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Penny Fractions: Bandcamp, Spotify and the Narrative of Helping Musicians

Hello, welcome to 2019! I debated if I wanted to wait another week before sending off this newsletter
Penny Fractions
Penny Fractions: Bandcamp, Spotify and the Narrative of Helping Musicians
By David Turner • Issue #68 • View online
Hello, welcome to 2019! I debated if I wanted to wait another week before sending off this newsletter, but I figured people can always go back and catch-up if they happened to miss one. I’m starting with a brief look at Bandcamp before diving a bit into how streaming platform “help” artists and the power of company narratives. I’m gonna include a little newsletter survey next week, so be on the lookout for that!

Two years ago Ethan Diamond, one of Bandcamp’s co-founders, wrote an blog post recapping the company’s 2016 successes. He offered a breakdown of positive sales across formats and provided a little color commentary on the overall state of the music industry. Here is a quote from his overview:
Longer term, if subscription music rental can’t work as a standalone business, then it will only exist as a service offered by corporate behemoths to draw customers into the parts of their businesses where they do make money, like selling phones, service plans, or merchandise. And when the distribution of an entire art form is controlled by just two or three nation-state-sized companies, artists and labels will have even less leverage than they do now to set fair rates, the music promoted to fans will be controlled by a small handful of gatekeepers, and more and more artists will be hit with the one-two punch of lower rates and less exposure. The net effect for music as a whole is worrisome.
Bandcamp holds no illusions of providing a panacea to existential music industry threats. What the site offers is fairly simple: A place for artists to sell MP3s, t-shirts, records, cassettes, and essentially anything that can line their pockets for a modest fee of about 10-15% off top. The company also allows for artists and labels to bundle music together for bulk deals, discount music, or even offer subscription plans (ex. Don Giovanni Records). This is all on top of their new artist/label metrics tools that were released last year. Over the holidays while re-reading Diamond’s posts, it became clear how Bandcamp’s business incentives were in lockstep with artists. The more artists make the same applies to Bandcamp, which can then continue to skim off the top without hinting towards charging artists or labels to access their platform, no concerns over subscriber numbers, or even advertising inventory. Of course everything I just described are the main business concerns of Spotify, but also to varying degrees Apple Music, Pandora, SoundCloud, YouTube Music, and essentially any western music streaming service, which unlike many non-western counterparts depend on a narrow number of ways meaningfully pull in money. That tension is what where I wanna dive into this week.
The Story of an Artist Platform
I don’t think it’ll be a shock for those reading in the industry that there’s been a bit of negative chatter around Spotify since going public. This can be seen in the number of 2018 departures from the company and that many were on the artist/public relations side. People leave jobs for various reasons so I’m hesitant to overreact too much, but each departure on the curatorial and editorial side did raise my eyebrow.
Spotify in 2018 made a number of announcements that when taken as a whole show a company preparing for change. It announced direct artist deals much to the chagrin of major labels, artists eventually will be able to upload music directly to the platform, and it invested in Distrokid to further buttress these efforts. There is also the speculation it’s going to attempt to sell artists and label tools that raised the eyebrows of a number of people. Daniel Ek even said as much during the company’s Q3 earnings call:
Our strategy in our marketplace side of the business is the same as we have on the rest of Spotify, which is it’s a freemium business, meaning there will be a certain amount of products which artists and labels can get for free, and there are others which we will charge money for. So, that’s an evolving strategy when it comes to our product portfolio.
This contrasts rather sharply with Apple Music and Bandcamp, where both companies introduced an artist first tool set but didn’t offer any hints or suggestions it’d need to charge for this access. The reason is fairly clear, neither’s business model requires squeezing the musicians, who provide the primary content of their platform, for money. A couple unnamed music executives expressed frustration with this proposal to Music Business worldwide back in August:
We’ve been in heated discussions with Spotify on this point for some time,” says one source. “We’re the ones investing in the artist, and yet we’re left under-educated when a manager calls wanting to discuss a data point. Spotify hides behind a handful of wonky reasons for this, including split rights between labels and publishers.
“Show me how much Spotify has invested in the career of a given artist versus what we’ve invested. And then show me what rights they own as a result. In both cases, the answer is zero…They’re planning to sell us data which already belongs to us.”
The issue right now, and certainly could change once this officially is put into action is that unlike equivalent offers of Bandcamp or even SoundCloud is these are only accessible by artists and managers. Now why would artists want labels to be allowed access to the same tools? Individual artists, along with their managers, don’t sit at the table and bargain with Spotify these kind of contract details. Music Business World phrased it as such: “Ek said that Spotify expected to move from a handful of licensing deals with large players to ‘lots and lots of deals that will happen [with] individuals as artists and labels are purchasing more services’.” There could be large deal with certain players but ultimately Spotify would want to see many artists signing-up for single deals. The company’s interest of working directly with artists neutralizes an ability to properly organize against such potential charges, if there is already such pushback at the executive level why would artists be any happier to foot the bill.
Last year Daniel Ek at Spotify’s Investor Day said “Our mission is to enable one million artists to live off their work.” The cellist Zoe Keating last month said that she received $4,388.93 based on 1,154,513 streams using RouteNote as her distributor on Spotify, which divided by 12 averages to less than $400. Do a majority of artists receive a million streams in a year? I’d guess no, but also if someone reading this knows for sure one way or another I’d love to know. Spotify loves to use stats in its marketing campaigns, but I’d doubt that a majority of artists were able to get a million streams on the platform. Even if a majority of artists were able to get a million streams, that wouldn’t be anywhere near enough to live off, especially if an artists had any children, live in a major city, or were in America and potentially needed to pay for health care. The Swedish company would appear to still be a long way towards that goal.
A Reason for Hope
Now does Bandcamp offer a perfect solution? Of course not. In a 2016 New York Times profile of Bandcamp, Diamond mentioned that “plenty of artists” made more than $100,000 on the platform but those are clearly the outliers. Except the platform positions itself as an alternative, not the future. The issue with Spotify, which is similar to companies like Uber that Liz Pelly highlighted in the Baffler last year is that this isn’t a model that builds a sustainable career for artists.
I don’t say all of this to start the year on a dour note. Diverse revenue streams was the norm for most artists well before the streaming era. Synch deals, touring, merchandise, Twitch, Patreon, SoundCloud, MixCloud, etc. all hold their own issues but speak to the numerous path open to being a musician in 2019. Juliana Koranteng, founder of MediaTainment Finance and TechMutiny, in the Synchtank 2019 predictions offered insightful commentary for artists concerned about their future:
More artists will seek greater control and ownership of their careers as technology becomes more scalable, more affordable and, even, vulnerable. The days when music creators were in awe of and virtually at the mercy of what Big Tech could do for them should be disappearing. Now that we’ve seen regulators probe, customers boycott and employees protest at one or other of the Big Tech conglomerates (Facebook, Google, Microsoft, Apple, Uber, Amazon et al) in 2018, we know their business models and strategies are fallible. So, tech should be about empowering and enabling artists, not owning them.
It’s that last sentence that sticks with me. 2019 should continue artists and labels experimenting and seeing what with what is out there. Perhaps this year I can do a better job highlighting those who are doing exciting work in these spaces to decrease shouting into a void, because many examples do exist (Why wasn’t the “Thank u, next” video on Twitch?!). That’s what prompted me to open with Bandcamp, as year-over-year it continues to offer more and more to artists outside of the streaming mainstream. So many other avenue for artists exist and are bout to pop-up that I’m excited to follow more what is happening on the margins.
6 Links 2 Read
Cherie Hu dives into the fairly complicated world of Middle Eastern streaming services. The piece is full of great quotes and a lot of speculation about a market that is still very much in the early stages of streaming culture. Though a thought that did enter my mind, and perhaps why streaming-only platform feels uninteresting to me, is that if people don’t desire paying for music, then what are going to be the new ways of making money off music that is offered by the internet.
My big takeaway here is still the decades long battle between the music industry and YouTube. I know things are getting “better” and such, but anytime I see the words “value gap” a small part of me remembers the years of bad blood between the companies.
I found this a fairly solid primer about the history of Tencent Music and the current state of the Chinese music industry. Another example that the future of music streaming probably doesn’t directly mean making money off music streaming.
My favorite topic returns with Max Read writing not only on advertising fraud, but deep fakes, “fake news”, and a general sense that everything on the internet is a lie.
I really want to do a history of User Generated Content and music streaming platforms, but what’s happening here isn’t new. Still perhaps we all need to remember the early days of YouTube because no platform ever quite perfected how to deal with this problem of illicit uploads.
This isn’t directly music related, but considering YouTube hasn’t announced any numbers with YouTube Music subscribers I consider this to still be of interest. Hint: People still don’t want to pay for a platform they’ve never paid for.
The Penny Fractions newsletter arrives every Wednesday morning (EST). The artwork was done by the graphic designer Kurt Woerpel whose work can be found here. Any comments or concerns can be sent to pennyfractions@gmail.com. The top of the year is always a good time to start a news year resolution like forwarding this email to someone if you enjoy it, but if you don’t like it then umm wait until a week you do like it and hit that send button!
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David Turner

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