Posted by on Jul 18, 2016 in News | 0 comments

The future of music is access. Forget sales and mechanical royalties, forget airplay and performance royalties. Those terms no longer represent how consumers use music. Today it’s all about access — to any song, by any artist, anyplace and anytime. But access doesn’t have to mean “free.” We have access to electricity most anyplace we go, but is it free? No. We have access to water most anytime we want it, but is it free? No. Whether at your local grocery store, your favorite restaurant or your neighborhood drycleaners, in addition to paying for the goods or services offered, you are also paying the establishment’s aforementioned electricity and water. It may not be itemized on your bill, but you can bet it is built into the operational cost of the business and reflected in the prices charged for the goods and services. To survive, the music business must embrace this same premise, and quickly.

For the first half of 2016, as compared to the same period in 2015, album sales have fallen by 15% and digital track sales by 25%. According to Nielsen, sales of digital track in the US are down a whopping 42% since 2012. Remember when digital sales were touted as the music industry savior? It now appears iPods may have fallen by the wayside faster than 8-track tapes. What is replacing these sales? Streaming, of course. And therein lies the problem. We do not yet know how to assess the true value of a stream. I think most knowledgeable of this issue would agree that when comparing streams to sales it is not a 1:1 ratio. So what is it? 10:1? 100:1? 1,000:1? 10,000:1? The truth is, the value is in a constant state of change. While the streaming of music is severely undervalued at present, I do not believe this inaccuracy will continue unimpeded.

The above opinion does not attempt to excuse Pandora, Spotify, YouTube, Apple Music or SiriusXM for the role each has played in the depreciation of music. But like any new business venture, the goal is to keep overhead costs low. And for these digital services, music is an overhead cost. They are in the technology business – technology that enables music’s consumers to access the end product. Music and technology are ancillary businesses – each needing the other to survive. But do not mistake these for the same thing.

As more people adopt streaming as their primary means of accessing ALL music, I believe the value of music will self-correct. In the interim, it will be painful – as it is anytime an industry undergoes a significant transformation. It is imperative that we, as an industry, look further into the future than tomorrow as we seek a solution.

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