Three Questions Concerning Spotify’s Direct Listing Decision

Originally published on Crunchbase News on January 3, 2018.


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As everyone was in holiday mode a few weeks ago in December, Spotify confidentially filed documents with the SEC to go public, likely in Q1 of 2018.

Previously, I discussed Spotify’s numbers and examined how those figures looked before an IPO filing. Now we can see how those numbers look in context.

This filing bolsters prior reports that Spotify would forego a traditional IPO in favor of a direct listing, a method of going public that has left many scratching their heads. For those unfamiliar with it, a direct listing is a way allow a firm’s shares to begin regular trading while avoiding the normal IPO roadshow process.

When asked about the direct listing strategy, IPO expert Barrett Daniels of Nextstep Advisory Services told Crunchbase News that there are a few reasons companies might choose to pursue the strategy. It typically boils down to the fact that the company may not be “strong enough” to transact a traditional IPO due to these reasons:

  1. The company’s growth (or lack thereof).
  2. The company’s size (in terms of revenue).
  3. The general climate of the industry.

So do these reasons provide Spotify grounds to go direct, especially considering how much money could be left on the table? Let’s find out.

1. Company Growth

Spotify has the kind of crazy growth that companies dream of. As its subscriber numbers have gone from 50 to over 100 million users, Spotify’s valuation has similarly been adjusted. It’s worth remembering, though, that while the total subscriber number sits somewhere north of 130 million users, approximately 60 million are paying listeners.

So Spotify is big enough to attract attention and generate a lot of excitement. In fact, because Spotify is such a well-known company to go public, an IPO roadshow seems to be precisely what it would want. More attention and more hype might mean more money on gameday.

2. The Company’s Size

This kind of fast-paced growth also contextualizes the music company’s size in terms of its revenue. According to Daniels, the size of a company’s revenue will dictate how larger institutions view it; if the revenue looks too small, larger institutions could deem the company too early or too risky, and therefore might be uninterested. But given Spotify’s outsized growth, though, perhaps this is a reaction to its continued unprofitability (as of yet).

3. General Industry Climate

Daniels also noted that in some direct listing cases, the decision to forego a traditional IPO could be something as simple as a timing issue. Industries go through hot and cold periods, and a cold period could convince a private entity to forgo the public process.

However, this doesn’t typically apply to the music industry. Because of business with mainstream acts, music companies tend to be more well-known among public investors than, say, a company which perhaps works on tooling or shipping. Therefore, Spotify has no reason to think that the climate would change at all between now and an expected 2018 IPO date.

Going through Barrett’s list of reasons, we can see that Spotify’s direct listing doesn’t pass muster on these grounds. But there are two outside arguments that augment the viability of direct listing: saving money on the IPO process and stopping the clock on Spotify’s convertible debt raise.

Saving Money

Outside of Barrett’s outline for going direct, Spotify could limit costs by foregoing a normal, pre-IPO roadshow. However, experts have pointed out that this doesn’t make much sense. The money which Spotify would save on an IPO roadshow is negligible compared to the amount it would ultimately raise in a normal IPO.

But there are other ways Spotify can save money.

Stopping the Clock

Last year, Spotify took on convertible debt from Dragoneer and TPG, totaling $1 billion. According to David Golden of Revolution Ventures, by listing directly, Spotify could essentially “stop the clock” on these debt-conversions, and presumably, save itself tens of millions of dollars.

As a refresher, under the terms of these notes signed in 2016, Spotify was required to pay 5 percent annual interest, a figure that grows by 1 percent every six months for a total of 10 percent. Investors could then convert the debt into equity at a 20 percent discount of Spotify’s IPO price. If there were no IPO within a year, the discount at which investors could eventually buy back stock would increase 2.5 percent every extra six months.

The Questions Left Lingering

All of this leaves a lingering question: if neither of the two most-cited arguments hold water, does the decision to direct list have anything to do with Spotify’s $20 billion valuation? There have been, as of late, multiple sources which have raised concerns, expressing reticence and opining what a public Spotify will look like. Spotify did not respond to a request for comment.

The streaming market also faces stiff competition. Apple can subsidize its music service until the end of time through its phone and computer sales. Facebook just signed a major deal with Universal, and YouTube is gearing up for its own music service launch. Pandora has just created a Spotify clone, and its post-IPO performance doesn’t bode overwhelming optimism. All of this is now against the backdrop of a $1.6 billion lawsuit filed by Wixen Music Publishing against the streaming music company.

Additionally, here are a few numbers we don’t know which will impact Spotify’s business model long-term:

  1. What Spotify royalty rates are. It has been reported the company pays anywhere from 58 percent to 83 percent.
  2. How often Spotify needs to renegotiate royalty deals with the major labels.
  3. What the percentage stakes each major label owns of Spotify.

We’ll see how things roll out by the end of Q1.

***

Find me on Twitter @adammarx13 and let’s talk music, tech, and business!

2018: A New Year with New Goals

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Perhaps the last picture I’ll post with my trusty iPhone 4S

2017 is over and 2018 is now here. That’s a good thing; last year was a tough one. A few very close relationships ended, and after a few years, I closed my first company. But I also learned that there is life after failure.

So here we are now in the new year, and I’m excited to start working on a bunch of new things. Here are some of the things you’ll see from me in 2018: 

  • 😎 🎸 I’m working on a new music project (company? 😎 ). That’s right — after a badly needed six-month hiatus (maybe longer?) from actually running a music-startup, I’m gathering feedback on a new idea which is incredibly exciting. So far, feedback has been very positive. Discussions with a select number of artists as well as a few journalists, founders, and confidants have yielded an ever-clearer perspective on how this can grow. I’m excited to read more people into this as the year progresses.
  • 📝 I’m working on editing a very special document that I’m extremely excited to finish. I’m a word-nerd, and in editing this piece, I can honestly say it’s been one of the most challenging and rewarding things I’ve done in my professional writing career.
  • 📝 🤘 I have an avalanche of new music articles written and in the works which I can’t wait to see published. Some of these will shake things up (I hope), but hey, what’s the point of being a music journalist if you’re not a little punk about it? 
  • 📝 📽️ I’m working on writing a rough draft of a screenplay (no, really!). Last year, I was kicking around an idea which I thought could be fun to work on, and over the last week, I’ve started mapping out characters and basic scene dialogue. I’ve never done a screenplay, so I am more than happy to have collaborators!
  • 🙋 🙋‍♂️ 🙌 🤝 I will start driving harder towards being more central to the discussions on sexual harassment and how to fix the issues we have before us. This is less of a “me” thing, and more something I am incredibly passionate about; I am open to collaborating with anyone on projects which will help with the goals of creating a paradigm with more meritocracy, equality, and egalitarianism. 
  • 😎 🎙️ I’m incredibly excited (and flattered) to have an invitation to be on a few podcasts starting this year — because I don’t talk enough as it is ha!
  • 🤔 📝 I’m working on plans for a new guide which will (hopefully) excite word-smiths everywhere; more on this project in the coming months. 
  • 📝 📖 I’m writing a pseudo-review of a book I’ve been reading which has changed my perspective on so many things, and has similarly confirmed a lot of the mantras which I try to live my life by. This will be out by the end of January.
  • 📝 🤝 I will be releasing many new articles in my Minimum Viable Network series.
  • 🎸 😉 I’ll be doing more work with artists (some have asked me to manage ha!) — maybe there’s a producer-credit in my future.  
  • 🤔 📖  There are a few of my past articles which I have been toying with revising into a rough pitch for a book. Let’s see what the year brings. 
  • 😄 I will be exploring more speaking opportunities.
  • 😎 🤘With the 2017 list out, I’m ready to start working on the new “100 Awesome Independent Album and EP Releases You Probably Missed” list for 2018.
  • 😄 🙌 I’m excited to start having * Many * More * Conversations * — I’m all about creating new things, and I look forward to picking up new projects throughout the new year, both with current partners in crime and new draftees.

Thank you to everyone who helped me pull through 2017. Your support means more than you know. Now, on to 2018!

***

Find me on Twitter @adammarx13 and let’s talk music, tech, and business!

100 Awesome Independent Album and EP Releases You Probably Missed in 2017

Here we are, back in December, and everyone knows what that means: more “Best of…” lists trumpeting the best new music on the scene. And as always, so much of the independent world flies completely under the radar.

For the last two years, I’ve drawn up lists of “100 independent albums and EP’s you probably missed” during the year. Here they are:

Now it’s time for list number three, and I am so excited partly because of how the map is expanding to include places which weren’t touched in the first two lists.

As with the first two lists, these 100 albums and EP’s come from artists all over the world. This year’s list includes artists from: Canada, the U.K. (England, Scotland, and Wales), Australia, Switzerland, France, Sweden, Russia, Finland, Belarus, Romania, Slovakia, Brazil, Japan, South Africa, Greece, Myanmar, Spain, Portugal, Chile, Serbia, Austria, Argentina, Ukraine, Indonesia, Poland, and 28 different U.S. states. The independent world is very, very big.

I’m also pleased to see an evolution of my own tastes and appreciation; this year’s list includes more pop, electronic, R&B, and jazz influences, obviously mixed in with a healthy helping of alternative, rock, and metal.

So here are 100 of the albums and EP’s that you probably missed in 2017. All were released during the 2017 calendar year; imagine if the mainstream paid attention to all the artists out there, and not only the handful we hear about.

As always, albums are in no particular order.

Go expand your universe. You’d be shocked at what you discover.

1. Why Am I Swimming Around Like This? — Fishtank — London, England, UK

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2. Tube One — Okto Vulgaris — Chur, Switzerland

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3. Space — The Head — Atlanta, Georgia, USA

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4. It’s Butter – EP — It’s Butter — Los Angeles, California, USA

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5. Grace Blue — Grace Blue — Los Angeles, California, USA

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6. Machine — Hello, Mountain — Denver, Colorado, USA

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7. The Hurricane EP — Morganway — Norwich, England, UK

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8. Tooth & Nail — Freya Wilcox & The Howl — Brooklyn, New York, USA

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9. Orphan Planet — Orphan Planet — Portland, Maine, USA

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10. The Truth & The Lie — Skies Collide — Brisbane, Australia

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11. Commitment Issues — Anyone’s Guess — Orlando, Florida USA

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12. Dark Matter EP — Auditory Armory — Altamonte Springs, Florida, USA

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13. Golden — The Talking Hours — Albuquerque, New Mexico, USA

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14. Animals — Blue Eyed Sons — Helsinki, Finland

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15. Dark Swallows — Dark Swallows — Boise, Idaho, USA

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16. Everything You Ever Wanted — Street Pieces — Brisbane, Australia

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17. The Trouble With Teeth — Little Coyote — Toronto, Ontario, Canada

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18. A Flood — Twin Strike — Brooklyn, New York, USA

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19. Bad Habit — Beth Blade and The Beautiful Disasters — Cardiff, Wales, UK

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20. Skiddish — The Fallaways — Vancouver, British Columbia, Canada

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21. Flux — Form Constant — Birmingham, Alabama, USA

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22. Background Noise — Treading Water — Boston, Massachusetts, USA

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23. Breaking the Line [EP] — The Strikes — Souchez, France

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24. Wide Open — Weaves — Toronto, Ontario, Canada

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25. Eclipse Of The Sun — Liquid Sunshine — Zurich, Switzerland

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26. Worn Out Heart — Hollow Sidewalks — Portland, Oregon, USA

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27. Start a Fire — The Burn Ins — Elkford, British Columbia, Canada

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28. Coyote Gunfight — Dynamite Thunderpunch — Cincinnati, Ohio, USA

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29. Monuments EP — Stereo Honey — London, England, UK

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30. The Gang — The Gang — Bratislava, Slovakia

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31. Drive — Sidewatcher — Detroit, Michigan, USA

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32. End Times — Brother Sister Hex — Denver, Colorado, USA

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33. Speak — Honey & the 45s — Chicago, Illinois, USA

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34. With – EP — Fencer — Los Angeles, California, USA

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35. Soul Sickness — The Versa Contrast — Revere, Massachusetts, USA

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36. A Sign of the Times — Cold California — Aberdeen, Scotland, UK

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37. Auto Racing EP 2 — Auto Racing — Ottawa, Ontario, Canada

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38. Note to Self – EP — Ready The Prince — Toronto, Ontario, Canada

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39. Decade — Fighting Jacks — San Jose, California, USA

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40. Gates Of Expression — Wildchild — Sibiu, Romania

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41. virus. — Novembervägen — Stockholm, Sweden

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42. Hypnotic Illusions EP — Living Still Life — Sydney, Australia

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43. A Show For No One — Just Noise — Des Plaines, Illinois, USA

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44. All Systems Go — CODED — Cape Town, South Africa

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45. Wasted EP — Kreepy Krush — Minsk, Belarus

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46. Better Days — The Clock Tower — Fukuoka, Japan

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47. Tales of Betrayal and Deceit — The McMiners — Belo Horizonte, Brazil

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48. Black and Blue EP — Little Raven — Nashville, Tennessee, USA

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49. Hydra Plane — Hydra Plane — Baton Rouge, Louisiana, USA

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50. Arcadia Feliz — Attikus Finch — Pamplona, Spain

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51. Sublimation — Gravelarks — Pittsburgh, Pennsylvania, USA

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52. The Words We’ll Never Say — In Good Nature — Boston, Massachusetts, USA

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53. Polaroids — A Fire With Friends — Scranton, Pennsylvania, USA

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54. Plan Of Action — The Kingpins — Montreal, Quebec, Canada

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55. No Time to Die — Daeodon — Louisville, Kentucky, USA

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56. Relics & Cycles — Before And After Science — Oporto, Portugal

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57. In Arcadia — Field Of Giants — Oxford, England, UK

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58. REM — SIAN — Tokyo, Japan

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59. Aura — Set Fire — Boston, Massachusetts, USA

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60. Karate Break EP — Karate Break — Minneapolis, Minnesota, USA

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61. Starla — Starla — Tacoma, Washington, USA

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62. Fine Motor — Fine Motor — Reno, Nevada, USA

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63. Clones — Naked Shark — Ann Arbor, Michigan USA

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64. Salting — Keeper — Washington, D.C., USA

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65. Radio Silence — Paranoir — Thessaloniki, Greece

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66. Secret Demo — Shadow Party — Minneapolis, Minnesota, USA

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67. Flying High — Laneslide — Petrovsk, Russia

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68. Weight — Old State — St. Louis, Missouri, USA

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69. Playground — Paranoid — Lille, France

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70. Crash The Gate — Cab Ride Home — Manassas, Virginia, USA

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71. Space and Grit — Domestic Blend — Omaha, Nebraska, USA

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72. Attic Salt — Attic Salt — Springfield, Illinois, USA

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73. Demo — Piines — Toronto, Ontario, Canada

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74. Heavy Dreaming — Painted Shut — Garden Grove, California, USA

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75. MUTT E.P. — Whorehound — Terre Haute, Indiana, USA

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76. Cinder Box — Cinder Box — London, England, UK

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77. Heavy High — Bruiser Queen — St. Louis, Missouri, USA

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78. The Endless and Unseen — Like The Ocean — San Francisco, California, USA

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79. In Plain Sight — Elastic Blur — Downingtown, Pennsylvania, USA

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80. As Far As The Stars — Nine Year Sister — Queensland, Australia

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81. Fever Dreamin’ — Billy King & The Bad Bad Bad — Austin, Texas, USA

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82. Sleep — Fawner — Cheltenham, England, UK

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83. The Forge Sessions — Hot Raisin — Norwich, England, UK

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84. Primeval — Iron Heade — Rancagua, Chile

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85. Escapade — Pandelic — Yangon, Myanmar

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86. Patterns — Longclaw — Portland, Oregon, USA

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87. Defector — HEAVYCRAFT — Cedar Rapids, Iowa, USA

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88. Change — Traces — Tamworth, Australia

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89. Thomas — The Shaftons — Vienna, Austria

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90. Parasite — The Coathangers — Atlanta, Georgia, USA

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91. Widower — Widower — Sydney, Australia

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92. Rock for Life — Early Grey — Moscow, Russia

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93. First Attack EP — Snappy Strokes — Krakow, Poland

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94. The Story — Oceantides — Kiev, Ukraine

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95. Forgiver EP — Shoplifters — Novi Sad, Serbia

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96. Skoll — Astro Diver — Charlotte, North Carolina, USA

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97. Alter Ego — Replica — Buenos Aires, Argentina

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98. The Best Things — Beat Off! — Kediri, Indonesia

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99. Kings – EP — August Tides — Cleethorpes, England, UK

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100. Demos 2017 — Goodnight Cairo — Seattle, Washington, USA

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If you enjoyed this please share, and feel free to Tweet me. Let’s talk music and tech!

The Most Important Acronym to Your Networking

An entry in the Minimum Viable Network series.


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Fun Acronyms

Acronyms make things fun. And things which are fun and useful? Those are the best. When it comes to building your minimum viable network, there is only one acronym that matters: A.B.C. 

What do those letters stand for? Simple: always be collaborating.

One of the most cross-cutting things I’ve learned from being at the intersection of music and tech is that some of the things which allow artists to amass huge, rabid followings is how they work off one another. There’s a similar symbiosis that is applicable not only to startups trying to grow their own communities, but also to individuals looking to build out a minimum viable network of supportive and engaged people.

Obligatory Musical Collaboration Examples

Think about some of the most successful artists in history; chances are whichever genre you’re focusing on, there are examples of collaborations which you may not have even been aware of. Sometimes these are some of an artist’s most well-known songs.

Eric Clapton played the lead guitar solo on The Beatles’ “While My Guitar Gently Weeps” off their White Album. Eddie Van Halen played the guitar solo on Michael Jackson’s “Billie Jean.” And all of this is to say nothing of the prevalence of supergroups in music: Temple of the Dog, Audioslave, Derek and the Dominos, Them Crooked Vultures, Blind Faith, Sixx:A.M., Mad Season—the list goes on and on. What all of these examples have in common is that they allowed artists to meet new people (sometimes serendipitously) and create new content (sometimes even more serendipitously).

Some of these collaborations resulted in a full touring band and multiple albums (as with Audioslave and Sixx:A.M.) and sometimes it was more an outlet for the artist to simply explore a new vein of their creativity, resulting in a single album and few, if any, tour dates (as with Temple of the Dog, Blind Faith, and Mad Season). Ultimately, it’s up to you to determine what kind of collaboration it should be, and what the end goal is.

Why Collaborate?

If the end goal is to disseminate your name and reputation more amongst a new network, view opportunities to collaborate on articles or podcast episodes as compensation in and of themselves. The prospect of someone opening up their network to you through a co-publication or guest spot is invaluable, especially in a niche industry. Collaborating well on such a project will also tell your contact that you’re reliable and can produce great content for their network. This is the end goal; to get them to invite you back to do it again in the future.

Other times, there may not even be a publication or launch date. It may simply be a project where someone has asked you to give some feedback on their new app or something they’ve written. In this, the goal isn’t to get your name out to their network, but to keep your name in their head. When someone respects you and values your input, they ask for your thoughts on their own content. In this scenario, there is absolutely no downside—say yes, and carve out the time to give them some thoughtful feedback.

When Collaborations Don’t Work

When you’re involved in someone else’s project, let them run the show and suggest feedback where needed and when it’s appropriate. Accept and respect that they may do things differently than you would, and may go in a different direction that you want. If that ends up being the case, simply state whatever feedback you might have in a respectful and reasonable manner, and then let it be. If it’s not your project, there’s no upside to having an argument over the details as if it is.

Some collaborations simply don’t work, either because the idea leads to creative differences or because there’s just no chemistry between the individuals. This is ok. The worst thing you can do in this situation is to burn a bridge with an otherwise reasonable ally. The same dynamic that helps to balance your allies holds true here: until there’s a problem, there’s no problem. If the collaboration isn’t working, simply acknowledge it and move on. Most times, a collaboration that doesn’t work out well isn’t a reason to burn a relationship; it’s simply a sign that collaborating with that person in the future may not be the best move.

When Collaborations Do Work

When collaborations do work, though, they can change your whole universe. This may not—and usually doesn’t—happen overnight. It takes time for new relationship dynamics to gestate and the benefits of those collaborations may not be seen for months or even years. But once you have collaborated with someone on something, two things are indisputably true:

  1. You’ve now (presumably) had a direct interaction with that person, and
  2. You’ve now created something together with that person (in this respect, feedback does indeed count as something created, since it helps the overall creation process)

These two things ultimately shift the power balance; where once the relationship might have felt unequal, it is now arguably equal in new ways as a result of the collaboration. This has an elevating effect, bringing you closer to that person, whether they are a VC, podcast host, another founder, etc. Recognize that equalizing effect for what it is.

Ultimately, collaborations should be about relationships and learning. Creating something new and popular is always a plus, but it’s never a given. Keep your mind focused on how the collaboration can strengthen your relationship with your potential collaborators on the grand scale. Similarly, it will impact and shape your reputation among others, especially other potential collaborators. This is what will make the collaboration a success or a failure.

***

Find me on Twitter @adammarx13 and let’s talk music, tech, and business!

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Without Majors, SoundCloud Had The Potential To Be A Better, Independent Music Space

Originally published on Crunchbase News on August 21, 2017.


It’s no secret that SoundCloud is troubled. Last month, news broke that the music streaming service slashed 40 percent of its workforce (173 jobs) and closed two of its offices (London and San Francisco). Two weeks ago, it dropped its founding CEO to secure new funding on the back of reports that it could run out of money within 50 days or so.

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The developments weren’t without augur or portent.

SoundCloud’s current situation brings us back to our prior thesis: namely that the company’s shift into the major label paradigm was a tactical error. And due to that mistake, SoundCloud lost its focus on an exploding demographic in the form of independent music, which it initially showed signs of controlling.

Rising Red Ink

Let’s run the numbers quickly. As I noted in my previous piece, Soundcloud’s revenue has grown for years. In 2010, the company recorded $1.8 million in top line; in 2012, $9.6 million; and, in 2014, $19.6 million.

But those gains came with rising losses. Soundcloud lost $2.01 million in 2010; $14.9 million in 2012; and $44.2 million in 2014.

The trend of impressive losses continued into 2015, when SoundCloud’s revenue increased by 10 percent to $22.5 million. Unfortunately, for the company, its losses grew by a larger 23.5 percent to $54.6 million in 2015.

And according to a recent Music Business Worldwide analysis, even post-cuts, Soundcloud won’t cut expenses to fully ameliorate its rising costs and royalty payments.

Major (Label) Gamble

Its cuts in staff are indicative of a larger problem. Namely, SoundCloud’s royalty payments are expensive. If Soundcloud’s payout to the major labels is similar to Spotify, it could reach the 80 percent mark of its subscription-sourced top line; in related topics, SoundCloud has consistently declined to comment on how much the major labels own of the company.

Adding to its financial picture, SoundCloud opened a $70 million credit line to keep its doors open.

While major label deals grant SoundCloud access to the world’s most popular catalogs, the royalty payments accompanying that catalog can be a Sisyphus-like experience.

The accompanying costs are high. For example, growth only accounts for one factor in determining a royalty payment. Other factors can range from the labels’ own fiscal bottom lines (which no streaming service can control) to the labels’ employment of a Most Favored Nation clause in their streaming contracts.

Major label content is also available through an array of streaming options: Spotify, Apple, (now) SoundCloud, Pandora, Tidal, and so forth. Given the number of services offering major label tunes, access to that content doesn’t make a streaming service unique. Rather, it gives the major labels outsized influence on a streaming service’s content offerings.

In Soundcloud’s case, the new major label paradigm likely impacted the now-beleaguered music streaming company in two ways:

  1. Major label deals changed SoundCloud’s value proposition. Due to its major label deal, Soundcloud could sell the same major label content as Spotify and Apple. SoundCloud would no longer be the home only for independent audio,  putting a pin in what arguably made the streaming service unique.
  2. The major label deals now required SoundCloud to pay the same piper as Spotify, Apple, and others.

All of this amplified SoundCloud’s already-noted strategic shift, and potential misstep: moving away from the independent music demographic—a group that it had performed well in previously.

Up until autumn 2015, SoundCloud primarily subsisted on independent music and user-generated content. But in the time it took SoundCloud to switch paradigms from the independent universe to the major labels, the market had changed. Whereas independent material up to 2015 was considered disinteresting to general consumers due to niche appeal, by the end of 2016, independent music streaming revenues made up $5.1 billion of the industry’s total haul of $16.1 billion. In fact, the independent market outsized Universal’s cut by more than $500 million.

Multiple arguments can be made about what has led the independent demographic to become the largest pie of the streaming-revenue pie. What’s clear, though, is that the old trope that’s been widely circulated about independent music—that nobody cares and it doesn’t make any money—is likely false.

From 2003-2012 alone, the independent landscape exploded in terms of participants. And it’s that market that Soundcloud likely ceded ground on due to its deals with major labels.

What Ifs And Takeaways

All this underscores SoundCloud’s decision to start down the major label path.

If it had made the same job cuts and office closures in 2015 that have now been enacted, then Soundcloud might look very different. The company might have been able to close the gap long enough for the numbers to show—as they are now—that independent music is a real area of growth in the music universe.

If that had happened, it might have given financial-credence to its massive independent catalog, independent-enthusiast userbase, and independent reputation. But the major label paradigm is like a lobster-trap; it’s very, very hard to back out of once you’re in.

Of course, all that assumes that Soundcloud would have been able to settle lawsuits and figure out a way to monetize its gigantic repository. Assuming it could, SoundCloud might now be the clear frontrunner in its own arena of music, almost completely removed from the whims and dynamics of the major label world which Spotify and Apple have to contend with.

What’s important to recognize now is that the music universe is multidimensional, and, with the explosive growth of independent content, it’s adding new layers by the day. SoundCloud’s plight should encourage—not dissuade—future would-be music-tech startups or entrepreneurs and investors. Let Spotify and Apple battle it out for the major label world; the independent universe is growing quickly anyway.

Whether it’s too late for Soundcloud to take advantage of that growth will depend on its ability to navigate its choppier, less-funded, waters.

The Streaming Wars Continue, And SoundCloud Is In The Balance

Originally published on Crunchbase News on May 17, 2017.


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It’s been a challenging year for SoundCloud. And its last quarter hasn’t made things any easier on the music-streaming startup.

Amidst a streaming war between Spotify, Apple Music, Pandora, and others, SoundCloud’s orange cloud is greying. Spotify passed on buying the company in December, it’s seen a patent dispute, a high-level shakeup, and multiple reports (here and here) have explored the possibility that it might run out of money by the year’s end.

The news has not been good for SoundCloud. (When contacted, SoundCloud declined to comment on its financial situation.)

So what comes next for the music company? The answer to that question is anchored on three points:

  1. The economics of streaming for non-label players.
  2. SoundCloud’s efforts to expand past its original, core user base.
  3. Its efforts to stabilize allegedly difficult financials.

We’ll approach each topic respectively to get a handle on how it will impact SoundCloud.

Streaming 101

To understand SoundCloud’s current financial situation, we have to understand streaming economics.

Streaming companies license material from two main sources: major labels and independent artists. In SoundCloud’s context, it’s the first content source which matters. Major labels set the standard royalty rates which services like SoundCloud must pay for access to their critical libraries.

It is notoriously difficult to pin down what a private music streaming company is paying in royalties. For companies like Spotify and Soundcloud, royalty payouts can total in the neighborhood of 70-85 percent of a company’s revenue.

To that point, rates released in reference to Spotify over the last few years have been all over the map. In 2013, Spotify released (via Stereogum) its own accounting of its royalty payout structure, which detailed that ~30 percent of generated stream revenue stays with Spotify while the other roughly 70 percent went to labels, publishers, and others. There was no mention of any additional costs.

In August 2016, however, Music Business Worldwide calculated that ~84 percent of Spotify’s topline went out the door for “royalty distribution and other costs.” Again, those other costs were not defined. Music Business Worldwide then followed up on its first statement and calculation with the note that Spotify’s precise royalty payout is believed to be just under 70 percent.

In 2017 alone, TechCrunch reported that Spotify’s royalty payout was 70-72 percent, except when other factors—like catalog geography and free vs. paid streaming—could bump the royalty payout as high as 84 percent. All this was before Spotify’s new deal that supposedly lowered royalty payouts in exchange for windowing. The aforementioned “extenuating factors” are so important to acknowledge precisely because they affect so much of any music company’s catalog.

So is Spotify’s royalty payout less than 70 percent, 70 percent even, 70-72 percent, greater than 70 percent, or even up to the low 80s? No one really knows except Spotify and the labels. Even using Spotify as a bar for understanding SoundCloud’s royalties leaves us convoluted

Of course, streaming services have an interest in limiting their payout rates, but streaming companies don’t have much leverage due to an imbalance of power. If SoundCloud or Spotify don’t have a major label’s catalog, either one could immediately start to shed subscribers to competing services not locked into the same label fight. In music streaming, platform diversification only flows in one direction.

Shifting Priorities

The streaming cost matter puts SoundCloud’s recent strategies into context.

SoundCloud cut its teeth licensing content in the independent world, a much different paradigm than Spotify or Apple Music. Because it built its success on independent material, SoundCloud wasn’t beholden to the major label oligarchy for material.

Priorities shifted when SoundCloud changed direction and pursued major label content on top of its independent catalog.

It signed deals with every major label, leading to a new direction for the company. When pressed last year, SoundCloud responded with the stark “no comment” on how much equity it may have provided to labels for access to the respective catalogs. Additionally, most of the deals hinged on SoundCloud releasing an on-demand premium service to directly compete with Spotify and Apple.

By summer 2016, SoundCloud had evolved into another major label distribution platform. This effectively posed the conundrum of potentially alienating its initial userbase, which might not have been inclined to see another mainstream music service as necessary in the first place.

Compounding the mainstream content conundrum, SoundCloud’s new catalog was the same mainstream content that its direct competitors were distributing. Further, SoundCloud was now compelled to build a new product to directly compete with Spotify, putting it in a position where it held less power for the content it licensed while burning money at a ridiculous rate.

Challenging Financial Realities

All that sums to the company’s current financial situation.

In order to understand the company’s fiscal situation as it stands today, it behooves us to remind ourselves what we know about its past performance.

As I previously wrote, SoundCloud’s financials in December of last year were as follows:

Revenue tracking upward (source):

  • 2010 – $1.8 million.
  • 2012 – $9.6 million.
  • 2014 – $19.6 million.

With losses ballooning (source):

  • 2010 – $2.01 million.
  • 2012 – $14.9 million.
  • 2014 – $44.2 million.

Based on the new numbers, SoundCloud’s revenue saw a 10 percent increase from $19.6 million in 2014 to $22.5 million in 2015. Its losses, however, increased dramatically by 81 percent, from $44.2 million in 2014 to $54.6 million in 2015.

Debt and Irony

Most recently, SoundCloud raised an additional $70 million in debt funding. With this round of debt funding, it’s likely that SoundCloud is trying to follow Spotify’s example by doubling down on their growth numbers long enough to find an exit. The problem with this strategy is that SoundCloud is nowhere near as big as Spotify, perhaps lowering its M&A potential. While this strategy presents challenges for Spotify as well, the analogy ends right there, since SoundCloud’s debt is barely a pittance of Spotify’s $1 billion debt raise.

Spotify’s delayed IPO casts a shadow of doubt on its smaller rival as well. If the company most obviously in line to acquire it has its own challenges to contend with, it’s clear that its attention will be on its own IPO, rather than a bail-out acquisition of SoundCloud—even at a fire-sale price.

Unfortunately, the reality for SoundCloud is this: the company has extremely unwieldy financials, and its main competitor—the company most likely to acquire them—just delayed its own IPO in order to figure out its own financial situation.

Uncertain Future

The faster that SoundCloud tries to shift to become more like Apple Music and Spotify, the more it runs the risk of highlighting it wasn’t trying to be like the standard streaming services at all.

Whether or not the summer will bring back the orange in our grey cloud remains to be seen.

There’s Life After Failure

 

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Four Cofounders (from left): Myles, Michael, Shelley, and me

 

Two weeks ago I shut down my startup.

I called my team members, notified our users, and made the decision that it was time to bring Glipple to a close. Retrospectively, the writing was on the wall. Now is the part where you wait for me to share some zen philosophy that I could only learn through failure.

Don’t hold your breath.

Don’t Gloss Over the Emotional Toll

Yes, I did learn a lot and in the end I’m glad I had the experience. But I’m not about to write another diatribe of cutely composed “tips for closing your first startup” which you will inevitably skim through until you read the next such post-mortem blog post on Medium…probably in about 30 minutes. Because in startups, it’s become the epitome of chic and cliche to write a post-mortem blog post when(ever) your startup fails.

Ultimately, though, so many of them gloss over the emotional toll it takes on you, so I’m going to write exactly what I’ve really wanted to know every time I read through one of these posts. Frankly, I’ve only seen a few people actually brave enough to publicly tell it how it is. If you haven’t already, I highly recommend reading this post from Andy Sparks and this one from Poornima Vijayashanker.

I’m not really 100% sure why there’s such a fascination with failure in our business. Probably because people shape that perception of failure into a positive reflection thereafter and attempt to use it as a drive for the next idea. That’s not a bad strategy, objectively speaking. But I sometimes wonder if it creates a flippant attitude toward failure which unintentionally misunderstands human behavior.

All these post-mortem blog posts make the whole process seem relatively easy; ok we failed, but here’s our end-of-the-run coffee party, and we’re off to better things tomorrow.

That’s not where failure gets you—not in the immediate moment.

The 3AM Blog Post in the Dark

You wanna know where it gets you? Right here, sitting in the dark at 3AM, typing out your bitterness and frustration in a draft as quietly as you can because you girlfriend is sleeping in the next room and there’s no point in waking her up to share your misery. It’s not perpetual bitterness, but temporary bitterness bristles just the same. Failure leaves you temporarily raw, and if it doesn’t, you didn’t care enough in the first place.

Emotional pain is the normal reaction. There’s a part of you that now feels lost, and grieving is a major part of the process. That emotional toll is what makes startups different than hobbies.

It’s ok if—for a moment—I sound like one of “those” entrepreneurs who couldn’t hack it. I’ve got news for you: chances are you’ll experience this feeling too at some point—I’m just choosing to be very public about it. Because in the end I’m human, and to pretend that everything’s ok and that I’m impervious to extreme disappointment and disillusionment isn’t being strong and resilient—it’s being fake.

Tech’s “Failure” Failure

In Silicon Valley—and in tech at large—failure is a great thing. It means that you took a shot, that it didn’t work, and that you supposedly learned something very valuable to draw on for your next venture.

And hopefully these things are true, but the reverence with which we look at failure—with which we make it a club that people should want to be in or be happy to join—is pretty ridiculous. To construct a system where failing is revered—almost required—is remarkably jarring. There’s just something about it that doesn’t seem realistic or dialed in to human emotion. 

To Feel Like an Abject Failure

I believe in my heart that most if not all of the people who write the positive tweets that we read mean well. Usually they’ve been in similar situations and figured out ways to surmount challenges and failures and move on to greater successes.

But sometimes, that unbridled optimism and pragmatism—well-intentioned though it may be—comes off as disinterest and disconnect. As if one has somehow forgotten what abject failure feels like. True, it may not actually be abject failure, but it sure feels like it in the moment.

And the worst part? When you feel this level of failure, it pulls you into a place where you don’t want to speak to anyone—don’t want to admit to anyone—that your failure is real, and that your need for help is even more real. You’re even more determined to strike out again on your own and prove to yourself and everyone else that you are a “real” founder—a “real” entrepreneur—and that you can pick yourself back up by your bootstraps. Those of us who struggle with depression feel this even more acutely.

But this is a mistake.

When People Are Your Strength

In the lull during which my startup started to fade—and during which I knew in my heart there seemed little recourse to keep it from doing so—I began to pull away from people. This was a mistake, especially for me. I’m a people person, and I gain so much of my energy from talking to people and helping people. When I started to pull away, I began to lose a part of myself. Actually, I began to lose another part of myself, because I was already losing a part of myself in losing my startup.

Only through recognizing that the disappointment and disillusionment which follow failure are part of the entrepreneurial fabric can we begin to open ourselves up to other people and possibilities after failure. This is the danger in fetishizing failure and spectacular flameouts: it is devastating for those of us who draw our energy from other people. Bragging about failure in a proud way is something distinctly Silicon Valley and very much of startup tech DNA; outside that realm, doing this is simply not done in such a way, and certainly not done with such gusto.

It’s equally important to emphasize to founders that failure isn’t simply a milestone that they should mark on their startup belts as they would raising a fund or releasing their 2.0 product. Failure is debilitating and it is in these very fragile states that founders need the most support from each other. Everything is easy when it’s easy; but when things go to hell, you need to be open to grasping someone’s hand when they offer it.

When people are your strength, it’s important to remember that heading back to that harbor is precisely how you recharge your batteries after a defeat. If you’ve done anything right along your startup journey to that point, you will have formed at least a few solid connections with others in your network who you can speak with candidly. If you’ve done at least this right, all the rest will fade into background noise.

Coming Back from the Brink

And after all of this—all the nights spent in cold sweats with stomach pains worrying about money, looking yourself in the mirror wondering if you’re a failure (are you even that?), skating over the “so what do you do?” question at parties and family holidays—you find a way to crawl back. You’ve stood on the precipice of failure and looked into the depths—spat it in the face—and somehow stomped your way back onto solid ground.

The funny thing about the failure precipice? It doesn’t ever exist as starkly in reality as it does in your mind. You stepped out over the edge expecting to fall a thousand miles into darkness, only to find yourself ankle-deep in a deceptively dark pool of water. So in the end, crossing over to the other side—finding solid ground again—isn’t as hard as it seemed before. The haunting chasm was only miles-deep in your mind.

Taking the Leap Again

There’s life after failure. That’s what I’m learning. Slowly but surely I’m learning it.

Will I do a music-startup again? Probably. Will I do a number of things differently now that I’ve learned new things? Absolutely. Am I as scared of my next potential failure as I was of my first one? Not even in the same ballpark.

I started drafting this piece in my apartment, sitting in the dark at 3AM, alone with only my thoughts of failure because I thought that’s how it had to be. Or how it was going to be regardless.

But I’m finishing it now, sitting in a bustling Starbucks in downtown Atlanta, drinking a large coffee, listening to Eve 6, and emailing people, looking for my next leap. I have drafts open of the next few articles I’m writing, and my phone is buzzing every ten minutes with new possibilities.  

Startup life isn’t easy, and failure isn’t fun. But it’s also not the end. As Eve 6 put it:

The monster in the closet, when the light’s turned on/

Is just a jacket on a hanger and the fear is gone/

And the world keeps turning, sun keeps burning/

We are the lost and found, gonna make it through another day.

***

Thanks

I’m so grateful to my cofounders for taking this journey with me. I know we’ll have another one together some time. To all those in my support system who have listened and helped me through this dip, you know who you are, and I am more grateful than you know. You took so much time out of your busy schedules to support me, and that does not go unnoticed. You all are a huge part of the reason I can write this post with a determined smile on my face.

Lastly, to my girlfriend who has been my rock through this whole adventure, and to my parents who are always my biggest support network.

***

If you’re struggling with your startup journey, feel free to reach out and let’s talk.

***

Find me on Twitter @adammarx13 and let’s talk music, tech, and business!

 

Unbundled, Part III: Democratizing the Future

Why democratization and identity are the future of music.

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This is the final entry in the Unbundled series on music dynamics. Read the previously published pieces here:


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Power, Gatekeeping, Scarcity, and Democratization

Which brings us back to the last step in the cycle: unbundled once again. Only this time, the unbundled dynamic refers to power and ownership. The new unbundled form of power—referenced above—removes the focus of power from the major labels and fractures it, splintering it to varying degrees among the plethora of new artists and startups now emerging.

This is the best thing that could happen because it leads to a more stabilized version of meritocracy in music. The top-heavy, unbalanced paradigm of major label control over everything that a fan is exposed to is ending, and being replaced with a much murkier—but more expansive—reality. This in turn affects scarcity and gatekeeping on a massive level.

Scarcity is obsolete; democratization wins.

Ownership

Perhaps the most prickly point here is the concept of ownership in the new age. This is a contentious topic even among friends, and no one really knows what the landscape is going to look like in the next few years. What can be surmised, however, is that concepts of ownership of musical material are evolving. Sampling and other trends in electronic and DJ music, along with self-recording and independent releases, have muddied the waters of who owns what and to what extent.

Now the action of covering or remixing someone else’s song and posting it online bristles feathers. But (most) artists who do this also attribute the proper credits to the original artist(s)—many times in the cover or remix’s title—simply because it’s the right thing to do and because it helps them to disseminate their new version.

Asserting that cover songs and remixes hurt the original artist is a cloudy and jaded argument at best.

Yet, the argument can be made that with this new overhaul in ownership orthodoxy, perhaps the right people are now able to own the things they should have been able to all along. Let us not forget the reality of master tapes (where a record label owns the rights to an artist’s original recordings) which so many artists have regretted. Controlling one’s own material, and deciding what to do with it, are the ultimate power plays an artist can make. Appealing to this new sense of power is the best avenue for emerging music startups to make.

Such a concept is fairly reminiscent of a point Daniel Mark Harrison makes in a piece regarding bitcoin, wherein he illustrated that controlling access to material is the ultimate power: “…any major purchaser goes direct to a Bitcoin ‘miner’…and negotiates steep discounts for their volume purchase action.”

In this scenario, the music fan is the purchaser, the artist is the bitcoin miner, and the service that serves as a conduit between the two is better off appealing to and providing value to the artist rather than only the fan. Both are important, but the latter controls the material which the former wants to consume.

Money and Community

One of the loudest major factors that floats around is the argument over money, from streaming, downloading, merch sales, ticket sales, etc. Let’s be clear though: streaming and downloading—the purchase of musical material—is not where the real money is for artists. It never has been. The money has always been in the merchandise and live ticket sales. What does this mean nowadays? Community.

While it is certainly arguable and many times probable that new unbundling dynamics have struck at artists’ ability to make money from the sale of their music, it is equally arguable that it has enabled them to make money from other, more lucrative, avenues.

An artist can only sell a $10 album so many times (unless you’re a major label darling). Their real bread and butter is in their community cultivation: growing their base, getting people to come out, getting people to spread their music and message, and capitalizing on those efforts. Streaming and downloading revenue is at best a holdover until a better stream is tapped.

The dynamics that exist now in this new unbundled world provide new opportunities for artists. Now, they don’t need to make their money off music sales or streams. Enough access to fans and communication/funding tools exist that they can actually give their music away for free and turn a profit somewhere else.

And this is exactly what a growing number of artists are choosing to do.

The dissemination of their material onto a global stage is much more important than a few album sales here or there, and leads to better things on the other side. A more expansive universe brings more shows, more exposure, more true fans, and more branding opportunities. These are the real things that grant artists staying power.

The Expansive Powers of Identity

Lastly, there is identity. I examined in a previous piece how we’re seeing the rise of “identity platforms” in media. Music is no exception to this. In fact, it might be the shining example of it.

Identity gives music—and by extension all art—certain powers that contribute staying power. Identity is so powerful precisely because it exists independently of genre, mainstream recognition, money, or history; it’s unique in it’s own ability to build bridges where previously there were none. Regarding music, identity brings together people on a core level that can almost supersede differences they might otherwise have.

The power identity—especially in relation to art and music—in its potential to create ever-expanding identities—to create communities. Money is certainly a factor in this, but if a shared identity which draws people towards one another, and can shield them—for better or worse—from outside forces seeking to compromise that unique, collective identity. As music is given the ability to disseminate more and more, more communities will arise around newly-minted identities, and art as a whole will become more lush and layered.

In the wake of these trends in art, music, and media, the power will lay with companies and platforms to not only cultivate these newly emerging identities, but to provide fertile ground for even more embryonic ones. Music becomes a vessel for the expansion of art and identity.

The Upswing

Where does this leave us? In unchartered territory to start with. Artists will continue to grow their power as new technologies make the opportunities possible. The companies which see this trend and capitalize on it will be the ones to stick around and do well. The others, however, who are resistant to this new set of events, will find it challenging to court artists and acquire material if they are determined to hold fast to a paradigm that was beneficial mostly to the major record labels.

Independents artists, and consumers of all strata (not merely the mainstream), will not be ignored or marginalized anymore. They will continue to experiment with the bundling/unbundling process until they find the right fit for themselves, and for their careers. There will be less of a set standard that all need to conform to, and more of a flexible set of possibilities and avenues for people to mix and match to reflect their changing personal experiences.

The future of music is three things: freedom, community, and democratization.

***

Find me on Twitter @adammarx13 and let’s talk music, tech, and business!

The Lucrative Strategy of Lurking

An entry in the Minimum Viable Network series.


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There are many times I find myself lurking in conversations with topics I know very little about, but which I’m very interested in learning about. It can feel daunting to try and contribute something meaningful to a conversation when 1) you’re unfamiliar with the topics, and 2) it’s around other potential experts. The preferred strategy of many people is to avoid these situations altogether; after all, the last thing you want to do is look like a dummy in front of someone whom you respect and/or want to make a good impression on.

But this does a disservice to yourself in the long run. Intimidation is a normal and valid feeling, especially when you’re new to a particular community. But avoiding the situation entirely doesn’t solve either your goals of learning more about the respective topic or making a good impression on the people you want to notice you.

A Better Strategy

A much more lucrative strategy is lurking, something which I do continuously on community sites like Twitter and Product Hunt. For me, topics like music-tech and networking are my wheelhouse; I feel very comfortable discussing them and putting my two cents into discussions, even when the other participants are people that I might somewhat

For me, topics like music-tech and networking are my wheelhouse; I feel very comfortable discussing them and putting my two cents into discussions, even when the other participants are people that I might find intimidating by virtue of their success alone. When topics shift to other industries, though, like med-tech or AI, I feel less confident in my ability to contribute meaningful comments simply because I don’t know as much about those particular areas.

AI is a great example. As much as it intrigues me, I’m still trying to understand enough to contribute major points to a discuss. So I lurk; I sit back and read viewpoints from others who know more than I do about these things and then try to surmise my own original thoughts based on them. Then, when the time is right and the conversation is right, I try to add a new viewpoint.

The Benefits of the “Lurk and Listen” Play

This strategy has two major effects early on:

  1. It relieves you of having to come up with a bombastic and earth-shatteringly brilliant point under the gun, and
  2. It allows you to absorb information and knowledge from others in an unassuming way, learning from their years of experience and insights 

A third, possibly hidden, result of both points is that when you do feel confident enough to contribute a point of view to the conversation, you have time to carefully compose exactly what you want to say. Flinging tweets off left and right is for subjects which you’re very confident speaking about, not for new ones you’re trying to understand. Shooting from the hip on something you don’t fully understand can backfire dramatically.

Lurking is a great strategy precisely because it requires so little effort, except for focusing on learning from others. It teaches you how to receive information in an age when we’re told we need to be continuously providing it. Additionally, absorbing information at your own pace has the added effect of making you feel more confident about a topic.

It’s not a quick or flash strategy, but it works. Learn to lurk and listen, then move when the time is right.

***

Find me on Twitter @adammarx13 and let’s talk music, tech, and business.

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Unbundled, Part II: Shifting the Paradigm

How a new music paradigm is rising out of the wreckage.

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This is a continuation of the Unbundled series on music dynamics. Read the previously published pieces here:


The second act in the “bundled/unbundled” production is the “bundled” piece. It’s about exploring the bundling process as it pertains to music, and really trying to determine the proper scope of examination. Said scope, when broadened enough, shows a shifting paradigm of power and perception rising out of the wreckage of the previous music landscape. It’s similarly divided into three parts:

  1. Bundled in the Wrong Way
  2. Power and Paradigm Shift
  3. Sexy vs. Unsexy

The first of these is an exploration of what types of bundling already exist, and how it might not be the right kind of bundling to pursue. The nature of peoples’ interaction with music has changed, so it follows that the things bundled in music should change as well. This is a particularly difficult thing to accept because it requires a reworking of thought regarding something already perceived as “done.”

The second part is a discussion of how power naturally shifts during these seismic events, and how the new power should be held by a previously dismissed faction: the artists.

This flows right into the last part, which is an exploration of how many of the things which should be considered and bundled may not be the “sexiest” or most exciting of things to include. But “sexiness” and utility don’t always go hand-in-hand, and reality prevails at some point.

BUNDLED

Bundled in the Wrong Way

This is the biggy. Inasmuch as many things in the music universe(s) have become unbundled, so too are there a variety of things that have also become bundled. In the light of all the unbundling going on (Chris Saad blew through an extensive example list from everything including music and news to relationships and war), it appears somewhat unsexy to talk about the things going through the bundling process.

Where unbundling is fast and sexy and simple, bundling appears slow and outdated. But in music at least, this is far too simple an assessment.

The reality is that there are many things in music that have always been bundled, but bundled in such a way that they appeared to be unbundled. Many of the things which “music” apps are now trying to tackle separately—distribution, marketing, social, ticketing, analytics, messaging and/or communication, and live booking—have always been bundled under the banner of the record label.

The label controlled virtually everything, from distribution and radio play (yes, payola is real) to marketing and fan engagement. If you wanted to exist as an artist, you needed to be a part of this world in some way. Otherwise, you were relegated to the “independent” pile, which in the years prior to 1991, was much less glamorous than it is now.

Power and Paradigm Shift

When the digital age hit, the unbundling of the record labels’ power began. Since around 2005, major label power has seeped, and independent power has reached new heights. However, in their new-found power, independents were also sold a myth that everything they needed could be solved by partaking in a variety of unbundled services, from analytics to social platforms.

What this myth fails to address though, is the massive time-suck it really promotes. There are a great many things that should be bundled. Things like analytics, ticketing, distribution, radio play, social engagement, community, and marketing should all be offered under the same banner of a startup or new company.

But—and this is so important—done so in a way where the artists retain their power.

Sexy vs. Unsexy

The unbundling that has occurred has amazingly and unexpectedly taken much of the power away from the labels and delivered it to the artists. Artists now have the ability to control nearly every aspect of their operation, from recording through distribution through community engagement. But they don’t really have it all in one place, for free (yes this is huge), with the level of choice they need.

They have a variety of music discovery sites to choose from, a variety of analytics engines to use, and a variety of social platforms to post on, among other things. This is too much, and simplification is necessary. A music company should offer all of these types of functions under its purview, wherein artists can then choose to use them—or not—as they like. Choice and freedom remain intact while efficiency and simplicity are underscored.

But why stop there? Why not tackle the unsexy things that major labels have always done and give that power back to the artists as well?

Have a company that encompasses all the functions above, and then add (fan-driven) radio play, legal information and resources, management, copyright, and informational context. In making the experience of one site all-encompassing, you then succeed in changing the artists’ paradigm, thus changing the music landscape.

Giving artists access to these “unsexy” things is just as easy as (easier actually than) giving fans access to the music they want to hear.

The only difference is that instead of focusing on half of the equation, you instead complete the circle, and do so independently of the former rigid structure.


The Power of Knowledge

Whereas the points of the previous piece—choice and format—led to the overarching concept of community, the three points here point to something different, but equally important: knowledge.

If knowledge is power, then bundling things in a new way to give artists access to more knowledge clearly translates to a shift of power in their direction. This upends the previous paradigm immensely.

As artists gain perspective and knowledge on things like music analytics, marketing strategies, and engagement statistics—as well as “unsexy” things like legal resources and contacts—the power shifts significantly away from the major record companies. Their power has always been cemented in two main things: money and knowledge. But once artists and creators have access to the second of these two things (knowledge), they can apply it flexibly to attain the first of these two things (money).

This creates major fissures in the current music landscape, and opens up a splintering ecosystem of new opportunities for creatives at all levels of music creation and engagement.


The next movement in the symphony will be Part III: Democratizing the Future, which will take a look again at a new unbundled dynamic. Concepts discussed will touch on how the new unbundling will change music ownership and identity.

Stay tuned!


Find me on Twitter @adammarx13 and let’s talk music, tech, and business!