Tony Z’s take on Spin.com’s streaming and Dance Music article and comments

Okay, so I’ve read Phillip Sherburne’s piece and many of the comments from DJs, Producers and others who ask some very good questions about streaming and cite many reasons why the quality of dance music seems to be suffering. Sherburne writes that today’s dance music producer is so frazzled between DJ gigs and travel, they have no time to write quality music. Is that true? I don’t know, but what I do know is that music production is vastly different today than it once was.

No longer are you stuck in a studio for a 15-hour session or back-to-back all-nighters. You can get stems from others contributing to your production or vocals from your singer in your DropBox, then drop them into your Ableton production on that 19-hour flight to Singapore. Sure, you’re not stuck in your home studio, but your hotel room, flight or limo ride have replaced the studio as the defacto production environment.

Let’s talk about quality, which has and will always be subjective. Every time a new genre explodes, those in the industry and beyond will – after a short period of time – run out and decry their genre as having sold out or find reasons to say, in this case, the dance music they once held dear is being impacted by forces that render much of it utter crap. This isn’t news. It’s been happening since the day I started DJing in 1979 and it still continues today. It’s fueled by the ease of being able to post your comments in Internet forums, on blogs and through email list serves. It never fails to amaze me how many people jump on the bandwagon in these discussions, because it becomes less about what is really going on and more about a big bitch session on how “I’m no longer making the money I once was.” Boohoo! Cry me a river. Somehow and someway, all these external factors have killed the gold goose that puts money in the pockets of DJs, producers and record industry. Next they’ll be blaming Iranian hackers for inserting a bug into Ableton Live 8.

Yes, downloading has severely disrupted the recording industry. There is no doubt about that. The sales that once lined label pockets and fueled artists careers is one quarter of what it once was. What does that tell you? Maybe the price you thought you were setting for your music was overinflated in the first place. Maybe now that digital has disrupted the market, we can truly see that what we were all paying for music was probably not realistic. It was like the Real Estate bubble, where so many where paying so much for homes, when the value of those homes wasn’t really the value at all. But artists refuse to hear it, because they somehow believe that what they do is on some higher level. Some higher plane in the stratosphere above our peasant heads. They think their art is worth more than someone else’s, when in fact, their art is a thread in the fabric of the same pop canvas as 100 other artists. When its hard to get your art, it becomes more valuable. When it’s easy to get your art, it becomes less valuable. I don’t have to buy that original photograph for $1,000 from the nature photographer down the street to hang on my living room wall, I can simply buy a $49 framed piece from World Market that will suffice. The value in art is subjective and relative – period!

Someone commented in the Spin thread that they had put a lot of time and effort into their art and they haven’t made a penny back. Well, there are hundreds of other artists making money. I know, because I buy Beatport tracks every month for my mixes and for my 8tracks.com playlists. Someone is getting paid or they wouldn’t be doing it and Beatport wouldn’t have a former Amazon executive as its CEO. If it’s not you, then is your music all that good in the first place? Does anyone really care about what you release? Didn’t you demo your tracks before you put them out there with some DJs to see if they would fly?

I’m a DJ and (not yet!) a producer, but I’m actually studying and will make a go of it at some point. Regardless, I own Netmix.com. I don’t put as much love into it as I used to. Revenue from ads has gone to a trickle, but I still do it because I love it. All those people that find it for free through Google; are they stealing my art or simply finding my words and compensating me in another way. Paying me with this thing called reputation? I’m putting it out there to build reputation in the hopes that one day, I’ll be hired by someone as an expert in my field, thereby generating revenue based on my knowledge and ability to sell my skill set through words. Someone will actually pay me for what I know, in the same way someone will hire a musician or artist for a gig or put them on a recording.

Today, reputation is currency and why many artists now put their music on SoundCloud, which really is the new radio. Here’s a service that has 140M active users worldwide, yet artists are putting their music on the service and literally paying for storage! But, you don’t hear a peep from artists about how SoundCloud is ripping them off, yet all artists attack Pandora for not paying enough. Ha! How does this make sense? I can’t figure it out.

Now, if you were assuming SoundCloud pays artists through SoundExchange, you would be wrong, because SoundCloud offers full interactivity, which SoundExchange doesn’t collect for. SoundExchange only collects for artists on non-interactive services like Pandora, Rdio, 8tracks and others. So, artists are paying SoundCloud, but not getting paid on the mechanical license they gave to SoundCloud, simply because it’s cool to be on SoundCloud in the same way it’s cool to be on radio!

Artists need SoundCloud to post their music and share their tracks in social media. When those tracks go viral in Facebook and they can be played directly in a Facebook status update, you don’t hear artists complaining, but they want every penny from Spotify. Remember, they’re giving their music away for free, but complaining that their download revenue suffers. Another anomaly? I think not. They are doing to themselves what they did in the past – they gave the most popular technology free reign to use their music with full interactivity without getting paid in return. Makes you wonder, right? Me too. They actually pay SoundCloud to host these files!

Let’s address the streaming issue. Yes, it take an exponential number of streams to make back the same amount of money for few singles sold. Since terrestrial radio negotiated themselves out of paying artists (not songwriters, but the performers themselves) for the public performance of music, all artists were happy to get their songs on the radio license free and payment free. If also happened to be the songwriter, they got paid a royalty for that too. Generally, performance on the radio translated into sales for the label and touring opportunities for the artist. The artist was never content with that model, but they never banded together like they’ve done against Internet radio to demand that terrestrial radio pay them. Well, I think that’s about to change, but the fact is, terrestrial radio hasn’t paid since radio was invented!

How much revenue did artists and their estates lose? Billions of dollars. Radio was so powerful that if you even tried to stand-up to the industry, you’d be blacklisted to never be played again. Fortunately, today radio has competiton – the Internet, which is giving more power to the artist, but yet the artist wants to suck everything out of only the Internet services, but not institute rates on terrestrial radio or increase the fees of Satellite providers, who pay 8x less than Pandora.

On today’s Internet or Satellite radio, all artists actually get paid something. That is definitely an advancement. Now, just because all artists get paid something doesn’t mean that the cut of revenue should be so high that the Internet company cannot do business. Let’s remember that with terrestrial radio, you have one feed and only 24-hours in a day. Yes, with digital radio, you can now split the signal and have 3 feeds, which triples the number of songs the station might play. But the station can only play a fixed number of songs depending on the track times. On Internet radio like Pandora, you can have 1M people listening to 1M individual streams containing 24-hours of music. When you think about what it takes to ensure that much more music is available (quadrupling the music staff) to the system and then hiring the right people (engineers, product managers, information designers) to ensure that they system works across the web, mobile, satellite and cable radio, you see the costs increase.

Remember, these people are not warehouse stock pickers or order takers, they are professionals; many with degrees from top tier universities or colleges and they have salary, 401K and health benefits. In order to retain these kinds of workers to build these services, it’s a large capital investment. Much larger than just hiring a few DJs to make some promo calls. Most labels can function with 5 or 10 people and the rest is outsourced to an accountant, attorney, promo reps and street teams. Internet companies need highly skilled developers who cost $95K to $150K or more a year.

Yes, I know. The argument would then be: “well, why shouldn’t the artist make that kind of money? The same money as a developer!” It’s because the developer comes to work from 40-hours a week (or longer in many cases) and builds a product that serves tens of millions of people. The revenue from those services fund those salaries, in the same way record labels hire their staff. Let’s remember though, the cost is much higher to retain highly skilled workers with advanced programming capability. It’s not the same as hiring a DJ to call 100 radio stations.

In the same way that an artist is paid $10,000 for a show, a developer is paid $10,000 over 2 weeks. Writing code today is certainly much more stable than a music tour. But, when your a top artist, you surely are making far more than a developer ever would, unless that developer is the CTO or founder of the Internet company. They could very weel become as popular as the artist in the public’s view. Shouldn’t the Internet company executive or developer who spent years of their life investing in themselves and their futures reap some profit as well? Same as an artist finally earning platinum status and touring with stops at the LA Coliseum and Wembley Stadium?

Artists forget this. They think Internet companies like Pandora were born overnight and somehow, every employee is rich and the Internet company is screwing them. Well, if that’s the case, then why does Pandora pay between 50% and 58% of their revenues depending on the quarter directly to artists? That’s right, Pandora is paying over 50% to artists. Spotify even more and that service is almost wholly owned by the major labels and venture capital firms. The rest has to go to salaries, overhead, business development, customer support, research and development and other costs to build the business. When you have 200+ employees, that’s far different than having a record label with 10 people. How many businesses in the world pay 50% of their revenues to their suppliers?

In an Internet business, customer support alone is a cost that no record label ever needed. How many people could ever get an answer from a record label if they had an issue with an artist website? Probably none. And how many artist websites built by labels have you ever seen updated after the first album release? Forget about it. Hardly any. You have to actually put bodies in a chair to answer customer complaints and solve problems. That, in itself, is an expense most people on Spin thread forget. Then, you have to have system administrators to make sure the servers bounce streams around the world, 24-hours a day, 7-days a week. This isn’t Romper Room or Sesame Street. It’s very serious work that takes highly skilled, expensive workers to maintain. Maybe costs decrease over time as Internet technologies become easier to use for the general population, but right now, that’s not the case. Websites and mobile apps are constantly evolving – almost like releasing new parts to the same album week after week. People don’t see this. They just see stuff work and they think it appears out of thin air. That’s the human condition; if you can’t see it, you don’t know that it exists, but if it exists in a way you can touch it yourself, then and only then will you understand it.

Let’s talk about sales. Artist bitch that digital download distributors are getting 40%. Why shouldn’t they? They build the infrastructure, do the promotion and marketing of select tracks on the service, maintain the servers and employ customer service reps to help your fans buy your music. Labels got you for more than that and never offered the same level of service!

I say, you don’t have to sell your music on iTunes, Amazon or anywhere else for that matter. You can totally control your music today and set up your own download store. But, you know why you don’t do it? Because you’d rather be where everyone else is – on Beatport, Audio Jelly, DJ Download, iTunes, Amazon, etc. You fear that if you’re not there, you won’t sell. Well, guess what? You won’t sell, because you simply don’t sell if no one knows about you. Putting your music on these services does not mean instant success. You still have to market and promote your brand and ask your fans to buy your music. They can do that on your website today just as easy as they can get it on iTunes.

You can set up a simple WordPress site and use the Cart66 shopping plug to sell digital downloads direct to fan, where you keep all the money. It’ll cost you $20 a month for a hosting account. If you want your WordPress site to look more like an artist’s site than having the default WordPress theme, you can have some local kid design it for you and an offshore developer code it for under $500. Then, you can sell your stuff direct through Etsy, Ebay or even Amazon. Or, you can use the same Cart66 plugin to sell your T-Shirts and other merch direct to fan. There is no reason that you can’t, other than you a) don’t feel like doing it, and b) think you need to be where everyone else is. Guess what? You can still be where everyone else is and still drive fans to your own website to buy your music, so stop putting your music on SoundCloud for free! Maybe a 1:20-second low quality sample, but not the entire track!

My last two points on the thread:

1. If you produce using digital audio workstations like Ableton Live 8, but don’t ever force yourself into creating a live show, then that’s your own fault. If you want to just be the guy/girl in your bedroom making tracks and you aren’t creative or resourceful enough to build a live performance, then stop whining about how you’re missing out on touring revenue. Again. It’s your own fault! Figure it out. There are plenty of others who do. Just ask Imogen Heap.

2. We have all known for many years that dance music will never get played on the radio, as long as most tracks are 4+ minutes long and have no vocals. Radio only plays 3-minute songs with vocals! Rarely does an instrumental track get nationwide radio airplay. Maybe if you’re Kenny G or Dave Brubeck you’ll get some love. If you’re a dance music artist, producer or combination of both, you have to learn how to make pop music with vocals if you want to have a financially successful career. You only have to look as far as Kaskade, Calvin Harris or David Guetta to see that without vocals, you’ve got a longer road to climb. Now, don’t get me wrong, I love the underground. Tech-house is my favorite genre right now. There are a ton of tech-house tracks now sans vocals, but there are also a few lately that are off-the-hook! If you’re not producing tracks with vocals then you’re always going to be in the underground and never the mainstream.

Okay, so your sales have dried up, but you’re still an amazing artist and people clamor for your music or rush the red velvet rope to see you. Where’s the revenue if its not in the stream? It’s in sync licensing. If you’re a dance music artist, there is probably no better time than the present to be able to license your music for film, television and video games. Yes, you have to get off your ass and do some networking and business development. You have to find the music supervisors and get your music into their hands. I know a lot of folks who have placements. It’s not easy, but it’s their if you want it bad enough.

What I find fascinating is that artists will pay promoters, agents, managers, bookers, street teams, designers, developers and anyone else for that matter to get their music out there and generate brand identity and awareness, but when it comes to payments from Internet radio, they find it unfair. Today, you have to do a little more. You have to go back to the drawing board and reinvent the wheel. We all know it sucks, but this is what the world has come to. Either you can go on Spin.com and decry the death of the quality of dance music and waste everyone’s time, as well as your own. Or, you can get up off your ass and do something about it. You can be more than whatever the media pundits write and the commenters confirm. You can drive yourself beyond that. I just look at the amazing success of Calvin Harris and say – it is possible!

As for quality, the industry veterans and other blowhards will always decry the death of dance music and say that it sucks, but every year we seem to go to the show, download the music, write on the blogs and do all the other things that keep us in the game. Maybe…just maybe, we can all be a little more positive. We can all put a spring in our step. We can all look toward the future and help guide others instead of continuing to fuel the oh, so negative “EDM is dead” or “dance music today sucks” debate. There’s lots of good stuff out there, you just gotta know where to look. Stop crying and get moving!

2 comments

  1. Rob R. says:

    Really thoughtful article Tony! When you have history that one can look back upon and see the trends, it's almost a "duh" moment because you can see it happening again and again. Again it goes back to hard work and picking up on the new technologies and innovations in the music industry. Now we aren't limited to one stream, the terrestrial radio. We have more competition now with the internet, so make the most of it!

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