The music industry has been in a rut for years — a $7 billion rut, to be exact. After a $15 billion peak in 1999, the industry watched its revenue slide until it plateaued at $7 billion in 2010, where it hovered for years. In 2016, the music industry finally saw an increase, notching a $7.65 billion year. Streaming was credited for the turnaround, but the threat isn’t over. There’s a silent killer in the music industry that’s having a sinister impact on up-and-coming artists: fragmentation. Independent musicians work with so many different service providers that the ultimate outcome of all their efforts is confusion — and an uphill battle. And making it difficult for aspiring musicians to share their art universally makes it difficult for fans to gain access to the music they enjoy. Without fans, there’s no revenue to be had. The music industry would benefit from simplifying an ecosystem that is crowded and overcomplicated.
Getting in the Way of Monetization
“As an industry, we are leaving…billions on the table because we frustrate fans,” says Mark Meharry, CEO of Music Glue, a direct-to-fan platform that sells music and merchandise. “The youth market has disengaged with music retail. If this continues unchecked we risk alienating consumers forever; and once they go, they may never come back.” Meharry explains that the music industry used to stand on the backs of retail-minded consumers who visited music stores. Once the digital format debuted and technology became a bigger factor in music delivery, frustration mounted: “As the tech companies scaled, so did the problems. Fans complained. Artists complained. Managers complained. Companies like Trinity Street and TopSpin crumbled under the weight of universal disappointment and inefficient order processing.” Amazon became a heavyweight, and direct-to-fan ticketing took the reins on the experience side. And simplification didn’t seem like an option with copyrights concerns. “The music industry, with regard to revenue generation and collections, is extremely complex and wrought with legalities,” says Jeff Ponchick, founder of Repost Network, a platform that helps artists monetize their music. “As such, it has caused a great deal of segmentation to occur based on rights type and how and where consumers listen to music.” Ponchick says it gets worse: It’s common for an artist to work with a YouTube MCN, a SoundCloud monetization network, a digital distributor, a physical distributor, a publisher, a performance rights organization, and a slew of one-off organizations, all in an effort to get one song heard. Ponchick summarizes the industry’s feeling about the fragmentation, saying, “It’s unfair that once an artist has managed to perfect his craft of making music, he or she should have to also go out and practically get a law degree to figure out how to capture the revenue he or she is entitled to.”
How Up-and-Comers Can Be Held Back
Music is centered on a musician or group, who’s then responsible for working with agents, producers, and more to capitalize on every opportunity. That lengthens the time between music development and distribution — fledgling musicians often don’t have the capital or collateral to finance a cycle of distribution opportunities at once, needing to pay as they play. And by the time a song is ready to be distributed, so much has gone into the production and marketing of the new release that it needs to be distributed instantly. Some music platforms, however, require a lead time of two to three weeks before adding a song to playlists or otherwise promoting a release. That means the music has been distributed to the platform but will sit for weeks until the platform has the bandwidth to get behind the song. “After decades of building distribution channels around record contracts and sales, the micro-transactional nature of the internet has, in some ways, diluted the industry,” writes WIRED’s Elizabeth Stinson. When developing musicians hit a wall in terms of exposure or success, their resources aren’t limited — but they can be difficult to pinpoint. Different distributors, labels, publishers, and music platforms have different strengths and weaknesses. If an artist is doing well on SoundCloud, she may be able to work with another entity to build her audience on Spotify or YouTube. A musician might work with a publisher to get songwriting gigs or features with larger artists. A multitude of different services exist to help independent musicians increase their exposure and success. The unfortunate side to this is that knowing who’s better at what implies a steep learning curve. That ensures that new artists have to fumble and experiment their way through options, losing money and time.
Where Do We Go From Here?
If fragmentation is the problem, consolidation seems to be a possible solution. Providing a clear path to promotion and distribution would not only benefit independent musicians, but it would also help the music industry capitalize on the one money-making resource that tends to be hidden: music. “As streaming continues to push recorded music into further growth, the industry is primed for a consolidation of services — lots of acquisition,” Ponchick says. “Hopefully, larger financial institutions will see the revenue opportunity in combining like-minded services for musicians under one roof so musicians can have a few one-stop shops.”