When Spotify bought Echonest, several years ago, they added a set of skills and knowledge in how computing can be used to analyse music. This field of work is fundamental to recommendation systems.
Conventionally researchers had taken one of two approaches; either try to understand how listeners express previous preferences, individually and collectively, and project that historical data into the future, or, try to find characteristics in the audio that cluster with previous preferences, and find new music that seems similar.
The Echonest team had added a new element, which seemed to me at the time (late 1990s) very insightful. Noticing how groups of listeners bent and stretched the definitions of musical genre they started looking at human evaluations as a filter through which to see what the computers were saying about the audio.
The humans in the mix might be considered ‘experts’; after all we would surely not want to cede our cultural definitions to computer science too completely. Now, after a few years of being the biggest music recommendation platform in the world, Spotify employs experts to add tracks to playlists, and thereby not only decides which artists get paid, but also which music is considered typical of most of the genres in global pop music.
In a music market that has, with a lot of help from Spotify, generated huge amounts more new music than its subscribers want to listen to, the more mechanical parts of the recommendation toolkit have gained new importance, for musicians and for culture. For artists new to the system then, the audio analysis is acting partly as a gatekeeper while the other signals are built up (or not, as the case may be).
So it’s worth trying to understand what’s going on in the datacentres, as new audio files hit algorithms and spit out analysis data that will decide which musicians are going to fail fast and which might go on to bigger things. And one of the parameters of a track that Spotify probably uses is what they call ‘danceability’.
Spotify exposes its danceability index as a floating point number between 0 and 1 via their developer API. What do we know about it, and how is it used? Here’s how they describe it:
Danceability describes how suitable a track is for dancing based on a combination of musical elements including tempo, rhythm stability, beat strength, and overall regularity. A value of 0.0 is least danceable and 1.0 is most danceable.
This metric seems to have some importance in the ecosystem. In a publicly shared Tableau visualisation, it’s the measurement most strongly correlated with success across all of Spotify’s vast catalogue of music.
It is undiscoverable whether music that scores highly on this index is inherently more popular with consumers, or whether it accumulates higher play counts because it is more recommended by Spotify. And we need to remember that familiarity drives preference in music more than preference driving playcounts, so it is vitally important to understand what music any consumer service pushes to the top.
It is also an unproven hypothesis that music scored by Spotify as more danceable is more danced to by consumers. Paradoxically one of history’s most famous pieces written for dancing to, Strauss’s Blue Danube Waltz, scores very low on danceability.
Due perhaps to high variability between bars and other temporal measures Spotify’s audio feature analyser seems to struggle to categorise some aspects of orchestral tracks. This version has a danceability score of 0.216.
Nobody rational would attempt to dance to The Blue Danube Waltz if they had no information about it other than Spotify’s danceability number.
So this opaque metric on close inspection looks really quite dysfunctional. But can it be done better, and if so how? Here’s one idea. With some simple experiments to measure how enthusiastically groups of people dance to different tracks this Spotify metric could be compared to a truth-based danceability index.
Groups of dancers could be asked to wear small unobtrusive monitors while they dance, with data collected over pervasive networks, such as 5G, and collated to capture the movements they make; whether they are more or less energetic, or rhythmic, and how closely they align with patterns in the music.
5G, wearables, and dancers could thus provide a truth-based counterpoint to Spotify’s opaque danceability metric. If anyone is in a position to collaborate on making this happen let me know!
The UK music industry is going through a period of internal arguments, and as sometimes happens some of us are reaching out for an adjudicator, or referee.
January 2021 saw the UK’s law makers brought into the ring in a big way. With Members of Parliament it’s always hard to know whether they see themselves as referees or as protagonists. In a series of streamed Q&A sessions a parade of music industry executives and participants – artists, former artists, accountants, etc – made sure there were plenty of fists flying; in a biting winter sleet of subsequent private and public debate the commentariat tried to decide among themselves who had landed a blow on what or on whom.
The background to this bitterness is the impact streaming has had as it became the dominant revenue source for recorded music, and therefore for some, but not all, of the UK’s artists. In these pandemic years the other leg of the stool, live performance, has disappeared, so some artists are suffering badly. And gallingly the biggest owners of catalogues of recorded music are enjoying growth and profitability, much of which comes from recordings they funded or bought decades ago.
Different markets make commercial sense of different deal structures. When the big catalogue owners controlled distribution an exclusive recording contract with a recoupable advance made a lot of sense. The label was on the hook while the account was in the red: advances are recoupable from record sales, not recoverable or repayable. Trading as much as 80-90% of future revenue for present funding worked while a band built a following, with the intention to inflate future advances, and to cash in on touring and merchandise, which traditionally were out of the label’s grasp.
Those contracts now seem unfair to many. The asset value of the copyright in the recording sits on the label’s balance sheet, and the biggest labels move into profit long before the artists do, as well as enjoying a far greater share of the future revenue. Streaming seems to have woken up a lot of older recordings that wouldn’t have made it onto the shelves in record shops. With such a strong grip on the top of the market the biggest labels have parlayed control of distribution into a reasonable position in the control of exposure and discovery, which is now most of the value creation game in music.
I think it would be fair to ask what the biggest labels are doing with the windfall profits from back catalogue that streaming has rained on them. But that doesn’t address the question of whether they have structural advantage, and if so whether it is earned. And it doesn’t start to consider whether such a structure is good for music in the UK or anywhere else.
This very live and somewhat acrimonious debate popped up again in a surprising context in January 2021. On a another streamed aural enquiry, this time into the problems the ICO, the UK’s information commission, is facing, lawmaker Damien Green asked about the use of data in the context of music services such as Spotify, Apple Music, YouTube and others. He asked, – are musicians adversely affected? The ICO punted. The question was very pertinent, in my view, but perhaps in ways that might not have seemed immediately obvious.
My professional life has been dedicated to the music industry, and it coincides with the disruption and regeneration that the connected digital world has brought. Green’s question, seemingly simple, brought many of the structural problems music faces right to the surface.
There are, as I see it, three distinct facets to problematic use of data in music:
Music services use music listening data, as well as social media and other tracking data, to give themselves a critical advantage over musicians and record labels when either predicting, or increasingly deciding, which music will give its creators and investors a return on their investment.
Music services track listeners in many different environments on social media and the web, and participate in the grey personal data economy, in ways that are almost entirely invisible to the music industry and to music fans, and almost certainly often illegal.
The music industry as an ecosystem has many databases but has been slow to move towards interoperability and transparency. This makes it hard for many of the people who contribute to the creation of music to know who is storing information about them and their work, and impossible sometimes to supply missing data or correct errors.
Many people in the music industry have been working diligently to overcome these problems, with some success. In fact, the UK provides a very outsized proportion of the global music industry’s critical shared infrastructure, and hosts important centres of excellence and development.
For the UK there are opportunities for some relatively small interventions from Government which could make a dramatic difference to the healthy flow of music and data in the music industry and in the public realm. I suspect that other regulatory regimes could find similar benefits from similar approaches.
Two suggestions from me would be:
A single centre of research and data that would help inform the music industry and policy makers on all issues related to the creation and enjoyment of music. This might be hosted at a University, or perhaps the British Library. It should be tasked with supplying facts rather than opinions or speculative applications.
An annual ‘state of the music nation’ report which recognises all the interests in music and performance, commissioned by the government as the representative of the public, and holding copyright owners, music services, and others to account. Over time this could surface internal music industry tensions earlier, and provide a fascinating history of the music industry in the UK.
Between them these two interventions would hugely improve the quality of the debate within the music industry, and between the industry and external stakeholders of all kinds, including the public.
Of course none of this by itself answers the increasingly important questions about whether the people who create and perform the music are fairly treated, and whether the industry seems sustainable as we all consider how we will emerge from the pandemic. What does ‘build back better’ mean for music?
On yet another UK Parliament enquiry, Jeremy Silver, who runs one of the UK’s critical agencies promoting and catalysing innovation, and who himself has a music industry background, made what seemed to me an essential point. The creative industries generally, he suggested, lack a formal approach to innovation. There’s a lot of new and interesting work going on, he was quick to point out, but perhaps (was the implication) it translated into less new economic value than it could if it were better structured.
In the UK’s music industry, and the increasingly connected global markets, we find it hard to cooperate with each other, and the result can be seen in the bitter and factionalised arguments that sometimes spill over into the public sphere. Perhaps the UK could find a role for itself in the future music industry as a centre for coordinated research and strategic thinking, to everyone’s benefit.
At the time of writing, a Google video search for ‘crushed by the wheels of industry’ delivers as its first result a YouTube upload with the plea, ‘NO COPYRIGHT INFRINGEMENT INTENDED’ from a user which calls itself ‘mrrockwithmebaby’.
NO COPYRIGHT INFRINGEMENT INTENDED. COPYRIGHTS RESERVED BY COPYRIGHT OWNER.This video is used only for non-profit usage and publishing.
As one of 69,600 results for that search, many of them straight rips of the Heaven 17 hit from the 1980s with nothing more than a photo as video content, it’s hard to argue that the upload adds to the sum of human knowledge. It’s also a flat lie that the video is used only for non-profit usage. It has the usual advertisements.
The recording in mrrockwithmebaby’s video has been claimed by the copyright representatives through YouTube’s ContentID tool; but it is one of the millions of videos that the music industry is claiming are remunerated below market price, due to the way that YouTube manages competition between owners and unauthorised uploaders so that no music is ever missing for long.
At the same time as the music industry protests the ‘value gap’ another debate is happening about the nature of the business that generates the revenue in the first place.
A Google search for ‘profit from the proceeds of crime‘ is many times more helpful than the one above, with links to Wikipedia and the sorts of neat summaries lawyers do to show off their expertise, helpfully pointing out that this is the activity more commonly known as money laundering, and that being any part of the chain is considered a crime.
Advertising supported services sounds benign; our mental models have not moved on from ads in a magazine article or in the commercial breaks on TV and radio. But the reach, scope, and nature of the data business is largely hidden from us in daily life; even if we are interested there is not much we can do to see and control who knows what about us. And this blows a big hole in the intent of data and privacy regulation, the foundation of which is, explicitly, permission, visibility, and control.
How does this relate to copyright and the ‘value gap’? With online advertising, companies are stealing our data and selling it to advertisers. The ‘value gap’ is those same companies stealing our music and selling the attention it gets to advertisers.
Here’s the common foundation both forms of abuse rest on. Once the individual has been disenfranchised from everything they do and everything they create they can be coopted into a business model that sees them as fuel, rather than as parties to meaningful and wilful transactions.
And when we have lost control of our data and our privacy we lose control over democratic processes too. It’s worth considering how data about ‘susceptibility to conspiracy theories’ was sold to political advertisers recently, gleaned from responses to online material about vaccination. Most of us are not equipped to read the science about vaccines, so we have to trust the judgement of people who are highly trained. The insight that mistrust of experts can be used to vaccinate voters against moderate and reasonable choices is both brilliant and very disturbing.
So here are two strong points which I think we in the music industry should consider as we campaign for more of the advertising money that these pernicious practices generate: First, even if we get our own assets recognised and compensated, do we really want to be making part of our living from the proceeds of crime? Second, does music have a role in driving change in business and society, and if so what do we do with our power?
Because surely the worst position for music to take would be to turn a blind eye to the privacy and data rights of our audience. And to spell it out, the erosion of both copyright and privacy come from the same political philosophy that put the rights of the individual below those of state and corporation. So we should probably take a moment to stand up for privacy and make common cause with those campaigning to protect it, in between our whining about not getting paid a fair share of the cash generated by our collective descent into data serfdom.
The Statute of Anne, enacted in England in 1710, opens with a statement of intent:
An Act for the Encouragement of Learning
I have argued elsewhere that it succeeded. Whether by the mechanisms intended, essentially the first modern copyright, or by serendipity as some would have it, Learning was Encouraged, universal literacy and scientific advance were achieved, and the profession of writing threw off the shackles of patronage to find an honourable place in the market. Printers moaned of course as writers got new pricing power, but made little impact on what was seen as a just and fair settlement.
Queen Anne making laws
All in all it was a very busy Act of Parliament. And worth reading from time to time in an age when many people think that copyright is a tool to impede learning by preventing writing, withholding access, and inflating prices. Today we benefit from the public domain, and lively and diverse markets for old and new books, plus a public library system (albeit one under stress), and for those who can afford it digital access to writing of all kinds.
But today’s faultlines are very visible. Instead of printers laboriously setting type, the new publishers are massive and almost instant copying machines, whose advertising engines are making unaccountable and unattributable money from the efforts of writers and creators. This widespread abuse is protected by a kind of enforced pseudonymity, which weakens not only the bonds between identity and authorship, but also our ability to hold each other accountable for our words and actions. And if creativity is flourishing on the horizontal axis, on the vertical, among the undoubted gems there is a viral outbreak of plagiarism and shallow re-use.
So where the deficit at the start of the 18th century was a self-regenerating engine for learning, at the start of the 21st century we are looking at a deficit of civil discourse and authentic creativity.
The Lord Keeper of the Great Seal.
It takes an historical imagination to understand why a late 17th scholar or parliamentarian would think that an Act to create copyright would encourage learning. The argument presented runs thus: Printers had been taking liberties, not asking permission before printing and reprinting, nor sharing the money they were making with writers. The lawmakers wanted to give writers a tool to negotiate a better deal with printers, and redress against infringements of their economic and reputational interests in their writings.
Alongside the private interests of writers, the public interest was clearly represented in the text and new rights and obligations the Act created. No protection for either the writer’s or the printer’s property could be obtained without a gift to the public of three copies each to the most established libraries of the day. The Act also formalised the public domain, by setting limits on the term of protection. The public interest was further advanced by the establishment of a register of works, under rules which allowed open inspection by anyone who cared to look.
The Act also added price control; if you thought a book was too expensive you could complain to any of a long list of authorities, including the Lord Keeper of the Great Seal and the Archbishop of Canterbury, who could decide what the fair price should be.
So, here’s an attempt to frame a Statute for the 21st century. Excuse me while I adjust my wig…
An Act for the Encouragement of Civil Discourse and Creativity by Vesting the Control of any Representation of Identity; and of the Use or Reuse of any Texts Images Sound Recordings Videos or any other Materials that may be Captured Copied and Transferred on Digital Services and Platforms; in the Person Represented by that Identity, and in the Original Creator of those Materials, during the times therein mentioned.
Whereas Digital Services and Platforms have of late frequently taken the Liberty of enabling and encouraging the Original Creations of one Person to be copied by another Person without Notice or Permission from the Creator; and in Flagrant Disregard of Common Courtesy allowed one Person to masquerade as Another while denying any Person the Ability to be identified as the Authentic Creator of what they have made; and of allowing and enabling Anonymous Messages to be sent in both Public and Private preventing any Redress for Abuse or Plagiarism of the Counterfeiting of Works of Art and Literature and Music; to the Detriment of Writers, Artists, Musicians, and Others who live by selling Copies of their Creations; and to the Great Detriment of Civil Discourse between People; May it be Enacted that the True Identity of each Person as they are Represented on such Digital Services and Platforms, and the Authentic Origination of any of Such Materials as they Create or Make, and any Permissions and Notifications about uses of Such Materials shall be solely under the Control and Right of those Persons; and further that any Assignment of those Rights and Permissions to the Owners and Operators of Digital Services and Platforms shall be subject to Valuable Consideration and shall be Accurately Recorded, such Records being freely available to any Interested Person on Demand.
If the sceptics are right we might well be coming to the end of the efficacy of copyright in the encouragement of learning. Times have after all changed, and printing presses are daily becoming less essential to the dissemination of knowledge and the exchange of ideas. But even if they are right, three hundred years is a pretty good run for an idea of how law and markets needed to be shaped, and we can apply the same approach and sound thinking to the deficits we see in today’s lives as they are lived on digital platforms.
Today we need better ways to talk to each other in public, so that divisions move towards compromise rather than conflict. And we need support for creativity that is less at the whim of the owners of digital platforms, who can tweak whole classes of creators out of a living by tuning an advertising algorithm or changing some monetisation rules; and whose incentives are diametrically opposed to authenticity and originality of content if it gives the creator stronger pricing power. We should recognise a common interest in getting this right for the next three hundred years. Those 17th century printers moaned and whined about the enfranchisement of writers, but profited handsomely from the encouragement of learning that copyright brought.
With the best intentions, some in the music industry are adding their voices to protest the US FCC’s rollback of net neutrality regulations. Keeping them won’t help the music industry; pretending it will means the real threats to open and fair digital markets will remain unaddressed.
To recap, net neutrality, as it is framed in the regulations, stops your consumer broadband provider from making either prioritisation or access to your devices conditional on fees or other non-charging policies. It was motivated partly by some clumsy attempts by telecommunications providers to protect their voice traffic by blocking VoIP and other peer to peer protocols (without net neutrality rules Skype would have been a far less attractive acquisition for Microsoft). Small content providers saw similar threats from huge media businesses, and feared being priced out of their audiences’ home Internet connections.
All this seems reasonable, but the concept of net neutrality – invented by a lawyer, not a technologist – is based on a very much oversimplified understanding of how the Internet works. It’s easy to assume that your consumer broadband provider connects to the Internet with everything else somehow magically taken care of. Indeed, many network diagrams just show the Internet as a cloud. Global connectivity is complex however and has changed a lot over the last 25 years.
So how has the Internet changed, and why does it matter? The discrimination that many fear is already happening in many ways and many places, to the advantage or disadvantage of many parties. Please pardon a somewhat detailed history lesson, but it is important to understand just why net neutrality is not capable of addressing the concerns it pretends to.
In the early days the Internet was made up of a fairly neat hierarchy of local, national, and global networks, referred to as tiers 3, 2 and 1. Lower tiers bought traffic capacity – known as IP transit – from higher tiers, and the tier 1 networks mostly just swapped data with each other at no charge. This business model drove investment in fibre and datacentres with relative agnosticism about what content and services were being carried.
One of the oddities of this arrangement however was that data sent between two near neighbours sometimes took a huge round trip to get to its destination. You don’t need to be a network engineer to see that exchanging traffic between UK networks in the UK should be quicker and cheaper than sending it across the Atlantic and back; in fact that was exactly the problem that led a group of UK ISPs to establish LINX, the London Internet Exchange, in 1994. Connection facilities such as LINX are known as Internet exchange points (IXPs). Initially membership of exchanges was limited to networks with roughly similar in/out traffic ratios, and costs were mutualised rather than individually billed between network owners. The exchange of traffic is known as ‘peering’ – giving a sense of its cooperative heritage – and can be done privately between two or more networks, or publicly by plugging into shared data switches. The global network of IXP centres continues to develop.
Internet architecture is designed to support peer to peer traffic, and each device can theoretically send to and receive from any other connected device. But as the net developed its commercial model, the traffic flows dramatically changed shape. More and more data was coming from specialised networks, such as CDNs (content distribution networks) and then from very large content distributors. The IXPs resisted at first, but then allowed these very asymmetric networks to join. In their quest to get ever closer to the consumer CDNs and content distributors quickly moved from public peering to private, investing in large capacity gateways to the bigger consumer ISPs. Then, as the consumer ISP market consolidated, the big content distributors started to install their equipment actually inside the ISP network, with private fibre connections to their own datacentres, a method known as colocation.
This change was being discussed, as a ‘massive disruption’, in the network operator community by 2007. Here’s a paper on it by one of the real experts, Willliam B. Norton, and here he is talking at a conference:
Public peering – relatively low cost, mutualised and operated by membership of exchanges
Private peering – organised ad hoc between network operators, and often used for specialised needs in business to business traffic exchange
Colocation – extremely expensive and only available to a small club of the biggest content distributors
To get an idea of the thresholds which drive traffic from one mode to another here’s a policy published by the UK’s national broadcaster, the BBC:
Any peer exchanging more than 1Gbps of traffic in either direction at any public peering location will be requested to migrate to private peering, at our discretion.
It should not be surprising that Google, Amazon, and Netflix are some of the biggest users of colocation, given the amount of video they ship to consumers. Here’s what Google says about their service:
With our edge nodes, network operators and internet service providers deploy Google-supplied servers inside their network.
Google has even installed its servers inside the Cuba national telecoms company, with now former chairman Eric Schmidt following close behind the Obama administration’s political normalisation efforts:
The Empresa de Telecomunicaciones de Cuba SA ( ETECSA ) and the US company Google have concluded the talks with the aim of signing an agreement Google Global Cache (GGC).
Globally, close to 90% of our traffic is delivered via direct connections between Open Connect and the residential Internet Service Providers (ISPs) our members use to access the internet. Most of these connections are localized to the regional point of interconnection that’s geographically closest to the member who’s watching. Because connections to the Netflix Open Connect network are always free and our traffic delivery is highly localized, thousands of ISPs around the world enthusiastically participate.
We also give qualifying ISPs the same Open Connect Appliances (OCAs) that we use in our internet interconnection locations. After these appliances are installed in an ISP’s data center, almost all Netflix content is served from the local OCAs rather than “upstream” from the internet.
So to understand today’s Internet it is important to have these three different models for how data gets into the consumer’s home; and to understand how the economics and incentives that drive their respective capacities and capabilities differ from each other; and most important of all, the balance between them, how they compete with each other, and the investment model that supports each of them. Because as traffic moves from one model to another – from IP transit to public, then private peering, then to colocation, the investment case moves too.
The simple fact is that a colocated content distributor needs less private peering, and little or no public peering in order to reach its consumers. Traffic might still be growing across the internet, but with public peering growing slower there’s less money to invest in IXPs, and more money for what are effectively private overlays occupying the same conceptual space as the public Internet. It’s obvious which companies are involved; Netflix for instance, and Google, for its YouTube traffic. Netflix is not investing in public peering capacity; to do so would only benefit its competitors.
But here’s where it starts to get a bit more interesting (sorry it took so long). Cloud providers too are colocating alongside their peering arrangements. This club includes Amazon and Microsoft, and Alibaba now entering the global market. Music companies are big users of the cloud, and if they are buying AWS, Azure, or Google Cloud each of them, no matter how concerned they might be about net neutrality, is benefiting from the advantages of getting out of peering and into colocation.
Now consider this from the point of view of a consumer broadband provider. Your colocation partners are already on your network, and on very high capacity connections; they need it for their video streams. Your private peering partners are also connected to an extension of your network in a datacentre somewhere, and have as much capacity as they need, but are further away in network terms so are less reliable and efficient. Your public peering is now very much the poor relation; you have no control over the quality of the route that the publicly peered content takes before it arrives at your network, and while you need to maintain the connection in order to be able to deliver the whole of the rest of the Internet to your customers, it’s impossible to anticipate which connection a large file or video stream might come from, nor help it arrive smoothly and in one piece.
Raphus cucullatus, Roelandt Savery (1626)
So, in brief, many music companies are now providing additional revenue to the cloud providers, who are abandoning as fast as they can the mechanisms by which the Internet remains open and fair. And that does not just include record labels; many consumer music services have moved their systems to the big cloud providers.
Here’s an ironic thought – an artist, a record label, and a distributor might already each be paying Amazon to store and process a track, in order to send that music to be sold and streamed by… Amazon!! There are more than twenty different ways that Amazon can extract revenue from music (sometimes in scalable and repeatable ways), and all but a few result in no revenue for the creators. It seems that the music industry collectively is doing as much damage as it can, as fast as it can, to the benefits that net neutrality is supposed to preserve.
Business is littered with situations where the collective interests of a class of companies are in conflict with the individual interests of most of them. Usually the result is the development of monopolistic or monopsonistic markets; no industry benefits from the dominance of Facebook and Google in digital advertising for instance, but many businesses benefit hugely from the reach and capabilities of the data and marketing platforms. And the answer to monopoly is usually regulation, but for better regulation to work it is essential that the intended beneficiaries have access to the skills and knowledge to move profitably into any fresh opportunities that the new rules might bring.
Can music make that move? As an industry we’re suffering from a brain drain out of the supply side and into the demand side, and there’s a lot of evidence that our trade associations and collective bodies are under-resourced to help such a change. But the game is far from over. In net neutrality, and in technology, the best approach seems to me to be the same as in so many other areas where we are looking at erosion of our freedom and agency. And that approach is a fierce and supremely well informed dedication to independence.
A little over two years ago I set out three reasons why I thought indie music was poised for a period of cultural and commercial success. Those reasons seem still valid now, but a series of events in the indie music world has shown that I overlooked some important factors.
My biggest mistake was to assume that major labels would not want to buy margin-shrinking and inherently weak independent distribution companies. Since 2015, several ‘insider’ distributors (the kind whose founders and owners sit on trade association boards) have been sold to major labels, or major owned distributors. It’s impossible to understand these acquisitions any way other than by the damage they do to market access for successful small record labels; these deals must be strategic.
The second mistake I made was in over-optimism that the ‘digital dividend’ would materialise for small businesses. Online platforms have revolutionised how teams can operate around the world, but indie labels seem to have missed out somehow. Perhaps their needs are so specialised that more generic tools – productivity suites, online accounting – just don’t have the same impact as in other industries.
Time then for a rethink. And it is one from the same fundamental optimism of a few years ago, but with some caution and new caveats. So instead of offering reasons why indie music will thrive, here are three conditions for survival as we head towards the end of Q1 of the 21st century:
Efficient Collective Rights Management
The indie music world seems to me to have fully accepted the need for intermediaries, aggregation, and where it’s necessary, collectivisation. What’s more, Merlin has set standards in rights management that have lifted the quality of licensing across the whole market.
A Thriving Marketplace for Services
Small businesses buy in more and use in-house teams less. Our community has not generated an effective market in the services we need, from sales and royalty systems to production, design, marketing, business information, and intelligence. Instead we have churn in providers, and risk for investors that customers will disappear at a moment’s notice.
An Indie Scale Connected Digital Platform
New music markets need new digital infrastructure to help indie labels manage releases and coordinate their relationships, not just with the music services they supply, but also the other services that they need to buy in. Platforms can transform industries, becoming almost like a computer operating system in the way they connect resources and processes. A platform is what connects the rights, the assets, the businesses and the people together to deliver all the other benefits of the digital world to independent music.
…And What Won’t Work…
And it is worth setting out what clearly won’t work, as aggressive major labels and VC funded businesses continue to take bites out of indie music infrastructure and catalogue.
The first and foremost of our impediments is the attitude that scale doesn’t matter in technology – that somehow a two person startup with a rented database and some code is an adequate answer to the massive platforms we now interact with daily. Our dependence on technology I have heard described, depressingly, as ‘the tail wagging the dog’. This particular tail has been wagging the dog for at least the last 15 years. Continue reading →
It was an early hero of the United States navy, Stephen Decatur, Jr., who gave the world the dubious chant of nationalist zealots, reportedly in an after dinner toast to,
Our country – in her intercourse with foreign nations, may she always be in the right, and always successful, right or wrong.
a notion which has horrified educated and sensible people ever since.
Along with much of the rest of our cultural and communication industries, music finds itself ever more beholden to a group of platforms which combine massive technical capability and the ability to operate at global scale. What happens to our world when more of our industry moves on to those platforms? GK Chesterton’s response to the jingoism of Decatur – “my wife, drunk or sober” – does not quite capture the indifference of the technology to the impact it has, or the awed helplessness with which we watch it reshaping our lives.
The Royal Higden map – England is the red bit, bottom left.
These platforms are now our central strategic challenge; how to service them and their users with our music in such a way as to shape a sustainable and profitable future for professional recorded music. We can see and measure the value that is draining from the surrounding ocean into these relatively closed ecosystems; with truly remarkable precision an EU study found during 2013-2015 that ‘137 Spotify streams appear to reduce track sales by 1 unit’, with an overall neutral effect on gross revenue. (Industry watchers will note the name Waldfogel on the cover – he’s got form in pushing an academic opposition to music industry lobbying.)
But they are competitors for the value of music as much as these platforms are customers. To understand this from music’s perspective with harsh clarity it’s only necessary to look at how playlists change the marketing game. In the last few years we have moved from offering people a choice of platforms to buy our music from, to competing for mindshare within each platform with no sense that we either can or should ask a listener to switch from, for instance, Apple Music to Amazon. We know they won’t not matter how much windowing we do. The wholesale price captures only part of this value as platforms find more scalable and profitable revenue in advertising and consumer data.
With a degree of complexity far beyond the old service or retail model these platforms are multi-sided business, which makes the challenge of servicing them and optimising our performance within them many times harder. At a technical level it’s no longer enough to set up some simple pricing and descriptive metadata, then drop the music and hope. More and more we are being offered continuous feedback on performance, and the tools to try to improve it. At a business level, competing within each platform while coordinating activity between platforms is becoming like three dimensional chess.
Serpiente alquimia – an ouroborus.
For an analogy we can look at the adtech industry, itself a direct response to the impact of big platforms on media and marketing. Within the platform economy adtech creates no new value from the attention of consumers, but rather chases and coordinates value within an already closed system. Funding for adtech businesses reached $3.2b a year in 2015, after 5 years of growth.
That is a lot of pricing power being hypothesised in what is essentially a tertiary business sector.
In music we can afford a slightly different perspective, in that we can demonstrate the ability songs and recordings have to create new value. Apple’s colossal growth was at the very least seeded by the combination of great music and the iPod platform to unlock digital mobility, a transition that was partly funded by piracy as people filled up devices with illegal downloads. We need nevertheless to understand that we are essentially competing with our biggest customers to grab our share of the value that we jointly create with them, and we also need to build strategies that acknowledge the asymmetry of this relationship.
Put simply, they have more data about our music and the people who listen to it, and more brains and more computers to understand that data with than we ever will. This is not however an argument for ceding the platform advantage and simply becoming tied tenants. The same reach and scale that enables the platforms we work with is available on the supply side, and we have the distinct advantage of being able to create competition and diversity against the inherent conservatism of big tech.
To achieve this we need to take some simple but brave steps.
First we need to break down our own data silos, to level the data playing field. Big data is truly our friend here as data needs to be sufficient rather than complete for patterns to emerge that really can guide and inspire business decisions. But no single label’s data is remotely near sufficient, so we need an environment that incentivises and rewards sharing.
Next, we need to understand our competitive dynamics better, so we know when by fighting each other we are harming our whole industry. Many industries face similar strategic problems, and find ways of overcoming them, for example by forming standards bodies, or pooling intellectual property. Perversely music’s most collectivised parts – the collecting societies – are foot draggers in the world of open standards.
Finally, we can look at what really creates new value and expands the market, and reward and celebrate it. This means a degree of unbundling of the unholy trinity of rights, supply chain, and marketing, along with much more transparency, at least for interested parties. Observable and measurable excellence should be what we honour with awards; we can and should invest in and recognise real expertise in relevant fields.
None of these are easy, and all rely on music growing its own supply side platform ecosystem, as well as some parties reconsidering where they think their competitive advantage comes from. But we already do similar things in many areas of music, through collecting societies, through indie rights licensing body Merlin, through the standards consortium DDEX, and sometimes via trade associations. Strength, coordination and dynamism in the middle layer of the market will make a much better world for musicians and music lovers; it deserves our best efforts.
Music, in its various forms, has done quite well in the age of copyright. Digital technology has brought with it many tipping points, when old certainties give way to chaos before finding new stable states.
Any new stability will rely, as copyright always did, on some strong ideas to act as a foundation on which we can share music efficiently and fairly with each other.
We know what the old ideas looked like. Copyright is mysterious and complex enough to have its own creation myths which set the tone for the codes that followed them. One of the most romantic of these concerns the earliest surviving manuscript written in Ireland, a copy of a Psalter, ‘made in haste by night in a mysterious light’. The King is said to have ruled with the rustic phrase, ‘to each cow its calf’, that the owner of the original kept title in the copy. This is an elegant statement of the parental ideas behind the droit d’auteur and moral rights as any.
Other myths more prosaically bind copyright to printing monopolies and exclusivities granted by the 15th century Venetian senate. In mid 17th England similar monopolies granted by the king rather lost their force. The English Commonwealth was a regime that shut theatres and banned dancing on Sundays, an authoritarianism which saw copyright as a tool of political control, perhaps spurred by fear of the power of the pamphlet which had played so effective a part in the breakdown of the old order.
The regime was rewarded by a powerful blast from no less a voice than John Milton, poet, moralist and political activist. Areopagitica was issued as a pamphlet to argue for the repeal of the 1643 Licensing Order, which Milton saw as an attempt to bring printing under government control. State censorship exercised through the printing press was, said Milton, tantamount to:
the discouragement of all learning, and the stop of Truth
Milton failed in his campaign. And this was the backdrop to the Statute of Anne at the beginning of the 18th Century, which was either a shoddy backroom deal between publishers and government, or an enlightened recognition of the natural rights of authors, depending on your tolerance for conspiracy and progressive optimism respectively.
And so it remained for 300 years, with an ebb and flow between a strong sense of the fairness of giving creators control and reward, a continuing suspicion of corporate and commercial monopolies, and a general acceptance that the public too, expressed through access rights and term limits, has a stake in the game.
This tension is even found in the Universal Declaration of Human Rights. The two clauses of Article 27 are hard to reconcile:
(1) Everyone has the right freely to participate in the cultural life of the community, to enjoy the arts and to share in scientific
advancement and its benefits.
(2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.
The UDHR is a powerful statement of the rights of the individual which it seeks to protect when there might be a threat from cruel or repressive states.
The primacy of the individual however is far from being a universality in copyright just as in the rest of human history. Mark Rose has argued cogently that until there was a grant of rights to the author as an individual there was little expectation of originality and therefore no sound basis on which to elevate mere scribbles to the status of property. Ideas of personal genius perhaps rest on the property right, and not vice versa.
Corporate interests too can act in such a way as to cast doubt on the sanctity of a material interest in such as spiritual thing as creativity. All copyright owners know the dangers of overreach when enforcing exclusive rights against innocent infringers. We know that words and music are meant to be shared, not blocked; this is a cultural certainty ruthlessly exploited by platforms of mass participation. One might call this the revenge of Article 27(1): the corporate interests of the record company might deserve to be flouted, but the moral and material interests of the artist should be respected, a popular but unreconcilable discourse which plays out continually.
The old paradigm suited an era in which education, production, distribution, and of course markets, used to be constrained to elites. Now perhaps half of humanity takes all this for granted. The 21st century is an inversion of the age that gave us the old style of copyright, and needs a new myth.
So what new foundations might a new social contract for music rest upon? In an age of self-expression we should preserve strong rights for the creative individual. With so much of our public identity now digital it would seem absurd to allow the music we create and perform to be misappropriated; and those who suggest that authorship is too much of a technical challenge just need to consider the thousands of datapoints held about them in marketing databases. Of course your attribution rights can be respected, persistently, and if your identity can be known so can your economic interest.
But alongside this we need to acknowledge that the idea of the lonely genius has passed into history. In some ways we are recovering our pre-copyright communitarian approach to creativity. Certainly Shakespeare expected to borrow and lend, and to collaborate where it was expedient. Today’s digital creative and casual producer of recordings can be inherently collective and collaborative, layering and modifying the material more than shaping the void. We should find ways to support and reward participation with the future life of creative works rather than seeking to preserve the creator’s control. And perhaps we should recognise collaboration as a joint endeavour – one for all and all for one – rather than the sum of several contributions.
There is a danger here that each item could end up dragging with it an infinity of attribution and reward, or that free riders could pile into and dilute the success created by others, just as search terms and hash tags get hijacked in today’s social media. Perhaps we need to consider degrees of creation and originality, with secondary creativity very much a subsidiary economic right. We have precedents. There is a separate right of arrangement in musical works which does not need to be exclusive; there are many thousands of private contracts made each year around the use of samples in new recordings, which could perhaps be collectivised.
Today we share, we participate, we have a strong sense of fairness, and we respect the individual. It’s important to recognise that we now have the digital tools to express all these ideas in our copyright framework, and even, thrillingly, to allow different copyright rules to co-exist and compete with each other for the affiliation of the best and most popular creators.
Giant corporate groups are a fairly recent development in the music industry. The most extraordinary and wonderful music has always been produced outside the city walls by innovative and committed independent record labels.
Around 40% of recorded music industry value is created by independent record labels, but 65% of that independent music is captured by major label owned distributors. Only 14% is truly independent all the way through the supply chain.
This is not really so surprising. Scale is very important, and bigger platforms can provide global coordination between digital and physical products that is not available to the flock of indie distributors. That is an active choice and is fair enough. Much music migrates into major label systems by default though, and much is there despite the preferences of the indie labels.
How does it get there? Some labels see themselves as incubators of talent, intending to pass successful artists up to the layers above for a price, and for them the relationship with a major label is valuable. Many labels get bought, or do a deal for financial support which locks them in.
Probably the biggest factor is that many distributors start independent, but either run out of cash or have investors who want to get a return on their money. The Orchard, for example, started out as a beacon for independence, took investors’ money, and sold out to Sony Music. On its way it took other potential icons with it into the corporate belly, a migration taken by IODA, IRIS, DRA, Essential, and others. Feeding the beast seems to be a Sisyphean task. It’s not just Sony; the other global music behemoths are just as hungry.
Here’s what this looks like from a drone:
If music distribution was as simple and transparent as it should be these major label owned, pretend independent distributors would be a great adornment to the commonwealth. For many reasons they are a blight. Here’s why
One: Stealing by stealth from the famous black box
Fake indie distributors provide a very easy way to funnel unattributable revenue – the famous ‘black box’ – into central corporate bank accounts. Other benefits too, such as delivery fees, deal fees, marketing and promotion opportunities – all these are essentially stolen and allocated to global priorities and corporate profits.
Two: Gatekeeping the label’s own metadata and music
Labels and artists have many reasons for wanting access to their metadata and files, from public performance to promotion and synch opportunities. Understandably the effort of preparing digital releases and data is not something they want to go through twice. Instead of sticking to their service ethos, some distributors (and not just the fake indies) forget where the value comes from and end up acting as a gatekeeper to a label’s own catalogue and assets, or worse, trying to herd them into rights admin deals instead of letting them collect directly where they can.
Three: Sitting on sales and analytics data
All distributors act as a conduit for sales and other analytical data. But beyond feeding some selected parts into a pretty dashboard, many don’t pass it through to the label, and so end up with more insight into the music and artists than the label is able to get for themselves.
A fair tradeoff?
These might by themselves be a fair tradeoff for the services and scale that bigger companies can offer in the marketplace, and the advantages of access to some major label deals might well balance out some leakage. But more recent developments are highlighting just how pernicious fake indy distribution can be for genuine indie labels.
So What’s New?
A major label buy out was always a reasonable exit for an indie label owner wanting a quieter life. That is how the majors ended up so big in the first place. But digital distribution has almost certainly accelerated this as new dependencies make that sell out happen sooner. And given the data asymmetry, the buyer now has much more information than the seller about what a catalogue is worth. So from being that indie beacon, The Orchard is now one of the biggest acquirers of catalogues and labels in the market, on behalf of its corporate master, Sony.
What this means is that with each acquisition there is more internal competition between owned catalogue and distributed catalogue, and you don’t need to be a genius to guess which will win.
And back to that data asymmetry, which sets up a very bad incentive for the distributor and its owner by giving insights into artist development way ahead of when a label might be thinking it’s time for an artist to move up to a bigger home. Anecdotally some distributed labels have already seen artists getting targeted by the corporate owner of their fake indie distributor. The fact that major labels are buying sales report processing companies, such as RoyaltyShare and Korrect, shows you how strategically valuable this data is.
Again this might be a fair and reasonable tradeoff for the scale, service, and access provided. But it might also be a toxic mixture of foreclosure and unfair competition. And if the latter what can be done about it?
Prevention is better than cure…
Starting with the basics, it helps to know who owns a distributor, and what their long term intentions might be. As a rule of thumb, the major labels are gatekeeping the more profitable revenue lines and trying to commoditise the rest, as well as ensuring as far as they can that there is less competition to sign the most promising new artists. Any distributor with venture capital or private equity funding – no matter how much they protest their indie credentials – will be looking to sell itself at some point, and will have given up to the financiers the right to decide who the buyer is.
Next, read the contract! Carefully!! It’s normal in many contracts where there are potential future conflicts of interest to include ‘change of control’ clauses in case you don’t like the new owners after a sale. But at the very least it helps to know what rights and privileges are changing hands before it becomes an issue, and what you can expect not to be provided as well as what is being offered. And any gotchas, like the right to use your sales data without your knowledge or permission.
And the practical steps. Keep your metadata and assets where you can use them without interference from your distributor. Those web based product uploaders might be convenient, but you can end up with no organised metadata at all about your releases and recordings. Store your sales and trends data too where you can use them yourself if you need to.
Of course the best defence against being packaged and sold is to remain independent, and only work with partners who value independence as much as you do.
The music industry says that artists, labels, and songwriters are getting a raw deal from services that allow users to upload content. The beef is that user-uploaded songs, which may generate advertising revenue for the service and the uploader, compete directly with those same songs uploaded by the copyright owner. The difference in revenue between a user upload and a professionally supplied version is what the music industry means by the ‘value gap’.
And they don’t like it. As explained by record company trade body IFPI’s Frances Moore:
The value gap is about the gross mismatch between music being enjoyed by consumers and the revenues being returned to the music community.
Copyright terms and conditions always make the uploader responsible for any copyright permission or licences, but sometimes uploaders don’t have all the rights they need. If services remove the content promptly when asked they benefit from what is known as a ‘safe harbour’, and the copyright holder has no claim against them for infringement or loss of revenue.
So what does the music industry want? Frances Moore again:
The “safe harbour” regime designed for the early days of the internet should no longer be used to exempt user upload services that distribute music online from the normal conditions of music licensing. Labels should be able to operate in a fair functioning market place, not with one hand tied behind their back when they are negotiating licences for music.
Unusually for the music industry the IFPI position has managed to generate broad support among artists and indie labels, as well as songwriters and publishers. Over 1300 artists have now signed a letter to the EC President Juncker, which you can read online here:
The music industry is not calling for safe harbour to be abolished, rather that the qualification to benefit from it is drawn far more narrowly now that many platforms are less file hosting services and more media and advertising businesses. And the European campaign is mirrored by similar efforts in the US asking for changes to the DMCA safe harbour provisions.
The pushback has been quick and predictable, and based on the same set of positions that have been rehearsed over the last 20 years of internet history. Some feel that copyright should be abolished, and artists who can play live should make money only from from ticket and tee shirt sales. Some suspect the campaign is just the biggest artists and labels wanting to add even more millions to their already vast riches. Many think that the music industry should share out more equally what it already has first before seeking to get stronger rights. Some think that over-zealous labels and artists are harming other creators by issuing unfair take-down notices.
Legal sophisticates will recognise some important principles wrapped up in this debate. Citizens and consumers are clearly right to demand that an industry with unfair practices is not rewarded. And in a commercial environment in which only a tiny proportion of new work achieves a return on investment there is a balance to be found between the value of distribution and promotion to the creator, and the value of the content to the service. There are too a whole class of either inadvertent, incidental, and innocent infringements where the uploader has no intent to profit to the detriment of the musicians. The can be no possible justification for chilling such activities as saving something to read later, or sharing an extract or a link with a friend.
But does the music industry have a point at all? The disparity in the money the music industry gets for the same consumer experience is real enough. IFPI calculated wholesale subscription revenue per user at just under $30 per year for 2015, while advertising brought in about $0.72 per user per year, albeit from a much larger user base. The advertising rates on UGC are generally much lower than on professionally supplied content, so where YouTube and other services are being used as a music jukebox the hit to music industry revenue from this competition is very significant.
Internet advertising has its own set of issues quite apart from any music industry griping. We are learning that the cost of relying on advertising to support media generally is paid partly in greater intrusion into our private lives as trackers try to squeeze more value out of our daily traces mostly with nothing like informed consent. High quality journalism is expensive. It might be weakened even as more people have greater access to publishing platforms, with subsequent harm to political process and public life.
Chauncey Gardiner in ‘Being There’ -” I like to watch…”
But of course there is no way to know whether all that intrusion is really necessary, or whether there’s more money to be found. The services currently benefiting from safe harbour have every incentive to increase their own revenue. Other old copyright businesses that are moving to internet economics seem to be suffering similarly, so it might just be inherent in the way internet media economics works. For an entertaining rant about this here’s Professor Scott Galloway:
For me one of the ironies of the long standing conflict between copyright and internet businesses is that if copyright was a tech startup innovation it would be lauded as a thing of progressive genius. It would not be organised in national silos, nor looked after by people who refuse to cooperate with each other of course, but there’s no more natural way, in a world of infinite replication and trackability, to incentivise and reward creators. And that is what ad-supported UGC services do, through unique digital object ids, channels, and the massively complex world of consumer tracking and advertising markets.
There is a great deal both sides can do to show they are fit for purpose. The music industry should finally deliver on the promise of digital technology and make it easy for everyone to identify and pay the creators and owners of the music, just like YouTube does with its own creators. Services need to show they deserve a safe harbour by demonstrating respect for the rights and privileges of everyone, from fair dealing student to striving artist to privacy deserving citizen. I would like to see the value gap closed by giving songwriters and musicians more say in the deals that affect their livelihoods, and by demanding more transparency from services on what they do with all of our data.