The Reaction to "Making Cents"

Last Friday, I was in Los Angeles to participate in Digital Music Forum West. I gave a presentation adapted from some of my writings about subscription service payments to artists called "Making Cents".

I wanted to get people thinking, and I accomplished my goal. I've been to too many of these conferences (including this past one) stuffed with uninformative, shilly, boring presentations from dull speakers, or discussions that meandered from stock topic to stock topic, or worse, were empty of any controversy ("Music is great! Who agrees?").

This morning, Dave Allen made a nice, inflammatory tweet:

At least @Mog 's @AnuKirk is honest about paying musicians pennies but spreads the blame. #BadDefense bit.ly/px9poK

...derived from his reading of this article about my talk.

Well, actually, I was talking about fractions of pennies! I'm not happy about Dave characterizing my talk as a "bad defense". That's not at all what my talk was about or intended to be. I didn't see Dave at the show, but maybe he saw the talk on the web.

The Fast Company article isn't exactly accurate either. I wasn't interviewed for it, and didn't have a chance to talk to writer Austin Carr. It also leaves out some very important points I made.

You can guess what buttons the author wants to push - there's a big photo of a nice hip band (upright bass! banjo! washboard!...it's even called "610-working-band.jpg") with all the right signifiers (bike in the background! recycling bins!)

Photo of anonymous "working band" by Flickr user jonathanpercy

Recently a number of articles have come criticizing subscription services for how little they pay artists for plays. (This is after years of articles questioning when or if subscription services will ever be viable).

As I said repeatedly in my talk, these small amounts don't seem fair. So what is fair?

I could summarize my rather brief talk as follows:

• Determining "what's fair" to pay artists for a single play is complex. It involves the artist, the service provider, and the audience. Presumably "fair" means all of these folks get something out of the transaction: the artist gets some cash or other benefit, the service provider is able to survive, and the audience/fan/listener has a service they're willing to pay for.
• Artists traditionally have accepted a wide range of payments for their music, including very small amounts, zero, and even negative dollars (artists have paid FM radio or other outlets to play their music). Hell, the band in the photo is effectively playing for free, and the author didn't even tell us who they were!...though he did tell you who took the photo: Flickr user Jonathan Percy (who doesn't identify them either)
• If rates are too high, businesses cannot survive.
• The audience's willingness to pay for a single play is highly variable. Pro tip: They don't want to pay a lot.
• There's often a mismatch between what artists think their music is worth and what business and the audience think it is worth
• The "real problem" is how we get more people to listen to more music, and value it more.

Take a good look at that photo again. You see the band playing. You don't see an audience. If you look to the right, you'll see a bunch of people. With their backs to the band, looking elsewhere. This is what I'm talking about. This is the problem.

Now, addressing some specific points in the Fast Company article:

• I did not create the estimate of "$0.04 per album play" - I specifically attributed that to its original source, Uniform Motion's article on HypeBot. (The SiriusXM and Pandora numbers are approximations from publicly available data).
• I did not imply that payments to artists could get worse. I noted that many of the businesses paying higher rates had folded or were struggling. It's certainly possible. They could also get better.
• I know services pay labels, not artists. I started with a disclaimer that I would be simplifying terminology and models due to the limited time, but that the gist and magnitude were accurate.
• There is no "per-play rate" for many subscription services. They operate like performing rights organizations, collecting a pool of money and disbursing it to "members". The amount paid "per play" varies depending on factors like the number of subscribers, the number of plays, and the number of participating labels

I strive to create compelling presentations. I am not a bomb-thrower, however. It's easy to shock and provoke, harder to really talk about issues in a serious way. So note some other points I made:

• Most subscription services pay labels/artists even if users play nothing in a given month
• Performers get paid nothing for plays on FM radio
• Selling CDs is hard - it's far more difficult to convince people to pay $10 for a CD than it is to get them to click a play button on a service they've already paid for
• According to Soundscan, in 2009, there were 98,000 CDs released (double or triple that if you include digital-only releases)
  
  Of those 98,000, only 2.1% sold more than 5,000 copies for the entire year. 1% sold more than 10,000.
  
  According to the "Information Is Beautiful" chart I referenced, a solo performer on a label needs to sell 1,161 CDs per month to earn the equivalent of minimum wage. 13,932 CDs for the year.
  
  So by that math, even in the "selling CDs" world, very few artists on labels are earning minimum wage. 
• Being totally independent makes it a little easier: 1,716 CDs per year. But that means the independent artist is doing all the work.

Ultimately I said the same things I've been saying for years: The music business is tough for everyone.