Don’t be surprised if more artists follow Taylor Swift and pull their music off Spotify, a fellow music streaming boss says.
The power of artist backlash came to a head late last year when Taylor Swift pulled her music from Spotify because she didn’t feel music streaming appropriately valued her art. It’s a trend Rdio boss Anthony Bay thinks will gain momentum this year, especially as streaming services attempt to get the model right.
“I think you’ll see artists starting to do what Taylor Swift was saying which is ‘giving my music away for free doesn’t make sense’,” Bay told Business Insider.
In November it was reported Swift earned $2 million from Spotify streams over a year.
After the Swift debacle Spotify CEO Daniel Ek published a blog post defending how much money the streaming service pays artists. He said Spotify has paid more than $US2 billion to labels and other entities that then distribute a cut to the artists themselves.
“Taylor Swift is absolutely right: music is art, art has real value, and artists deserve to be paid for it,” Ek wrote.
Part of the problem is that the amount of money Spotify pays labels does not equal the amount of money artists see from allowing their music to be streamed.
Bottom line is the music industry is still trying to figure out what model works best for artists, labels, companies and consumers.
“I think there isn’t a clear path yet and Taylor Swift has one position. There are other artists who also feel they aren’t being paid enough so there’s a lot of controversy and points of view without a clear path forward,” Bay said.
The music industry has been hit by major disruptions over the past decade. Peer-to-peer file sharing sites like Napster and Limewire enabled users to download music for free, then iTunes came along and transformed the industry and now there are all the streaming services.
“Unfortunately I don’t think there’s a simple version of that other than more experimentation is going to happen,” he said.
“We’re going through one of those changes. When Napster came along piracy really swept over and changed the business dramatically. Then came iTunes which at the time was generally viewed as destroying the music business because they let people buy singles whereas now when iTunes sales go down everyone thinks it’s the end of the world. Now you have internet radio with the rise of Pandora.”
Competition in Australia is intense
Australians are being courted by some of the world’s largest music streaming services.
It’s creating an interesting market dynamic, with a small population Australia isn’t a huge market, so competition for users is intense.
Spotify, Rdio, Pandora and iHeart just some of the streaming players chasing market share.
Bay was in Australia this week and took some time out to discuss what it’s like operating in the Australian music market.
“You have more competition than other countries,” Bay said adding it’s because of the licencing laws in Australia.
After working at Amazon, Apple and Microsoft, Bay has been in media and tech since the 80s and has seen the fallout after the tech wreck a decade ago as well as how the industry picked itself up in the years following.
Over the same period the media industry has been through drastic change. It’s something which lured Bay to take on the top job at Rdio.
“It’s still day one for digital music if you look around the world,” he said.
“What was interesting to me about Rdio, in a sense music is behind what’s happening in video, if you look at the growth of Netflix and the growth of subscription video, music has really only recently started to develop the streaming access model. Previously to listen to music people bought music, they listen to the radio or they got music without paying for it.”
Getting users to pay for free stuff
But any development needs support from consumers, which is something Bay said involves providing a service which delivers “a better experience than piracy”.
“The challenge is most people are, if you look around, people are reluctant to pay for things that they can get for free,” Bay said. “There is a market for paid and there is a market for free, we want to appeal to both of those.”
He said the majority of people will put up with ads while some are willing to pay to avoid them, “although they are the minority”.
“The evolution to digital media has meant that people are reading more, listening more and watching more than ever before. Not surprisingly, it remains difficult to convince the majority of people to pay for content – people like to get things for free , but there is a very broad willingness to watch, listen or view advertising in order not to have to pay for content,” he said.
“Most people don’t particularly want to be content pirates if there is a good legal alternative available.”
As a hybrid internet radio service, Rdio is a combination of Pandora and Spotify. Many of the company’s designers are ex-Apple. It was founded by Janus Friis, Skype co-creator, in August 2010.
At the end of Janurary 2015 Rdio was licenced to operate in more territories than any other service.
“We’re a multi-local company. Global technically, but when it comes to experience we’re local,” he said, adding that’s an important strategy to run on in Australia because of the passion embedded in the market for local talent.
Streaming adoption is going to take time
Bay believes that ultimately, streaming will be primary way music is consumed, but can’t identify the tipping point.
“I think that evolution is going to take time. It will be a mix: people still buy records, people will still by singles, people will listen to free streaming, whether it’s Rdio or Pandora, and people will subscribe. All these pieces will need to fit together so it works for all the parties.
“I don’t know that this is the year that it hits that ‘Netflix moment’… [where] people in very large numbers realise that you don’t have to own a movie, you don’t have to rent it, go to the shop and get a disc, you don’t have to pay $5, you can pay a flat fee every month and have access to great video.”
He said while Australians have been slow to use internet radio, it’s something he thinks will change – especially looking at how it’s played out in other markets.
“It’s been incredibly popular in the US, but for some reason has not been as widespread in Australia but I think the value proposition for customers and consumers is really nice.
“No company has yet built a large global franchise in professional media (rather than user generated) with exception of Netflix. We are excited by that opportunity.”