The Music Industry Is Broken. How Do We Fix It? – FUXWITHIT

The music industry is broken. Those at the top rake in millions while artists often struggle to get by. Music doesn’t sell like it used to and streaming services are paying artists a fraction of a penny per stream. Live events and touring were the main source of income for artists of various sizes until the pandemic hit. Suddenly what accounted for more than half of a 50 billion dollar industry vanished with no clear line of sight into when it would return. The unexpected global pandemic pulled back the curtain on just how broken the industry is. The overreliance on live events is just the tip of the iceberg. The industry has been broken for a long time, only now it’s become impossible to ignore.

Looking to get deeper insight into the problem and bring forth some potential solutions, we reached out to a myriad of industry experts in order to get their thoughts on how to build a better future. We connected with veteran journalists like Cherie Hu (Water & Music) and Jacob Moore (Pigeons & Planes), artists RAC and Wylie Cable, label managers Harrison Bennet (Deadbeats) and Mouna Dif Pacherie (Quality Goods Records), promoter and label owner Henry Lu of Space Yacht, and some of the sharpest minds fusing music and tech, including Clayton Blaha (Audius), Parker Reyes (Toneden) and Paul Meed (Matter Music). I asked them all the same question: The music industry in broken. How do we fix it?

The responses are sure to intrigue, excite, inspire, provoke new ideas, offend and even anger. We wouldn’t have it any other way.

Cherie Hu

Why you should listen: Cherie Hu is an award-winning Journalist and the Founder of Water & Music an independent newsletter and paid membership community dedicated to unpacking the fine print of innovation in the music business.

There is so much in the music industry that needs to be “fixed” on an infrastructural level that is beyond the scope of a few paragraphs. But I also think what needs to be fixed is a collection of mindsets that many people in the industry have accepted as standard, even though they are detrimental both to our individual advancement and to the industry’s wider equity and wellbeing.

Firstly, the pandemic has encouraged many people in my network (including myself) to prioritize their physical and mental health and wellbeing much more than they otherwise would have on the industry grind, and I hope putting health front and center continues to endure long after the pandemic is over. After all, the music industry cannot be sustainable if artists cannot sustain themselves.

On the business side, I’ve also noticed many artists and their teams shift their focus away from surface-level consumption metrics on streaming services and social-media platforms, and towards cultivating long-term communities directly with their fans on platforms where the artists have more ownership over their data and their fan relationships. Especially in a virtual and remote world, community becomes a much more effective moat than mere “consumption” alone, and I hope more artists and their teams embrace that mindset moving forward.

Clayton Blaha

Why you should listen: Clayton Blaha is the Head Of Partnerships at Audius, a music streaming company that is looking to redefine the music landscape with cutting edge technology. He also Co-Founded OWSLA alongside Skrillex and two additional partners.

I think “broken” is a misnomer, I’d say “fundamentally evil” is more accurate. You have to consider that major labels are owned by publicly traded companies who, according to the Friedman Doctrine, possess the sole mandate of returning as much money to stockholders as possible regardless of ancillary effects on other participants in the economy, environmental concerns, etc. So by that measure the industry is doing exactly what it’s supposed to be doing (and doing it better than it has for like 15 years), it just happens that what it does is fuck people over for profit.

If we think about the industry as “broken” it implies that it can be fixed; to think that anyone can have any sort of meaningful impact on the way creatives are treated in the music industry is to ignore that the frameworks of late-stage capitalism across all industries are designed to extract value from the worker-participants, specifically artists in this case.

It’s clear that our energy would be much better spent creating new technological systems of value exchange and ownership that benefit the people and resources that make networks and industries valuable, which is what Bitcoin did for traditional commodities like gold and what we are doing at Audius for music. We’re not trying to fix an old Honda Civic, we’re building a bullet train from space materials.

Harrison Bennett

Why you should listen: Harrison Bennett runs one of the most successful artist backed record labels in electronic music (Deadbeats) and has a wealth of experience in the industry.

Get rid of every A&R and music supervisor that’s been responsible for working this plague of dance music cover songs. That’s the industry serving the industry, and devaluing music in the process. That’s what’s broken. It’s why we’re in a place where solid touring acts that have actual fanbases can’t make sustainable streaming money and are hurting right now.

We’ve gotten to a point where most radio stations and grocery store soundtracks are indistinguishable from one another, and generally do not reflect the real world of music fans. Independent retailers and promoters, and even blogs have all but disappeared in the last 10 years so instead we get this weird homogenized middle ground of music discovery that all music must exist on and play within the rules of.

Live music and events is one of the last true free creative bastions for artists in which they can present their music without inhibition. That’s on pause, and must be preserved. Pressure your local governments to support funding for the arts and event spaces. That’s the best way for artists to retain independence in the long run and continue in my opinion, and ensuring that part doesn’t fully break should be the focus.

Henry Lu

Why you should listen: As the Co-Founder & Co-Owner of Space Yacht, Henry Lu has developed one of the most well respected brands in electronic music. Renowned for forward-thinking events, next level merch and a newly launched label, his knowledge is multifaceted.

The music industry is seen as broken because one of the most public-facing pieces of it is operating unsustainably, and very publicly so.

My company, Space Yacht, comes from the events world where things were at least working up until COVID. As an independent promoter we created something sustainable that worked for our partner venues, the artists who performed for our shows, the contractors who serviced the shows, and of course the attendees. Things more or less worked.

We recently entered into the record label space, and the feeling is not the same. In the past decade, the recorded music industry has converted from a retail-adjacent industry (going to a store to buy a CD) to a tech-adjacent industry (going to an app to stream a song). We are still in the middle of this shakeup. The brick-and-mortar has long been eliminated, but the dust hasn’t settled, and the apps are still using this time to make their own rules.

As an artist or independent label, what are you to do when you are “the supplier to the supplier,” who then turns around and offers your creation for $8 a month? And you have little to no negotiating power as an independent. Something seems fundamentally wrong here.

I recommend to every artist and independent label — understand that your power to connect and sell directly with fans is greater than ever. It’s the mentality that paves way to the ideas of “own your masters” or “grow your brand.” These things make sense because the tools to sell directly to fans are cheaper than ever, if not outright free.

This mentality was what empowered Space Yacht to grow so fast in events, then in apparel, and now in music. There is an element of directness in every lane. We deliver results to our artists that they don’t see elsewhere because we have that direct connection to our ecosystem.

The various verticals of the music industry creates these games for us to play, but we don’t have to play only their games, we can create our own.

Jacob Moore

Why you should listen: Jacob Moore is the Co-Founder & GM of Pigeons & Planes, one of the most influential and important music blogs of the past decade.

I struggled to come up with a response to this question, because it’s a loaded one and there’s no easy answer. There are so many problems that come with outdated record label models in a streaming economy, the reliance on data and the ways so many people manipulate that data for leverage, and the sheer amount of music being released every day.

I believe there will be solutions for all these things soon enough. We will see more viable alternatives to the major label system and new ways for artists to monetize their music (or at least monetize the platform they build through music). And the manipulated data, fake views/streams, and scams will never win in the long run. None of that is sustainable.

What I think really needs to be addressed is the root of the problem, and a big part of that is the lack of transparency. In 10 years we’ll be looking at a different music business, but we’ll see a whole new set of problems if the culture so dominant in the industry doesn’t change. Artists should understand what they’re signing, people in positions of power should be sharing information instead of hoarding it, and the way artists, producers, and writers are paid should be way less complicated than it is today.

The business models will change, but the leaders making decisions also need to evolve. In the past, screwing over artists may have been an acceptable path to success, but we’re seeing more artists speaking up, and more executives and labels being called out. I hope that aspiring music industry professionals today see that taking advantage of artists isn’t just a matter of ethics — it’s bad business.

Mouna Dif Pacherie

Why you should listen: Mouna is the Head of Operations for Quality Goods Records, the Founder of Quality Goods Management, and is an artist herself. She’s helped to guide the careers of stars like UZ & Ian Munro and runs one of the best independent labels out.

COVID-19 has brought into the light some underlying issues in the music industry and rapidly accelerated changes that were long overdue. One major issue being that artists have become completely and for most strictly dependent on touring for revenue, fanbase growth and development for a successful career. In the last few years, I have seen this industry drift slowly away from its essence: the music, without which there wouldn’t be an industry in the first place. Live music & concert sector being at a current stop right now worldwide, artists are set back to focus on actually making music, in a more creative and productive pace without the pressure of being constantly on the road. For most times touring has proven to be detrimental to their mental health and therefore their inspiration and creativity on the long run. Artists are now able to take the much needed time to reconnect with their music and be more in tune with who they want to be, they are taking more risks & enjoying the process. I am excited to hear the new sounds that will emerge from these dark times, “Every act of creation is first an act of destruction.”

Parker Reyes

Why you should listen: Parker is the Head Of Music at Toneden, one of the top companies fusing music, tech and marketing with a key focus on artist growth.

We at ToneDen are pretty optimistic about the future of the industry. With the recent changes in the business landscape, artists are being forced to become better at building their audiences and monetizing their audiences in ways that may have been on the back burner pre COVID. Without touring, how does one remain relevant? Social media and the internet has created an opportunity to directly create fan relationships at scale, to cultivate a following strategically – a following that one could then learn how to monetize. People are starting to realize when it’s actually done right, the needle can be moved.

Monetize with merch, with live streams, with royalties and streaming platforms. There are clear winners beginning to emerge already in the live streaming space (Nederlander & Awakening with successful drive-ins, Shelter Music Group doing paid live streams, Silverback Music investing more in their merch business) not to mention the fact that Underoath generated over half a million dollars through their live streams via ticket sales and through strategic merch sales during the stream! Artists and their teams are getting smarter. The real estate is there for the taking for the innovators.

Paul Meed

Why you should listen: As CEO of Matter Music, Paul Meed has made it his mission to usher content creators into a new realm of possibility by providing tools for growth and fostering an environment where artists and their fans can thrive.

Things tend to break when you apply legacy frameworks to new age problems. It’s no longer about playing local shows in hopes of getting a record deal, it’s kids inventing new sounds from the comfort of their bedroom and broadcasting it to the world over the internet.

But when there’s already so much music available for free, how do you get listeners to spend more? The answers could be in learning from success in adjacent markets. There’s also a ton of free adult entertainment and video game footage, yet content creators on OnlyFans and Twitch are raking in substantial fees in the hundreds of millions. They go beyond offering content to deliver personalized experiences.

So the answer to me seems simple:

1. Own your brand and masters (content)
2. Build and interact with your community
3. Leverage your content + community to make money by offering commerce and experiences

RAC

Why you should listen listen: RAC is a Grammy Award Winning Artist with millions of followers and monthly listeners. He is constantly taking innovative approaches to releasing music and using his voice and actions to help move toward a better future for the music industry.

• Free markets. We don’t have that.
• Artist gets paid first, 80/20 split. 20% goes to the various value added middle men. Let them fight over pennies and see how long it takes for gross revenue to go up.
• Labels pivot to creative services & marketing and separate financing to relatively low interest rate funds (5-10% APR). Funds invest at 1-10% ownership rates comparable to the VC world. Even better, let fans invest in their favorite artists with likely no interest.
• Distribution fees are a form of payola and have no reason to exist in 2020. The only reason they exist is because DSPs effectively give them favorable placement and allow them to charge for that access.
• Fixed streaming rates fundamentally do not work. Let me repeat, fixed streaming rates fundamentally do not work. This is insanity. Artists should be free to set their own streaming rates. Is the UX hard? Figure it out Silicon Valley.
• Spotify needs to lose ad-supported tier and charge 50% more. Switch to user centric model which splits your monthly fee in between the music you actually consumed instead of subsidizing the stupid ad model. While they’re at it, maybe don’t give your shareholders primarily placement on editorial playlists. Netflix doesn’t give you every movie possible ever made, why does Spotify?
• Publishing industry exists because we have an incredibly inefficient manual process for collecting royalties. Is pairing/pitching writers and fronting their living expenses really worth 50%+ in equity? jfc. A similar model to labels could be applied by separating the financing to relatively low interest rate funds.
• Touring, promoters take on risk but artists should get a piece of all alcohol and food sales if it’s profitable. Guarantees are good, but I’d like to see a more flexible deal structure that allows for more upside. Maybe a sliding scale of income based on ticket sales with a basic floor to cover expenses. Oddly enough, the touring industry is somewhat competitive compared to the rest of the industry. I wonder why they account for 80% of revenue? 🙂

Wylie Cable

Why you should listen: As a Producer, DJ and the Founder of independent record label Dome Of Doom, Wylie has dedicated his life to music and has more experience than most navigating the industry in multiple walks.

I don’t think the music industry is “broken” per se, it has always been the wild west and the rules seem to change pretty dramatically every 2-3 years based on technology and trends. I do think however, that we are in a moment here where the industry part of music is in upheaval, shows and tours for the most part are cancelled in the states, places where they can have shows are still at ultra limited capacity, and nowhere near the live music club and festival experiences we have all grown to love. Packed together by the hundreds if not thousands, dancing, listening to music loud and sharing a collective experience in the moment.

I have had lots of conversations with my fellow artists, label owners, managers, promoters, journalists and friends during this whole pandemic catalyzed industry-wide shut down. The theme of all my conversations about the state of the industry with my peers has revolved around a few central concepts, one of them being that we had all molded our own personal habits and attitudes to fit into what were considered industry norms, regardless of how self destructive they were, because we all wanted to participate in this thing called music by any means necessary. We all accepted that to have a career as a touring DJ, we had to sacrifice our mental and physical health and submit to the grueling schedule of playing 30 shows in 30 days. I am so deeply grateful for all the opportunities music has afforded me, but during my time touring heavily I realized there was little to no dialogue about artists mental and physical health, and with a long line of people eager to take your spot on the stage, the unspoken rule was just show up and do your job and don’t complain about it.

This issue presents itself on all levels of the industry, the artist is exploited at every turn, but fame and the spotlight is valued so highly in our society that it seems acceptable to run an industry on the backs of artists in exchange for a tiny percentage of the value we create. Put simply, the music industry would not exist without artists and creators. So why are they so often the bottom of the totem pole when it comes to money? Why does Spotify pay the artists that make their company viable a fraction of a penny for a play on their platform with a 50 billion dollar market cap? Why is it an accepted industry standard that a major label will pay $500 for an artist’s master in perpetuity, and then license it to a car commercial for $50k and pay the artists nothing? Why is it normalized that for women to participate in the touring industry, they have to put up with sexual harassment at their place of work? Why have we accepted all these known issues about the “industry” and are we all willing to accept our own responsibility for perpetuating all the things we collectively grieve about through our own participation in it?

With all this said, we are now in a time when it seems this conversation on changing these industry norms is very loud. I think this is a direct result of the lack of financial opportunities in the music industry right now. Touring is unarguably the biggest revenue source for artists. Venue owners, promoters, managers, club staff, sound engineers, bartenders and the long list of associated jobs all exist because artists sell tickets and fill venues. Without those gears turning, we have been afforded a moment to re-examine how this has all been set up, and whether or not we want to continue along our current course, or collectively create something new. I got into music because it was the one thing in my life that was always there no matter what, and I think that many people who chose a path in music feel similarly. I feel I personally have no other realistic life path besides music, and started my label because I was already frustrated with the “music industry” almost a decade ago and decided to just put out mine and my close friends music in a DIY fashion and it just slowly grew from there.

Something I’ve realized is that even in my effort to run an artist friendly label there are certain “industry norms” that I found myself enforcing about record label contracts, manager fees, booking fees, standard producer splits, 6am flights, the list goes on. We all were told that this was how it worked, and to tow the line or miss out on living our dreams. I think collectively we all need to look inwards and think about how we can help artists make a living off of their creative labor, and treat the music itself as something that has intrinsic value that belongs fundamentally to the artists who created it.

Looking Ahead

It’s easy to become jaded with all the problems in the industry but we can build a better future by putting some of these ideas into practice. We need to break outside of the norms and stop doing things because it’s how they’ve always been done. We need to focus on building communities and meaningful relationships between artists and fans. We need to get back to the music and embrace new technology that can propel us forward. We need to properly value creative work and the creators behind it. The industry may be broken, but it’s not beyond repair. Let’s work together to fix it.