WHY CONVERSATION AROUND ARTIST COMPENSATION IS WRONG (GUEST COLUMN)

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This is a guest column culled from Music Ally by Chris Howard, CEO of The Rattle, which operates in London, Los Angeles, New York City, and stands “as a counter-culture to the traditional music and startup industries.” We spoke to Howard for our recent Q3 2021 report on music/tech (and in the accompanying podcast episode), where his critique of the music industry’s (in)ability to engage with technology ruffled a few feathers. 

Naturally, we asked him back for more – and in this guest column, he suggests a different future for artists who build brands in music and turn that into income from parallel industries, says that radical perspective is needed – ”one coffee company earns almost as much as all the world’s recorded music” – and that the answer to the problem of artists and musicians being underpaid is simple: ignore the music industry.


Hear me out: artists aren’t underpaid. We are mislabeling the problem. Artists aren’t underpaid–it’s the music economy that is too small.


The music economy is both small and capped. People want music and want to support artists, but fans aren’t sure what such support might mean in precise monetary terms. They’re given mixed messages about what the price of music should be: On one hand, they’re told artists don’t make enough money, and on the other, they see their favorite artists drive a Rolls Royce into a pool. This is a problem we can’t fix; the size of the economy isn’t something we can easily change – particularly with such conflicting perceptions on the economic value of music. At the end of the day, the music economy is determined by the number of money people will pay to hear it, and that amount is capped currently around $75 billion. And while that amount is expected to grow to about $125 billion by 2030, that isn’t going to put money in the pockets of artists who don’t operate in the top 10% of the market pyramid.

But wait, that’s a lot of money, isn’t it? Surely there’s plenty to go around? To put these figures in perspective, we need to compare the relatively small music industry with, say, the retail coffee business. Consider Starbucks: the famous chain’s revenue in 2020 was about $19.2 billion, which, for reference, is nearly as much as the entire global recorded-music revenue at $21.6 billion. One coffee company earns almost as much as all the world’s recorded music.


Fighting Over Scraps

As if the relatively small size of the industry weren’t bad enough, the economic increase is also not happening fast enough to keep artists’ businesses sustainable. Let’s put some numbers to that. Every day on Spotify we see about 60,000 new tracks. Let’s argue those are 10,000 new artists each day, which is about 3.65m new artists every year. At minimum wage, the music economy needs to increase by 3.65m x $24,000 per annum, which means about $85 billion per year, just to pay a very basic living wage to artists. It’s safe to say that isn’t going to happen.

In fact, traditional opportunities for artists are shrinking, especially as a consequence of the pandemic. Let’s take one example. Livestreaming concerts have become a common tool for artists in the past couple of years, in particular after the complete shutdown of live music venues worldwide. For superfans, attending virtual concerts is a great way to support artists they follow, but when we’re talking about expanding an artist’s income, this method isn’t sustainable for the industry as a whole. Sure, industry execs will tell you they were able to sell millions in tickets for a handful of their artists, but that’s mostly because those artists already have tens of millions of fans already.

The real reason live streaming isn’t a silver bullet is due to the “attention economy.” Just like a financial economy, the attention economy is capped. It’s the amount of “screen time” people are prepared to spend. Most people already utilize the amount of screen time they are comfortable with, which means virtual concerts are not only forcing fans to choose some artists over others but also competing with TikTok or that Jamie Oliver recipe video for their attention. People aren’t all that prepared to give up their favorite non-music content to binge on live streams.

So, if we want to really help artists improve the odds of making a living, we need to think drastically about how to increase the size of the pie available. If artists want to be paid more, fighting over scraps is not the answer.


The best thing an artist can do to grow is to build their artist  brand through the act of being a great artist, but build their business in a different economy altogether


The Answer: Ignore the Music Industry

The entertainment industry as a whole—gaming, film, media—is worth about $2.5 trillion dollars. And where you build your business doesn’t need to be the same place you build your brand. For example, Tesla built its brand by making cars. But its business is actually in battery technology. That’s why Tesla is worth so much money: They bypassed the car industry and moved into the fast-growing energy industry. So, if any artist is serious about their career, they should be thinking along similar lines.

One thing artists are utterly world-class at is creating a brand. They are masters of creating things that generate audiences. The best thing an artist can do to grow is to build their artist brand through the act of being a great artist, but build their business in a different economy altogether (think Rihanna and Fenty).

Most artists, whether they know it or not, only tend to focus on their brand – putting their financial hopes in the hands of execs in ivory towers. But it’s selling products that generate income. And good products solve commercial problems. Despite what some may think, music isn’t often a product, so much as it is a brand signifier, something made to change someone’s behavior. The right to reproduce or perform music is the actual product in the music business. And artists don’t often have control over those rights once they sign deals. In the current market, artists will only succeed if they understand what their actual product is and what commercial problem it solves. Odds are, the most economically savvy isn’t the right to reproduce or perform music, but something totally different.


“What can you do brilliantly that others can’t do?”


A Venture Model for Artist Growth

Disrupting and then growing the market begins by helping artists think like the founder of a venture. Founders create a set of rules for decision-making and a vision of what they want to accomplish both socially and economically. That vision should be specific and define the community they care about; it should have the goal of shifting positions and behaviors in market economies; it should provide an outline for deciding if new opportunities along the way will materially help achieve the vision. Ultimately, these rules and vision provide focus. They help artists work on the things that matter for themselves – and not some industry bigwig who takes 87% of their income for the next 26 years.

When it comes to the products they sell, artists need to next find their “unfair advantage.” At MIT, we ask nerds “what do you know that others don’t know? or what can you do brilliantly that others can’t do?” Leveraging this unfair advantage to create a unique product is key. It’s the unique edge. It could be a talent for communicating hard concepts. It can be a network of people others don’t have. It could be an invention one made in the course of creating a novel track. In short, don’t sell what everyone else makes; sell something only you can make.

Many artists are natural community builders, so looking there is often a great place to start. Make astonishing music. Have something important to say with your art. Change the behaviour of your community in a positive and challenging way. These things build a brand.  Artists who demonstrate they can then leverage an unfair advantage to create products for their community will have unknowingly created an “MVP” (minimum viable product). These MVPs can be extraordinary – from selling tickets to rehearsals all the way to newsjacking for major brands. With an MVP comes leverage and credibility. Proof they are not just some ‘silly artist in a magical wonderland of their own’. Leverage and credibility are the keys to getting support, resources, or partnerships for future growth. No more signing terrible deals.

Finally, the artist should identify a code of conduct to establish founder and company values. It’s how the founder is described when discussed by their community. This code should address what it is about the artist’s character they’d like to be remembered for and a plan for building their network. Long story short, consistency in messaging and values re-enforces that brand and ultimately leads to more sales.

These techniques are used all over the world to turn amazingly talented nerds into venture builders. Into startups, in other words. It’s the exact techniques Reese Witherspoon used to create Hello Sunshine, or Ryan Leslie used to create Superphone. And they’re nurtured in every great accelerator in the world from yCombinator to The Rattle.


If artists can develop their own brands without sacrificing their integrity as artists, the entire industry will rearrange in a way that is more sustainable for everyone.


Disrupting the Industry

We need to help artists say, “I identify as an artist, but my business is this.” That change is transformative: if an artist doesn’t want to build their business in the fame business model, what is the purpose of a traditional label? If an artist doesn’t need to be marketed and financed by a label, labels will have to reimagine what they are. This opens the potential for a whole new source of financing for the music industry. The dots between the innovation community and the artist community will have been made. It will normalize the difference between influencer and artist. If artists can develop their own brands without sacrificing their integrity as artists, the entire industry will rearrange in a way that is more sustainable for everyone.

But right now, the message to the next generation of provocateurs is that it is unwise to become a musical artist as a career. We want to disprove that notion. As long as artists can stop thinking of themselves as “music makers” for a label, but instead as “founders” of cultural ventures, there is hope yet.

We don’t see artists of the future belonging to the music business. Instead, they are pioneers of a new music-culture economy. As artist-founders, their missions are guided by the changes needed in society by surfing the waves of music culture, to use their unfair advantages to address growing commercial problems tied to those trends. Once they use their skill to solve those problems, they’re no longer just an artist–they’re a founder of a venture, and they’ve helped transform the market for everyone else to follow. And as artists and founders, they’re no longer fighting over scraps; they’re laying a richer table.

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