16 Comments

Summary:

Country star Taylor Swift made some bold and hopeful claims this week about where the music business is going. We should listen to her.

Country-pop star Taylor Swift penned an optimistic essay in Tuesday’s Wall Street Journal about the lasting bonds between performers and their fans, and why she thinks the music industry is “just coming alive.” You can think what you want about Swift’s songs, but her take on the business is a welcome change from the doom-and-gloom we normally read.

In her essay, Swift is upfront about what everyone knows: CD sales fell off a cliff and, while streaming and digital sales have grown dramatically, they have not plugged a shortfall that has seen overall music revenue fall from $15 billion in 2003 to $7 billion today.

Often, such numbers are a cue for a musician to launch into a long harangue about piracy and the need for Congress to expand copyright. Instead, Swift does something different. She offers some new insights into about the evolving relationship between musicians and fans. Here’s what she says about autographs, for instance:

There are a few things I have witnessed becoming obsolete in the past few years, the first being autographs. I haven’t been asked for an autograph since the invention of the iPhone with a front-facing camera. The only memento ‘kids these days’ want is a selfie. It’s part of the new currency, which seems to be ‘how many followers you have on Instagram.’

And here is how Swift sees social media changing traditional music deals:

A friend of mine, who is an actress, told me that when the casting for her recent movie came down to two actresses, the casting director chose the actress with more Twitter followers. I see this becoming a trend in the music industry … In the future, artists will get record deals because they have fans—not the other way around.

Swift’s essay also makes a heartfelt plea for the album as art, and expresses a belief that fans will always pay for those special albums that change their lives: “I think the future still holds the possibility for this kind of bond, the one my father has with the Beach Boys and the one my mother has with Carly Simon.”

Taylor Swift

A way forward

It’s easy to be snarky to Swift. Indeed, others have already pointed out that her faith in revived album sales is misguided, and that the economics of digital distribution mean that only a lucky few, like Swift or Justin Bieber, have the celebrity klout to sell records in this day and age.

That might be true, but it doesn’t mean that Swift’s other observations aren’t helpful — if only the music industry would act on them. Alas, the industry is instead expending its legal and lobbying power on trying to wring more money from 50-year-old music. Just look at the current efforts to squeeze the likes of Pandora dry with ever-higher royalty rates and ill-considered class action suits.

Imagine if the industry directed more of its energy to finding new revenue sources amid all those selfies and Twitter followers surrounding Swift. As my colleague Mathew Ingram has explained in the context of news, new business ideas based on “membership” may offer more promise than attempting to replace past product sales.

Yes, many of the details are still fuzzy. But new user-based companies like Twitter and Instagram and are still developing their business models, and in coming years they will no doubt offer Swift and others a range of money-making ideas that we have yet to to imagine. Meanwhile, YouTube, despite contract scuffles, is already offering millions in ad revenue to famous acts and upcoming ones alike.

In the future, there will also continue to be a growing range of web and app platforms — everything from games to disappearing messaging apps — that offer both music licensing opportunities, and new ways for fans and performers to connect. The money may take time to emerge but, for cynics and the music industry, this is the way forward. Or in Swift’s words, “This is a love story, just say yes.”

This story was updated at 12:30pm ET to reflect that the music industry figures are in billions not millions.

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16 Comments

  1. Taylor is not saying anything profound or revolutionary….so I do not quite understand why she is being portrayed as forward thinking. It will be interesting to see how she evolves from singing a song like “We are never ever getting back together” to something that will be a classic 20 years from now….haven’t seen anything yet.

    1. Jeff John Roberts whodunnit Tuesday, July 8, 2014

      Thanks for the comment, whodunnit. I agree that, apart from one or two early singles, Swift’s music does not appear destined for the ages.. But I admire her in this case for sharing a new view on the industry. Ordinarily, whenever a musician takes to the op-ed pages, the article feels like it’s written by entertainment industry lawyers and a PR a firm. So Swift deserves credit for: 1) not whining; 2) writing something original

  2. JenniferDawn Tuesday, July 8, 2014

    Taylor Swift, technology trendsetter?
    I…I think I have to sit dow nf or a bit..

  3. Nicholas Paredes Tuesday, July 8, 2014

    There must be a replacement for the “music experience.” We have not seen this object in the market as of yet, but I am hopeful that there will be something that fans can engage with in an ongoing experience.

    Several years ago at Moog Fest, I asked Wayne Coyne of the Flaming Lips to make a get well card for a friend with a Sharpie. It was quite awesome. His music in particular needs to come alive in new ways for fans.

    1. The idea of evolving the music experience is a good one

      Working with new distribution platforms we uncovered a few things worth marinating on

      1. The industry has to define the experience as more than a transactional one

      2. The relationship of a fan to a music artist’s IP is different than to a movie artist and their linear IP and to a TV artist and their how-to IP on Food Network or HGTV

      3. If you are migrating the classic industry experience to a permanent digital platform and you want predictive sales, you have to understand the types of fans, level or commitment and experience desired and the kinds of extensions beyond the music itself that are worthwhile to produce

      Its the hard work of making it better

  4. Jim Kennedy Tuesday, July 8, 2014

    Proof read much?
    Music revenue $15 MILLION? Might it be BILLION? Why is IN capitalized?

    1. thanks for flagging, that’s fixed

  5. Sometimes the most profound statement is the obvious….The Emperor has not Clothes….while her comments are obvious but true….come on those of us who group up on vynial bought the album just once but we had a relationships wrapped Tapestry , we walked the halls of Hotel California, were friends with Sweet Baby James….and those artist too were not expected to endure….. music is a relationship with the artist, the performer, with life…

  6. Sqeeze Pandora dry? Artists are just asking to be paid what radio pays for performing their work.

    1. Jeff John Roberts Fongootie Tuesday, July 8, 2014

      Thanks for the comment, Fongootie, but that’s not the case. Most radio stations don’t pay anything for performance rights, while Pandora (since it’s a digital service) must pay large portions of its revenue. There’s a huge discrepancy between what the digital services pay versus AM/FM

  7. Nitish Kannan Tuesday, July 8, 2014

    I wrote about this as well. Yes I agree selfies and the number of followers is the new currency the more free music you stream and give away with ad revenue. The better album sales you get. Look at macklemore or Lorde. Having huge spotify success. Leading to more albums and concerts.

  8. Earl L Harbeson Wednesday, July 9, 2014

    Taylor does not let her albums go on Spotify for some weeks if ever after they are released, she let one single (We are never getting back together) from the Red album go on Spotify, which went to #1. Her last 2 albums sold over 1,200,000 in the first week, and she had the most successful tour in 2013. So I guess Spotify is not that important to her!

  9. John Meredith Wednesday, July 9, 2014

    Well done Taydolf for pointing out the bleeding obvious. But it comes across more as seeking for confirmation of her as an “artist” veiled in some paper thin manifesto of astute social commentary.

  10. “In the future, artists will get record deals because they have fans—not the other way around.” This has been true for a very,very long time in the industry;the only difference being it used to be based on people going to a club to watch your shows as a burgeoning artist,now it includes those social media efforts.

  11. Not looking to kill the messenger here, but I’m wondering how optimistic Ms. Swift will be when her hey day is over and new technologies and pirates are making more money from peddling her songs than she is? Of course artists and companies should be looking for new ways to reach fans and thereby “monetize” their offerings. But does that mean artists and companies that invest in them shouldn’t have some say about where and how their work is exploited? New cliche: free isn’t a business model. Artists and companies need revenue to survive and continue to create. When your livelihood falls off a cliff rosy predictions of an undefined future are not that comforting.

  12. Historically when there is a major change in business those who are of the past tend to fight like wounded animals to hold on to what they once had. The music industry was full of bloated profits, which raped the artists of much of their earnings with charges for every little promotional thing. They were all given opportunity to jump on the bandwagon of the initial change in music about the time Napster hit the scene, and each had the resources to create and invent what Steve Jobs did at Apple. But they resisted. I know because I was in there pitching them to let go of the past and control their future. Instead they saw all of this as a fad and thought things would eventually return to their former glory. It was not just labels, it has happened in many industries who were disrupted by digital. Yet these angry formerly flush-with-cash companies are trying to get it out of others who they say are taking advantage of them. The world has changed. In spite of their greed and desire to make back those big heyday dollars (who can blame them for wanting it to return) they are targeting others. Yet the business model of streaming for radio, for Pandora and others is so fraught with costs that success is nearly impossible as it stands. They not only have to pay to stream to each user they have to pay a higher royalty rate per user. The labels are targeting radio broadcasters trying to increase their royalty rates now, claiming fairness. Yet none of these services will survive with the heavy tax they want to impose. PLUS users are now realizing their data charges for listening to streaming services on their phones is adding another $30-40 a month just for their normal listening and a backlash has begun. All of these sources FUEL music sales, concert sales, etc. and the labels will one day look back wishing things were as good as they are today, once there fewer outlets for music survive. Pandora has massive public debt and profitability may never be seen, especially if the labels persist. Its short term thinking on the part of the music industry, who has been so wounded and is so angry, they want it all or nothing. As one who spent my life working in and around the industry I predict the current industry as we know it will disappear and a new industry of smart and reasonable labels will emerge, who understand the value of collaboration instead of the behavior of thugs.