I got 99 problems, and you’re probably one

Photo courtesy of flickr.com

The other day, my friend and I launched into a conversation about the music industry, one that was both enlightening and frustrating to someone hoping to one day work in the business. He advocated for free access to music, a sentiment shared by the majority of our peers, and his arguments ranged from “I refuse to buy into corporate greed” to “art should be made for the sake of artistic expression.”

After pestering him with my argument that we as consumers are obligated to pay for a product that costs hundreds of thousands of dollars to create, he finally uttered those magical words that have come to define my generation.

“But if other people pay for it, I don’t think I should have to!”

And there it is.

Born in the 1980s to early 2000s, millennials have become infamous for a crippling sense of entitlement, the mentality that we belong to a higher caste of humanity and deserve things we don’t work for.

And that, ladies and gentlemen, is why the music industry is screwed. The majority of its key marketing demographic doesn’t want to pay for anything. 

The issue is that even though we love music, there’s this huge discrepancy between our perception regarding the cultural value of music and the financial value of music. Every party, wedding reception, restaurant, gym or department store I have ever been to has played music. Film and television producers use music to bring their works to life. I have never met anyone who didn’t have a favorite band, musician, genre or song.

We all love music in every aspect of our lives. So why does this dichotomy between loving music yet refusing to pay for it exist?

The answer lies in the concept of convenience.

The music industry was booming in the 1980s because if you wanted new music, you had to actually go to a brick-and-mortar record store and buy a physical product. There was a sentimental experience associated with purchasing and listening to music. With the advent of the Internet, however, digital piracy and file sharing have given consumers free and unlimited, albeit illegal, access to music. Now let’s be honest — there’s nothing more convenient than sitting at home, downloading thousands of songs at no cost.

And then, in 2008, two Swedish guys came to the rescue. Or so it seemed.

Hailing from Stockholm, Daniel Ek and Martin Lorentzon founded Spotify, a digital music streaming service that provides users unlimited access to music. The service offers a free-to-consumer model that is funded by advertising revenue and a paid subscription version for $9.99 a month. It’s a music library that’s limitless, interactive, user-friendly and legal. On the surface, Spotify seemed like the knight in shining armor to the music industry.

But they have just one teeny little problem that could potentially wipe out not only their own business, but also the entire music industry as we know it. Spotify is giving the milk away for free, and now nobody wants to buy the cow.

The free-to-consumer ad-revenue model of Spotify was created with the intention of introducing users to the service and ultimately converting them to paying subscribers. But it’s now 2015, seven years since Spotify first launched, and since then, the music industry has continued playing the waiting game, hoping that the Swedish service will figure out how to turn a profit and finally start paying musicians their fair share.

Looking at their financial statements, however, it’s actually the 75 percent of Spotify’s users who don’t pay for their use of the service who are the problem. Until Spotify can generate more profit through paid subscriptions, they can’t afford to pay musicians fair royalty rates.

The “freemium” or low-consumer-cost business structure will continue shrinking the music industry’s aggregate revenue pool, and while it’s hard to see the immediate effects today, the ultimate production of music that we know and love will certainly see creative consequences as a result of the lacking financial support.

In July 2014, Taylor Swift wrote in an op-ed for the Wall Street Journal arguing for the financial value of music as an art form. Then, in November 2014, the singer-songwriter made headlines by removing her entire catalogue from Spotify because the service refused to offer her music exclusively to premium subscribers. A longtime advocate of paid music distribution, Swift used her clout as the highest-selling artist of the year to speak for those musicians and songwriters who don’t have the bargaining power to stand up to Spotify.

Yet even with her economic power, Swift alone can’t create any real substantial change on the digital streaming landscape that is threatening the music industry.

Enter music businessman extraordinaire and answerer of the music industry’s prayers, Jay-Z.

Late last month, the hip-hop mogul, after purchasing Swedish music technology company, Aspiro AB, for $54 million, relaunched Tidal, the company’s digital music streaming service. The service gained widespread media attention due to its equity partnerships with 16 of music’s biggest stars, including Madonna, Kanye West, Rihanna and Jack White.

The service, unlike Spotify, offers a limited free-trial period before requiring subscribers to pay for their use of the platform. Tidal currently offers two subscriptions: a standard version for $9.99 and a high-definition sound quality version for $19.99.

Still in its introductory period, Tidal has already received mixed reactions from both consumers and industry experts. Some question whether or not the service will see any financial success or market share gains. Others are criticizing it as being the music industry’s top one percent demanding an even higher paycheck like greedy, overpaid celebrities. At the end of the day, everyone is wondering whether or not Tidal can actually succeed.

The thing is, Tidal doesn’t need to succeed in order to be successful. It’s real purpose is in its name: it’s making waves in the industry, a feat that no other service since Spotify has been able to do. Tidal is revitalizing the conversation about the monetary value of music and by pledging to pay much higher royalty margins than Spotify and its other competitors, it makes the point of saying, “Hey, songwriters. Your music matters, and people should pay you for making it.”

The point isn’t to make Jay-Z or Madonna or Kanye West richer. Tidal is essentially serving as a creative labor union for all musicians, songwriters, and producers — everyone involved in the process of creating music. By gathering music’s elite as spokespeople for the service, Jay-Z is forcing people to listen to Tidal’s message:

Dear consumers, technology companies, and anyone that benefits from the intellectual property of creative thinkers,

Music is valuable, both culturally and monetarily. Let’s start treating it with the respect that it deserves.

Sincerely,

The Music Industry

Music is important. It’s one of the most important forms of art that exists today, and we are the future of this art, the ones responsible for keeping it alive. So let’s be part of the solution, not the problem.