Last week, Billboard published a guest editorial by Thomas McAlevey, CEO of streaming startup Radical.FM. The below is in response to Mr. McAlevey's piece.
Dear Mr. McAlevey,
I read your Billboard guest editorial “Forget the Rhetoric, Streaming Music is Already Profitable.” Forgive me for not sharing your enthusiasm about the viability of the current streaming model. As an artist, I found your bright and cheery vision of streaming to be nonsense.
I think you need to look up the definition of a "fact."
“Pandora and Spotify are still losing money despite tens of millions of users and hundreds of millions of dollars invested” is not a semi-truth, it’s a fact. To the contrary, your assertion that “Pandora could be profitable tomorrow if it increased its frequency of commercials” is not a fact, it’s conjecture -- especially since you admit that increasing the frequency of commercials would decrease usage, which would in turn decrease advertising revenue.
I’ll allow that, given time and the right management strategies, services like Pandora and Spotify could potentially be profitable to shareholders. I’ll even allow that the major record labels they work with can find profit working with these services. But your editorial omits any mention of how these services would ultimately put a living wage in the pockets of the artists and songwriters who make up the heart and soul of these services’ products.
At the core of your argument is your assertion that streaming music could be instantaneously profitable, should streaming services choose to make it profitable. Naturally you, the owner of a startup streaming service, have every incentive to paint as rosy a picture as possible of this industry's possibilities. In light of the fact that the two largest streaming services have appeared unable to turn a sustained profit, what hope does your company, whose core business model relies on a large ‘Donate’ button, have for ever becoming profitable? But as an artist I have to wonder -- after tallying up your Paypal and Bitcoin donations, and deducting your rent, employee salaries, electricity and server costs -- how much money do you have left over to pay for the 25 million songs you serve your consumers?
Much has already been written by artists more famous than me about the tragically small artist payouts from streaming. Many of us acknowledge that the industry is inexorably moving towards an access model over an ownership model. However, your article fails to address the fact that this transition is going to be incredibly painful for a great number of artists, for whom each micro-penny royalty payment is a cutting reminder that their music is (literally) worth less than a piece of copper most people wouldn’t bend over to pick up off the sidewalk.
So when someone like you comes along and says “The future is so bright, I gotta wear shades,” well, that’s when you invoke the collective ire of the musical working class. Had you phrased things differently, perhaps I would have stopped reading after the headline, but instead I browsed the full text of your op-ed on your company’s website, and in so doing was shocked by something I’d never seen before: a CEO of a music company with an outright disdain for the musicians whose work you’re building your business on.
And nowhere is your disdain for the musicians more obvious than in this sentence:
"Now if Thom Yorke, David Byrne, Taylor Swift, or any other artists with more creativity than business acumen read this, please refrain from using my knowledge to fuel idiotic arguments about how the new streaming paradigm is ruining the music business (though you may want to review your label contracts)."
You can condescend all you want, but I’m fairly certain Thom Yorke, David Byrne and Taylor Swift have little interest in your “knowledge," much less care that you discredit their opinions simply because they’re musicians.
And then there’s this horrifying paragraph:
"Musicians will rejoice when they realize that streaming radio shares the massive ad revenues with them that terrestrial radio never did in the U.S. Then well-fed artists will create great new songs for innovative streaming services to distribute to happy consumers who whole-heartedly support a born-again music industry, one more glorious and lucrative than ever before."
It's insulting that, in your utopian vision of music’s future, the gold standard that a musician should strive for is the ability to afford food.
Secondly, your bold prediction that streaming radio will share "massive ad revenues" with artists is naïve. How do you know that music will generate large advertising revenue? Even if streaming music channels became the advertisers’ format of choice (which seems unlikely, given the rise of interactive entertainment, the web, and streaming TV) what happens when someone invents a service that, like Tivo, will allow listeners to buffer a Spotify stream and automatically skip commercials?
And even if the advertising dollars were to start flowing in, what incentive would Spotify, Pandora or YouTube have to dole out massive portions of that ad revenue to musicians? Why wouldn’t they just continue to do what they’ve always done, and look for ways to pay less money to artists that you yourself so clearly disdain? Do you think corporations have the same generosity-of-heart that music fans do?
This brings me to the one thing I agree with you on: Your average music fan will voluntarily pay money for the music they listen to.
I, like many artists, sell my music on my website. And I give my fans the ability to pay more than they need to for it. Nearly half of them do (bless their hearts!), which I think is a testament to the fact that fans know that the artists they love need to be supported.
You seem to think that same enthusiasm will translate to a streaming services company, and have built Radical.FM on a pay-what-you-want model. And perhaps there are some people that will make contributions. But corporations are not people, and music fans have a long history of being suspicious of any company that tries to profit off the backs of music-makers. And if there’s one thing I’m fairly certain of, it’s this: If you ask your average music fan whether they want their $10 to be paid to the band they love, or instead to a company’s profits, I’m almost certain they’ll choose the former.
Christopher Tin is a two-time Grammy-winning composer, and a Governor of the L.A. Chapter of the Recording Academy. Although the Recording Academy actively lobbies for fair compensation from streaming services, the views contained herein are his own.
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