A Better Future for Music

Direct trade and stream-to-own fractional payments

Here is a plan for a better music industry, great for artists and consumers alike (although maybe not so good for iTunes or big labels). This is in response to both David Byrne’s fear-mongering about the internet’s destructive power and recent reports on the failure of streaming services (like Spotify, Rdio, etc.) to profit from their “disruptive” new platforms. This new model has to be at least reasonably profitable for the owners of the platform, much much more profitable for artists, and cater to the high expectations of consumers. If the future music platform does not provide “whatever you want whenever you want” to its listeners, it’s already lost.

Commit to Openness

The platform will commit to do the following:

1. Operate with the utmost, proactive transparency, publishing and announcing constant reports about its accounting, operations, and future plans. Providing up-to-the-minute data for anyone to see.
2. Provide shares of the corporation to all artists who meet a certain threshold of sales (providing a mutual interest for success and allow artists a vote in the operations of the corporation).
3. Allow a direct transaction between artists and listeners; minimize the platform’s cut of artist’s income as much as possible.

Sell it as a social good, because it is. Ask all new customers to agree to a commitment:

1. Support Artists: Don’t stream any music anywhere that does not operate transparently and cannot prove how well they support artists.
2. Support the Little Guy: Challenge yourself to listen to a little heard of band once every week.
3. Support the Movement: Tell your friends about new direct-trade music platforms like this one that try to pay artists what they are worth.

What better social project to get people excited about than one that supports the music we all love? People will get behind it because they love music.

The Economics

Essentially, the platform would allow listeners the same benefits of current on-demand services like Spotify, Rdio, and Rhapsody. The best part about these services, I would argue, for both listener and artist, is that they give listeners the freedom to check out new bands at no risk. Streaming, on-demand music is the ultimate platform and convincing customers to move to anything else at this point seems like a hard sell. David Byrne and many others have argued these platforms are terrible for artists, but their luddite perspective ignores the benefits. Much like how Amazon and the App Store have made it so easy to buy stuff—sometimes too easy—these platforms, if they were changed slightly, make it really easy for people to buy music and that’s a good thing.

One problem here is the payment model. Right now, everyone pays $9.99/month for unlimited music all the time everywhere. There is, perversely, no connection to how much people listen or the diversity of their collection. And, unlike the movie companies, labels and artists have seemingly little clout against the obligatory new platforms. While licensing issues have seriously limited Netflix in the content they can offer, streaming music services can offer nearly complete offerings of the world’s well-known albums. You won’t see Spotify spending $100 Million creating its own custom content to make up for its limited library and bring in new subscribers.

In order to change the economic incentives and properly compensate artists while maintaining the freedom of on-demand streaming, the new platform has two interesting options:

1. Adopt a “stream-to-own” model built on incremental payments. Instead of $9.99/month as a subscription, members sign up for $9.99/month in streaming credits. Their $9.99 is then slowly doled out as they listen to music, $0.05 here $0.25 there depending on the premium artists place on their music. The platform should create interesting mechanisms to pro-rate the cost of content depending on the user’s history. For instance, if a listener approaches an album for the first time, make an entire listen of the album cost just $0.25; the second time, make it cost $0.75; artists could advertise “first listens” as free if they choose; user data could be utilized to offer a select group of listeners free first-listens if they will probably like a similar band. Over time, as listeners spent their streaming credits, the system will keep track of how much is spent on each album. If you really love the new CHVRCHES album and spend >$9.99 on it after a few months of listening, then you own it: you get access to both FLAC and mp3 ARM-free downloads of the album (plus, maybe some premium content!). Of course, you can just buy the album right away if you want to and, if you run out of credits in a given month, you can always buy more (or sign up for a larger plan, maybe a plan for $22-credit costs just $19.99)
2. Similar to the above model, but without incremental payments. Instead, just pay for a streaming subscription and enjoy infinite listens of everything. But, as you listen, you accrue ownership credits on particular albums. Then, at some point you are given ownership, based on an algorithm (frequency of listening, total plays, plays of each song/album, longevity of album interest, percentage of plays this compared to other albums/songs). This platform could also allow purchases of albums and could, possibly, limit the number of listening-hours members are allowed. Pay a higher monthly-rate, get more listening hours.

In both models, there has to be a way to allow listeners to purchase albums and encourage them to spend more than just $10/month. I prefer option 1. By implementing a pro-rated incremental payment system, you enable listeners to try out lots of new music, but have a realistic sense of the economics involved in supporting artists.

Go to the Shows!

From talking with a number of my musician friends, I know that—if they are doing well—artists can make some good money and, more importantly, build their listener base by getting people to a live show. Much like Bandcamp has allowed artists to easily host and share their music, this new platform should allow artists to easily host and sell tickets to shows. If an artist’s show isn’t hosted through the platform, it will still be listed through partnerships with other event aggregators. Users will get notified via alerts and a music calendar about what shows are happening in their area from any of the bands in their collection. They can buy tickets right through the site. This service seems like a no brainer, a nice benefit for both the listener and the artist.

How to Start This

In launching this sort of platform, there are some serious technical, licensing, and marketing challenges. I think, with the right creative team, the marketing will be an easy sell: a great new platform that is cooler than the others guys and actually supports the artists you love. The licensing and technical issues are another story. If this platform were to get off the ground they need to first build some serious technology infrastructure and acquire a minimally viable collection of songs.

Building the Library

If done right, the work of licensing a great song library can be equal parts marketing and necessity. For a platform like this to get off the ground it would need both a good core library of well-loved musicians and some really important albums that nobody else has. To start, it would do well to focus on artists that are more of the “independent” variety. These types of musicians will be more apt to sign with a platform that has their interest in mind and would likely appeal to the type of indie-music listening early adopters the platform would have as its first customers.

Once a minimum library is established and the platform can launch, get 20 important bands that have “pay artists better” interests, to do an exclusive release. Get Radiohead, get Arcade Fire, get Lupe Fiasco, get David Byrne. Build up to launch day by getting artist-support-advocates to lend their voice to a Thunderclap announcement. On launch day, thousands of supporters and media outlets will share the story: “The Future of Music Puts Music-makers First: New Platform Has 20 Exclusive Albums from the World’s Best Artists.”

After gaining subscribers and momentum, any labels who may have been disinterested at first will be won over by economic incentive.

Building the Platform

This is the part I know the least about. No doubt the back-end infrastructure of servers and hardware maintenance is extraordinarily expensive. On the front-end, however, I think this project could be created via an open-source platform. Instead of hiring a huge developer staff, hire a core team who then hires the community via Gittip and via Bountysource to build the platform. Open the code up so that savvy users can submit their own bug tickets, or even solve their own issues.

In short, run the operation as lean as possible. More than a company, it needs to take its role as middle man between listeners and artists seriously and work to minimize their presence. An even easier option would be for one of the pre-existing platforms to recognize the destructive futility of the current model and make a serious shift or, at least, sell their infrastructure and software to a new owner. In looking at the current landscape, Bandcamp, with their simple design and focus on the artist is the best fit for taking on this big project. They already operate with a degree of openness, already host streaming audio, and have some serious cred in the indie music world.

Bandcamp, you in?