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Is Anyone Listening? Jay-Z Launches Tidal and Gets the Music Biz Talking

Jay-Z

The term “starving artist” is not a new one.  Songwriters have long been fighting the battle for fair compensation.  It’s not a new topic in the music industry, yet little has been done to combat the issues these artists raise.  During a conversation with a Senator, Bill Withers said, “You know, Senator, if things don’t change, we aren’t going to be able to make a living doing our songs; we’re going to have to find something else to do for a living.  And Senator, you do not want Ozzy Osbourne as your plumber.”  With the wide range of social media and streaming sites allowing us greater access to music, artists struggle between the concept of access versus being able to pay their bills.  According to the Recording Industry Association of America, on-demand streaming services grew 26% to 7.7 million in 2014.  Digital downloads and streaming contribute to 64% of the music industry’s total revenues, with physical sales reaching a measly 32%.  While people recognize the shift to digital is long past us, streaming music is steadily becoming the norm.  Artists have the ability to reach more people than ever, but at what cost?  With streaming sites like Pandora and Spotify paying songwriters miniscule royalties for their content, many artists have voiced their frustrations with the current compensation model that is federally regulated.  Artists argue that the current music licensing system needs to become modernized in direct response to all of the advancements the music industry has made.  With a changing industry must come changing laws and a new perception of music’s true value.

In an effort to create a dialogue about this issue, this week Jay-Z launched Tidal, an artist-owned music streaming company.  Earlier in the year, Jay-Z bought out Aspiro, a Swedish music streaming company, for $56 million.  Other than a 30 day free trial, Tidal is not a free streaming service, and offers standard audio quality for a $10/month subscription or high-fidelity digital audio files for a $20/month subscription.  The service features 25 million songs, 75,000 hi-def videos, and does not use ads.  So far, Tidal has 17,000 paid subscribers (to put it into perspective, Spotify has 60 million global subscribers, of which 15 million are paid.)  So what differentiates Tidal from sites like Pandora and Spotify?  Some have been quick to point out that Tidal’s user interface looks suspiciously like Spotify’s.  Jay-Z sees Tidal as more of a community for creative ideas and a way for fans and artists to communicate.  Artists have the option to release exclusive content through the service.  Rihanna, for example, is featuring her new single “Bitch Better Have My Money” exclusively on Tidal.  The service also features playlists compiled by Beyonce, Jay-Z, Jason Aldean, Deadmau5, and more.  Alicia Keys contributed behind the scenes footage from her last tour, and even Taylor Swift, who notoriously pulled her music from Spotify last year, has some of her music on Tidal (with the exception of 1989).  Jay-Z believes Tidal’s limits are endless, and he foresees the service as a platform for creativity and even more advanced music marketing.

While Tidal has not publicly disclosed its royalty rates, its 16 shareholders are very public figures.  In addition to Jay-Z, the following artists own Tidal: Madonna, Rihanna, Beyonce, Kanye West, Jack White, Arcade Fire, Daft Punk, Calvin Harris, Alicia Keys, Coldplay, Nicki Minaj, Usher, Deadmau5, Jason Aldean, and J. Cole.  After the launch of Tidal and the #TidalForAll social media campaign, these not-so-starving artists have been criticized for using their celebrity for Tidal instead of on other matters like racism, hunger, and poverty.  Many social media users expressed their opinion that Tidal is only a ploy to make these rich musicians richer, even going so far as to create collages of these artists covered in money.  Jay-Z’s point, however, is that music should not be free, and artists are getting robbed of their rightful royalties.  In his Billboard interview this week, he said, “People are not respecting the music, and [are] devaluing it and devaluating what it really means.  People really feel like music is free, but will pay $6 for water.  You can drink water free out of the tap, and it’s good water.  But they’re OK paying for it.  It’s just the mind-set right now.”  While Jay-Z recognizes the criticism he faces for launching Tidal, he maintains that at the very least, he wants this to begin a dialogue about the value of music and the proper compensation owed to songwriters.  Although Tidal is creating a media wave, this certainly isn’t a new issue.  In her rather exaggerated speech during Monday’s launch, Alicia Keys said, “We’re gathered… with one voice in unity in the hopes that today will be another one of those moments in time, a moment that will forever change the course of music history.”  While the 16 artists involved are going into this endeavor with grand intentions, they’re calling attention to a matter that affects all artists (even the actually starving ones).

While it’s true that streaming music tends to lead people away from piracy, most songwriters feel that given the miniscule amount of royalties these streaming sites pay out, they might as well just get robbed by the illegal sites.  Last year, Aloe Blacc took to Wired.com to write his piece “Streaming Services Need to Pay Songwriters Fairly.”  In it, Blacc calls attention to the fact that the laws governing music licensing were established in 1941, and there have not been any updates to these laws since 2001.  These laws pre-date the iPod, and don’t even begin to touch streaming services.  “The abhorrently low rates songwriters are paid by streaming services – enabled by outdated federal regulations—are yet another indication our work is being devalued in today’s marketplace,” Blacc says.  His collaboration with Avicii on the song “Wake Me Up” gave Spotify their most streamed song, and it was the 13th most played song on Pandora.  With 168 million streams of the song on the site, the total payout was $12,359.  This $12,359, however, was then split between three songwriters and the publishers, which ended up with Blacc receiving less than $4,000 domestically.  Blacc says, “By law, we have to let any business use our song that asks, so long as they agree to pay a rate that, more often than not, was not set in a free market.  We don’t have a choice.  As such, we have no power to protect the value of the music we create.”  According to David Israelite, the President and CEO of the National Music Publisher’s Association, “Roughly two-thirds of a songwriter’s income is heavily regulated by law or through outdated government insight.”  When a song is downloaded or streamed, the songwriter royalties are dictated by the Copyright Royalty Board.  In 1909, the mechanical royalty rate was $0.02 per song.  Today, the mechanical royalty rate is $0.091 per song.  To put it into perspective, eggs cost $0.14 in 1909; they now cost $3.00.  Artists have long been demanding fair market pay, but is anyone listening?  Groups like the American Society of Composers, Authors, and Publishers are.  ASCAP is a non-profit membership organization that collects and distributes royalties to more than 460,000 independent songwriters, composers, and music publishers.  ASCAP and Pandora, in a well-documented public battle, have seen many days in court arguing over the rate songwriters should be paid.  On average, 1,000 Pandora streams are equal to $0.08, which is 4% of their total revenue.  They have plenty of money to pay artists more, but will they?  With Pandora controlling over 70% of the U.S. streaming market, they garner over 70 million listeners per month.  ASCAP maintains that Pandora isn’t paying artists a fair market rate, and they have made it their mission to modernize the current music licensing system.  ASCAP President and Chairman Paul Williams says, “I don’t want to see people who are listening to music pay more.  I love the idea of music being delivered to people who love our music for free.  What we do want is people who are making money by transmitting the music to pay a fair compensation.”  Williams also brings up another point: “… record labels and artists often earn 12 to 14 times more than songwriters for the exact same stream.”  So not only are the artists failing to see their proper compensation, but also the writers behind these songs are as well.

Pandora and ASCAP’s public battle isn’t the only one to stir up headlines.  When Taylor Swift pulled her entire music library from Spotify last year, she said, “Everybody’s complaining about how music sales are shrinking, but nobody’s changing the way they’re doing things.  They keep running towards streaming, which is, for the most part, what has been shrinking the numbers of paid album sales.”  Swift is not alone in her public dismissal of Spotify; Radiohead’s Thom Yorke, the Talking Heads’ David Byrne, and Cracker’s David Lowery have all spoken out against the site and have pulled tracks.  Spotify’s site lists the current royalty payout as falling between the range of $0.006 and $0.0084 per stream.  The streaming service has a database of 30 million songs and has paid out over $2 billion in royalties.  Daniel Ek, Spotify’s founder, insists, “We’re getting fans to pay for music again.”  With 15 million paid subscribers out of their 60 million global users, Ek isn’t lying, but at the same time, Spotify doesn’t make the paid incentives for a premium subscription incredibly appealing.  With the paid service, subscribers are basically paying to make the annoying ads go away.  At least with services like the soon-to-relaunch Beats Music and Rhapsody, premium subscribers are incentivized by having special access to certain music (like Taylor Swift’s).  So what is the solution?  Should services like Pandora and Spotify have a tip jar for bands?

Sites like Huzza, Patreon, Noisetrade, and Grooveshark give listeners the option to tip their favorite artists.  With Huzza, users get exclusive content and can share/discover music along with their friends.  Tips go directly to the musicians, and Huzza takes 5% plus any payment fees for credit card and bank transfers.  The site assures artists that, “in general, you’ll get more than 90% of your tips.”  Noisetrade has a similar goal in mind, but with an added incentive for musicians.  The site allows artists to give fans free music in exchange for email addresses and postal codes.  Fans can tip artists, and Noisetrade takes 20%.  The site is free for artists and fans alike, and serves as a platform for communication and mutual respect between the two parties.  Similarly, Flattr is a “social micro-donation system” that allows fans to tip their favorite artists on Grooveshark, a free music streaming site.  90% of Flattr tips go directly to the artist.  Patreon, another tip jar type of site, encourages people to “support and engage with the creators you love.”  The site doesn’t solely focus on tipping musicians, and instead offers up other categories for video/film, writing, comics, drawing, comedy, dance, and more.  Unlike Kickstarter, which seeks monetary contributions on a per project basis, Patreon encourages users to tip for content that is produced by their favorite musicians, artists, dancers, etc.

The question is, with services like Pandora and Spotify making free listening easy, how many people will actually go through the trouble to tip their favorite artists?  These sites mean well, but they rely on people feeling generous.  Jay-Z’s Tidal, however, forces users into buying subscriptions after the end of their 30 day trial.  Will people simply use his site for 30 days, then return to Spotify?   Jay-Z has faced plenty of opposition throughout his career, but can he pull this off?  Will his $56 million investment change the structure of the music industry and call for regulatory change?  There’s no doubt a conversation has already been started, but will all the talking lead to action?  In her 2014 op-ed piece for the New York Times, Taylor Swift wrote, “Music is art, and art is important and rare.  Important, rare things are valuable.  Valuable things should be paid for.  It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is.  I hope they don’t underestimate themselves or undervalue their art.”  There is no doubt that music is valuable, but how will the industry get people who are accustomed to free music to suddenly begin paying for it?

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