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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

Disclaimer: the opinions expressed in this weblog are those of the authors and not of their respective institutions.

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

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November 28, 2012

How Do We Make More Than Pennies Flow?

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Posted by Alan Wexelblat

I am coming to believe that artist compensation issues may be a bigger stumbling block for streaming music than I had thought. You may recall in October I asked whether streaming music was a viable business, and the question has come up again.

This time it's via a thought piece by Damon Krukowski for Pitchfork titled "Making Cents." Krukowski was a founding member of the late-80s alternative band Galaxie 500 and has been a performing musician for decades. He writes from the point of view of someone who watched his industry wrenched out from under him as his career went along. And, like David Lowery, Krukowski believes that the new music business models are systemic swindles.

He directs a shot specifically at Pandora, which I noted last time was trying to improve its image of being too stingy with payments, and Spotify. He gives specific numbers showing that the total payments by these services that end up in the musicians' pockets amounts to pennies - and not that many pennies either. But his major complaint isn't with the services named - it's with the model of streaming music as a business.

As Krukowski lays it out, the streaming companies aren't making profits either, so it's not like they're ripping off consumers and artists and pocketing the wads of cash. Instead, he notes, they're just businesses in the business of being businesses. They grow their companies' values, in ways wholly divorced from the music business.

On the one hand, I'm sympathetic to this. It's got to be frustrating for someone to try to make a living having no idea how to price and distribute what they make so that they can have a real income. Krukowski links to where you can get all of his bands' music streamed for free anyway. The difference between free and the services' pennies isn't that big a deal, clearly.

On the other hand, you could just as easily accuse Apple, Amazon, or Wal*Mart of being "divorced from music" even though they all sell a crapton of it. That's not a reason to dismiss the contribution each of these giant retailers makes to selling music. Rather, it's a reason go to back and say "If big retailers can make money on, and pass substantial revenue to artists on, music why can't the streaming services?"

It's clear we haven't gotten the model right yet, but it's still very early days. I'm not willing to give it up before it's been really tried.

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