Keeping a close eye on the music space, I encounter a lot of startups and fledgling products. Unfortunately, a lot of them are misguided, for a variety of reasons, most of which can be prevented. Often, these early mistakes result in painful pivots or founding teams giving up, which is a real shame, as we need more applied innovation in the music business.
Here are the questions I wish music startup founders would ask themselves early on.
Does this work as a mainstream behaviour?
The biggest mistake music startup founders make is they assume that everyone loves music the way they do. Most people simply donât care that much about music. They like it, they love it, but in a very different way from whoeverâs likely to read thisâââlet alone found a music startup.
You need to be very critical of your idea. Itâs ok if it doesnât work for mainstream consumers, but then adjust expectations and target your product accordingly.
Does this work as a mainstream price point?
So letâs say you figure out you have the perfect lean-back experience for music listeners. Youâre creating something thatâs not demanding of its users and doesnât require big changes in existing behaviours. In other words: youâre ready to cater to a mainstream audience.
What about the price point? Price points are difficult to determine and people are notoriously bad at predicting what price theyâre willing to pay for something. If youâre going for a mainstream audience, your safest bet is pricing for impulse purchase decisions.
How does this work rights-wise in the long term?
You canât live on the APIs of YouTube, Soundcloud or Spotify forever. At some point, you need to build your own business. Do you understand the costs involved of licensing? Will content disappear from the service?
Launching light weight is fineâââif youâre looking to test an idea, using an API can be a great choice, but you need to understand your long term strategy, too, and plan for the next steps.
What are the ways in which people already solve this problem?
Changing an existing behaviour is hard work and takes commitment. Itâs risky to assume people will immediately fall in love with your product, drop everything, and never look back. Problems I see entrepreneurs frequently try to tackle are: staying up to date with your favourite artists, better ways to find new music, or giving people all their music in one place.
Are these problems consumers are already aware of? We all have our workarounds, so it may not seem urgent to your target users. Understand exactly how people are currently solving the problem, so that your product fits into a certain behavior and augments it, so that it becomes better.
Radically changing a behaviour is painful for users.
Do I really need to do a consumer-facing startup?
Sometimes entrepreneurs do music startups, because they have a vision for the music business and they want to break into it. Doing consumer facing startups is often costly and makes it trickier to gauge interest and test the market. If your goal is to create a better music landscape, perhaps you could consider solving problems within the music business.
After all, many of the imperfections that consumers have to deal with have a lot to do with problems in the music business internally.
Matthew Adell about founding MetaPop and the surprising amount of money being left on the table by artists &Â labels.
Itâs 2016 and artists still have to think like lawyers when working on remixes. As someone whose music consumption primarily exists of remixes and sampled works, this is a very personal pet peeve of mine. The topic is, finally, getting some attention beyond lawsuits and takedown notices.
Earlier this year, a task force from the US Department of Commerce presented their findings of a 2-year study, suggesting that a compulsory license is undesirable. Instead, it recommends that the marketplace be left alone to figure this out. An upcoming key player in this marketplace, is MetaPop: a platform that connects labels, producers and remixers, co-founded by former Beatport CEO, Matthew Adell. To date, MetaPop has signed on over 5,000 labels and helps them clear and monetize fan remixes.
I spoke to Matthew about how it got started, why remixes are so important, and the future of the remix landscape and MetaPopâs place in it.
~
A year after selling Beatport to SFX, Matt decided to step down and take some time off. After some time spent relaxing, he started looking for a new challenge, asking:
âWhat is not getting solved, because people just think itâs hard?â
This question formed the basis of Mattâs search for intractable problems in the music business. Having always had an interest in derivative works he decided to investigate this problem, because âespecially in music, weâve seen the behaviour of people making remixes without authorisation really become explosive,â indicating that remixes account for 10% of all music listening on YouTube.
To find this out, he teamed up with Michael Mukhin, former CTO of Boomrat, and built a piece of technology called Remix Finder. The purpose of the technology was to understand derivative works online. To start, they created a huge index of remixes, mashups and DJ sets on YouTube. The index contains track information, metadata, and engagement metrics, and over time they could also start seeing the speed and frequency at which these derivatives were taken down. If at all.
âWhat we learned is while mashups have hits every now and then, there arenât a lot of mashups that generate a tremendous amount of engagement on YouTube. DJs have some of the tastemaker names in the world, but we found that other than after-movies from really big festivals, DJ sets werenât really generating that much engagement on a global scale. The work that was really generating the most engagement, and was leaving the most possible revenue on the table, was what we call the single-song remix.â
So as a starting point, they honed MetaPopâs technology on single song remixes and found that theyâre better at finding single song remixes than YouTubeâs Content ID tool. On YouTube alone, they identified over 8 million remixes that are currently not monetized for the original artist nor the remixer. This could mean hundreds of millions of dollars currently being left on the table, because according to MetaPop just 2.5 million of those fan remixes generate over a billion plays per month.
âSo, we have built a system now that allows rightsholders and remixers to come together on our platform to authorise and monetise all of these fan remixes.â
The platform is intended for all genres. In fact, they found that country music is one of the more popular remix genres on YouTube. But why should artists care about remixes in the first place? Matt explains how back in the day, one would have to press vinyl bootlegs to get remixes out there. It was a slow process.
Now music has become part of a constant flow of social media. As a musician, itâs nearly impossible to create enough music to feed this constant flow by yourself, he explains. For remixers, it can help them get noticed, and for the original artist it means an expanded fanbase, and increased revenue.
It makes sense. If you make country music, and someone makes an EDM remix of your track, suddenly youâre reaching another demographic that you otherwise wouldnât. MetaPopâs revenue split, 70/15/15 to the original artist, remixer and MetaPop respectively, can form a great incentive to monetize remixes, as opposed to taking them down.
If itâs so valuable to artists and there are hundreds of millions of dollars on the table, then why has nobody cracked this before?
âIt wasnât solved before, because there was no money. And itâs complex. Each country has its own laws for how to deal with derivatives.â The rise of streaming means that now there suddenly is a way to monetize. You wouldnât be able to track the vinyl bootlegs and monetize them, but with all the music platforms out there now, thereâs suddenly a lot more data.
Matt also understands that older generations of original artists were more wary of remixes, but this is becoming less the case today.
In the next 10 years, he expects remixes to become even more prevalent, because the software and hardware necessary to create them is becoming ever-accessible. In this landscape, weâll see much less takedowns than we do today, with there being more systems in place to monetize instead. This is where MetaPopâs place is, as a rights-clearing house for derivative works.
Thereâs still a long road ahead. The team currently consists of 5 people, with all the technology being built by 1. The thousands of labels, remixers, and original artists theyâve managed to attract and host is an impressive feat, and testament to many years of experience the team has throughout music & tech.
MetaPopâs currently in the process of raising a Series A investment round, so that they can start going global and bring in more music from more places. Besides single song remixes, they want to expand their footprint to cover other forms of derivatives, too, like mashups. The goal is, quite simple: to be able to monetize derivatives more widely and more efficiently.
Are MetaPop going to be able to crack this problem? Matt is confident.
âNobody else has the right mixture of experience, tech and relationships.â
~
Personally, Iâm happy to see people cracking away at this problem, because its importance is underestimated. There are 2 trends that make it urgent to create a legal base for derivative works:
Adaptive music: generations are growing up expecting interactivity from everything in their environment. This is the generation that is growing up trying to swipe magazines, televisions and windows, believing they should be able to interact with it. Their music is going to be adaptive to fit the situation and whims of the listener.
The remix is the internetâs language: whether itâs attaching a gif to a tweet, changing the caption on a meme, or filming yourself playbacking on the wildly popular Musically, we use the remix to express ourselves now. Music genres are increasingly behaving like memes: they often start with remixes by bedroom producers giving existing tracks another twist. Take vaporwave, moombahton, nightcore or even edm-trap as an example.
This is the way people interact with music now. The world shouldnât have ignored the inner city kids sampling in the 80s and 90s to create hiphop, but now thereâs just no getting around it.
If so, allow me to break your music industry bubble for a second.
People outside the music business are often filled with astonishment by the music industryâs prevalent sense of entitlement.
âI made something, so I deserve money.â
Nonsense. What kind of business is that?
To me, the best way to think of yourself as an artist is as an entrepreneur or freelancer.
You have a business to build, an audience to identify & serve, and a competitive landscape to understand.
The landscape is hyper-competitive and choosing to participate in it, especially without identifying a good niche, means there is a good chance you will not be able to make a good living out of it.
If you make good music, appeal to a well-defined audience, and have a good business strategy for monetizing that relationship, whether thatâs through gigs, sales, Patreon or something else, then youâve got a good chance to make a good living.
But youâve got to keep working hard at it – just like an entrepreneur.
If you build enough, work at it long enough, you might be able to let the reins go and collect money on your past achievements – just like an entrepreneur.
But if you fail to identify your market or risks, youâll go broke – just like an entrepreneur.
A recent report commissioned by Dutch rights organisations and a labour union for musicians revealed that as much as 19% of Dutch musicians who live with a partner or family are able to make a living from music (PDF). Itâs as much as 31% for singles.
How cohabiting musicians (left) & single musicians (right) make a living. Green means they live from money generated by music. (Source: Pop, wat levert het op?)
Over 80% of businesses FAIL. Why should it be different for music?
Letâs take the 20-30% success rate for musicians who can make a living and think about how we can increase that.
First, we need to shatter the sense of entitlement, that has new artists entering the business with false expectations. It sets them up for failure.
We need management companies, record labels, booking agencies and rights societies who stress the importance of hard work and strategy. Who can communicate the necessity of reinventing yourself when your chosen path hits a dead end.
Many artists choose to continue down a dead end path. Becoming wedding DJs or playing covers of classic rock ân roll tracks at the opening of a friend’s shop in a local mall or something.
âThis is the music I play. I should be able to make a living off of it.â
No. Your entrepreneurial pursuit failed. Start over. Do something else. Pivot.
We need music schools to prepare artists for this.
Artists also need room to fail – just like entrepreneurs.
Look at startup accelerators and incubators, look at tax incentives or cuts from governments. Governments, businesses and the existing music industry could do more to give artists some room to breathe while they work on their music & business strategy.
Many initiatives already exist. Every country, and every city, having its own mechanics or ecosystem.
What Iâm particularly interested in are collaborations between people from different disciplines. Take artist managers, musicians, developers, tech entrepreneurs, designers, and organisations in music with a lot of data, like ticketing services, event organisers, collection societies, etc. Divide them into groups and give them 48 hours to hack something together.
We need:
More data to help artists & management to understand their markets and to develop strategy to address them;
More collaboration to make it easier for entrepreneurs to have their products piloted at scale;
More applied innovation – we can talk about blockchain, artificial intelligence, and virtual reality, but how do you apply it to your strategy?
Iâd love to live in a world where everyone who wants to make a living with music is able to do so. Itâs just not likely. But letâs expand that 20-30%. Letâs push it to 25-35% and then higher.
Rapid developments in technology means weâll be able to offer a greater diversity in experience. Itâs these developments that has led to a situation where more artists are simultaneously earning some money with music, than ever before.
Technology, combined with human creativity, can expand the market.
And that may be just what we need to help more artists make a living.
Hat tip to Marco Raaphorst for the link to the research report.
Every month this year has been the hottest in recorded history. Our weather is getting increasingly unpredictable, leading to more storms and floods in some areas and extreme droughts and forest fires in others.
The importance of selling music, or solving problems in the music business, pales in comparison with these issues.
However, these are not separate. We are the environment and our actions affect it. You can bet that last century’s vast record distribution networks made an important contribution to our CO2 output.
Can you guess how much of the CO2 footprint of a CD purchase comes from the ride between the consumerâs home and retail outlet?
10%?
Bit more.
Try something like 20-30%.
Well..
Still wrong.
Itâs 50%.
Comparison of six album purchase scenarios in GHG emissions (g CO2/album). Error bars represent 90% credible intervals from Monte Carlo analysis. (Source:Â Microsoft, Intel)
In economics, there is a concept called negative externalities which is defined as “economic activity that imposes a negative effect on an unrelated third party.â Take the CD trade as an example. It imposed a large negative effect on consumers, since the taxes levied around transportation do not raise enough money to reverse the effects of the associated CO2 output.
There are many remaining negative externalities in the music business, but technological innovation can help alleviate problems. Itâs in our economic interest to care about these negative externalities. If we can prevent scenarios with cataclysmic weather events, consumers might be a little more relaxed to go see a gig, buy some merch, and spend money on music instead of sand bags to protect their house against a flood. Iâm not exaggerating: floods in US coastal cities have more than doubled since the 1980s.
Transportation
As highlighted before, transportation is one of the biggest contributors to CO2 output. What can we do besides driving hybrids or environment-âfriendlyâ trucks?
The commute to the studio
Democratized means of production, such as production software and more affordable high quality digital equipment, have reduced the need for regular commutes to the studio. Studios may still be a necessity due to acoustics, sound isolation and for recording purposes, but you donât need them every step of the way.
Bedroom producers are polar bears’ best friends.
The commute to the office
What goes for musicians, definitely goes for most people with office jobs in the music business. If you want to be a sustainable company in this day and age, encourage everyone whoâs able to, to work from (close to) home at least 1-2 days a week.
VR and concerts
Perhaps the biggest contributors to the industryâs carbon emissions are live touring and festivals. They require equipment to be shipped, band members to be flown, and fans to be congregated. In the UK, audience travel is estimated to account for 43% of the industryâs gas emissions. The rise of electronic dance music and hiphop have helped to reduce the amount of equipment, and band members, being flown around. Virtual reality could be a next step.
While VR wonât replace the concert experience, it will offer a new competing experience. Being able to host virtual performances for fans worldwide, at a much lower cost, wonât just help reduce emissions, but can also alleviate some of the stress that a lifestyle of always being on tour entails. There has been much attention for mental health in music recently: perhaps VR can help?
VR, band practice and collaboration
Another reason why people come together a lot is for practice and collaboration. What if you could work together in a virtual environment, from the comfort of your homes? What if that virtual environment replicated a normal practice studio perfectly? What if that virtual environment could provide an experience richer, especially in terms of features, than a real world place?
Merch, 3D Printing, and distributed manufacturing
Another big cost to the industry, consumer, and environment: shipping merchandise. And letâs think beyond just the t-shirts. Some artists ship in large quantities, but most donât have the scale to mass-produce. They produce small batches, and then ship them around the world from where they live. It would arrive at your home or a local pick-up point. What if instead, you order something, itâs produced at the nearest 3D printer and you can pick it up from there. Not only are there less emissions involved, but it might be faster too. There are still questions about whether the amount of energy required offsets the carbon emissions, particularly for mass production, but some printers are performing great.
Services like 3D Hubs are already providing over 1 billion people with access to 3D printers within 10 miles from their home.
Developments in commercial flight
Even if we donât do anything, technology is being developed to make flight a lot cleaner. Biofuels may reduce carbon emissions by 36-85%. Longer term, lithium-ion batteries may allow for solar-powered flight. Weâre not quite there yet, but as can be seen in the video below, Elon Musk is optimistic that itâs doable.
Hardware
Now letâs tackle the impact of producing some of the equipment necessary for making music. Some instruments get resold, recycled, or re-used. A lot of hardware doesnât, though. According to a UN study, only 15.5% of âe-wasteâ gets recycled.
Furthermore, there is a lot of unused value sitting inside communities.
Self-driving vehicles promise to reduce the amount of cars we need to manufacture. Why? Because our cars are standing still 95% of the time. If cars are automated and shared, one car could service many more people on a day than it would normally do in a month.
Likewise, a lot of instruments and equipment go unused for vast amounts of time. What if there was a way to share this value with other musicians in your community? Think Airbnb for music equipment, which includes insurance. A startup called Demooz lets you borrow things to try before you buy. A startup with a broader use case, Peerby, lets you lend to and borrow from your neighbours. For free, or you can charge a fee.
So, maybe you donât have to go to the studio to use a good microphone and there is also no necessity for everyone to own all of the equipment they might need either.
Tents get left behind, a lot of water is used to clean, and cars queue up for hours to get into parking lots.
One of the most interesting music-related startup accelerators has to be Open-House. They look at how events can be made more efficient, but also how festivals can be used as a case study for how we organise humanitarian aid, or solving other societal issues.
Their startups include Kartent, a recyclable cardboard tent, Sanitrax, which makes the toilet experience more efficient, and Watt-Now, an energy monitoring system for festivals.
Each year, Amsterdam Dance Event organises a full day of presentations, panels and discussions about sustainability in events and dance music, called ADE Green. Other conferences should take note.
Conferences
Music industry events used to be the only way to handle business for a lot of people. Now, with fast communication, video calls, etc. that aspect has lost its importance. Even for networking, Slack channels like the Music Tech Network or good old Twitter might be a n easier way to get in touch with relevant people, and especially more CO2 efficient. Sure, online networking doesnât build the same trust relation as meeting face to face does, but collaboration does – and with such vast arsenals of tools at our disposal for online collaboration, there has never been a better chance to involve people from around the world in your projects.
And if you’re going to organise a conference that flies in a lot of people – at least dedicate some time to sustainability.
Using music to inspire
Music is powerful. When people come to a festival, for many, it will be an experience theyâll never forget.
Music is part of everyoneâs life. From Fortune 500 CEO to high school student, from plumber to engineer.
This gives us a unique position. We get to dictate the standard. We get to influence what is âcoolâ, and what should be considered normal.
Consider a large-scale, âgreenâ festival, such as the UK’s Shambala. Implementing these solutions has a ripple effect.
Music has the power to inspire movements and new societal norms. It can ignite revolutions.
Letâs use musicâs power to inspire people to build a greener world.
Extra resources
If you want to make the music business more sustainable, here are some amazing sets of resources to help you on your way.
Julie’s Bicycle: a global charity dedicated to making the creative industries sustainable. They have a vast set of resources ranging from guides, to fact sheets, and webinars.
Ouishare: a collaborative economy initiative that does research, connects people together, and shares advice and insight into how sharing can make us more resource efficient.
Is it fair that a 50-second song costs the same as a 20-minute composition? Back in the days of album-driven sales, track length didnât matter much. If an album contains 50 tracks of 1 minute each (punk, grindcore), it would sell for roughly same price as an album with 3 tracks lasting 20 minutes each (post-rock, ambient).
Streaming services have changed this. Payouts occur on a per-stream basis. All songs treated equally. This means that if the amount paid per-stream is something like $0.005, Godspeed You! Black Emperor would make just 2 cents every time someone listens to Lift Your Skinny Fists Like Antennas to Heaven (runtime: 1h27m).
Royalty rates are variable and depend on total revenue vs total amount of plays. Spotify uses this formula:
I took a look at Spotifyâs top 50, since they publicly communicate the number of playbacks. Assuming a pay-per-stream rate of $0.005, which may differ from reality, I summed the total plays to understand the volume of the royalty pool and the cut each track would take. Then I took into account track lengths and compared the two. The difference for Spotifyâs top hits runs into tens of thousands of dollarsâââper song.
If charts were based on time spent per song, rather than total number of plays per song, here are the biggest risers:
Drake âControllaâ (24 â 15)
Nick Jonas âCloseâ (32 â 23)
G-Eazy âMe, Myself & Iâ (35 â 26)
And the biggest fallers:
Mike Perry âThe Oceanâ (27 â 36)
Shawn Mendes âTreat You Betterâ (16 â 25)
Major Lazer âLight It Up (Remix)â (15 â 31)
Changes in accounting make a multi-million dollar difference
The top of Spotifyâs global chart is not the most important area in terms of implications. The implications are greatest for artists and labels who produce music in genres that are structurally paid less per minute than other genres.
Massive pies are being built that need to be split fairly. Music industry analyst Mark Mulligan recently uncovered that indie musicâs global market share is closer to 38% rather than the 20% conventionally believed and added:
âThis matters not for bragging rights but because in the digital marketplace, market share shapes the deals that are struck, with more market share translating into better terms. So a more accurate measure of share can help the independent sector compete on fairer terms.â
Debates need to occur about market share, pay-per-stream versus time-based royalties, and the way subscription payments are divided. Streaming services are not the ultimate deciders in this: theyâre locked into pay-per-stream royalties with the industry through contracts with differing renewal or extension cycles. Therefore, these changes need wide coalitions to occur. It would also help to have a truly competitive music streaming market that nurtures models beyond the typical $10/month all-you-can-eat services.
Streaming is here to stay. Itâs a necessary layer for a healthy music landscape. In this landscape, itâs currently very difficult for artists to practice autonomy over the pricing of their music. Two $20 albums of equal length receive completely different payments for the same amount of plays if their track counts differ.
Is that fair?
Disclaimer: the royalty rate used in this article is based on an assumption and taken from a Billboard article dating back a year. In reality, royalties are slightly more complex eg. through subscribersâ streams counting heavier than ad-supported usersâ. Any total numbers resulting from using this assumption are therefore completely fictional.
However, even fictional numbers are useful in debating this. Whether the exact number per specific track is smaller or greater doesnât matter. Weâre still talking about how billions of dollars are distributed each year.
Hat tip to Cherie Hu for early feedback and sharing some data points.
Top image: Ocean of Sorrow, a work by Javad Alizadeh (CC/BY/SA).
