The Biz's Blue Period Has Arrived
Sober realities could be leading to serious change — finally.
In an article published last week about the literary Booker Prize, the chair of the judging panel, novelist Esi Edugyan referred to the “unease of our time” in trying to capture the common themes amongst the past year’s best writing. That word — unease — is an interesting one as it implies a feeling of anxiety or discontent even in the absence of actual crisis. The dreaded waiting for the other shoe drop.
Across the music x tech landscape, we’re seeing unease almost everywhere. Recorded music revenue may continue to grow and live music keeps breaking records, while more people than ever are both making and listening to music. But there remains a sense of disquiet caused by the uneasy relationship between most creators and the platforms intended to serve them (beccause it often feels the other way around).
There’s also the reality that some of the post-pandemic exuberance experienced in 2021 and 2022 needs to be reeled back in, which is why the platforms themselves seem to be stumbling. Like this morning, when it was announced that Epic Games, the developer of Fortnight, is selling Bandcamp to Songtradr as part of a larger cost-cutting campaign within the company.
The announcement comes just 18 months after the surprise acquisition of Bandcamp by the video game giant. At the time, it was a bit unclear why a game developer would want an indie music marketplace, but it now seems likely that execs at Epic Games were drunk on the barrels of pandemic cash in their coffers and enticed by the low interest rates of March 2022 to branch out beyond their core competencies.
However, the fiscal hangover Epic is suffering pales in comparison to what is happening at Hipgnosis Song Fund (HSF), the high-flying music rights vehicle that’s been coming apart for a couple of months now. This week saw some of the worst news yet, as a proposed sale of assets by the publicly traded fund to shore up investor confidence was presumed dead mere hours before the chair of the fund, Andrew Sutch, announced he was stepping down. This morning, the Financial Times published a piece outlining the current crossroads for HSF, including some lacerating accusations of mismangement with a healthy portion of conflict of interests. So rock bottom could be in sight.
Fortunately, in both these cases, those taking the losses are well-equipped to handle them. For all the handwringing around Bandcamp’s sale to Epic Games, nothing has changed on the site for artists or fans. And Songtradr, with its focus on music licensing, seems better positioned to offer new opportunities for the small artists and labels who make up Bandcamp’s sellers without disrupting the current marketplace. As for HSF, 77% of shares are owned by institutional investment groups like BNY Mellon Global Real Return Fund with ample money to splash around.
But regardless of who takes the hit, we’re clearly past the point of big swings in music coming from the top-heavy finance sector. At the same time, experiments in bottom-up fiscal instruments (all those worthless NFTs) are equally kaput. So, where should we look for innovation? The new trend we’re seeing is measured experiments that are aimed to solve the problems that real-world musicians have been kvetching about for years.
The most obvious is Live Nations’ On The Road Again campaign, which is meant to support acts playing the concert giant’s smallest venues by removing merch fees and offering stipends to cover additional touring costs. Predictably, the National Independent Venue Association (NIVA) called foul, claiming the program is a “calculated attempt” to harm indie venues. But it’s basically damned if you do, damned if you don’t for the world’s biggest concert promoter. So better to be damned for doing in this case.
Over in streaming, Deezer has defined itself as the petri dish for experiments on new models. The first streamer to raise its prices back in 2022, Deezer got the whole industry to follow with what appears to be a “minimal impact” on subscriber growth. That led the French service to raise rates again last week. It also announced a plan to increase streaming payouts for “professional artists” and “active listening” (as opposed to algorithmic recommendations), while damning up the revenue that seeps out through literal and metaphorical noise content.
As the tenth largest streamer, Deezer won’t fix streaming alone. But its relatively low stakes make it the perfect test ground. Plus, the fact that the plan was conceived through a partnership between Deezer and Universal Music Group while the former shares a parent company with Warner Music Group means that any net positive results from the new model might not face as much friction when it comes time to implement reforms at the larger DSPs.
Not everyone is 100% happy with all of the solutions proposed by Deezer, of course. DIY distro service TuneCore’s owner Believe was quick to issue a statement accusing Deezer and UMG of favoring megastars while reducing payments to emerging artists. But as former Sony Music exec Thomas Hesse pointed out in this week in Rolling Stone:
The proposed cutoff for defining “professional” artist status is pretty low – 1,000 streams per month from at least 500 monthly users. Long tail “noise” would be ineligible for the bonus, though, while even mildly successful developing artists would be treated the same as superstars.
In the same article, a current VP at UMG referred to the plan as “fixing the roof while the sun still shines,” referring to the threat of a far longer tail that all musicians might face as more AI music apps come online. An admission that human creators big or small will all be in the same boat once machine learning unleashes an ocean of music.
That same could be said for Live Nation. Pinching off a fraction of a sliver of revenue so that lower-wattage performers aren’t completely washed out by the blinding light of a couple of Taylor Swift tours at least acknowledges that venues of all sizes need performers who can afford to perform.
This is the same collective reality we’re witnessing in this week’s settlement of the WGA strike. Studio officials may dream of writerless writer rooms, but picket lines do still have power — for now.
Could we be entering a post-post-pandemic period of calm and rational compromise instead of endless cycles of emergency and ebullience? A Threads era after the age of Twitter? It’s nice to imagine the possibility.
TAKEAWAYS
Salient statements from this week’s music news.
1. Music’s Top Money Makers: The Highest-Paid Executives and Stockholders at Publicly Traded Companies
Headline-grabbing CEOs earned mountains of moolah, causing some shareholders to balk at the biggest paydays.
Takeaway: The largest companies tend to have the largest pay packages and companies within the United States tend to pay better than companies in other countries.
2. Web3 Music Startup Sonorus Added 160k Users in Six Months
Speculative NFTs may be toast, but there might still be compelling use cases for blockchain in the music space.
Takeaway: This decentralized system relies on actual user engagement and preferences. It's not just about how much a song is played, but also how much users are investing in it and supporting it. This makes it more genuine and fair.
3. Is BMI Selling, or Are They Selling Out Songwriters?
Music managers are cautiously awaiting what could be a major overhaul.
Takeaway: Until songwriters get serious about unionizing, and the industry gets serious about supporting songwriters, they will continue to get screwed—and not just potentially by BMI, but literally by anyone and everyone in the streaming music food chain.
