Entrepreneur, investor, and infamous shark on Shark Tank, Mark Cuban, ranked the music business at the top of his list of “three hardest businesses in the world” (the last two were “2. Anything involving Kevin O’Leary, and 3. Selling “cool,”–which could arguably be connected to number one).
He is right, of course.
The annual NAMM Show (National Association of Music Merchants, founded 1901) held at the Anaheim Convention Center in Anaheim, CA is the largest music trade show and showcases the latest products that will be used to create music for all forms of media and entertainment. The event is always an invaluable opportunity to gather information and strategize for working in the “hardest business in the world.”
Even a month later, the panels and conversational themes that floated around NAMM continue to make their way to my inbox.
NAMM reinforced the importance of three main issues for making money in music streaming today: metadata, algorithms, and superfans.
Metadata is how you get paid and get your team paid, but your metadata is much, much more than names of contributors.
Making money on music streaming platforms was a hot topic at NAMM and continues to dominate the music business discourse. Streaming platforms like Spotify have notoriously been known to underpay artists, the latest lawsuit brought on by Enrique Iglesias who is suing Universal Music Group for underpaying royalties on streaming.
To learn more about the distribution side of the business, I went to a lively panel discussion, “Trends in Distribution,” with speakers Jeff Price (founder and CEO, Tunecore), Kevin Breuner (VP of Marketing, CD Baby), and moderator Moses Avalon (author of the seminal music business text, “Confessions of Record Producer,” founder The Moses Avalon Company).
The members of the panel uniformly stressed the importance of including accurate and thorough metadata when uploading your music to streaming platforms to ensure that you, your mixer, producer, songwriter, et al. receive their fair percentages.
HOWEVER, this frustrated panel exclaimed, Spotify did not even have a place to input such additional credits! So even having the best intentions as a music creator (or third-party distributor like TuneCore who brings artists to Spotify), the system in place does not fully support the artists and therein lies much of the problem with getting people paid (of course, the music streaming business are being paid handsomely).
As if Spotify had planted a spy in the room that afternoon, just a week later Variety posted the article “Spotify (finally) Adds Songwriter and Producer Credits.”
But there is even more at stake by having complete metadata.
Metadata is not only a list of credited authors who have contributed to a song’s creation, it’s an exhaustive categorizing set of words used to describe your music in order to capitalize on that platform’s algorithmic search engines.
Nobody could really answer how the algorithms are set up, but they are used to expose more listeners to your music.
If you are using streaming platforms to distribute your music, you must nail down all of the possible genres, styles, moods, audiences, subcultures, catch phrases, trends, instrumentation, “sounds like,” functions and holidays, etc., with the intention that your music will land on relevant playlists or be suggested alongside other artists that are similarly categorized (these points were recently echoed by an article in Music Ally).
People will pay more for stuff that reflects their identity.
Notwithstanding thorough metadata, how do you make money from streaming music platforms whose users pay only $9.99/mo for the service?
That was the question asked by Digital Music Economic Researcher, Chris Golinski, who presented the engaging talk, “More Than $9.99 a Month: How to Increase Revenue in the Music Streaming Economy,” which focused on the spending habits of music fans on streaming platforms like Bandcamp and Patreon.
Golinski revealed what we had already suspected, a $9.99 subscription fee is not enough to make an artist anything significant (unless you are already a superstar). In his research on the Bandcamp streaming platform where fans are given the option to decide how much to pay for a song, Chris stated that consumers often pay more than the suggested price due to “superfan” psychology.
Fans will mostly playlist their music, but “superfans” will pay a premium because the music connects to their identity by reflecting their own personal style and worldview. These are the folks that spend beyond the monthly $9.99 fee.
When fans relate to artists on a deeper, identity-driven level, they will pay a lot more for music because that is fundamentally how they express themselves to the world. On a platform like Bandcamp, music consumers can spend big dollars on music because it is a public space for the world to see, psychologically, competing with other consumers in the same fandom.
Golinski proposed adding the “pay what you want” option (including the actual percentage given to the artist) to platforms like Spotify which would motivate fans and superfans to pay more.
And this circles back to selling “cool,” Mark Cuban’s third “hardest business in the world.”
This is old news in any business industry, but the talks at NAMM were a good reminder for music creators: the “cool” (aka “sell-able”) in music is tapping into something deeper than melody and harmony. It is about identity. The music must reveal something personal about the creator or process that invites such connection, which as a result, will raise the commercial value of the art.
SMT and AMS are great, but go to NAMM at least once.
February 20, 2018
(I originally wrote this article for NARIP, the National Association of Recording Industry Professionals, www.narip.com. You can see the article here.)