Are you killing the value of your own music?

An open letter to music creators worldwide by Lewis Foster, CEO of Music Vine

I’m writing this letter to raise awareness of the seismic changes that are currently happening beneath the surface of the music licensing industry.

As both a music producer and the co-owner of a music licensing company, I find it deeply troubling to see our collective space being increasingly reshaped by aggressive profiteering.

If you create music and if you care about the worth of your work as well as the health of the ecosystem that makes our craft possible, then I urge you to take the time to read this letter. This is a hugely important conversation — it’s one that needs to happen on a larger scale and it’s one that desperately needs more clarity.

So let’s get the conversation started.

A wolf in sheep’s clothing

Imagine this:

You receive an email from a well known brand. They love one of your tracks and want to use it in their biggest ad of the year. The production costs for the ad will be in the hundreds of thousands and it will be viewed by an audience of many millions. It will generate a vast amount of profit for the company. They say your track is the perfect fit — it has just the right vibe and will be instrumental to the success of the campaign. They ask if you will license the track to them, not just for this ad, but for use in all their future ads for $1 †. Would you say yes?

Clearly this would be an absurd and insulting proposition. Yet, shockingly, an increasing number of musicians are signing-up for exactly this level of devaluation by placing their tracks with subscription based licensing companies who operate a one-size-fits-all model at a radically low pricepoint.

For a single annual fee of $200 USD or less, these companies open up their entire catalogue for use in an unlimited number of productions of any type and scale and with any distribution. What’s more, once the subscription has ended for a given customer, downloaded music can still be used forever, any number of times and in any production.

An obvious question comes to mind: why would any musician ever choose to join and contribute to a model that seeks to profiteer from such extreme devaluation of the musician’s work? It seems that there are 5 main factors at play:

1. The subscription model inherently masks the extremity of the devaluation. If a price tag of $1.00 (to purchase a license to use a track forever, with no limitations) were displayed, no musician would give these companies the slightest consideration. Such absurdly low prices aren’t even expected of bottom-of-the-barrel stock music libraries. But this is the thing, with the subscription model, a per-use price isn’t apparent. And while the promoted $200 subscription fee is still shocking to many of us, the full reality of the devaluation it represents doesn’t quite hit home in the same way.
2. Many of the musicians fundamentally misunderstand what commercial licensing is. I’ve spoken with numerous musicians about this and I’ve been shocked by the extent of confusion about what music licensing actually is and the value they should expect from commercial placements. When misunderstanding is so rife, it’s no surprise that some musicians have decided to get involved.
3. The model leverages non-exclusivity to engage artists. As an example, one company’s pitch to prospective artists goes as far as suggesting that exclusivity places a limit on an artist’s creativity and imagination, and that the platform’s choice to only offer non-exclusive rates is indicative of their love for the music. This rhetoric is clearly suggestive of a couple of things; firstly that such a model would struggle to convince any artist to submit material on an exclusive basis, and secondly that the company simply doesn’t care about having exclusive music (as their objective is primarily to undercut), with the increased profit from the non-exclusive rate being a far more important factor to them. The model also appears to take advantage of those musicians who have a hasty and promiscuous approach to placing their work non-exclusively on numerous platforms.
4. The musicians see the money, not how it’s made. As the radically low price-point naturally draws in vast numbers of customers, the musicians confuse the moderate spoils of mass exploitation for healthy, appropriately valued earnings.
5. The platforms dress themselves up to allure artists. If you have a business concept that depends on a craft produced by others (music) but is centred around aggressively undermining the very same industry, how do you get that idea off the ground? You make it look cool. You lather on imagery that enthrones the artist. You make the musicians feel like they are part of something high-end.

So, aside from the fact that a relatively small number of musicians are sadly killing the value of their own work, why does this all matter so much?

It matters because these changes don’t happen in isolation. We are all part of an ecosystem, the health of which is paramount to a network of music creators, software engineers, equipment manufacturers and many more professionals, all of whom deserve to earn healthily and fairly from the valuable work they do.

The impact on our industry and craft

Think of the music licensing market as a huge, highly pressurised container. The air pressure within represents the value in the market (i.e. the total $ that video producers are spending on licensing music) — this pressure is vital to sustaining all the music creators and related professions. Without the air pressure, the container collapses, the professions perish.

Now imagine puncturing that pressurised container. That’s essentially what happens when an aggressive business model seeks to capitalize rapidly by undermining the value of the market’s core asset (music). If the puncture is allowed to persist, the pressure in the entire space steadily diminishes, the ecosystem withers and it no longer becomes possible for musicians to earn sensibly from the licensing of their music. But there is of course one party who benefits enormously from the devastation — I don’t need point out who that is.

So here’s a question I’ve received a few times from involved musicians: “If these platforms are so harmful, how come I’m making reasonable earnings on them?”. If you’re a part of the object that is piercing the container, you’re also going to be party to the blast from the air leak. In other words, the earnings that artists are making on these platforms simply reflect the extent and rate that their own music and the entire market itself is being devalued, combined with the fact that only a minority of musicians are currently contributing to this model. If you sell something valuable but at a rock-bottom price, it’s going to sell a lot and fast, which will add up to something that appears reasonable. However, it’s crucial to realise that the air blast doesn’t last long. We are witnessing a pressure change — a rapid and significant transition of the value that’s present in the market as a whole. For those musicians contributing to and benefiting from that pressure leak right now, make no mistake, it’s a very temporary benefit.

What is the consequence of this market-wide ‘depressurisation’? In the worst case scenario, it would mean that the invading business model monopolises. Previously prosperous routes to earning from music licensing would atrophy and music creators would be left with no choice but to join the subscription models. Subsequently, the rapid catalogue growth on these platforms combined with their market saturation would result in average artist earnings quickly decreasing until they are reduced to a pitiful amount. Creating music for usage in media no longer becomes a viable professional endeavour for the vast majority. This is what we mean when we talk about sustainable and unsustainable business models — i.e does the model provide both artists and businesses with healthy, stable and fair income, for the long-term.

Many composers are already well aware and equally as troubled by all of this, which is why when it comes to quality of music, these companies generally fall well short of the industry-leading platforms that are operating a fair model. By their very nature, musicians who take pride in producing great work tend to value both their own music and their craft as a whole — this comes hand in hand with a deep care for safeguarding that value, not exploiting it. Put simply, quality gravitates to where quality is valued. That’s not to say though that some skilled and presumably misinformed musicians haven’t fallen into the honeytrap of exploitation.

At Music Vine, this is the primary reason that we’re very confident that our company and artists (along with other companies that place high value on the quality music they represent) will continue to do well. But we’re also under no illusion about how things are changing in the wider marketplace that we’re a part of. It’s already becoming a more challenging and aggressive environment.

But why is music so valuable, anyway?

Now that we’ve got some clarity on what is happening to the industry we all share, let’s get back to something more fundamental: why our music is valuable in the first place. This is something that an increasing number of businesses (and musicians) seem to be forgetting.

To license a track by a well-known mainstream artist for a large commercial placement, the fees can be in the tens, even hundreds of thousands. While prices are clearly less than that in the production music industry in order to make music accessible to more typical video production budgets, platforms like Music Vine still strive to ensure that both up-and-coming artists and production music creators alike can earn fairly and sustainably from the placement of their work.

But why has recorded music possessed this privilege of being licensed over and over at what are sometimes very substantial prices? Video cameras, editing software, microphones — all of these are crucial ingredients in the production of a video, yet none require a fee each time a video is produced. What makes music so special? Do these new, radically cheap subscription companies simply represent an inevitable move away from a time when music licensing has enjoyed the luxury of being overpriced and overregulated? I’m sure that is how the companies themselves justify their model.

These questions take us to the principles at the heart of music licensing. Here’s the chain of reasoning:

• In film and video, it’s well known that music is responsible for a huge proportion of what an audience feels and perceives.
• Unlike production equipment or technology, when music is used in visual content it has direct and intimate contact with the audience.
• So it follows that the value of a piece of music to the customer is that it is an instrumental component in a production that will benefit them or their organisation, often in the form of generating significant profit.

It’s with these principles in mind that musicians typically take the stance of: ‘if you’d like to use my track (which represents a generous helping of my own artistry, passion and identity, as well as involving years of developing skills in music and a significant investment in equipment/software) as one of the most important ingredients in your campaign, you should, of course, pay me well for that privilege in proportion to the commercial scale of your usage.

Does $1 cut it? I’ll let you be the judge.

In disregarding these principles completely, the one-size-fits-all subscription model recklessly cuts musicians off from the economics of how their own music is licensed. Instead, the earnings that artists make per placement become dictated entirely by volatile extraneous factors: namely the total number of subscribers, the total number of usages (across all subscribers) and the number of tracks/artists on the platform.

Perhaps this model could be reasonable if restricted to small-scale usages such as personal YouTube channels, or if it were more thoughtfully tiered to ensure that those with larger commercial requirements were contributing a much more appropriate amount — but even then it would still require a very careful approach to ensure that musicians are being fairly compensated.

While we’re on the subject, here’s another question I’ve received a couple of times: “This is what Spotify did to music streaming, surely this is the natural direction for music licensing too?”.

The fact I’ve received this question at all illustrates the level of misunderstanding that’s out there. There is clearly a colossal difference between the personal enjoyment of music and the commercial usage of music. Spotify left a bitter enough taste for many musicians and that is a model for the personal consumption of music. Franky, to attempt apply the Spotify model with Spotify prices to commercial music licensing is beyond absurd.

The musician’s prerogative

Our industry and our craft thrives when we recognise the value of our own music and when we have integrity about how we earn from the usage of our work. When we take that stance, the very same respect and value permeates into the industries that depend on music as a vital asset.

However, when musicians disregard the value of their own music and focus instead on making money through any means, that’s when they give power to business models designed to profit and domineer by burning through the value of music. And if you fuel that fire by throwing your own work onto it, you will surely get some warmth to begin with, but not long before things are reduced to ashes.

Let’s not forget, it’s in the nature of a free market that there will always be those businesses that attempt to profiteer rapidly through exploitation. Often such businesses will be adept at painting their model in a benign or even forward-thinking light. Some existing companies may attempt to follow suit out of sheer paranoia about their own future. Now more than ever before, musicians must be careful not to presume that just because a new model has come into being, it represents ‘just another opportunity’ or a natural evolution for the industry. It is both the prerogative and the responsibility of music creators themselves to recognise profiteering business models for what they are, to put integrity before quick moneymaking and to be bold enough to decide which direction their own industry takes.

† I don’t know what the average artist earning-per-usage is across the handful of companies that are operating this model, but we can safely say that it will be extremely low. Based on an average annual subscription fee of $180, users placing an average of 50 tracks per year, and the artist cut being 30% (which I believe is the actual rate offered), that gives an average earning-per-placement of $1.08. These figures are clearly presumptions — if anyone has more accurate insights, please feel free to correct me.