MTP: I watched your CNN interview with Poppy Harlow and you made some significant points that don’t get picked up much. Let’s start with the last one: Spotify could be the next Myspace. I think we all remember when Myspace was viewed as the Second Coming and then one year it just evaporated. I was trying to remember the CEO’s name. What about Spotify reminds you of Myspace?
Blake Morgan: The false idea that Spotify is inevitable and gargantuan. In fact, if they don’t evolve, they may find themselves more like Goliath. And we all know what happened to Goliath, right? If you don’t, just ask MySpace. Streaming is not itself in question here, any more than MySpace’s failure called the idea of social media into question. It didn’t. Its failure was a reflection on MySpace, and its model. Same thing here. Streaming may or may not be a viable future, but it won’t be if the people who make streaming services’ only product––music––don’t get paid fairly. It’s not a question of inevitability, it’s a question of a particular business model’s viability. Hence the cautionary comparison.
MTP: It seems like both were commoditizers. It could be music or any other mass market good that is digitizable. And Google the Great Commoditizer, the destroyer of worlds, was all up in Myspace and they’re all up in Spotify. Maybe that tells us something about Spotify’s future? Do you think they think Google actually cares whether Spotify is selling music or YouTube-style sex tourist home videos?
Morgan: I think Spotify has a lot of masters (pardon the recording-jargon pun), and Google being one of them does not surprise me. I think they’ve also drunk a lot of their own Kool-Aid over at Spotify. At the private artists-only meeting with them in NYC a few weeks ago I was at, the Spotify execs constantly pointed at YouTube and the people using YouTube as the bad guys. One exec said, “our competition is from people right-clicking on YouTube music videos and taking the audio.” I answered, “well then why don’t you call your buddies over at Google and have them just disable that function.” Response? Silence.
MTP: Another point you made that was especially compact was the break-even analysis for iTunes compared to Spotify. I’m always amazed at how the business media or business school critics just completely ignore MBA 101 type break even analysis. Want to go over the example you gave of recouping recording costs?
Morgan: Sure. So it’s common for a middle-class recording artist like myself to make a new record for around $15,000. On iTunes, that would mean you could sell 2,000-2,500 albums and break even. iTunes pays 70 cents for a 99 cent download, and $7.00 on a $9.99 priced album. The Spotify break-even equivalent, and this is even if you accept their per-stream estimate of half-a-cent-per-stream (it’s usually much lower), would be between 3,000,000 and 3,500,000 streams. Jason Aldean, a #1 Country Music artist, got a reported 3,000,000 total streams for his new album his first week on Spotify. That’s what it would take. Oh…by the way, he just pulled his new record from Spotify yesterday (insert smiley-face emoticon).
MTP: Do you think that straight news journalists know enough about the music business to be able to unpack the press releases they get? I noticed that Ms. Harlow read a Spotify press release in the lead to your segment that started out stating that Kobalt earned more from Spotify in Europe than they did from iTunes. That story line somehow expanded from a story about a publisher with a stable of writers who include some of the biggest songs of the current era that made more as a publisher from Spotify than they did as a publisher from iTunes into a story that sounded like Spotify paid more in royalties than iTunes. Which we know is simply mathematically impossible. I felt like Ms. Harlow, a very smart journalist, was getting conned by Spotify simply because she doesn’t understand the complexities of the music business.
Morgan: You know, so much of what’s changing in the current movement and groundswell from music makers about all this stuff is the understanding that winning the hearts and minds of music lovers is central. That’s what I’ve really tried to focus on myself, with #IRespectMusic. Congressmen and Congresswomen are music lovers. Legislators are music lovers. Teachers, radio hosts, club owners, guitar makers––they’re all music lovers. Journalists and news anchors are too, and Ms. Harlow was really clear, on the air and in the interview, that she too loves music. She, along with many others, are just now learning how music makers are paid (and not paid) for their work. She generously thanked me for presenting the arguments in a way she could, in fact, understand and learn from. So I think we’re on the right track…we just have to keep going.
MTP: And none of them think that Spotify would just lie, right? Like that royalty rate that Spotify released. It’s frequently cited as “Spotify says” not “Spotify says and I asked these four artists who all said it was bullshit.”
Morgan: That’s true. But I also think that the idea that artists are business savvy and smart is (sadly) still a new one. That we would question the information coming out of a giant corporation about their rates––and be right––is a new concept. But I think that’s changing now too.
MTP: No thanks to Bob Lefsetz, by the way. How has the reaction been to your interview in the #irespectmusic community?.
Morgan: It has been just like it’s been throughout this entire year. People are celebrating. They’re energized. Motivated. Appreciative of everyone and anyone who is stepping forward. They’re standing together, respectfully and joyously, to fight and win for music and the people who make it. Onward!