Essays on Technology and Culture

The True Price of Music

The former CEO of eMusic thinks the price of music is too high. David Pakman has some stats on his side, and it's worth checking them out. The numbers make an almost convincing case, but the conclusion he draws reads as “We'll make it up in volume.” That scares me as a music fan. The cost of streaming services is a huge problem. After my screed against streaming music, I've decided to give music streaming one more chance to impress me. While it's early days in the experiment yet, I can't say any of the services I've tried give me a compelling value proposition for $10 a month. Half of that might sway me. It's a fraction of the $60 to $100 I spend per month on music in one form or another. 1

There are three things that worry me. First is that streaming royalties, and streaming profits are borderline non-existent. While digital distribution of music as download is almost free for labels and indies, alike, streaming has serious overhead costs, and the more people who use it, the more it will cost unless they can pony up for a sweetheart deal à la Netflix and Comcast. If they can barely afford to keep the music playing, and barely afford to pay the artists, cutting the price in half isn't going to help, even if the labels allow it.

Second, it's the people on the technology side, not the creative side, who are leading the charge about music being overpriced. I'm reminded of ex-Indie Rocker Tim Quirk, now with Google Music, who claimed “[Y]ou can't devalue music”. He's out of the music-making game, not recording, performing, or worrying about whether he'll be ever see a royalty check because his album hasn't made back the advance. The technology people make money when the company they work for makes money. They make money when more people give them money to use the service, or at least to buy ads. The last person to see the last of the money is the artist.

This isn't new. The artist typically got a pittance even when music was sold on Big Black Discs. Unless they became a Top 40 sensation, multiple times running, or at least managed to build a large enough fan base to sustain them, most music acts keep the money coming in through performance or licensing deals. And the label will take a cut of that, too. David Pakman talks a lot about consumers, but the word “artist” or “band” does not appear a single time in his piece. The supply of music is taken as a given, and unfortunately, he really can get away with that line of thinking. People aren't going to stop making music if the money dries up. It still comes off as callous.

What worries me most is that the streaming services and the download services alike are competing against free. Free is very dangerous to compete with. YouTube is an insanely popular way to listen to music, and while it does do revenue sharing for ads, it's not everywhere and for all artists. Unless you're Psy, you're probably not getting anything more than the price of a cup of coffee. Naturally, YouTube is popular among the teenage demographic, the ones who typically don't have much money to spend on music anyway. Even the ad-supported free tiers on the various music streaming services are competition to the paid version, and I don't even think that stopping users from skipping songs, and inserting one minute ads after each track would drive paid growth.

Music, like every other form of art, is an inelastic good. The demand is perpetual, and constant. It's just that music consumers have so many ways to get what they want, and many of those ways are a lot cheaper than $9.99 a month. Because of this, it behaves in an elastic manner, but an artist who is willing to play the game can still find a way to make money. That's the foundation of the relationship between labels and artists—if the independent hustle is too much, a label can take over some, or all, of the business aspects for a price. Part of why labels set streaming rights prices so high is to cover their expenses and provide their end of the bargain with their artists. (Though a lot of it is, yes, gratuitous pocket-lining.)

Something will have to break before we see things level out again, and it looks like streaming music might be it, if it can't start making money. Downloads may be losing ground to streams, but only because of price. Somewhere a balance is tipping, and I don't know what it will take to right it again. I worry that when it finally tips, it's going to take a lot of the artists I admire with it. That's why I'm doing what I can to support them with my money, directly when possible. Unfortunately, most people don't have that much of a connection to the music they listen to. If whatever way people opt to get their music in the future can forge that connection, we may be in business.

And that is a tough row to hoe.

  1. I am, however, an outlier, considering the average music listener puts out that amount per year