Streaming Ahead!.. Swift ‘Tailor-made’ Action.
Huge congratulations to Taylor Swift this week who is innovating and leading the pack with her robust, brave but ultimately commercial decision to remove her new album 1989, its lead single ‘shake it off’ and all her back catalogue of songs from the music-streaming service spotify.
In an announcement this week about the launch of her new album Taylor explained “It didn’t feel right to me. I felt like I was saying to my fans, “If you create music someday, if you create a painting someday, someone can just walk into a museum, take it off the wall, rip off a corner off it, and it’s theirs now and they don’t have to pay for it.”
Although her older albums currently remain available on rival Beats Music, which is owned by Apple this type of pioneering market testing is just what the music industry could need. I have long been a fan of creating strong, meaningful brands from the inception and then integrating it a ‘loved and fanatical’ community together online.
Spotify has previously drawn criticism from artists who claim it doesn’t pay them enough in royalties and fuelling this fire is Taylor who is streaming ahead of the game. This is a strong example of how to create an independent channel where few of the traditional rules, opinions and politics operate thus putting music consumers and artists first and more in control of what their needs and wants are. This is also a great move financially for artist, the label, publisher and management if successful long term.
Still think it’s a radical idea? I love the fact that it comes down to thinking ‘inside the box’ and placing commercial common sense at the heart of some key business activities. Let’s look at the commercials around the action in practice and its impacts to sales and revenue:
Not many CFO’s and financial savvy people would be too disappointed at those weekly sales although I would guess that thinking really long term about how to trim that 30% commission have been a long painful previous conversation and one with no robust resolve yet (and probably not for this article in too much depth).Table 1 – Taylor Swift 1989 financial snapshot
Activity like this example potentially paves the way for the future of the music sales and increases sustainable revenues in a time when much need lead generation and commercial action has to be implemented. The wonderful irony being is that this type of action is also very helpful looking forward to solving industries such as film and TV who can begin to rationalise some of the best practice here. A leading US music magazine recently published this iTunes graph that shows a revenue breakdown.
Graph One – Itunes revenue assignment
Food for thought for music labels then that if nearly half of the assigned revenue for $1.29 single purchase is your responsibility then this exercise potentially earned you some serious bucks!
Recommendations – What does it mean for artists and music labels?
Seriously! Labels and all entertainment staff listen up! Nothing but opportunity exists here! Gaining a better understanding of the future of global streaming services and having a very positive discussion will be good news on how to improve new value propositions between consumers and music brands.
I would like to look at some other leaders in the music and social space that could create a similar proposition and own their channels more profitably:
*Twitter statistics correct as of 9th November, 2014
Global music labels need to think even more about the leveraging huge fan bases through music acts so that they can better create a bespoke portals that can service all future and existing music product ranges in the future. Looking at the Sony catalogue 1D & Michael Jackson fans will happy buy music from where need too. ITunes is fantastic but if the content is not there then the fans loyalty will be more than tested. Smarter more digital consumers want simple cost-effective mobile friendly answers that really satisfy their music obsessions.
In Taylors’ example she is a very strong case study for change and even though Billboard has reported that some label exec’s scoff at the move as her sub label ‘big machine’ is in the process of selling itself it does come down to the numbers at the end of the day in a business environment.
Spotify has asked for Taylor to come back in a statement but maybe Spotify’s role and other competitor streaming services in the future could well be more around a promotional tool and advertising agreed by label and artist. Taylor has outlined that she feels Spotify could be just another grand experiment and one which she is now not willing to share her revenue of music with. I don’t think she will be the last and the music accountants will be honing in on the cash in sales!