The Digital Music Economy Is Still A Hot Mess

Music reporter Cherie Hu was recently invited to attend the annual Roundtable Conference, an international “music industry symposium focused on copyright.” What she learned is that the industry is basically stuck.

After suffering from shock and awe in the Napster era — in no small part because most powerful players the music industry either had their heads in the sand or were treating the customers like the enemy — by the 2010s, as streaming took off, Roundtable participants seemed pretty upbeat and hopeful about developing solutions that were sustainable. But by this year, they “[seemed] to revert back towards the pessimism and stagnation of a decade prior.” Why?

A music industry consultant at the Roundtable suggested that streaming’s initial, rosy promise to rights holders has since been overshadowed by disillusionment around messy data and the compensation challenges that result. “We’re still only at the beginning of the innovation bell curve,” she said. “It took until 2015 — 15 years! — for labels to admit that on-demand streaming was here to stay. Then came 2016, which was an ‘oh shit’ moment when labels realized that they weren’t prepared to process and analyze the vast swaths of data that were coming in, nor were they equipped to make sure the money was flowing properly through the pipes.”

And so the industry began to veer back towards a Game of Thrones approach to their common problem.

As a result, a behemoth, fragmented rights management landscape has cemented itself even further into the industry’s core…. Interestingly, the majority of Roundtable participants agreed that a global rights database — the long-glorified concept of a single, authoritative registry that would reduce ambiguity around ownership and revenue splits across organizations — was no longer a feasible solution for the music business, both technologically and politically. Many participants argued not only that non-disclosure agreements essentially force labels and publishers to resist creating a public database, but also that unattributable royalties (commonly referred to as “black-box money”) gets distributed on market share if unclaimed after a few years, which benefits bigger labels and actually gives them incentives to provide bad data.

In fact, there has been a marked attitude change in the industry overall around data quality, such that umbrella organizations are beginning to compete, rather than cooperate, on accuracy and trust. The RIAA and NMPA have banded against the ASCAP-BMI duo on building their own separate databases, presumably more for strategic advantage than for the betterment of the wider music landscape….

Many Roundtable participants also pointed to how the pessimism in the music industry comes not just from the lack of good data and surrounding incentives, but also around the culpability of streaming services in devaluing music and making the consumption experience less personal, particularly for DIY and niche communities. An executive from a European PRO, calling himself a “student of history,” recalled that the music industry’s solution for digging itself out of its historic recession in the 1920s was to cater to niche genres. “Now, I’m afraid we’ve found ourselves at the tail end of a similar financial situation, but have the opposite solution of going towards safer, mass-market music, which has the effect of making the average music listener more indifferent,” he said. “We’ve gone from curating music that people really love to curating music that people simply don’t hate.”

It’s not that there aren’t any attempts to create a more healthy solution. For example, Hu mentions the Open Music Initiative, “a historic, top-level initiative bringing together over 140 member organizations, from major labels and publishers to early-stage startups, dedicated to rights management reform.” But efforts like these were not discussed in the Roundtable conversations, and most participants seemed unaware of them. All in all, pretty sad state of affairs.

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