Tidal: why Jay-Z and Taylor Swift are wrong

Jay-Z, along with Madonna, Kanye West and other thoroughly cringeworthy big names in music have launched Tidal, ostensibly to protect music, musicians, art. But this Instagram post from Madonna is telling. She says, in part

And remember nothing is for free! This is a universal LAW. Somewhere-Somehow-Someone has to pay.

Let’s not forget that this is also the woman who compares an album leak to rape and terrorism. How could such a person possibly be wrong about the future of music? I guess she’s in pretty good company though, as Taylor Swift (who is also on Tidal) pulled all her music from Spotify, saying

Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.

But she and other artists who believe they’re being paid too little under the streaming model are wrong. Here’s why.

1. No one else gets paid forever for work they did once

Art is indeed valuable. No one is contesting that. But isn’t everything valuable? Nursing care, doctors, teachers, the guy who painted your house. The software engineers that make Google work, or the ones who maintain Wikipedia. All of their work is valuable. But does the engineer who wrote part of Google’s search code get paid $0.0006 every time someone does a Google search? Does the guy who installed your toilet get paid every time you flush it? Even if their work continues to be of value, even if there’s a measurable way in which it’s being used, most people do not get paid forever for work that they did once. What millionaire musicians don’t seem to realize is that they already enjoy a position of great privilege in the royalty system and they should be more grateful. It’s easy to understand why they aren’t: they see that Spotify pays 70% to the recording companies, which leaves a smaller share to them. But the answer is not charging the end user more money.

2. Making streaming more expensive will not increase revenues

The same applies to making streaming more difficult. If someone wants a playlist with all their favorite artists, but the artists each have exclusive contracts with five different streaming services, it makes life difficult. If streaming costs $20 per month, it makes the service less attractive. In fact, according to data analysis done by David Touve of the University of Virginia, the price of streaming that will maximize revenues is around $6/month.

3. Lost album sales is the wrong way of looking at things

Musicians just need to forget about the glory days when buying a CD or waiting around for the song to play on the radio were the only ways for a fan to consume their music. The metric of “lost album sales” is misleading. There’s no evidence that if pirating and streaming weren’t options, those fans would all be paying for albums.

4. The only way to increase revenue is to increase value

It should be fairly obvious that free or nearly free streaming and pirating are here to stay. It should also be obvious by now that fighting these (with encryption, lawsuits, shutting down sites like The Pirate Bay) are a temporary stopgap at best. If it’s easy to get free music, the only way to convince people to keep paying a premium price for it, whether via album sales or costlier streaming services, is to offer them something extra. Tidal claims it offers some exclusive content, but I think they’ll have to do better. Promotions like “buy this album and be entered for a chance to win a dinner with this artist” or “subscribe for N months and you can qualify to get these limited edition items” — things that freemium streaming and pirating don’t and can’t offer.

I’ll end with simple armchair psychology. If musicians alienate their fans by complaining that an estimated $6 million per year earned from Spotify is too little, fans will be less likely to care about “hurting the artist” by pirating.

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