Competition In The Music Space Is Great: Fragmentation In The Music Space Is Dangerous
from the don't-screw-this-up dept
As you may have heard, Jay-Z bought himself a music streaming service, called Tidal, which is now being relaunched with lots of high profile musicians onboard — in fact as partial equity owners:
The plan was unveiled on Monday at a brief but highly choreographed news conference in Manhattan, where Jay Z stood alongside more than a dozen musicians identified as Tidal?s owners. They included Rihanna, Kanye West, Madonna, Nicki Minaj, Jack White, Alicia Keys, the country singer Jason Aldean, the French dance duo Daft Punk (in signature robot costumes), members of Arcade Fire, and Beyonce, Jay Z?s wife.
So, we have all of these artists, taking on Dr. Dre and Trent Reznor who were the keys to Beats Music, which Apple is getting set to relaunch. Jay-Z is positioning Tidal as more friendly to artists — though that was also the marketing claim behind Beats, and then it failed to attract too many users, in large part because there was no free, ad-supported tier. Of course, it’s one thing if you’re one of those megastars listed above, who get some equity stake in Tidal, but what about every other musician? Is it really going to be that good of a deal for them? Jay-Z and crew insist they’ll be paying better rates than competitors, but considering competitors still can’t get anywhere near profitability, it seems reasonable to question if Tidal can actually make any money at all. It’s one thing to say you’re going to pay artists more. It’s another to defy basic economics.
Tidal also has no free, ad-supported tier, but does have a more expensive $20 tier for higher quality sound, which may attract random audiophiles, but not much more than that. Indeed, the recording industry (and many artists) have been pushing back against the free tiers that already exist. Universal Music has been demanding Spotify cut back on its free tier. And Universal’s CEO Lucian Grange has been using every opportunity to complain about “freemium” music plans. Now owned by Apple, Beats wanted to offer service cheaper than the standard $10/month and the record labels said no.
And, of course, now Jay-Z is bashing free music tiers as well:
?The challenge is to get everyone to respect music again, to recognize its value,? said Jay Z, whose real name is Shawn Carter. ?Water is free. Music is $6 but no one wants to pay for music. You should drink free water from the tap ? it?s a beautiful thing. And if you want to hear the most beautiful song, then support the artist.?
That’s kind of nonsensical in a variety of ways. Every time we’ve heard people talking about getting people to “respect music again” or “recognize its value,” the projects have failed (often miserably), because they’re not at all focused on what music fans actually want. Rather they’re focused on trying to change the behavior of music fans and that’s really, really, really difficult — especially when you’re not really offering that much that’s different.
But Jay-Z has a plan to get around that: exclusive deals.
Over the weekend, the Swedish blog Breakit reported ? citing sources close to the deal ? that Tidal?s plan of attack will be to ink first-window deals with the artists, where Tidal would get first releases of tracks from big-name artists ahead of any other digital streaming services. This would be exclusive, but only for a period: Spotify, Deezer and others would eventually also get these tracks, but only later.
At least they’ll go up on other services later, but this seems like a dangerous path to go down. Again, rather than focusing on providing more value the focus seems to be on taking away value from other services: ending free streaming deals and doing exclusives to fragment the market and make it harder for fans to actually listen to what they want, when they want it and how they want it.
That’s the wrong lesson to get at this stage of the game. We’ve gone through nearly two decades of the recording industry fighting the internet at every turn, and now that we’re finally starting to see some services that actually cater to what people want, the old industry players are jumping in and trying to kill the golden goose yet again. Any time any service shows that it can attract a lot of users, the recording industry tries to figure out a way to bleed it dry as quickly as possible, rather than helping it grow and building out more value for users.
More competition in the online music space is a great thing. But the trend towards locking stuff up, and taking away the value to music fans, while similarly jacking up the prices, doesn’t seem like a productive path. It seems like one that is just going to annoy fans and push them back towards unauthorized alternatives.
Filed Under: copyright, exclusives, freemium, jay-z, lucian grange, music, music streaming, recording industry, subscriptions, tiers
Companies: apple, beats music, spotify, tidal
Comments on “Competition In The Music Space Is Great: Fragmentation In The Music Space Is Dangerous”
The challenge is to get everyone to respect music again, to recognize its value,” said Jay Z, whose real name is Shawn Carter. “Water is free. Music is $6 but no one wants to pay for music. You should drink free water from the tap — it’s a beautiful thing. And if you want to hear the most beautiful song, then support the artist.”
Man, he’s a little uninformed.
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It’s actually pretty deep. Sarcasm doesn’t come across well in text, especially when it’s taken out of context. Have you you ever drank “beautiful” water from the tap for free? My guess is no. I’m sure you’ve paid for bottled water though.
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No, I have not. The water that comes out of my tap is “beautiful” in the sense that it is high quality — as good or better than most bottled water. But it is not free. I pay a water bill for it.
To make a streaming service profitable while paying the artists a decent rate, you have to do the one thing the music publishing industry won’t allow: pay the artists. Directly. Without going through the labels and their one-sided contracts with the artists that see 90+% of the royalty payment going to the label. Without that, you’ll fail. (Even with it you may still fail, but at least you’ll have a chance.)
Water is not free. The bill I receive every other month says otherwise. If he wants to pay for my “free tap water” I will pay for his $6 music.
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Water is free.
It is just incredibly inconvenient to get the free stuff. You need to collect it in a rain barrel or something.
Music is free. It’s just less convenient in free form. Amazingly, like water, people will actually pay for music to be convenient as well. Perhaps if he focused on making his service convenient, he would find some customers.
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He specifically said “drink free water from the tap” though which means he thinks most people don’t have to pay a city water bill.
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Well, technically most people actually have a well system.
The water is free – getting it out of the ground may have a cost to it (unless you have solar panels).
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In rural areas, yes. In urban areas, where I would venture to argue that “most people” live, not so much.
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In urban areas, where I would venture to argue that “most people” live, not so much.
I think hardly anyone in what would be described as a suburban area has a well either.
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I happen to live deep in the depths of suburbia, and we have municipal water. I do know people who have well water, but they live way out in the country — they don’t even have cell phone service out there.
But let’s get some real facts here. According to the USGS, (as of 2014) 86% of the US population gets its water from municipal water supplies.
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What exactly is inconvenient about it?
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“Music is free. It’s just less convenient in free form.”
Actually the music publishing industry is making sure that’s not the case.
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you can’t possibly be that slow. So I’ll chalk it up to the fact that Sarcasm doesn’t come across well in text, especially when it’s taken out of context. Have you you ever drank “beautiful” water from the tap for free? My guess is no. I’m sure you’ve paid for bottled water though.
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No, I’ve never had beautiful water from the tap for free. I have had beautiful water from the tap, though. And, spoiler alert, a lot of bottled water is tap water. They just bottled it up for you.
>> But Jay-Z has a plan to get around that: exclusive deals.
“But Jay-Z has a plan to get around that: exclusive deals.”
Oh, good. Someone else willfully denying pirating exists. Do you know what I say to your “exclusive deals”? I’m just going to torrent the album and add it my 50,000 song allotment Google Music gives me on top of the unlimited streaming.
And at half the price.
Go back to your champagne business you fraud.
Economics is not like gravity
It’s another to defy basic economics.
Unlike gravity, economics can be defied. Well, defied with the full support of the US Government and the copyright regime.
Re: Economics is not like gravity
Economy can always be bend by laws. Laws can be bought. The cyclical nature of the current political situation globally.
Rather than concentrate on streaming, which is problematical with mobile caps, how about set up a freemium download service, which lets the artists retain their copyright, and use other services in parallel. Share the profits based on the number of downloads….. Oh dear, that leads to a swatting demanded by the labels and Hollywood.
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how about set up a freemium download service,
They’re not even offering a freemium streaming service, I can’t imagine they’d have any interest at all in a freemium download service.
Since they seem to have tunnel vision about piracy and want to kill it at all costs, perhaps instead of framing the narrative about different business models around giving people a reason to buy, how about putting it to them this way: Is there any part of your business model that will give people a reason to pirate instead of buy? Ok start there. Get rid of that. Now carry on.
Well here’s another service I won’t be using.
The Swan Song of a dieing industry
The public won’t be bothered to remember those that insisted on selling buggy whips. Now is the time for you to fade into obscurity, you talentless hacks. And take your corrupt criminal “music producers” with you.
Re: The Swan Song of a dieing industry
Swan Song
Please send a check or money order to the MPAA for referencing a song in your post.
Thank you.
Re: The Swan Song of a dieing industry
“dieing” “buggy whips” lol
Water if free, if you don’t care about quality you can get it anywhere (well… mostly in major power countries, but then we’re just showing the disconnect “artists” have with the world as a whole, more on this in a bit.). If you want “quality” water you pay more. A lot of people pay for “quality” water. Many people have to pay just to get subpar water these “artists” wouldn’t give their pets.
Analogy fail and way to show ignorance to a majority of the world’s population.
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If by quality you mean packaged in petroleum based individual serving sized containers that are higher quality primarily because the marketing says so, then ok.
Still tap water may be cheap but isn’t free. Maybe Jay-Z should go talk to the people of Detroit about drinking free water from the tap before he makes another comment like that.
The artists, record lables, and online services that find ways to better connect with fans are going to be the successful ones. They need to try to migrate away from the traditional record business model as much as possible, and find innovative solutions to the 21st century reality of a hyper-connected fan base that can be either the music industry’s greatest marketing asset — or its worst enemy, depending on how it’s dealt with.
The pornography business is said to have dealt with widespread file sharing by offering live shows and more customized interaction with customers. Maybe the music biz could do something similar. For instance, they could have done much more, much sooner, to open up concerts to online fans, rather than the traditional approach of locking up the show content while trying to eradicate the inevitable bootleggers that are only filling a niche that would otherwise go unfilled. It’s not exactly a new idea. The Grateful Dead went this route half a century ago, and taking that unorthodox step worked very well for them.
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Zappa’s response to bootleggers was similar. Compete with them by offering a better product.
So here’s how it’s likely to go: artists release singles and albums on this exclusive deal, but even with all the hype I’m going to miss out because of my inability to make online payments. So several months down the line when the music is finally released on services I do use, I’ve already heard it at friends’ houses and what have you, and I’m like ‘meh’. Artists will lose out on this deal because of this, no piracy needed.
Hats off to the founders of Tidal for cutting out the ‘creative’ publishers who seem to help themselves to the Lion’s share of music revenue for the service of copying .mp3-files from a master CD to various online platforms. Way to go, Jay-Z!
Regarding the ‘free’ music, pictures on the internet suggest that it pays enough Jay-Z to afford decent suits. Is there any information about recent earnings of Tidal’s founders? Memory suggests that they have all been doing rather well recently.
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“The challenge is to get everyone to respect music again, to recognize its value,”
“Regarding the ‘free’ music, pictures on the internet suggest that it pays enough Jay-Z to afford decent suits. Is there any information about recent earnings of Tidal’s founders? Memory suggests that they have all been doing rather well recently.”
See the problem is not that people don’t value music, it is that the “music” industry had a bubble where they were able to overcharge for certain music. Now that people have realized this and demand that music be priced reasonably the industry and those it chose to pay are pissed.
So now we have millionaires screaming “I want my money” (entitlement much) and trying to use their lower paid employees to justify it. When in reality, the lower paid employees are being let go cause the CEO needs his 60 Million salary plus bonuses, cause he’s better than everyone else, and the artists need those millions cause they are better than everyone else.
Don’t get me wrong, I think everyone in the chain should be compensated, and people who work harder and make a better product should be compensated better. It’s just the level of compensation and the entitlement I have an issue with.
Good old days
Oh for the good old days of radio when we only had to pay… Oh, yeah, radio wasn’t a pay service either. IIRC it was ad supported and made enough that you could even hire folks to play the records and talk between songs… Amazing. And a streaming service, computer controlled with no real long term daily staff can’t be ad supported why?
Sounds fair, with a catch
“The challenge is to get everyone to respect music again, to recognize its value,” said Jay Z, whose real name is Shawn Carter. “Water is free. Music is $6 but no one wants to pay for music. You should drink free water from the tap — it’s a beautiful thing. And if you want to hear the most beautiful song, then support the artist.”
I have no problem supporting artists, and in fact have picked up a good number of albums and singles over the past few years after listening to them(often multiple times), but here’s the thing:
My support? It comes on my terms.
I’ll pay what I think is reasonable, and if I’m going to be buying, I’m not going to accept being burdened with any ‘You must be a criminal’ restrictions like DRM.
Make it easy and reasonable for me to pay, and I am far more likely to do so. Make it difficult and expensive to pay, and I’ll just ignore what you’re offering and move on to someone who’ll offer me terms I’ll accept.
Re: Sounds fair, with a catch
So it sounds like if they took my advice earlier and removed any part of their business plan that gives people a reason to pirate, such as DRM and artificially jacked up prices, they wouldn’t have any problem adding you to their customer base.
Re: Re: Sounds fair, with a catch
If I cared for their music perhaps, but somehow I don’t see someone used to how the major labels have worked getting even remotely close to what I consider reasonable terms(decent price, able to listen before buying, no DRM, no account needed for purchase).
Water is free?
Is Jay-Z an East Coast rapper?
Music is like water
Actually, Mr. Z, music is just as free as water. You may not be willing to make any without a contract, but people all over the world make music all the time.
However, just like water, the delivery of it in a convenient, cost effective manner is something that people are willing to pay for.
In fact, music itself is even more readily available than water, and easier to deliver, and as such should be priced much lower than water delivery.
They are going to hurt sales. People are going to record these exclusives and upload them which will divert people from ad supported music services to torrent sites.
Once there they will start downloading more than before.
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I wouldn’t waste one nanobyte of bandwidth or hard drive space downloading anything from that glorified crack dealer. Or his porn star trophy wife.
But I’m sure there are plenty of useful idiots with plenty of disk and cranial room to spare.
““Water is free. Music is $6 but no one wants to pay for music. You should drink free water from the tap — it’s a beautiful thing.”
1 – Water from the tap is not completely free. You still pay for it in some ways, through your own utility bills and taxes (for public fountains, for example) – in the latter case, even if you don’t personally use it. Similarly, you pay for “free” music in some way unless you’re pirating it, or it’s used to subsidise other services as a loss leader. It may not be a premium or it may come in a form other than direct monetary payment, but you still pay for it.
2 – Not all water is “free”. there are large businesses centred around getting people to pay large premiums for bottled and other water – some of it even coming directly from the aforementioned municipal supplies. If people can work this out with something that literally falls from the sky and is available in every modern home on demand, why are the entertainment industry still unable to work out how sell their product?
3 – All of these comments attack “free” users of Spotify (strangely, I don’t remember them attacking “free” users of radio for the entire length of the recording industry’s lifespan). What they forget, is that there is a significant proportion of paying Spotify users who are also negatively affected, making the product less useful and people less likely to pay. In other words, in the hope that person A will suddenly decide to pay a premium, they’re potentially losing person B who already is doing just that, with no guarantee they’ll keep either one. Madness.
It’s sad that even in what could be a positive step, easily debunked lies and obvious misdirection are still the way they want to play this.
“This would be exclusive, but only for a period: Spotify, Deezer and others would eventually also get these tracks, but only later.”
…and reality shows that rather than suddenly deciding to pay for a more expensive service to access these songs, people will use other methods (legal or illegal) to access them.
It’s astounding, really. They’re so scared of being short-changed by legal services (which, by the way, are paying amounts they mutually negotiated with the labels in the first place), they’re making sure that they get nothing from many potential listeners – either because they turn to piracy, or because they simply listen to the other artists on their preferred service instead. I know that when I’m listening to music on Spotify, the fact that acts like Tool and AC/DC aren’t available on my (paid) account doesn’t make me start paying for other services to access them or buy copies of the albums I already own. I just listen to other bands, who get my money instead. They didn’t suddenly get richer because I had to go elsewhere, they just lost the residual income they’d have got from the times I’m listening on the road without their album synced to my device.
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There are large businesses centred around getting people to pay large premiums for bottled and other water […]
Really? Because I’ve never paid more than 30p (just over 44¢) for a two litre bottle of water from the supermarket.
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Really? Because I’ve never paid more than 30p (just over 44¢) for a two litre bottle of water from the supermarket.
Yes, really. Depending on where you live and whether you have metered water, that could be a 100% markup over getting it from the tap. And some bottled water is a lot more expensive than that.
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Do you really think that your personal anecdote about how you personally shop for a product where you live is the entire global industry?
That’s before we even get to the definition of “large”, which you seem to be misunderstanding in the context of the argument (maybe 30p/litre is “cheap”, but it’s a huge percentage increase on what you pay for water from your tap).
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Or, 15p/litre by your example to be accurate, but the point remains even if that did reflect what everyone pays.
Music shouldn't be an Industry
It’s an art form, and as such it should be allowed to flourish and the RIAA, and their fellow parasites should be lanced from the equasion altogether.
“I don’t remember them attacking “free” users of radio for the entire length of the recording industry’s lifespan”
In the early days of radio, stations broadcast live concerts, as well as live dramas, straight from the broadcast booth (The live broadcast of H.G. Wells’ “War of the Worlds” that drove an entire town into a panic frenzy might be the most famous example).
People may not realize this, but the advent of recorded music put an awful lot of performing artists out of work, when both retail establishments, and later radio, abandoned the age-old practice of hiring live musicians in lieu of the much-cheaper substitute of playing recorded music.
The early-21st century decline of the record industry is nothing compared to the early-20th century decline of performing musicians. Why is it that we are supposed to lament one as a horrible tragedy but celebrate the other as “technological progress”?
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“In the early days of radio, stations broadcast live concerts, as well as live dramas, straight from the broadcast booth”
I realise that. I just meant that the recorded music industry were very happy to have people access radio for “free” when they felt it benefited them. They don’t now get to demonise the concept of “free” when they feel they’re not benefiting like they used to.
“the advent of recorded music put an awful lot of performing artists out of work”
Indeed it did. It also created a huge number of jobs in other areas and made a lot of other industry and technology possible. Some people lost out, for sure, but the overall effect was very positive unless you were truly tied emotionally or financially to the old way of doing things.
“Why is it that we are supposed to lament one as a horrible tragedy but celebrate the other as “technological progress”?”
Because that’s how human nature works. Some people (mainly those who make a lot of money from the “old” way of doing things) resist change and lament the loss of what they grew up with / profit from, while other embrace the new way of doing things. Eventually, the ones fighting change look silly and lose out to the people who work out how to be successful with the new way of doing things. Until they become the old guard themselves and have to deal with the next cycle of change.
It’s always that way, we’re just in the latest transitional phase. Which sadly means that we have to endure the lies and whining of people who wish they could turn back the clock.
The challenge
That’s not the challenge. I think that music is as respected now as it ever was. I suspect what he really means is that the challenge is to get everyone to respect the mainstream music recording business again. I don’t think that’s possible until it behaves in a manner that deserves respect.
Re: The challenge
“Music” is respected.
However, Jayonce and Trailer-Trash Swift are not included in that category.
Maybe he’s complaining that he wants to be respected as a musician without actually making any music?
I’m sorry Jay-Z. But I respect music.
You are, however, missing the point. (Just like Taylor Swift did with her rant against Spotify.)
People have respect for music. But we don’t valuate it as high as you do. And until you understand that, you’ll be chasing the respect chimera.
What is wrong with this picture?
Okay, buy a music system.
Add in every feature that people hate from the movie industry. (Release Windows, etc).
Have a high priced tier for better quality reproduction (of Rap music ??)
Promise to pay artists more than other systems (which are losing money).
Insult your intended audience.
Take the $$$ to the bank.
It’s possible the idea has a flaw or two.
Jay-Z hates radio
I fail to see the difference between online streaming and radio, except that radio is free to listen to and ad supported. The very model that Jay-Z hates so much. Why does Jay-Z hate radio?
Re: Jay-Z hates radio
“I fail to see the difference between online streaming and radio”
In reality, I think it’s quite simple – choice. With radio, someone on the radio station or label end chooses a single song that’s played to every one of its listeners. This means that each song is played to potentially hundreds (or thousands, or more) of people at the same time, and thus a bulk rate of per-listener revenue along with an invaluable amount of mass marketing (hence the payola scams). Since the major labels control a majority of these stations, this guarantees a lot of advertising for the product they want to sell, as well as a healthy chunk of direct revenue that’s hard for independent artists to access.
With streaming, the choice is moved to the listener. The per-listener revenue may actually be higher, but there’s no longer any guarantee that hundreds or thousands of people will listen to it. This reduces the control that the labels and stations have over the content people listen to, and may result in a far lower overall payout to an artist that’s chosen less often. The guy who was 10 years ago forced to sit through Jay-Z’s latest single to get to the songs he actually wanted to hear can now listen to whatever he wants – and that includes decades of previous music as well as his direct competitors. That includes the guy playing in his garage or bedroom at the same level as those who sell out stadiums. This democratises the output, but means that more artists fight for the same revenue with major labels no longer guaranteeing the biggest cut.
There’s other concerns which I think are smoke screens for larger fundamental problems (such as the fear that streaming will replace sales and concerts completely), but at the end of the day the answer is simple. Why is Jay-Z afraid? People who don’t want to listen to Jay Z will never do so, and he won’t get paid from such people, like he would have done in the 90s and 00s.
Re: Re: Jay-Z hates radio
Excellent point, thank you. I hadn’t thought about it in that way, but it makes sense.