The platform wars: subscription, ad-funded, user-uploaded or curated?
When we look at the “value gap” between YouTube’s revenues and the royalties it pays to rightsholders, the solution often presented is to legislate for a level-playing field between the different streaming platforms. But is this even possible? If so, where does the music industry begin to lobby and negotiate?
“Our careers are built in a market that’s broken,” said Paul Pacifico, CEO of Featured Artists Coalition and President of IAO, at last week’s Music 4.5: The Politics of Licensing. “But unless we know what might be a good way forward, how can we know what we want [a level playing field] to look like?
Which is more powerful: an artist’s endorsement or dissent?
At the moment, Pacifico says that all streaming services are putting pressure on artists to endorse their respective business models. “So many [streaming platforms] tell me their approach is the best and they should have an artist endorsement, but can the artist voice actually move the debate?”
Becky Brooks, formerly of Omnifone, believes it can, but quite often it is dissenting voices, not endorsements, that change policies. “Take Taylor Swift,” for example. “She spoke out on Apple’s policy to not pay royalties for the free three months of its Apple Music trial period, and Apple caved. They want to be seen as respecting artists and copyright.”
Does any streaming service get it right?
Pacifico explained the pros and cons of what he identified as the three main music delivery models – on demand, the YouTube UGC model, and radio broadcasting.
“Is YouTube the new radio?” he asked “On radio in the UK, Radio 2 – for example – pays £62.50 per play, broadcast to an aggregated six million listeners. On a per listener basis YouTube is paying 100 times more than radio.”
But the Spotify’s and Deezer’s of the world don’t get it completely right either. “When we look at streaming services like them people often say ‘Isn’t it great that they pay more?’, but neither are making money. They hand out 80% of what they bring in.”
“The problem is a gaping trust gap”
Pacifico conceded that moving towards full licensing might slow growth in the streaming industry, but that current licensing practices weren’t sustainable.
But he warned that letting corporations drive changes to current licensing agreements would harm the industry. “We need to promote competition and diversity and rebalance negotiating powers,” he said. “We’ve got to have transparency and empowerment to drive how these decisions are made. However, we need to be careful how old world leviathans are dominating how things are changing. The problem is not the value gap, but a gaping trust gap.”
Jonathan Tester of independent music publisher Bucks Music Group argued that there was a danger that the industry became too concerned with scrutinizing the various delivery platforms and were losing sight of the fact that more music is circulated and heard now than ever before.
“Embrace change and embrace new delivery systems,” he said. “If a platform is benefitting, the creator is shared with this revenue.”
The on-going discussion on the issue continues in New York, with Music 4.5 – The Value Gap: Free vs Paid on 2 November 2016, which will explore what changes in legislation, licensing and contracts will guarantee a marketplace where the two different business models – free, ad-supported and paid-for subscription – can be made to work fairly with increased revenues returned to artists and rightsholders. Get your tickets here.