Disintermediation….Huh!….What Is It Good For?
dis·in·ter·me·di·a·tion disˌin(t)ərmēdēˈāSH(ə)n/ noun / Reduction in the use of intermediaries between producers and consumers, for example by investing directly in the securities market rather than through a bank.
The music industry is gaining velocity toward complete disintermediation. The promise of the ‘disintermediation gift’ came from the tech world, programmers, engineers, internet visionaries etc., hell bent on exploiting music, the artists that make the music, and the companies that finance the making of music, without consideration of the ramifications. Disintermediation is found in the ‘long tail’ concept, and now that we have entered the ‘streaming bubble era’, is being found out for being the fallacy that it always was. It is true that most of the barriers and intermediaries that an artist, musician, or band needs to go through to reach a potential fan base have been removed and that’s not all bad. The last hurdle….to be known, is still dominated by the three major label-distribution behemoths, (Warner Music, Universal, Sony) and a few others with their power of promotion. What is missing for new and developing artists, is the money that subsidized promotion and marketing taken in by the SALE of CDs and Digital Music. The fact remains that streaming revenue from the looooooonnnnggggeeerrr tail has undermined the business part of the music business. This trap was already set as Wal-Mart, Best Buy, Target and a few other big box retailers sought to drive down CD prices as a loss leader to sell TVs and other bigger ticket items. They soon realized that the accessories for your IPods, Pads and Phones returned greater revenue per square foot than a 9.99 CD. Having sufficiently killed off purely music retailers, Best Buy is now only going to carry vinyl following Target.
I bring all this up as two headlines came across my news feed, the first is: Facebook Stock Tumbles Down 19% (CNN MONEY) and loses $119 billion in value in a day. Facebook’s DNA was about nerds meeting girls on the campus of Harvard and metastasized into a repository for propaganda. Music was an add on and what it means for bands and connection is a mystery. I could never tie any meaningful correlation between Facebook ‘Likes’ or ‘Follows’ to hit songs. The other headline: Spotify Hits 180 Million Users and Loses More Money (Rolling Stone). Spotify artists truly make so little money that it’s almost like buying a lottery ticket and dreaming the dream. The exploitation from these streaming platforms have cratered actual sales from recorded music while catering to the most passive music user. Spotify is a bubble, like the CD bubble that lasted from the early 90’s with the explosion of CDs to 2000. Their real objective is disintermediation. From creation to market with no intermediaries is an enthralling idea, but may be as unprofitable as the company seems to be for the creators. The millions that Spotify and the other streaming platforms pay out to labels mostly comes from catalogue. Hit songs and albums that were propelled along with help from the intermediaries, i.e. record labels, publishers, A&R Men and Women, Promotion and Marketing departments, the radio stations and programmers, and had nothing to do with an algorithm.
‘To Be Known’ is what every singer, songwriter and band seek. Radio promotion and marketing to broadcast and satellite radio is the most valuable way ‘To Be Known’ and that process changes culture for the better and creates real value for the artist and songwriters. Contact us at The Artist Cooperative and Mars Music to talk about how we can help you ‘To be Known’.