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Penny Fractions: Issue 43 - Phone Bill, Music Bill. Same Thing?

Hello, I hope everyone reading this is enjoying their week so far. Last week I forgot to mention but
Penny Fractions
Penny Fractions: Issue 43 - Phone Bill, Music Bill. Same Thing?
By David Turner • Issue #43 • View online
Hello, I hope everyone reading this is enjoying their week so far. Last week I forgot to mention but I was on the New York Times Popcast with Briana Younger and Jon Caramanica talking about the latest albums by Nicki Minaj (Queen) and Travis Scott (Astroworld). Then last Friday my friend Casey Newton, Silicon Valley editor at the Verge, mentioned me in his excellent daily social media newsletter the Interface. That might account for the sudden surge in new followers.
Thank you all for subscribing and if you enjoy this newsletter please do recommend it to friends, coworkers, local librarians, and area park rangers. I also wanted to point out that for new and old, but still kind of new, readers that my archives can be found here. Just in case you wanted to read my frustrations over the launch of YouTube Music, thoughts about Twitch before Drake hopped on the bandwagon, and the role of voice in the future of music streaming.
One last bit of news. Next week will contain a small announcement about Penny Fractions going forward and thus won’t be a normal essay and links newsletter. My parents are also visiting me in NYC, so it’s my own little vacation. All questions and thoughts can be sent to pennyfractions@gmail.com. Now let’s jump back into a conversation about cell phone companies and record labels. 

I’m going to pick up this week with a quote from a recent Billboard piece by Cherie Hu on record labels rubbing elbows with telephone companies:
But in addition to demanding minimum-revenue guarantees and marketing commitments from the telcos, record labels are increasingly pushing for deals in which a wireless carrier offers customers a long-term free trial of the ­streaming service, then requires them to pay full price for the ­subscription when the trial expires. Says Mulligan: “Labels want to retain control over telco strategy.” 
My question to Mulligan’s closing statement is: What control? The scenario that Hu described above is one where record labels and artists already lost. Why would a Samsung, Sprint, T-Mobile, etc every agree to negotiate better deals with labels? Even if there is more competition in the marketplace for music, it’s hard to envision any major labels being able to play between Amazon, Apple, or Samsung for a stronger deal.
One only needs to look at the last couple of years of label negotiations with tech companies to see a repeated pattern of the music industry, even in a competitive field, failing to secure better deals. Billboard reported last year that Universal Music Group agreed to lower royalty rates for the purpose of allowing for album windowing, a feature that few artists have taken advantage of to trade away potentially million dollars.
Earlier this year independent artists witnessed another iffy deal as Digital Music News reported on a licensing agreement with Facebook that was a lump sum deal rather than per stream payouts. Thus leaving a limited pool of money in case if over the next two years this becomes a real money maker, these artist won’t see that much in return. So forgive me for lacking confidence in the negotiation skills and leverage that music labels will have when working against companies who aspire to be worth a trillion dollars.
Opportunities Under Consolidation
Let me step back. What do these partnerships mean for artists and actual workers within the industry if anything?
I’d say I think this is a good time to eye all the other means of establishing fan connections and finding revenue streams. Outside of the major label system, or within its most interesting parts, there are a number of ways to re-imagine music consumption outside of the mass streaming model. I wrote about this earlier in the year when I was envisioning different ways to interact with fans on Twitch. That’s why I love talking about Twitch and even YouTube’s recent attempts to copy Twitch’s direct to artist monetary options. There is real momentum to envision music consumption outside of needing to win a rigged playlist lottery.
I often joke with people that Bandcamp is just a merchandise site that happens to sell MP3s. I never say that to dismiss the platform, which for full disclosure I’ve written for multiple times, but more to just show they aren’t building a generation of MP3 obsessed fans. No, they’re catering towards a category of fans who still or are learning to love owning part of their fandom. That the site offers a semi-column dedicated to merch even speaks directly to that fact.
The streaming-first, always, and forever ecosystem is training consumers to decouple making real transactions with the artists they love. If every phone is bundled with a music streaming service, that’ll only increase the friction for a fan to pull out their credit card, if they’ve never paid a dime for music in their lives.
(I’ll admit here the reverse could easily be true and the amount of merch done by SoundCloud rappers would show that.)
(Second aside: Yes, I know Spotify sells vinyl/shirts/etc. but it takes you to a third party site and isn’t at all well integrated into the platform right now.)
I hold a similar view on SoundCloud to Bandcamp in being a platform that potentially offers something beyond an endless catalog that can be found across many services. The platform’s artist side ease of use and the fact an entire musical generation exists almost exclusively within its walls shows there is a large audience for off-the-beaten path music without it being 1950s Hawaiian rockabilly—love y’all Bandcamp. I didn’t love SoundCloud’s attempt to be Spotify (SoundCloud Go), but their refocus back on artist tools and more ways to engage with the community with mobile song comments is a nice sign. SoundCloud might not be tucked away into a phone or smart speakers but it can and would be probably be best served leaning into a place for music fans to ready to engage beyond a passive playlist.
Yet the real “winner” of this space aren’t even music platforms. Even though musicians like Amanda Palmer were some of the earliest backers of Kickstarter, I’m still surprised more don’t venture over to Patreon or even Twitch. Instead of putting bench markers at a million Spotify monthly listeners there is a celebration at 2,000 paying Patreon subscribers. I wrote about this earlier in the year and arrived a similar thought of scale for most artists not being a proper end goal and instead one should drill deeper into their own fans and community than assume they’ll win the scratch off mainstream success. Even those who hold that goal could also take hint from properly building up an audience that won’t simply fade after a few singles or two album cycles. This is why I also think of Twitch, not because its perfect, but because it opens up the ways to think about what is valuable and monetizable for a musicians beyond a final sound recording.
A world of further media consolidation is one that kills jobs and makes the already powerful, even more so, but it can offer an opportunity to re-approach much of this business. Instead of an artist stressing about album sales lost to streaming or praying a curator put them on a playlist, one can be refocusing their energy directly towards their fans. Every fans that is directly paying an artist five dollars a month might not help a label’s eventual catalog streams but does it does make paying rent much easier for up-and-coming artist.
6 Links 2 Read
I’ll be blunt: I love this weird idea. The Canadian electronic music label Monstercat in the last decade showed there is highly fertile ground between gaming and music. However the idea of this mostly being cross promotion or there being artists performances between matches or whatever sounds like a terrible market deck. I’d much rather just work directly with the actual athletes by exclusively putting UMG music in their streams and fostering connections between artists and the eSports stars, rather than what sounds like somewhat boring licensing deal. I guess that’d actual mean direct deals with individual teams than a league like ESL but o well.
Lauren Levy over at the Fader did a rather deep dive into the rather postmodern merchandise deals happening with artists like Ariana Grande, Nicki Minaj, and Travis Scott. The piece argues well that essentially the music industry at this point has given up on the album having any meaning if it’s being given away to with any random bundle of goods. If buying a shirt with a collection of MP3s is an “album sale” then what is an album in 2018?
I could spend an endless amount of time complaining about how data and information are so poorly used within the context of music, but I’ll just direct y’all towards Hu’s article and take a breather.
Will Oremus at Slate dove into a number of reports that shows not only Google creeping up on Amazon in the space of voice-based surveillance home boxes but also that neither company holds a major foothold in smart speakers’ largest market: China. To keep the focus on music, Amazon is leveraging Alexa as what separates them in the music streaming marketplace, as is seen in their first advertising campaign, but it appears the company is already losing that opening lead.
I’ll say for new readers one thing I do in links is often throw in non-music stories from the world of tech because of the deep connection between music and technology from the earliest sound records to modern times. Anyway, Microsoft’s dismissed a number of workers who were attempting to unionize. I find this especially rich as Microsoft right now is pivoting along with Apple to be a more moral tech company in light of all the bad press around Facebook, Google, and Twitter. Yet, if a company is engaging in centuries old anti-worker policies please don’t pretend to care about society’s health because truthfully you don’t.
I included this at the bottom because it doesn’t really have anything to do directly with music. IGTV isn’t doing super awesome of the gate. People don’t want a vertical YouTube and creators don’t want a platform where they can’t make money, who would’ve saw that coming. Stylist is just one publisher leaving, but check out this TechCrunch story to get a deeper sense of the difficulties facing Instagram’s latest venture.
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David Turner

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