Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal. Unfortunately, my colleague Tracy Elloway is out today.
Speaker 1: I'm kind of disappointed, actually a little bit, because even though,
Speaker 1: like Tracy and I have been doing the podcast for
Speaker 1: several years now, there are some things I still don't
Speaker 1: know about Tracy. Like I don't really know what kind
Speaker 1: of music she's in two for example, I've gone to
Speaker 1: karaoke with her a couple of times, so I know
Speaker 1: a little bit about what she likes to sing, I think,
Speaker 1: but in terms of what she listens to, I actually
Speaker 1: don't know. I was going to ask her. As for myself,
Speaker 1: you know, like I'm a forty one years old, so
Speaker 1: I have very cliche tastes. I would suppose I like
Speaker 1: a lot of old indie rock, and I hardly I'm
Speaker 1: not very good on keeping up with new music. By
Speaker 1: and large. Pretty much, if I discover new music, it's
Speaker 1: often courtesy of the algorithm that Spotify serves up to me.
Speaker 1: But I don't really know about how it all works
Speaker 1: and how the industry works and who benefits from this
Speaker 1: current system, and I've always wanted to learn more. It's
Speaker 1: particularly interesting now because of course we've had a number
Speaker 1: of artists take their music off Spotify, notionally sort of
Speaker 1: in defiance of Joe Rogan's We're All There. But also
Speaker 1: I think there's been a lot of musician frustration with
Speaker 1: Spotify and other streaming platforms, the new economics of music
Speaker 1: that long precede any of the current drama. So in
Speaker 1: light of all that, I want to learn more. And
Speaker 1: I'm very excited about our guest because he writes a
Speaker 1: lot about the economics of the music business and how
Speaker 1: it all works and where the money is and so forth.
Speaker 1: But also beyond that, he was a member of one
Speaker 1: of my favorite bands, and so this is personally very
Speaker 1: enthusist estek I'm gonna be speaking with Damon Krakowski. He
Speaker 1: is was the drummer of the indie rock band Galaxy
Speaker 1: and currently part of the duo Damon and Naomi. Damon,
Speaker 1: thank you so much for coming on odd lot, Thank
Speaker 1: you for having me. You know, with musicians don't get
Speaker 1: asked about business very often. I'm really grateful for the opportunity.
Speaker 1: Will you write a lot about business? And I guess
Speaker 1: that's that's why we could have this sort of music
Speaker 1: slash your business conversation. Why do you write about business?
Speaker 1: Why is it? You know, there are a lot of
Speaker 1: musicians who probably are frustrated with the economics of the
Speaker 1: music industry, but you were. You write quite a bit,
Speaker 1: You've written books, you have a sub stack, a newsletter
Speaker 1: about it. Why is it important for you to uh
Speaker 1: to write about music? Yeah, it's a really it's a
Speaker 1: question I asked myself pretty often. So, yeah, I started
Speaker 1: a sub stack. It's called Dotta Drummer Almanac, and my
Speaker 1: Twitter handles dot a Drummer That's where that came from.
Speaker 1: And you know, I started writing about the business of
Speaker 1: music very accidentally. It's the same way that I had
Speaker 1: to pay attention to the business of music accidentally, which
Speaker 1: is from being a musician. And you just end up
Speaker 1: at the other end of so many contracts and so
Speaker 1: many deals and so many accounting reports that you know,
Speaker 1: you either I guess at a certain but for quickly
Speaker 1: early on, decide I'm never going to pay any attention
Speaker 1: to any of this and turn it over to someone
Speaker 1: who convinces you that they are, or you start reading
Speaker 1: all that stuff. And there actually are a surprising percentage
Speaker 1: of us that do read all that stuff. Um, some
Speaker 1: some just out of necessity, because if you don't have
Speaker 1: a manager, or you elect not to, or you don't
Speaker 1: trust your manager, or your manager cheats you. I mean,
Speaker 1: you know, there's so many ways that musicians end up
Speaker 1: having to look finally at, even if they didn't want to,
Speaker 1: at what the hell is going on? And once you
Speaker 1: take a look, well, it's a big business and so
Speaker 1: it's got a lot to learn. Takes a time for
Speaker 1: you to learn how this came to be because musicians
Speaker 1: tend to be they come in very young, many are
Speaker 1: not in the business very long, and the business is
Speaker 1: oriented toward the next set of musicians that are coming.
Speaker 1: You know, not you, um, you're always you're just a
Speaker 1: temporary talent for an industry that has set itself up
Speaker 1: to deal with a revolving door of talent. And so
Speaker 1: you know, things are not explained to you. It's kind
Speaker 1: of like who can bother who? You know, why bother
Speaker 1: explaining something to a band. They're only gonna be around
Speaker 1: at best, you know, a few years, a few albums, whatever,
Speaker 1: we're gonna make our money and move on. So just
Speaker 1: get what you can. So you know, there's a lot
Speaker 1: of that, but then we learned, you know, so what
Speaker 1: happened to me was our first band, Galaxy. You know,
Speaker 1: we were young. We signed the classic contract that handed
Speaker 1: over all our rights and uh, and then the record
Speaker 1: label declared bankruptcy and our contracts were thrown into Banks
Speaker 1: Co in Manhattan. I spent over a year dealing with that,
Speaker 1: trying to extricate our contracts and an ownership of our
Speaker 1: records in perpetuity throughout the universe, known and unknown. These
Speaker 1: are boilerplate things that are typical of music contracts, UM
Speaker 1: and all formats uh, you know, as yet undiscovered and
Speaker 1: all you know, blah blah blah, every contingency. Um. They
Speaker 1: were just thrown into this Banks record and and and
Speaker 1: put up for auction. So I spent a long time.
Speaker 1: You know. We called our music business lawyer who we
Speaker 1: had a very fine firm, grew Upment and Turskey Schindler
Speaker 1: representing us at the time. They were Madonna's lawyer and whatever,
Speaker 1: and they said, I'll forget it. You know, you have
Speaker 1: no you have no rights to have no chance. I mean,
Speaker 1: you signed that deal and we're like, you told us
Speaker 1: to sign that deal. They're like, well that spoilerplate. The
Speaker 1: company goes bankrupt, you know, it goes into bankruptcy court.
Speaker 1: It's and that your contracts are an asset. It's like,
Speaker 1: no way, you know, what do you mean? It's it's
Speaker 1: just an asset gone into into bankruptcy court, our own contracts.
Speaker 1: As I understood that the stock from the warehouse went in,
Speaker 1: I understood that maybe the Master Tapes head ownership, but
Speaker 1: I mean our contracts were that. That was insane to me.
Speaker 1: So anyway, I was like no, So I read all
Speaker 1: the stuff and did my own negotiations, you know, and
Speaker 1: called up the bankruptcy court appointed lawyer and taught myself
Speaker 1: the business. Uh and we won. We got our rights.
Speaker 1: I love that. So so I'm I'm a Galaxy fan.
Speaker 1: I discovered it. I discovered the band Luna first three
Speaker 1: year old band mate Dean were them, and then of
Speaker 1: course I went backwards and discovered Galaxy for for listeners
Speaker 1: who maybe aren't from the layer, can you describe like,
Speaker 1: I think it's a pretty influential band, but a little
Speaker 1: bit sort of like how big you guys were, however
Speaker 1: you want to measure it and what kind of contract
Speaker 1: gets offered to a sort of highly influential, but I
Speaker 1: don't think like a Billboard chart topping band in the
Speaker 1: late eighties, right, No, we weren't a pop band by
Speaker 1: any by any measure, and nobody nobody saw us that way,
Speaker 1: most importantly ourselves, and so we had no pop ambitions
Speaker 1: and there was no question of trying to be world
Speaker 1: conquering multi millionaires would have. So anyway, we were a
Speaker 1: niche band. Uh an in indie band when we started
Speaker 1: was called college rock because it was college radio stations
Speaker 1: that played on our music, not commercial stations, and that
Speaker 1: divide was very um significant at the time. It meant
Speaker 1: the major labels produced music that they tried to get
Speaker 1: on commercial radio and into the chain store record stores,
Speaker 1: and that that was their world and we really had
Speaker 1: no part of that world. But but a lot of
Speaker 1: people in the music industry were not part of the
Speaker 1: world yet were in the music industry and built a
Speaker 1: fully functioning, very very efficient and good system of distribution
Speaker 1: and sales outside of that. So we had independent stores
Speaker 1: in every town. We had uh college radio stations which
Speaker 1: are mostly nonprofit but or community stations also but played
Speaker 1: our records, and you know, the potential on the air,
Speaker 1: it's the same as a commercial station, so you still
Speaker 1: can reach people. And we had venues that we played
Speaker 1: that the major label bands didn't go near, and so
Speaker 1: we had a fully functioning network. That network was hard one.
Speaker 1: It had been built by a generation or two of
Speaker 1: bands before hours. It was really mostly the hardcore scene.
Speaker 1: Actually from from our from my point of view of
Speaker 1: kind of white college indie rock more or less was
Speaker 1: more was pretty much forged by the hardcore bands who
Speaker 1: went out and slept on people's floors and and found
Speaker 1: alternative spaces to play and built this system. We came
Speaker 1: in a sort of a more diverse musically, a little
Speaker 1: bit less male, unfortunately, still pretty close to white, which
Speaker 1: is something that really wasn't discussed or acknowledged nearly enough
Speaker 1: at the time. But we came and sort of stepped
Speaker 1: into that world and opened it up musically, I think
Speaker 1: a little bit more than it had been and so
Speaker 1: a lot of types of bands went through those channels
Speaker 1: to the point where the major labels turned around and
Speaker 1: realized that there was a market there that our world
Speaker 1: had developed and was communicating with and selling product too,
Speaker 1: and they were not. And that's the expression would happened
Speaker 1: in the nineties. So the major labels kind of realized
Speaker 1: that they had missed the boat on a whole lot
Speaker 1: of music that was potentially more salable than they thought.
Speaker 1: So they looked at our scene and they, you know,
Speaker 1: they sent their and our scout, they hired in our
Speaker 1: scouts out of our scene, sent them back in to
Speaker 1: kind of evaluate who could take it to another level commercially.
Speaker 1: And then there was this really pretty ugly moment in
Speaker 1: the late eighties early nineties where our scene that had
Speaker 1: existed was destroyed more or less by the major labels
Speaker 1: coming in and investing in it. So what they did
Speaker 1: was they he picked from bands. They broke up Galaxy
Speaker 1: five hundred by well Gas Bars being offered a major
Speaker 1: label contract of its own, and in its place, Dean
Speaker 1: was offered a solo deal by an A and our
Speaker 1: guy who had worked for our record label, Rough Trade
Speaker 1: and independent label, had been fired by Rough Trade, had
Speaker 1: told his colleagues a Rough Trade that he was going
Speaker 1: to break up our band in retaliation, got a job
Speaker 1: with Electra, which is owned by Warner Brothers, and offered
Speaker 1: Diana solo deal. At the same moment that Galaxy of
Speaker 1: Hunter was being offered a band deal by Columbia. So
Speaker 1: Dean double cross to us he signed the deal on
Speaker 1: his own with a different label instead of signing the
Speaker 1: deal that we had already negotiated with our mutual lawyer
Speaker 1: with Columbia. Besides old arguments which are long since, I mean,
Speaker 1: you know, this is a long time later. But what
Speaker 1: illustrates is what happened to the scene as a whole.
Speaker 1: The deal that we had negotiated with our lawyer as
Speaker 1: a band with Columbia was going to have complete artistic control.
Speaker 1: We were going to choose our producer for our records,
Speaker 1: we were going to choose our singles for our records.
Speaker 1: We were going to control our videos. Our lawyer said
Speaker 1: to us, and this gives you a hint of how
Speaker 1: this all goes down. Our lawyer said to us in
Speaker 1: our band meeting with him in street conference room, if
Speaker 1: you insist on that you will get less money. You
Speaker 1: understand that. And we all said yes. But of course
Speaker 1: I realized in retrospect that Dean didn't necessarily say yes.
Speaker 1: He just was sitting there not saying no. So so
Speaker 1: you know, and then um, the deal that Dean signed
Speaker 1: with Electra Solo, where he had no negotiating power as
Speaker 1: a band because we had built our brand and we
Speaker 1: had built our audience. That deal was without any artistic control,
Speaker 1: and so he signed as a solo artist to be
Speaker 1: shaped by the label, and the band that he then
Speaker 1: put together was his were his employees. The label chose
Speaker 1: his producers, the label chose his singles. The labels ran
Speaker 1: him a million dollars in at as we all now
Speaker 1: know because he has spoken about it in interviews and such,
Speaker 1: and ultimately dropped the band. Of course, that's that's that's
Speaker 1: what happened, kind of largely to the scene as a whole,
Speaker 1: because how do the major labels work. Well, It's like
Speaker 1: they have a bunch of hits that fund everything else
Speaker 1: is not a hit, and everything else is not a
Speaker 1: hit eventually just drops off their radar altogether. They're not
Speaker 1: really in it for anything else, and only the hits
Speaker 1: fund the business. That's how entertainment generally works as an
Speaker 1: economic model. It sounds like the venture capital industry to
Speaker 1: where you you sort of aim for one massive winner
Speaker 1: that the returns a hundred extra on your investment, and
Speaker 1: then everything gets sort of tossed by the wayside before
Speaker 1: we sort of move on from like this moment, Like,
Speaker 1: can you just talk a little bit more about the
Speaker 1: economics of a Galaxy five album in terms of like
Speaker 1: the income that you were able to generate both from
Speaker 1: how much is from album sales versus how much was
Speaker 1: from the touring that you did, Like what is the
Speaker 1: what does that look like? Obviously? Um, yeah, on the
Speaker 1: on the indie labels of the time, right, Well, it
Speaker 1: all speaks to the same two differing models really, right,
Speaker 1: so that we just talked about the major label model
Speaker 1: classic entertainment business. And it's interesting to hear you compare
Speaker 1: to venture capital. I'm sure it's the same idea. You're
Speaker 1: basically gambling, but you the odds are are pretty good
Speaker 1: that you know, if you have like a thousand pieces
Speaker 1: of product, you know one one is going to become huge,
Speaker 1: and you stack the deck by making sure you control
Speaker 1: the distribution channels and the promotion channels that all those
Speaker 1: hits go through. So whatever it's gonna hit is going
Speaker 1: to be one of the ones that you have. It's
Speaker 1: not gonna be somebody else's, right. That's that's crucial, and
Speaker 1: that's crucial to looking to what's happened now with streaming
Speaker 1: the other model is an independent model, a niche model,
Speaker 1: which is what the independent world that I was a
Speaker 1: part of and still am operates on. And that is,
Speaker 1: like I've always said, it's like running a lemonade stand.
Speaker 1: It was like we didn't need any more economic know
Speaker 1: how than a kid opening a lemonade stand on the sidewalk.
Speaker 1: It was like, we had a product, we had to
Speaker 1: sell it for a couple little bit more than we
Speaker 1: caused us to make, and we had to know who,
Speaker 1: how many too, how much to make. I mean, that
Speaker 1: was all it was. It was like it was just
Speaker 1: like basic capitals and any like American five year old understands,
Speaker 1: and that's all we were doing, and that's all any
Speaker 1: of the bands in our scene were doing. We were
Speaker 1: pressing records, in selling them for more than they were
Speaker 1: cast us to make, and making a small profit. And
Speaker 1: there was no model that would take that much bigger.
Speaker 1: But you, as you well know, on that model or
Speaker 1: is pretty much like every small business traditional small business ever.
Speaker 1: So it was like having like a small grocery store
Speaker 1: or harbor store or anything that serves the neighborhood of
Speaker 1: community and survives by pays the bills plus then some
Speaker 1: and you have a p business model. It is not
Speaker 1: a business model that attracts capital, right, So this is
Speaker 1: really interesting, and I guess it gets to the heart
Speaker 1: of the tension here, which is that we all sort
Speaker 1: of understand that I mentioned VC, but I think Hollywood
Speaker 1: is the same. And I guess currently sort of mainstream music,
Speaker 1: which is it's really about the hits, and you aim
Speaker 1: for one hit out of I don't know, a hundred
Speaker 1: or a thousand, and it's just so big and so
Speaker 1: massive that you could have numerous flops and it doesn't matter.
Speaker 1: And this sort of the tail is very, very skewed
Speaker 1: towards these mega stars. And today you know obviously Taylor
Speaker 1: Swift and Adele and a handful of artists that just
Speaker 1: sell an absurd amount. And so I guess the question,
Speaker 1: and maybe this sort of leads into where we are now,
Speaker 1: is like, is the lemonade stand model effectively dead? At
Speaker 1: this point? There's just no other route to music other
Speaker 1: than or sort of Yeah, there's the lemonade stand model
Speaker 1: dead in a world of streaming only, Yes, that's the
Speaker 1: way to put it. Yeah, recorded music, yes, because what
Speaker 1: happened was they were there were parallel methods of distribution
Speaker 1: and sales and reaching your audience before and the majors,
Speaker 1: So the majors when they broke up for example, My
Speaker 1: I mean, they've done this time and again, but my
Speaker 1: particular moment, it wasn't like indie rock was like the
Speaker 1: only time this ever happens, happened over and over and
Speaker 1: over and over again in many many different genres to
Speaker 1: the independent jazz world that you know, all these things
Speaker 1: have gone through similar cycles. My particular world, you can
Speaker 1: see it very clearly again to stick with with references
Speaker 1: to your generation and my generation of artists. Um, you
Speaker 1: can see it in Nirvana. So at that moment the
Speaker 1: gas have found broke up was also the moment that
Speaker 1: Nirvana was signed by Geffen and we all knew. We
Speaker 1: were all all told because Nirvana was on another independent label, Subpop.
Speaker 1: They were on our scene. We were playing the same
Speaker 1: venues that they where. We were at all the mutual friends.
Speaker 1: Everyone knew before the public knew that Nirvana was going
Speaker 1: to be a huge hit and this was going to
Speaker 1: change everything. And that's also why that's when Dean got
Speaker 1: signed to a solo contract, everybody was already in gear
Speaker 1: looking for more Kirk cobains, because it was like, Okay,
Speaker 1: they can take something from our scene and turn it
Speaker 1: into this other model, which is you have one hit
Speaker 1: and a thousand failures, and that's just part of the model, right,
Speaker 1: And so what what I witnessed in on my own
Speaker 1: little scene in the late eighties early nineties was the
Speaker 1: way that that all shook out. The difference to now
Speaker 1: is that even though that happened, the rest of us
Speaker 1: could continue our non major label model of distribution and
Speaker 1: sales and of lemonade stand style business. And we did,
Speaker 1: you know, Naomi and I formed to do. We signed
Speaker 1: with sub Pop, which had been Nirvana's previous navel, and
Speaker 1: continue making records and touring at the same kind of
Speaker 1: scale budget that we always had, reaching the same sort
Speaker 1: of curtailed subset of of a music audience that we
Speaker 1: always had been a part of, and being played on
Speaker 1: college radio, non on commercial radio, and not making videos
Speaker 1: for MTV, etcetera. So that continued. And so what's changed
Speaker 1: now is that there's no parallel network for distribution and sales.
Speaker 1: So what digital did was, as in all our businesses
Speaker 1: and all our communications, it uh scaled everything up through
Speaker 1: fewer channels, and you don't really have another way now
Speaker 1: of distributing music. There's no indie channel for um sales
Speaker 1: and distribution online. We have to go through the same
Speaker 1: channels that everybody does. It's Spotify, it's Apple, it's Amazon.
Speaker 1: These are the biggest corporation. Well, Spotify is one of
Speaker 1: the biggest corporations, but in music they're enormous. I mean,
Speaker 1: their valuation on the stock market is bigger than the
Speaker 1: major labels, and Apple and Amazon are literally among the
Speaker 1: biggest corporations in the world. So we're talking about like
Speaker 1: little me and also not just middle aged me, but
Speaker 1: young versions of this of the pattern that I followed,
Speaker 1: who really have no choices and no already established audience,
Speaker 1: and no ways of navigating this outside the way that
Speaker 1: everybody does. So everybody just has to put their music
Speaker 1: up in the same platform. It's as if back then
Speaker 1: in the eighties and nineties, we all had to put
Speaker 1: our compete for this for the sales space in Kmart
Speaker 1: and Walmart and and and eventually Target, instead of being
Speaker 1: able to go to the independent record stores. If you
Speaker 1: see what I mean, there's no other channel, and that's
Speaker 1: the problem with with the model that's going on now
Speaker 1: because there I mean, there are many problems that I'm
Speaker 1: happy to go into, but the basic, basic one from
Speaker 1: music music business point of view or a band's point
Speaker 1: of view, is that there's no choice. And the other
Speaker 1: thing is that these platforms treat us just like they
Speaker 1: do consumers, where we're kind of just like another It's
Speaker 1: just like Facebook, you know, we're just like users. We
Speaker 1: don't get some special status because we're producing the content.
Speaker 1: They treat us just like all social media. There's no
Speaker 1: distinction really between content producers and consumers. So I just
Speaker 1: have an account. Basically, I can't get anyone on the phone.
Speaker 1: I can't ask a question can you update? Like can
Speaker 1: you write your band bio or anything like that. They're
Speaker 1: very limited ways in which you can interact with these platforms,
Speaker 1: just like there are on any platform. Like yeah, you
Speaker 1: can change your profile picture, you know, it's it's it
Speaker 1: doesn't go much beyond that. On Spotify, you can't just
Speaker 1: upload your music Spotify. They're a handful of distributors that
Speaker 1: have access to that obvious. The three major levels are
Speaker 1: the main ones they hold. I forget the exact percentage,
Speaker 1: it's over the copyrights that are on there. The Indians
Speaker 1: go through consolidators that are approved and have an account
Speaker 1: with them. It's already limited in that way. It does
Speaker 1: make room for independent artists and all kinds of ours,
Speaker 1: everything can be up there. Theoretically that's important to their
Speaker 1: business model, but that doesn't give us any status beyond
Speaker 1: really essentially just another user on the account. They create
Speaker 1: websites that we can interact with in this extremely limited,
Speaker 1: condescending manner and change, you know, tiny little bits of
Speaker 1: the of the individual page, but really so limited that
Speaker 1: it's ridiculous, but limited enough that I've gone on Spotify
Speaker 1: and our one artist official playlists that we're allowed to
Speaker 1: create is called I forgot exactly jording. I said, Damon,
Speaker 1: you have me official downloads available on band camp. That's
Speaker 1: the name of the playlist, so that if you click
Speaker 1: on it, if you look for the artist official playlists,
Speaker 1: it will be called go to band camp. And of
Speaker 1: course Spotify doesn't notice that and take it down because
Speaker 1: they're not looking at my account. So I mean, Galaxy
Speaker 1: is there's probably a lot of listeners on Spotify still
Speaker 1: I presume I don't know. I mean it comes up
Speaker 1: on my playlist a lot but I guess that's because
Speaker 1: I listened to it, But I presume that on sort
Speaker 1: of related artists it's probably I don't know, above it
Speaker 1: for people who are fans of a certain style of
Speaker 1: indie pop comes up decently. What do you get from that? Like?
Speaker 1: What are the benefits to you? And you know, obviously
Speaker 1: one of the things that people talk about all the
Speaker 1: time is like, Okay, yeah, you're not gonna people musicians
Speaker 1: don't make that much recording, but other things live concerts
Speaker 1: and so forth, Like what does that look like as
Speaker 1: a not huge but also not irrelevant indie band? Now
Speaker 1: the sort of the ongoing listenership of Spotify, I think
Speaker 1: you said there have been something like sixty two million
Speaker 1: users or sixty two million streams of your song, Like,
Speaker 1: what's the benefit to you from there's only really one
Speaker 1: for a band like Cars, which is no longer performing.
Speaker 1: We haven't played a show as God's Fence, so um,
Speaker 1: But that's not irrelevant because the bulk of streaming on
Speaker 1: Spotify is catalog, because the platform is actually oriented toward
Speaker 1: non working bands or anyway old records catalog. So it's
Speaker 1: no surprise. Why is that? How sorry? How is like
Speaker 1: in what sends. Does Spotify oriented itself towards non working well,
Speaker 1: is it? Really? It's a great question. I mean, one
Speaker 1: of the things that that Spotify is not is transparent.
Speaker 1: So we don't know how those algorithms work, and they
Speaker 1: won't share that information. So why my band, my old
Speaker 1: band might pop up on your feed, will never know.
Speaker 1: But I'll tell you this, if we pay Spotify to
Speaker 1: boost our work in their algorithm, they tell us, they
Speaker 1: brag about it, that it will it will come up
Speaker 1: more often. I didn't even know that. I didn't even
Speaker 1: know there was a thing paying to be well, it
Speaker 1: shouldn't even be legal, is what you was. The other
Speaker 1: thing you might say, I didn't even know that was legal,
Speaker 1: because if it was radio or analog distribution, it would
Speaker 1: not be legal. That is payola. Those these were fights
Speaker 1: that were fought in the nineties, fifties and sixties about
Speaker 1: radio broadcast because radio becomes so powerful and corrupt and famous.
Speaker 1: DJ got caught and there was congressional action about it.
Speaker 1: So paola wasn't illegal before Congress got involved. Spotify is
Speaker 1: in a digital space. They claim they're not governed by
Speaker 1: radio broadcast rules, and so they say they're not covered
Speaker 1: by payola rules, so they have an official marketing. It's
Speaker 1: two sided marketplace. They bragg a better in their investment
Speaker 1: call and their investor calls. It's the discovery mode. They
Speaker 1: call it Capital D and it's a program where this
Speaker 1: is This is the small way. They say it's not payola.
Speaker 1: They say they're not taking cash. They're taking a lower
Speaker 1: royalty on selected tracks. But for all we know, there
Speaker 1: are other ways that they are taking cash because their
Speaker 1: contracts with the major labels, for example, are privately held
Speaker 1: and never disclosed. So we've always believed in the industry,
Speaker 1: those of us who watched this, that the playlists were
Speaker 1: for sale. How could they not be Radio always was
Speaker 1: radio continued to be after payal the laws, just in
Speaker 1: third party arrangements so called radio promoters who handled the
Speaker 1: cash in between. I mean, this is in my experience
Speaker 1: and my direct understanding knowledge, So how could it not
Speaker 1: be on Spotify, which is even so powerful these playlists,
Speaker 1: so in any case, but then loan behol while we're
Speaker 1: busy accusing them of that. But officially, just but just officially,
Speaker 1: we don't. There's no evidence as such, other than the
Speaker 1: part about how you can an artist can agree to
Speaker 1: take a lower royalty and theoretic right, but taking here,
Speaker 1: but here's the evidence. I mean, for one, taking Lottle
Speaker 1: royalty is paying Spotify obviously say currently they say they're
Speaker 1: algorithms are based on the consumer's interest, right, Like so
Speaker 1: if you if you're wondering why this gaspel fund to
Speaker 1: come up in your playlist, you'd be thinking, what is
Speaker 1: it about my taste? That's the first thing you said
Speaker 1: as you introduced it. But if that's the case, how
Speaker 1: could it change by if you give them a lower
Speaker 1: royalty on a given track? Is not editorial placement on
Speaker 1: They have two types of placement on playlists. One is editorial,
Speaker 1: one is algorithmic. They distinguish them even on their reports
Speaker 1: to us. They give gasp Funder, for example, next to
Speaker 1: no editorial placement. I don't know if that's because I've
Speaker 1: been so vocal, but I will tell you that Damon
Speaker 1: and Naomi, my own personal band, gets zero editorial placement.
Speaker 1: They give us a percentage of our plays based on playlists,
Speaker 1: and the percentage for editorial placement is zero percent. And
Speaker 1: other artists who are very active and critiquing Spotify have
Speaker 1: a similar issue. Now I'm not saying I know that
Speaker 1: that's why, but I will put it out there that
Speaker 1: we know what for For what is the breakdown of
Speaker 1: algorithmic streams versus editorial I think editorial streams for Galaxy
Speaker 1: is something like five of our total stream so that's
Speaker 1: next to nothing. In others we have not been given
Speaker 1: the benefit of their is they're officially declared editorial interventions,
Speaker 1: which is they create a playlist that's like, this is
Speaker 1: the music you should listen to if you like. Now,
Speaker 1: then there's the other type, which is algorithmic. Now, the
Speaker 1: algorithmic playlists, which both both of my bands get to
Speaker 1: various degrees and it swerves around with time, are totally opaque.
Speaker 1: We have no way of knowing what what is doing this.
Speaker 1: But they have now admitted by bragging for their own
Speaker 1: marketing program making this available from manipulation, that if you
Speaker 1: cut them a deal, they will boost it so that
Speaker 1: that's the algorithm that's not the editorial side. So this
Speaker 1: is the side that's supposedly based on nothing. But you
Speaker 1: know all this data that they're collecting, so obviously the
Speaker 1: data is manipulatable, that the algorithm is manipulatable. I mean
Speaker 1: of course it is theoretically anyway, because human beings create
Speaker 1: those algorithms and make choices. But this is officially saying
Speaker 1: it is manipulatable for business purposes. Now, once you get
Speaker 1: that understanding of how Spotify is working, then it starts
Speaker 1: to open up a whole lot of other explanations of
Speaker 1: how their entire business model is working. Because let's not forget,
Speaker 1: since we're on a business podcast, Spotify declares a loss
Speaker 1: nearly every quarter on music. Music is a losing proposition
Speaker 1: for Spotify, according to them. And yet I'm sure a
Speaker 1: lot of people are listening to this have invested in
Speaker 1: Spotify and are not thinking they're losing punk cop proposition,
Speaker 1: because of course they aren't. But music is a loss
Speaker 1: leader for them. That's what they That's what they claim.
Speaker 1: So where is their profit coming from? And that's what
Speaker 1: you really got to start to look at with Spotify.
Speaker 1: It's obviously coming from like other tech platforms that give
Speaker 1: away their product for free, their content for free, It's
Speaker 1: coming from data. Uh, It's coming from two sided marketplace
Speaker 1: deals like Paola. It's coming from the stock market, from
Speaker 1: capital investment, from growth, it's coming from market share that
Speaker 1: they leverage in all kinds of other ways that have
Speaker 1: nothing to do with music, So they move further and
Speaker 1: further from the lemonade stand version of music. It's not
Speaker 1: my product or galaxy of hundreds product that makes Spotify
Speaker 1: any money anyway, and that's crucial to seeing what what
Speaker 1: what's wrong with the with the industry? Well, let me,
Speaker 1: I mean the whole reason Spotify is back in the news,
Speaker 1: And I mentioned this in the intro, of course, Neil
Speaker 1: Young saying he's going to take his music off of Spotify,
Speaker 1: ostensibly out of his anger about their contract with Joe Rogan.
Speaker 1: But how much is that as sort of in your view,
Speaker 1: I guess a, I don't know, an excuse, but as
Speaker 1: sort of like trigger point of there's already a number
Speaker 1: of musicians large and small, frustrated with Spotify. Spotify, in
Speaker 1: your view, doesn't care that much about musicians. It may
Speaker 1: view podcasts as more profitable and a potentially more durable
Speaker 1: business model. So how much is the recent kerfuffle like
Speaker 1: sort of like a bunch of people who didn't like
Speaker 1: the model anyway suddenly like this is a good uh
Speaker 1: rallying point to voice their displeasure with the platform. There
Speaker 1: was certainly no no organization taking advantage of this current moment.
Speaker 1: Neil Young did that as he's always done things in
Speaker 1: his career completely on his own, without announcement and without
Speaker 1: contacting groups like my group Union of Musicians and Allied
Speaker 1: Workers that's been organizing very diligently for for over a
Speaker 1: year about UM the financial model of Spotify UM. But
Speaker 1: the flashpoint is telling for so many reasons. It's actually,
Speaker 1: if you're interested in pursuing a musician's version of what's
Speaker 1: going on with Rogan, I would look to India Ari,
Speaker 1: who was very very articulate about putting together all these
Speaker 1: various issues that are going on with Spotify, Joe Rogan's
Speaker 1: racism being paramount because it speaks to a model of
Speaker 1: discriminatory practices that are tied to the type of capitalized
Speaker 1: businesses Spotify is. And that I mean, I don't think
Speaker 1: you have to be a Marxist like I probably would
Speaker 1: be identified by by some of your listeners to to
Speaker 1: appreciate that these issues are tied together. On that how
Speaker 1: you treat your labor force is tied to how you
Speaker 1: reward your labor force and also how you you know
Speaker 1: how you set up your business in terms of capital
Speaker 1: and labor. Spotify is set up capital. They have no
Speaker 1: connection to music. We are the labor that provides the
Speaker 1: content on that platform, or that has built it to
Speaker 1: at least in its first stage of development as a corporation,
Speaker 1: to the point where they're on the New York Stock Exchange.
Speaker 1: They are a music company, and they do not negotiate
Speaker 1: with us. They do not extend us even the common
Speaker 1: courtesy of having a relationship with us UH and they
Speaker 1: certainly don't reward us in any kind of way that
Speaker 1: we consider most of us consider fair. And yet we
Speaker 1: have no way of organizing and demanding anything from them.
Speaker 1: We were not even at the table. They only cut
Speaker 1: the deal with the three major labels, not their artists,
Speaker 1: but just the labels themselves. And the way they cut
Speaker 1: the deal, the way they entered the US market, was
Speaker 1: they gave the three major labels ownership shares in Spotify
Speaker 1: before they went public. Now this is how then the
Speaker 1: labels cut them a deal that screwed their artists. They
Speaker 1: cut them a deal of minuscule royalties because the royalties
Speaker 1: from the major labels point of view passed through the
Speaker 1: major label to the artist accounts. Ownership was held by
Speaker 1: the corporation and was pure profit for the corporation, so
Speaker 1: they traded ownership for decent royalty deals. So the artists
Speaker 1: on the major labels were not any better represented than
Speaker 1: I was without any seat at that table at all.
Speaker 1: They were sold out by the majors. So the major
Speaker 1: label artists are no happier with this than the rest
Speaker 1: of us. Now. The one difference, though, is that there
Speaker 1: are certain artists on the major labels who've been making
Speaker 1: money hand over fists from streaming because what the model
Speaker 1: does is consolidate it's more of the money in the
Speaker 1: music industry into the top of the pyramid. It's it's
Speaker 1: it's designed that way. The way they calculate royalties, they
Speaker 1: put everything into one pot. It's called a pro roder
Speaker 1: system that they capitalized on. The majors have proved this,
Speaker 1: So my streams go into the same pot as Taylor
Speaker 1: Swift streams, and then we each get paid back out
Speaker 1: according to the percentage of all the total streaming that
Speaker 1: we each hold. Mine is of zero to to disappearing
Speaker 1: infinity compared to what the few people at the top hold.
Speaker 1: Now we get back to the whole question of the
Speaker 1: playlists and the algorithm where Spotify is steering consumers to listen.
Speaker 1: Of course, they're steering them towards a handful of places,
Speaker 1: because the whole thing is designed to consolidate as much
Speaker 1: all the money in the industry into the top. Then
Speaker 1: we get to the podcast because here's the magic for podcasts.
Speaker 1: From Spotify's point view, you might have been wondering, why
Speaker 1: are they spending so much money on podcasting. Podcasting doesn't
Speaker 1: seem that lucrative. I mean, in present company, I'm sorry,
Speaker 1: podcasting as is not that lucrative in it for a
Speaker 1: lot of reasons. But of course he has a lot
Speaker 1: of listenerships, so you know, can you turn that into
Speaker 1: money somehow? Here's the thing for Spotify. There's no royalties
Speaker 1: on podcasts, so Joe Rogan streams have no royalties to
Speaker 1: pay right, Taylor Swifts do Adele's do. It may be
Speaker 1: from my point of view, too little the Spotify sharing
Speaker 1: for the royalties, but from Spotify review, it is a
Speaker 1: serious expense, and the more they stream music, the more
Speaker 1: that expense goes up. It's one to one. They can't
Speaker 1: get around it except by pulling cacamam schemes like reduce
Speaker 1: your royalty and will boost your algorithm. Right that what
Speaker 1: they're after is reducing their overhead. I mean again, it's
Speaker 1: just back to the that's lemonade stand I understand they're
Speaker 1: trying to reduce their royalty exposure. They only have two
Speaker 1: ways to do it, pay musicians even less or get
Speaker 1: to stuff that doesn't have royalties. So they're doing it
Speaker 1: in multiple ways. One is podcasting. There's no royalties on podcasts,
Speaker 1: as you know. Second, they're commissioning music and owning content. Now,
Speaker 1: there's another long standing scandal in the music world that
Speaker 1: didn't get out to the general media, but did enough
Speaker 1: in the music press that is commonly accepted now of
Speaker 1: the so called fake artists. This is because Spotify at
Speaker 1: the at the top of some of Spotify's most popular
Speaker 1: playlist So that means all the money and Spotify is
Speaker 1: in the play lists, okay, because you go on the site,
Speaker 1: they push you to a playlist that then they control
Speaker 1: what you what you're going to stream, and it's not
Speaker 1: just on the popular place at the top of the playlist.
Speaker 1: Because of course, how many songs you listen from the
Speaker 1: beginning and how how deep do you get into playlist, well,
Speaker 1: most listeners just get a few songs in, so all
Speaker 1: the money is caused. It's the same pyramid thing. All
Speaker 1: the money is concentrated in the top of the top playlists.
Speaker 1: That's where the bulk of the streaming is happening. That's
Speaker 1: why payola is so crucial here, because of course, getting
Speaker 1: on the top of the playlist will make you a living.
Speaker 1: What is Spotify do to to reduce their royalty exposure? Well,
Speaker 1: they started inserting tracks in those playlists and those popular
Speaker 1: playlists that they own. How did they do that without
Speaker 1: consumers noticing? They created fake bios for fake artists, That's
Speaker 1: what That's why it's called fake artists with you know,
Speaker 1: photos that they pulled off of the internet, fake bios
Speaker 1: and a song title and they slip it in to
Speaker 1: a playlist. I mean, is this just on like you
Speaker 1: instrumental sort of ambiance? No? No, no, no, no no, no,
Speaker 1: it's anything, it's anything. So there other fake country musician, Well,
Speaker 1: I don't know specifically country, but there are fake well
Speaker 1: so called fake there are fake tracks scattered throughout Spotify.
Speaker 1: The only way we know about them is that journalists,
Speaker 1: investigative journalists figured it out. They figured it out by
Speaker 1: not recognizing a name at the top of the playlist
Speaker 1: and googling it, finding a bio page and then finding
Speaker 1: no other links. It didn't have any existence. These artists
Speaker 1: have no other existence anywhere in the world except at
Speaker 1: the very very top tier of one of the top
Speaker 1: tier playlists. So it's clear that it's Spotify owned and
Speaker 1: not just someone who used like one of the aggregators
Speaker 1: to upload because I found that, because you can trust
Speaker 1: the copyright. And where did this music come from? There
Speaker 1: all come from Swedish recording studios Spotify. The Swedish company
Speaker 1: Spotify said well, these aren't fake artists. These were created
Speaker 1: by these producers in Sweden that that we paid to
Speaker 1: produce this music got it. So their argument is what
Speaker 1: do you mean fake? This is as real music as
Speaker 1: anything else. And now you get into another set of
Speaker 1: investments to Spotify has been making, which is into AI.
Speaker 1: What is AI going to do for them or is
Speaker 1: already doing for them? You can create sound like music
Speaker 1: that people can't distinguish in terms of style or you know,
Speaker 1: so you feed in, take the take whatever is at
Speaker 1: the top of the charts at the moment, feed it
Speaker 1: all into AI and have it spit out a track
Speaker 1: that's enough like it that a listener on a playlist,
Speaker 1: as passive listener on a Spotify playlist, will not stop
Speaker 1: the playlist and move away from the from it, letting
Speaker 1: go continue when they hear it is maybe not an
Speaker 1: artist they recognize, but they accept it going past them.
Speaker 1: It sound I'm just looking. I'm reading a I pulled
Speaker 1: up a Variety article from and it sort of gets
Speaker 1: at this, and they deny that fake artists exists, although
Speaker 1: the Variety article sites insiders who say that it is about,
Speaker 1: as you say, reducing the streaming royalties that they owe,
Speaker 1: the leverage that they have against the record labels. So yeah,
Speaker 1: but I think if you look at the language of
Speaker 1: their denial, all they're saying is that these are real people.
Speaker 1: But the fact that they own those tracks is the
Speaker 1: crucial part here. I mean, whether it's an artist that
Speaker 1: they signed to their own label like Rogan, that they
Speaker 1: own a percent. So the key with the difference would
Speaker 1: be essentially in your view, that they are real people,
Speaker 1: but have Spotify commissioned the songs and therefore the royalties
Speaker 1: they're not leaving, They're not They're not going as far
Speaker 1: they're not well, they're not going anywhere they own. The
Speaker 1: problem is Spotify cannot be and this is the Rogan
Speaker 1: controversy has brought this to the fore, and I've been
Speaker 1: really happy to see this terminology surface in the mainstream
Speaker 1: press about it. Spotify cannot be a platform if they're
Speaker 1: also a producer, right there, a producer of music tracks.
Speaker 1: We have known this for years in the music business.
Speaker 1: We have been screaming about this. Nobody cared, of course
Speaker 1: outside the music industry, and those who are running the
Speaker 1: show don't care because they're making money hand over fist.
Speaker 1: I mean, the estimates are that the major levels are
Speaker 1: making a million dollars a minute from streaming. So obviously,
Speaker 1: I mean, we started this conversation and you know, as
Speaker 1: you point out the beginning, Galaxy never aspired to be
Speaker 1: like a true like pop band that was going to
Speaker 1: have like a megahad. Wasn't your seeing the lemonade stand
Speaker 1: business model. Nonetheless, the pop scene has always existed the
Speaker 1: hits driven record you know, whether it's radio stations, record
Speaker 1: store CDs, etcetera. That's always existed just within the realm
Speaker 1: of pop setting. Aside, the end of the lemonade stand model.
Speaker 1: Has it gotten even more skewed? Is streaming royalties to
Speaker 1: the handful of artists that make a killing on it,
Speaker 1: like the Taylor Swift, like the Adeles? Is it even
Speaker 1: more skewed than it used to be if we went
Speaker 1: back to say, record sales and radio plays in the
Speaker 1: era of say Madonna, Well, here there's some squish nous
Speaker 1: because it's very hard to compare one to one because
Speaker 1: there has been a sea change from analog to digital
Speaker 1: in terms of how the business is structured and how
Speaker 1: the royalties are calculated, etcetera. I think everybody feels that
Speaker 1: it has gotten more concentrated. I don't know of any
Speaker 1: good studies that I can point to two that make
Speaker 1: the case with numbers. I hope they're out there. If
Speaker 1: they're not, I hope somebody's working on it. But it
Speaker 1: is a kind of a difficult thing to compare. And
Speaker 1: this is a lot of the discussions around what's wrong
Speaker 1: with streaming sometimes quickly revert to, well, how many hours
Speaker 1: we're making a living in right versus today. It's just
Speaker 1: not the type of calculation that's that that exists because again,
Speaker 1: because the business was decentralized so much more. And I
Speaker 1: think that even framing the question those terms is an
Speaker 1: indication of how centralized it is now. We do have
Speaker 1: the figures for right now and here they are, according
Speaker 1: to Spotify themselves. Because so my my scrappy group of
Speaker 1: independent arts, self employed artists that got together during COVID
Speaker 1: and are forming a new union called the Union of
Speaker 1: Musicians and Allied Workers Union of Musicians dot org. We
Speaker 1: launched our own punk rock campaign to alert people to
Speaker 1: what's going on with Spotify and streaming in general. But
Speaker 1: we used Spotify as our target because they're they're running
Speaker 1: the show, they have the largest market share, and they're
Speaker 1: they're such a good enemy because they put the foot
Speaker 1: in their mouth all the time. So we chose them well,
Speaker 1: i'd say, as this podcast proves. And you know, we
Speaker 1: launched a campaign called Justices Spotify, and we've got all
Speaker 1: close to thirty thou musicians have signed onto it. It's
Speaker 1: it's it's it's really it's made ripples in the music world,
Speaker 1: and it certainly has called Spotify's attention, because then they
Speaker 1: launched a website to answer our accusations called Loud and Clear,
Speaker 1: and that was a website just directed to it's like
Speaker 1: a giant f a Q with their talking points counted
Speaker 1: to our arguments for what's wrong with Spotify on that website.
Speaker 1: So this is on Spotify's own pr designed to counter
Speaker 1: musicians complaints. They say, wait, look how many people are
Speaker 1: making a living from from Spotify and they say it's
Speaker 1: thirteen thousand, four hundred globally are grossing fifty thou dollars
Speaker 1: a year or more? Okay, so this is their claim
Speaker 1: to the success of this model. It's very hard numbers
Speaker 1: so well as they're just like lift a little corner. Now,
Speaker 1: the only reason they said that was they thought it
Speaker 1: sounded so good. First of all, their mission statement was
Speaker 1: to make a million artists a living. Four hundred is
Speaker 1: not a million. They're off by nine eight, seven thousand whatever. Right,
Speaker 1: they're wildly off. And now let's consider what fifty thou
Speaker 1: grows is for a musician, typically for a band, or
Speaker 1: for any artist, there is a label involved. We talked
Speaker 1: before about how Spotify doesn't even platform unless you go
Speaker 1: through at least a distributor, but mostly the lion share
Speaker 1: of stuff on there is from the majors over and
Speaker 1: then you've got all the independent labels on top of that,
Speaker 1: So most people on Spotify are on a record label.
Speaker 1: Labels have various deals. Of course as a private contracts
Speaker 1: privately negotiated, but as a rule of thumb, you can
Speaker 1: assume the labels taking at least fifty of that income. Okay,
Speaker 1: so now we're talking thousand dollars a year for thirteen
Speaker 1: and a half thousand artists globally. Now, so you get
Speaker 1: twenty five dollars in for a year. Now that's gross.
Speaker 1: Say you're in a band, say you're in Galaxy off
Speaker 1: I foundred that has three members that split the money evenly. Well,
Speaker 1: now you're earning a third of dollars gross. That's without
Speaker 1: any percentage that goes to management, distribution, all the other
Speaker 1: overhead that any artist has producing product that gets itself
Speaker 1: on Spotify. So you're talking about below minimum wage. And
Speaker 1: this is the figure that they're bragging about as their
Speaker 1: big model of success. They have drained the music industry.
Speaker 1: Streaming is now eight of all revenue in the US
Speaker 1: for recorded music, all revenue from all sources, and of
Speaker 1: that Spotify as alliance share. So yes, it's a little
Speaker 1: bit more from the other platform. So if you're making
Speaker 1: k from Spotify. Yeah, you're probably making I don't know, SEV,
Speaker 1: but you're not really making that. You're making less than
Speaker 1: minimum wage. So what have we traded for this global
Speaker 1: model for most of us, for almost all of us, nothing,
Speaker 1: We get nothing out of it. I could make that
Speaker 1: money back with with two tho LPs or less, but
Speaker 1: they're making it impossible for me to do that. I
Speaker 1: have to go through Spotify, and that's the problem. So
Speaker 1: before we wrap up, but we just have a couple
Speaker 1: of minutes left, I want to ask a couple of
Speaker 1: quick questions about this, because this is where I was
Speaker 1: about to go. I mean, first of all, you know
Speaker 1: you're talking about okay, just modified but versus say the
Speaker 1: late n A band can raise their profile in all
Speaker 1: different kinds of ways, and there's Twitter, and there's Instagram,
Speaker 1: and there's Facebook, and so sure, maybe the record stores
Speaker 1: that network maybe is uh diminished, although there are still
Speaker 1: our record stores and some independent music stores. But what
Speaker 1: if someone says, like, you know, look, it's two Yes,
Speaker 1: there are obviously things that have gotten more skewed. On
Speaker 1: the other hand, the ability of a musician or a
Speaker 1: band to become a name to promote themselves. They don't
Speaker 1: have to go through a record label anymore. There are
Speaker 1: other things that have countervailed that that allows someone to
Speaker 1: get awareness and build fans on the internet and monetize
Speaker 1: their music in some different ways. Why why does that
Speaker 1: not work? Why why does it not counteract by the
Speaker 1: fact that there's all these new platforms for an artist
Speaker 1: to promote themselves, well, because none of them are are monetizing.
Speaker 1: I mean, you stick monetizing monetizing in there, but but
Speaker 1: the platforms you mentioned are not. Don't pay. Twitter hasn't
Speaker 1: pay your Facebook doesn't pay you. So the only modernization
Speaker 1: that has been open to artists in the streaming era
Speaker 1: is live performance. And it is absolutely true that you
Speaker 1: can leverage your exposure. I mean it's basically, we're all
Speaker 1: interns through our recorded music to the music industry, and
Speaker 1: then we're supposed to make our living live. I mean,
Speaker 1: the truth is only some type of bands can make
Speaker 1: a living live. I mean, live music doesn't fit all
Speaker 1: the models of the type of music that you might
Speaker 1: want to listen to and recorded music, and there are
Speaker 1: entire genres of music that can't really turn a profit live,
Speaker 1: like jazz, for example. I mean there's a whole. There's
Speaker 1: a whole, there's a whole, vast amounts of recorded music
Speaker 1: that cannot translate into will go hit the road and
Speaker 1: just live that way. Then there are a whole lot
Speaker 1: of personalities and lifestyles that don't fit that way. Then
Speaker 1: there are a whole lot of people who fall to
Speaker 1: pieces on the road because you know, actually going on
Speaker 1: the road is is a tall order, okay from And
Speaker 1: there's a reason why we have all these stories, and
Speaker 1: there's a reason why the end of Kirk Evans story
Speaker 1: is what it is. But here's what happened in the
Speaker 1: last two years, which is COVID, so all of live
Speaker 1: music shut down. That's why my group got together Union
Speaker 1: musicians and allied workers because we were all unemployed because
Speaker 1: our only employment in the streaming era has been live performance.
Speaker 1: That is only monetization available to us. All the modernization
Speaker 1: channels of recorded music have been swallowed by streaming. That's
Speaker 1: that pie chart that the r i A, the Record
Speaker 1: Labels Association takes note of every year that's now up
Speaker 1: to from streaming. What's left in that seventeen is everything
Speaker 1: else you can think of. It includes soundtracks for films,
Speaker 1: uh selling to commercials. It includes radio performance, it includes
Speaker 1: satellite radio, it includes everything else you can think of
Speaker 1: that monetizes recorded music. Streaming has taken it all. It's
Speaker 1: done it by going into all the other markets and
Speaker 1: swallowing them. For example, back when we had coffee shops
Speaker 1: and bars, they play music, and they're supposed to play
Speaker 1: and we pick up a small license from that music.
Speaker 1: But what are they doing If you ever ask your barista,
Speaker 1: they're playing their own personal Spotify account when on a
Speaker 1: phone plugged into the onto the machine. They're not supposed
Speaker 1: to do it. And if you dig and dig and
Speaker 1: dig on Spotify's website, you will come up with a
Speaker 1: page that says, do not use this for commercial situations.
Speaker 1: But boy, they don't work very hard to let people
Speaker 1: know that do that. In fact, Starbucks as a deal
Speaker 1: with Spotify where they give free premium accounts to every employee.
Speaker 1: I mean, you can see what that does, right, So
Speaker 1: we lose that. Satellite radio it was a good income
Speaker 1: stream that was coming up because of they were being
Speaker 1: installed in all the new cars. And there's a different
Speaker 1: royalty model for salar radio that's very secure for musicians
Speaker 1: that was set up by Congress in the nineties that
Speaker 1: was really booming. I mean, it wasn't a lot of money,
Speaker 1: but it was going up straight line up. And now
Speaker 1: it's going straight down because of course, what is everyone
Speaker 1: playing in their cars? They stream instead of playing salid
Speaker 1: raid because you don't have to play, you don't have
Speaker 1: to pay the subscription Sali radio or maybe already have
Speaker 1: one subscription to streaming service. You just use that. So
Speaker 1: all these other channels branding, To take a great example,
Speaker 1: people think, oh, you build your your thing. Brands put
Speaker 1: on playlists on Spotify. They put our music on. They
Speaker 1: don't have to negotiate with us. They don't have to
Speaker 1: pay us anything for that because it's just another playlist
Speaker 1: on Spotify, Nike presents whatever the hell they want to
Speaker 1: label it. It used to be a brand wants student
Speaker 1: wants to associate themselves with your music. That was a
Speaker 1: big payday. The biggest payday Galax five hundred ever got
Speaker 1: was from Honda who used thirty seconds of instrumental track
Speaker 1: of ours in a television commercial. That was a huge
Speaker 1: pay day for us, more than our record royalties that
Speaker 1: we ever managed to collect from our labels. Um that
Speaker 1: we were assigned to before we took made our own label.
Speaker 1: That's much better. But in any case, that doesn't exist anymore.
Speaker 1: Honda wants to have a playlist on Spotify, they just
Speaker 1: build it. Do they pay Spotify? Probably to Spotify report
Speaker 1: that back as music income? No, right, you see how
Speaker 1: this goes, so that that's what's going on. Spotify has
Speaker 1: a model. It's unregulated. There are no set royalties from
Speaker 1: anything except the three major label contracts that they did.
Speaker 1: And that's a very winning model for destroying the music industry.
Speaker 1: But here's the kicker that I really want to emphasize
Speaker 1: for your listeners in particular, it's not a winning profit model.
Speaker 1: They still say they don't make money on music, and
Speaker 1: I believe them because look where they're putting their money.
Speaker 1: They're putting their money in Joe Rogan. And that gets
Speaker 1: back to why Neil Young calling out Joe Rogan, which
Speaker 1: he had every reason to do, was explosive because it
Speaker 1: actually speaks to the whole problem and in the ari
Speaker 1: put it all together, even putting it together with racial
Speaker 1: issues in the music industry, I mean, the music industry
Speaker 1: has a long, ugly history of making money from black
Speaker 1: artists that go to white executives, and you've got to
Speaker 1: look at this tie to that too. Well, Damon, this
Speaker 1: was a fascinating conversation, and I'm sure there's plenty of
Speaker 1: more roads and other aspects of all of this that
Speaker 1: we could go down, but I think that's a good,
Speaker 1: uh place to stop it. Really really appreciate you coming
Speaker 1: out odd Life. Thank you for having me, really appreciate it.
Speaker 1: Take care of them. Well, that was for me. I
Speaker 1: loved having that conversation. Like I said at the beginning,
Speaker 1: I'm a big fan of Damon's music and a galaxy,
Speaker 1: but that really did actually put some pieces together for
Speaker 1: me about the frustration because in my view or the
Speaker 1: way I thought about it before, it was like the music,
Speaker 1: the music industry is always brutal. Very few people actually
Speaker 1: get to become superstar musicians or make a living at
Speaker 1: Anyone who ever has made a living at recorded music
Speaker 1: has of course been very lucky. But this sort of
Speaker 1: comparison that he made between the the the hits driven
Speaker 1: pop model, which has always been hits driven, versus what
Speaker 1: he called the lemonade stand model, where you can not
Speaker 1: expect to make a gigantic hit, but maybe between record
Speaker 1: sales and touring taken a bit more income than the
Speaker 1: cost to put it all on. That really clicked for me,
Speaker 1: and that was that was really strike against. So this
Speaker 1: idea that with the loss of most record stores, the
Speaker 1: loss of the CD business, and recently, of course the
Speaker 1: loss of live music, that really everyone is shuffled into
Speaker 1: the hits business. That clicked to me. So I really
Speaker 1: enjoyed that conversation, and uh big thanks to Damon for
Speaker 1: coming on. So this has been another episode of the
Speaker 1: Odd Lots podcast. I'm Joe Wisenthal. You can follow me
Speaker 1: on Twitter at The Stalwart. Follow my co host Tracy Alloway.
Speaker 1: She's at Tracy Alloway. Follow our guest Damon Kurkowski. His
Speaker 1: handle is at Data Underscore Drummer. Follow our producer Laura
Speaker 1: Carlson at Laura M. Carlson. Followed the Bloomberg head of
Speaker 1: podcast Francesco Levi at Francesca Today, and check out all
Speaker 1: of our podcasts at Bloomberg under the handle at podcasts.
Speaker 1: Thanks for listening.