Music’s Manic Episode Over Digitization

text by digital-media

08 November, 2015

Nestled on the side of the California coast breathing in salty air and luring in young audiophiles is Sound Spectrum, a record shop that’s been right where it’s sitting since 1967.

Wave Baker, a 15-year employee of Sound Spectrum, believes that in music we have “the best of all worlds for us today”.

Baker, a self proclaimed “student of sound,” says that for him the digitization of music has led to music becoming more convenient in “packaged tiny bites” and a growing appreciation of all live sound growing from concerts to the wind.

Baker makes the shift of music into the digital age seem expected and natural, but not everyone agrees with this sentiment.

In the last decade music has shifted more and more from something owned to something borrowed as listeners have shifted from purchasing physical copies of an artist’s work to streaming them online using a variety of platforms.

And regardless of where their loyalties lie, almost every music lover you meet has dipped their toes in the piracy pool if not cannon balled in.

Even music giant, Apple, which has dominated MP3 sales for over a decade is now joining the streaming business with Apple Music.

Streaming services for the first time had generated more sales than CDs in 2014 according to a report released by the Recording Industry Association of America as quoted

It’s safe to say that the battle is over and streaming has come out on top, with a bevy of companies such as Pandora, Spotify, Apple Radio, Google, Tidal and others, now flood the streaming market.

As technology out grows the copyright laws in place, several problems have arisen. Artists complain that they aren’t paid the royalties they are owed with streams of their work. Streaming services struggle to stay afloat or turn a profit, as royalties and licensing fees are too high. And somewhere in between, 20 to possibly 50 percent of the fees are lost to a “black box” of middlemen according to the Berklee College of Music’s Institute for Creative Entrepreneurship as quoted by NPR. Industry insiders refer to this as a black box because the money is not traced back to the writer or artist, but is lost someone along the chain of companies used to pay labels and artists.

But there isn’t even agreement on who is to blame and the finger is pointed in several directions.

Ted Coe, Development Coordinator at KCSB FM, doesn’t think the finger should be pointed at any one entity but the system. He says, “Capitalism has always been a problem for art…it rips at the fabric of doing things because you’re passionate.”

Coe quoted Boots Riley, an artist, saying, “ it’s going to be a different economy for musicians”. He feels that musicians now have to make a choice whether to be viable and lose autonomy or follow their passion and scrape by.

A slew of critics from all corners of the music industry have suggested amendments to law and some other more creative solutions to try to appease all members of the industry.

According to RollingStone, The International Federation of the Phonographic Industry, the music industry’s U.N., decided that one solution to music piracy would be to standardize music release dates. They have been backed by the Music Business Association, which represents many U.S. retailers including Spotify.

In the U.S. before July 10th music was released on Tuesdays, while in other countries the release dates varied. So if one country received a release before another there was incentive to leak the album illegally to virgin ears.

The IFPI announced that the new worldwide release date would be Friday after music consumers were surveyed on their preferences. It is their hope that this will reduce the urge to leak unreleased content and therefore reduce revenue loss for artists and labels.

James H. Richardson, a UCLA law and management scholar, devoted his dissertation to how appropriately changing the compulsory licensing scheme could save the music industry. He suggests changing the foundation with a multi-part amendment to copyright law.

His solution involves tying licensing fees distributors pay to labels to distributor’s revenue. This would prevent distributors from going into deficits or out of business entirely.

Next it involves setting a minimum royalty rate so that distributors would still have to pay artists something even if they were making little to no revenue. This is key in the fledgling phases of more platforms.

And lastly Richardson’s solution involves putting a tax on the licensing fees. This would have the impact of music content being offered at market value, diversity in labels competing and funding for copyright governance boards to function autonomously.

Coe, of KCSB FM, states that industry members he respects are now backing copyright law changes to compensate performers as well causing him to lean in this direction as well.

Hip-hop artist Jay Z came up with a unique solution after trying to collaborate with several streaming platforms, according to NPR. He decided independence was key to artist control and he purchased his own service, named Tidal. With the backing of celebrities like Beyoncé, Daft Punk, Kanye West, Madonna and several other big names, he hopes to focus on giving the largest shares to artists and audio quality. Audio quality is one of the only gripes of users of streaming services. Jay Z hopes to provide uncompressed file options that promise high sound quality to avid audiophiles at a higher price tag. Tidal will have no free version like Pandora or Spotify, which should evade it falling into a deficit early on.

Stephen Masnyj, a long time audiophile and KUCI’s promotions director, believes that large labels are stifling artists. When artists don’t get paid sufficiently they can’t eat or live let alone create.

He proposes a reinstatement of a type of patron system, much like a tech start up. “Like Angel investors, investors would hold a five percent stake in an artist’s work leaving the other ninety five percent to the artist. The five percent would be enough to cover the cost of recording, producing and distribution,” says Masnyj. Angel investors are people who are not interested in being refunded or making interest.

He’s not alone in viewing this path as a solution. It seems to be an up and coming idea in the youngest generation of music industry hopefuls.

One form of this patron system already exists in the crowd-funding site, Kickstarter. Artists encourage fans to donate in order to fund their projects, usually albums, in exchange for gifts of CDs, vinyl, shirts and other merchandise.

Artists like the band, Crook and the Bluff launched their Kickstarter in May 2014 and by June had raised $5,680, which was enough to record and distribute their album both physically and digitally.

In merely two months they had raised enough to produce their art and do so autonomously.

Kenny Oravetz, general manager at KCSB FM and producer of “The Roadtrip”, agrees with the idea of patronage to support and fund artists. He says, “If I was rich and really loved an artist I would make sure they could continue to produce work.”

Another possible solution he offered was one in which labels and artists would change their focus from the store to the experience.

Oravetz believes listeners expect music to be free in a world where everything is instantly available online.

Baker, of Sound Spectrum, goes so far as to say, the “laws of nature are supportive of music being shared” to support this idea.

Labels should focus on the “live experience” and sell tickets, merchandise like shirts, CDs, and vinyl when artists tour. Oravetz states that ticket prices have gone up passed the inflation rate so maybe labels are in fact catching on.

Artists also tour much longer than they have in the past, often longer than a calendar year. This is likely due to the higher revenue stream from performing than producing the album and banking on sales.

Spencer Vonhershman, coordinator of an all ages venue known as Funzone and soon to be radio disc jockey, thinks it’s a little blurrier than simply directing all focus to touring and ticket sales for every band.

He believes that artists loosely fit into three tiers. The lowest tier is composed of “hobby musicians” that would be happy to move up but will take any opportunity. The middle tier is artists that require album sales to keep making music and “scrape through with tours”. And the top tier is artists whose livelihoods provide more than their own income and need album sales to remain at the top.

Essentially album sales are still vitally important to all artists.

However, Vonhershman thinks tying merchandise to albums sales at shows is a creative compromise.

“People want to be able to show their friends they went to the show,” says Vonhershman. He’s referring to when items are packaged with digital downloads.  Nowadays vinyl comes with a digital download so that the new wave of young audiophiles can be fully satisfied. They’re not just stuck with this large impractical though rich sounding piece of plastic, but have their portable bite sized MP3s for convenience too.

Strangely enough despite the grand scale shift from physical to digital ownership, digital piracy, and then borrowing through streaming services, vinyl has had a comeback of sorts. It can be found in every hip shopping mall and record stores that are now frequented by a much younger demographic then before.

Vinyl sales are the only physical media that is increasing in revenue. Vinyl sales soared to 9.2 million copies last year, according to Nielsen music as quoted by Stereogum. The average vinyl sold at $23.84, which is up 40% even when adjusting for inflation. So you have an old medium with rising prices and sales.

While the push back of vinyl is far from balancing out the revenue loss from streaming, it is an interesting phenomenon worth exploring since it might contain a truly viable solution.

Wave Baker believes that the draws of vinyl for young people are it’s “warmer and deeper” tones, which “most authentically reproduce the live music experience”.

With digital music the compression means that something’s missing; that the sound waves are crunched together.

It may seem paradoxical that while the mainstream music consumer is shedding their weigh in physical media and “extraneous” sound waves, there’s a growing niche circling back to a largely impractical vinyl.

But the fact is that the market is simply reacting to consumer demands for, as Baker said it, “the best of all worlds”. Vinyl is something physical that can be provided as merchandise at shows, can come with a digital download code for convenience, sells an album, and ultimately results in more of the payment getting to the actual artist.

So it seems that this solution of accommodating the industry by weighing heavier on the live experience is already naturally occurring, at least with vinyl, and is the most viable step in the right direction for the industry.


Written by Shay Mehr

Posted in Music