of me that suspects that the publicity around this story during the same window as the release of a new album into a saturated market, couldn’t have damaged Ms Swift’s cause.