‘Middle class’ artists need niche, not scale

Streaming continues to grow strongly, as evidenced by the 28% growth reported by the RIAA for H1 2021 in the US. Everything looks great for the build-up to the impeding Universal Music Group (UMG) IPO. But all is not well in the creator community, as many artists and songwriters continue to be unhappy with streaming income (seen most pertinently in the UK parliamentary DCMS inquiry). However, the origin of so much of their ills, even if they do not yet realise it, is the mechanics of streaming itself rather than any party (labels, publishers or streaming services) not passing on enough money. Could these entities transfer more to their creators? Yes, of course. But there is no increase that could transform the outlook for most of these creators without potentially breaking the entire streaming economy. The crucial, emerging dynamic is that most mid-tier creators are never going to be big enough to gain adequate streaming scale to use as a reliable income source. In fact, they need the opposite of scale – they need niche.

Streaming income is always going be different from sales income

One of Daniel Ek’s Spotify ambitions is to create and empower a new ‘middle class’ of artists, enabling a new wave of creators to build careers from their creativity. But the irony is that the ‘middle class’ (depending on how you define this amorphous group) is, perhaps, least well served by streaming. Here is why: in the old world, a ‘middle class’ five person band might sell 50,000 copies of an album in a year, for, say, $10 each – thus receiving $35,000 each*. In streaming, this group might generate 10 million streams in a year, which would result in $7,000 each. The old model delivers far fewer fans but far more income. In isolation, the streaming model is less beneficial, however, in a wider context, the streaming-era group is likely to generate more live performance, merch and branding income as a result of streaming’s bigger audience. This is why streaming received much more critical creator attention during the pandemic, as the halo effect across other income avenues was cut off at the knees.

The squeezed middle

This comparison is not intended to suggest the streaming model is broken, but for the middle tier of artists, the scale at which streaming delivers is not enough on its own, and instead it catalyses the wider mix of creator income streams. At the other ends of the creator spectrum, superstars get enough scale to earn a truly meaningful streaming income, and the emerging independent artists are able to reach global audiences in way they could never do pre-streaming. So, the ‘middle class’ of creators actually become the ‘squeezed middle’ of the creators’ streaming economy.

Monetise niches, not scale

Even doubling the creator royalty rates would still leave streaming income 2.5 times smaller than sales income, but it would break the streaming model in the process. Rather than break streaming, an alternative attempt at resolve would be to focus on finding an artist’s core fans – the ones who really care – and selling them products and experiences. With this approach, middle tier artists would be able to replicate the same sort of income flows as the old sales model. Clearly, that theoretical five person group would likely sell fewer than 50,000 copies of a product because much of their audience would already be getting all they need from streaming. But this is not about replacing streaming – this is about complementing it, by bridging the income gap. So, while some artists have opted to remove themselves from streaming and focus solely on platforms like Bandcamp, this approach is unnecessarily reductive and will actually hurt the artist’s earning income in the longer-term, as the funnel for acquiring new fans has been massively narrowed.

Fame and fandom

The concepts in this post are not particularly new and I have, in fact, discussed a few of them before. But they are crucially pertinent, nonetheless. ‘Middle class’ artists need to start thinking about streaming more like radio, i.e., a tool for growing fanbases which they can then monetise elsewhere. Streaming delivers the fame, while niche delivers the fandom. And it is fandom where an artist and a fan get the most value, in all possible permutations of the word ‘value’. As long as, of course, the artist does not get lazy and simply try to fleece their super fans!

*These calculations are simplified, do not include cost deductions (other than retailer margin), assume group members each have an equal share of recording and publishing rights, and assume that rights splits are the same across both.

7 thoughts on “‘Middle class’ artists need niche, not scale

  1. “ ‘Middle class’ artists need to start thinking about streaming more like radio, i.e., a tool for growing fanbases which they can then monetise elsewhere.” True, but this tier will never be able to duplicate the platform that the label system provided to fuel growth and awareness. For priority acts, labels spent enormous sums pimping the radio stations to play designated songs, advertising in print ads, and underwriting live tours. The latter is especially important. It is no cheaper to tour now yet touring still is the supposed life blood of performers. It can’t possibly anchor a struggling artist who lacks substantial promotional support. Also forgotten is the compounding effect that label promotion over even just a few albums would serve to build a legacy (i.e., lasting public awareness) — that gave an artist a base to continue touring in the future even after the label deal ended.

  2. AS Quincy Jones “Said’- we do Not have the Same old Music-Film Industry any more, .Developing ,Learning and Performing the Talents of Singing-Songwriting and Finding Real Proven Professional People in this High tech world is Very Daunting to say the Least, not many Clubs and Venues to perform at beside there are So many Fake Wanna-be Companies and People out there it is hard to Know Where to begin and “Trust” what is Said.in the past you did have the Chance to Travel to New York, Nashville & Los Angeles and Hang out and Meet “Real” Music-film-Entertainment Professionals not Internet Scams- i sometimes Wonder how many of the Great Talents we Know of now, if Faced with these New Challenges might have Never been Discovered ? “where there is a WILL there is a Way” so true now than Ever Before. Good Luck, Never Give up, Stay the Course of the Passion and Calling you have in your Soul. Be your “Original” Self-like My Song “Step into the Light” Explains-..Joseph Nicoletti : Global Village Music co.(ascap) music-film@att.net

  3. I agree with pretty much every word.

    There does seem to be a general feeling amongst musicians today that they are ‘owed’ a certain level of income without explaining just how that is warranted or from where it is payable.

    It wouldn’t matter if the streaming services didn’t pay their employees or paid any costs of running the business, the reality is that even handing over 100% of streaming receipts to writers and musicians would be insufficient to allow the vast majority to give up their day job. or even their multiple part-time zero-hour jobs.

    Most musicians (or the music) simply aren’t of interest – and thus value or income – to the great unwashed audience. If ‘nobody’ is listening then there will be no income due or frankly warranted.

    Given the lack nowadays of the ‘gatekeeper’ role that used to be supplied by producers, studios, labels, radio there are simply way too many musicians releasing way too much music for the paying public to have any chance of hearing something they might like. There are also way more alternatives to music for the available audience that didn’t exist back in the day. The competition from non-music sources of entertainment are so much greater.

    The ecosystem is such that music is now too easy to create, record and distribute. There is more equality of opportunity than ever before but this has come at the expense of a greatly reduced chance of a musician generating enough interest, and in turn income therefrom, to make even a ‘living wage’.

    As you say, the vast majority of musicians will have to find alternatives to earn their crust, let alone a sustainable income. Which is as it ever was, long prior to streaming. Not that this is ‘right’ but it is a recognition that very very few musicians have ever made life-changing sums of money from the execution of their art.

    Bitching about streaming services will change not a thing.

  4. Pingback: ‘Middle class’ artists need niche, not scale – Music Industry Blog – Indistry News

  5. Pingback: ‘Middle class’ artists need niche, not scale - Techy Rack

  6. Pingback: ‘Middle class’ artists need niche, not scale – The Music Factory

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