Taylor Swift Schools the Music Industry Once Again, While Streaming Services Wring Their Hands
Every time Taylor Swift releases an album, she decides how to make it available -- and streaming service executives decide she's completely wrong.
Swift's new album, Reputation, sold 1.212 million copies in the U.S. last week, according to Nielsen Music -- and 2 million all together worldwide. But Swift's decision to withhold the album from streaming services "kind of sets the industry back a little bit," according to Troy Carter, Spotify's global head of creator services, who spoke at an Internet conference that took place before sales numbers were available.
Although streaming services offered the singles from Reputation, most of the album's sales came from digital and physical stores. Even without streaming -- which accounted for 62 percent of the U.S. music business in the first half of 2017, according to the RIAA -- Reputation actually sold better than the rest of the Billboard 200 combined.
At some point -- maybe soon, maybe not -- Swift will let streaming services offer all of Reputation. There are any number of guesses when this will happen -- after Christmas, after six months, the day Katy Perry releases her new album. The ideal time is obvious: Once Swift can make more money from streaming royalties than she can from $20 magazines, $15 CDs, $13.99 digital albums, and $1.29 downloads. This is Economics 101. Swift knows this, which is why her approach to streaming has always been "when and how," rather than "yes" or "no." She's not exactly known for being indecisive.
By holding out, Swift is following a path marked by the Beatles, AC/DC and other superstars, who came late to the iTunes game. They, too, were criticized. But they, too, realized that the right time to start selling $1.29 songs comes when it gets harder to sell $15 CDs. The Beatles hardly suffered: They were the second best-selling act of the aughts, after only Eminem, and they took a profitable last bite of the CD apple by reissuing their catalog in 2009 before joining iTunes a year later. They weren't holding out -- they were maximizing revenue.
Technology companies hate this. In a 2015 interview, Spotify co-founder Daniel Ek told Billboard that Swift's decision to withhold 1989 from the service would just send her fans to YouTube or pirate sites. "I don't think scarcity is the model anymore -- we have to embrace ubiquity," Ek said. Which is tech-speak for, if you don't let me sell your content on my terms, consumers will pirate it.
Ek isn't entirely wrong: Swift's decision to keep her albums off of streaming services probably does result in more fans listening to her music in ways she makes little or no money from. But Spotify doesn't pay all that much either, at least in the short term. If Spotify pays half a cent per stream -- it almost certainly pays less, but let's make the math easy -- Swift's songs would have to be streamed 2000 times in order for her label to make the same $10 it would from a CD. If each song is four minutes -- again, let's make the math easy -- Swift would make as much on streaming as she did from a CD sale after 133 hours of listening. Over the course of a year, that's possible. In the short term, not so much.
There are other advantages to streaming, of course, including long-term revenue from years of listening, a boost for catalog, and as a marketing tool. But Swift isn't sacrificing any of those. Her singles will boost her catalog and get her all the visibility she needs. She's also on the side of UPS trucks.
Swift and Adele have been criticized for holding back the progress of streaming, and perhaps they have. But they've also helped to steer plenty of consumers to digital and physical retail outlets. Physical sales have showed surprising resilience, partly because of high-margin items like Target's exclusive $20 CD and magazine package that let them generate more revenue from their most ardent fans. Shouldn't artists support that business, too?
Perhaps most important, why do so many executives and pundits think that Swift needs their advice? At least Carter was respectful: Spotify's 2014 blog post about Swift included a playlist aimed at winning her back. Two years before that, Rhapsody launched a #WheresTaylor campaign when Swift released Red -- which went on to sell more copies than Rhapsody has subscribers. Even journalistic coverage of Swift's decisions can be patronizing, framed in the emotional vocabulary of a pop song. Swift is known for being as smart about the music business as most of the people in it. Garth Brooks, another streaming holdout who's known for his business savvy, "weighs in on Spotify." Why does Swift always seem to be breaking up with it?
One of the strange things about the music industry is how everyone in the technology business seems to have figured it out, even though some of their businesses aren't actually making money. Swift is -- so maybe they should stop talking and listen.