Thought that this newsletter was too good to pass up and thus your treat below on the comparison of the growth in online streaming of music and video.
Once upon a time television was like radio, something you received over
the air for free via an antenna. But in the eighties, TV moved to a
subscription model, people paid for cable, for a better picture and more
and better programming. So, customers became inured to paying a
subscription fee, every month, in perpetuity. And they still do, despite
all the hoopla about cord-cutting, the truth is you're paying for
access, whether it be with the cable company of yore or via FiOS or LTE
wireless, all of which you pay for each and every month.
And then came home video. Initially an ownership market, it didn't
burgeon until it was turned into a rental market, which flourished until
it became a dirt cheap ownership market which threw off tons of cash,
then
Netflix brought back rental and then went streaming and the cash
cow ownership model crashed.
Music was always about an ownership model. And this was resented by
consumers when DVD prices dove down to nothing and included all the
music on the CD for a lower price than the music only disc.
And then the internet hit. All media were unprepared. And music was
affected first, because of the small size of the files. But TV learned
and created Hulu and Netflix flipped its model to streaming, which, if
you remember, customers hated, but have now embraced. Furthermore,
streaming is cheaper than all its predecessors, and it's all you can
eat.
In music, we stayed with the sales model deep into the twenty first
century, way too late, with the iTunes Store. We broke out the single
from the album, Steve Jobs tried to keep the prices low, but the labels
lobbied for an increase, which they finally got, driving their
enterprise right towards the cliff when YouTube emerged.
There was no viable alternative. Yes, Rhapsody existed, but most people
had no idea what it was, and unlike in TV/movies, people were not in the
habit of paying a subscription fee, which they'd already been doing in
visual media for decades. So with no viable alternative, the youngsters,
who are cheap and have loads of time, flocked to YouTube, which the
rights holders eventually monetized.
Now visual creators and actors get paid in the new streaming era, just
not much. The rights holders bundle their products and license them to
distributors. Actors and writers agitate, even go on strike, but it's
seen as a battle between them and the studios, not them and the
distributors.
But it's different in music. Because despite hefty advances, artists got
royalties, which were frequently a laugh in visual entertainment, owed,
but not paid.
Now visual entertainment is screwed because it believes it's ahead of
the game, believes it's got it all figured out, when the truth is you
need multiple subscriptions to get everything you want and as a result
piracy is rampant. In music, one subscription will get you everything,
so piracy has tanked. But in both worlds, streaming rules. It's just
that ownership fell by the wayside eons ago in visual entertainment.
Also, visual entertainment is still holding on to windows, it's still
trying to figure out how to replace DVD sales revenue, never mind make
its nut via streaming income, whereas windows are passe in music, but
the reduction in income...creators are still bitching about that.
But consumers don't care. They're in heaven. And they're never going back to the old ways.
So where does this leave musicians?
Believing that the barrier to entry is so low, the ability to get your
stuff streamed so easy, that they should all be millionaires, not
realizing consumers have very little time and infinite choice and they
probably won't choose you but the hits.
Whereas in visual entertainment, the hobbyist doesn't believe his
productions should be offered on Hulu or Netflix. And doesn't believe he
should make bank on YouTube unless he's got millions of plays.
The song remains the same. If you're popular, if you've got leverage,
you'll make money. Actually, popularity now rules because of the
suddenly seen metrics, no one with 1,000 plays is bitching they're not
getting rich off of YouTube, but somehow people with the same number of
streams on Spotify believe they should.
So what we've learned is that access has won. And in this case, TV
preceded music by nearly two decades, it trained people to pay, every
month. Furthermore, the public was weaned from ownership by insanely low
rentals, like Redbox, and nearly as cheap streaming. This is the future
of music too.
So music has to train its audience to pay. It was blindsided by YouTube,
which has become the music destination of choice. Blame the labels, who
didn't license Spotify, et al, earlier, forcing Spotify and its clones
to offer free subscriptions just to get people to try them out, because
YouTube is free.
But movies were never free. There did not need to be a free Netflix. The
only thing the visual purveyors are fighting is piracy, which is
incredibly significant, but convenience is helping them, because you
can watch so much instantly, at your fingertips, on all your devices.
Yet in music, the makers abhor convenience. They trumpet CDs and vinyl.
They insist people listen to the album when they don't want to. They're
pushing the ball uphill, they're fighting their own best interests.
So get with the program. Know that streaming has won and the goal is to
get everybody to pay for a subscription and that winners will be paid
handsomely and losers should just thank their lucky stars that they're
able to play.
And, now that visual entertainment is everywhere, along with video
games, it's incumbent upon musicians to make art that trumps its
competitors, that is better than "Homeland" and the rest of the cable
shows.
That's quite a challenge, but I know you're up to it.
Some of you.
