Monday, November 24, 2014

Apple, Beats Music, and Artist Royalties: Why I Am Calling Out Dr. Dre

#DrDreisaHypocrite

I wanted a simpler hashtag - something that would be easily memorable, not take up too much precious characters in a tweet, and yet capture the entirety of my argument. Well... While it ticks off the first box, I can see how it falls short on the other two. At the very least, the statement is provocative enough that it may just prod people - perhaps even Dr. Dre himself - to ask why I am leveling that charge.

Who am I?

My name is Kareem Powell; I am a pianist from Dayton, Ohio. Depending on who you ask, I am either a brilliant overlooked pianist, a nice guy, or a laughing stock that gets called only as a last resort. Frankly, I'm at an age where I've ceased to care. I take care of my family and sometimes I actually get to make music. If you want to learn more about me, browse through the Curriculum Vitae on my website.

Front cover of my album

The more relevant thing to note is that in 2011, I released my first - and to date only - solo piano album "Reflections in Black and White." The back of the album cover says "Sunstrike Entertainment LLC." What it doesn't say is that I am Sunstrike Entertainment LLC. I wrote most of the tracks and arranged all of it for piano. The studio time came out of my pocketbook. I used my car as collateral on a loan to pay for that album. There is no agent, no manager, and no producer. The risk was solely mine.

Honestly, the album got very little traction. I couldn't even book a local gig with it. No one was interested. Three years later, I've given away far more music than I've sold. Do I stand by the music? Absolutely. I gained valuable experience that I'll put to use whenever I do a followup. The point is that "Reflections in Black and White" is my hard work - blood, sweat, tears, risk, reward and failure. All of it.

Ins and Out of Digital Distribution

Like most recording artists, I use digital distribution. Where the major-level artists are concerned, the major record labels - all three of them - are responsible for getting their work out into the digital marketplace. Because they have the big-name artists that consumers most want to hear, the record labels are able to negotiate directly with each of the platforms: iTunes, Spotify, Rdio, etc. All of them.

Well, I'm not signed to a record label, remember? For my album to be delivered to these digital marketplaces where you can find it along Taylor Swift and my "enemy" Dr. Dre, I have to use what is called an "aggregator." You see, each place has certain things that need to be done to the music files in order to be delivered best on their platform. The record labels have people whose job it is to do that. My one-man-operation doesn't. An aggregator collects all of us stragglers - I mean - independent musicians, processes our music, and sends it right to the marketplace. For that service - which is the only way we little people can distribute our albums along with the majors - the aggregator charges a fee or percentage of the royalties. My aggregator of choice is CD Baby.

For the most part, I have been pleased with the quality of CD Baby's customer service. They were the shining jewel in what was otherwise a chaotic process of self-releasing my first album. Just because you like someone doesn't mean everything they do is perfect.

The CD Baby Account Dashboard

One of the things I like about CD Baby is their record-keeping. I can go inside my member profile and see when an album or track has been sold, which site it sold on, and how much money I will be paid as a result. My revenues are nothing to brag about, so my browsing through this is more of a "morbid curiosity" type thing. I can also see which platforms are streaming my music, which tracks are getting streamed, and what they are paying me. Again, it's nothing significant, but it gives me a little personal insight into the ongoing discussions about digital streaming.

Here are some "very exciting" screenshots of my streaming reports from:

Streaming Report: Deezer

Streaming Report: iTunes Match

Streaming Report: MediaNet

Streaming Report: Muve Music

Streaming Report: Rdio

Streaming Report: Rhapsody

Streaming Report: Spotify

Yes, the individual stream revenues are laughable. I was actually tickled pink whenever I saw anything even resembling a penny per stream, seeing as Spotify likes to pay me 4 hundredths of a cent. I joked to a friend a few weeks ago that Spotify usually pays me enough to buy half a candy bar per year.

On Sunday November 16, 2014, I happened to take a peek at my account overview and I saw with delight that my album was now being streamed on Beats Music for the first time and these were the first streaming reports. (There is usually about a 2 month lag between the streaming and the actual report.) Again, this is typically about entertainment value for me, so I went to see how many streams and what minuscule amount that Apple's newest acquisition would be paying me...

Streaming Report: Beats Music
WHAT...

...THE...

.......@#$%!!!!

Fifty-three streams - which is the equivalent of listening to my album four times - and I did not get paid a damn thing by a corporation that Dr. Dre had just sold to tech juggernaut Apple Inc for THREE BILLION DOLLARS.

Needless to say, I was hot. Assuming it was a mistake, I asked CD Baby what was happening.

"Dear CD Baby: WTF, Dude?"

"Dear TKP: Yeah. We sold you out, Bruh."

"Dear CD Baby: *insert expletive-laden rant*"

Yeah, I blew my stack. I was already earning jack shit and Beats Music just got to use my music at no charge so they could build their own customer base?

How do I respond?

Good question. I didn't need a lawyer to know that what Apple/Beats Music just did was perfectly legal. Like everyone else, they negotiated with CD Baby and the other aggregators and CD Baby agreed. If the major record labels accepted this arrangement - again, I don't know... they don't call me - then I could easily see Apple turning to the aggregators and saying "This is the deal; take it or leave it." Again, there's no doubt in my mind it's legal.

Do you know what else is legal? Using eminent domain to route a sludge pipe through a farmer's corn field. Starting a Black Friday sale during Thanksgiving Dinner. Passing laws to criminalize feeding the homeless. Legal does not mean right.

My initial reaction as you see from the email above was to remove my album from Beats Music, reconsider my relationship with CD Baby, and be done with it. Once my initial anger subsided, I started wondering if that would really solve the problem. It's not like I was the only musician this affected.

1.) Did other musicians (particularly with CD Baby) know this was happening?

2.) Did Beats Music negotiate that agreement with everyone?

3.) How can this practice affect the entire market?

4.) Who has the leverage?

Again, Beats Music - the brainchild of Dr. Dre and Jimmy Iovine - is owned by Apple. Apple owns iTunes, who single-handedly determines the maximum sales price for digital downloads. Why? Because everyone goes there. Any other marketplace will just want to match or beat iTunes price. So yes, they control that part of the industry and will take their 30% cut. Could Beats Music possibly do the same thing to streaming?

Spotify - the favorite punching bag of Taylor Swift and Scott Borchetta - is valuated at $3 Billion last I checked. Pandora - an online radio service whose royalties are set by law - is valuated at $2.6 Billion. Apple Inc. is valuated at $662 Billion. (What'd you expect? Beats Music was worth $3 Billion to them.) I'm neither an economist nor a businessman, but I'm pretty sure with pockets that deep, they probably will take over streaming once they figure out the right product. If Apple/Beats Music can get away with setting a new standard - that artists do NOT get paid for music streamed during "trial membership periods" - then all other streaming platforms will follow suit.

So, yes, I could take my album off of Beats Music aka take my ball and go home. In a few months, I'd just be finding out that Spotify, Rdio, and everyone else will be doing the same thing and not compensating artists for streams on their "free versions." Apple has already been in negotiations with major labels to reduce their royalty rates. What do you think that will do to the rest of us?

It is time to speak up.

Other musicians need to know this was happening. Other musicians need to know this could possibly be happening to them. They need to check their reports and tell their stories. Speaking out against Apple/Beats Music is the only way I can see convincing them to end this practice and pay artists for all the music streamed on their platforms.

And from my standpoint, that begins with holding "one of our own" to task.

Dr. Dre needs to be held accountable.

Yeah... Technically, Dr. Dre and Jimmy Iovine sold Beats Music to Apple. While counting their billions, they are both still at unspecified roles at Apple. What are they? No one knows and the sale is nearly 6 months old. The fact is that Beats by Dre still has his name attached to his product. Beats Music is a spin-off of Beats by Dre. Dr. Dre is an integral part of that company. There is no way he "didn't know" what his company was doing to artists. He knew. He condoned it. He profited from it.

Back in 2000, Dr. Dre sued Napster because his music was being uploaded and shared onto that platform. Users were sharing his music for free and he received nothing. 14 years later, he's streaming the work of other musicians on his own platform and what is he paying them in return? Nothing.

Dude practically wrote my opening attack.

"Yo, Dre! Are you a hypocrite or what?"

Yes, I wrote it by hand on a notepad, took a picture of it with my cell phone, and posted it to Instagram. Short, sweet, and to the point. Despite my "fantasy" of this sparking a movement, I wasn't sure what to expect out of it or if anyone would really care. Dr. Dre is a musician/producer/entrepreneur who makes more in one minute than I do in an entire month. He is a billionaire and popular icon that has built an empire. I'm a poor, fat, hairy schmuck in debt up to my eyeballs.

It struck a chord. My friends felt strongly enough to share it. A friend of mine posted it to imgur with the caption "Dr. Dre is a hypocrite" that in a few days would become my hashtag. The imgur picture didn't have the details the Instagram or Facebook caption had, but it did spark a discussion. That was a start.

You called out Dr. Dre; what do you want?

As nice as money would be for my 53 streams, the market value is not worth the price of postage. This is about a basic principle: If you use my creative work, I should be paid for it. I did not release my album to build Dr. Dre's empire. This is what I'm looking for:

1.) The practice of Apple/Beats Music streaming music to "trial members" without compensating the artists who created it needs to end. If you play my music, I should be paid regardless of whether or not you are collecting money. It's one thing for me to decide to give away my music. It's another thing altogether for a multi-billion dollar corporation to give away my music.

2.) Musicians need to be aware this is happening. They have the highest stakes in this "game." They need to check their streaming reports and SPEAK UP! Apple and Beats Music will continue getting away with this as long as we and our fans let them.

3.) Consumers need to recognize that smaller level, independent artists are just as (if not more) affected by what is happening as the major label artists. There has been a lot of talk about the "greedy major record labels" getting their comeuppance for screwing their musicians and very little talk about independent artists like me who own all our rights. To be clear, the labels do me no favors with their "deals," but these tech companies - regardless of how good they are from a consumer standpoint - aren't exactly being good "partners" either. Apple used my music to expand their customer base and paid me nothing in return.

4.) Someone needs to tell Beats Music/Apple to fix the page on their knowledge base to more accurately reflect how they are "paying better royalties." Here is my correction:

Aw, hell. I'll say it here: Beats Music TOTALLY lied.

5.) Dr. Dre needs to answer to his peers - the musicians, not the billionaires. He needs to look musicians in the eye and explain how he can go from fighting against piracy to condoning and placing his name on a legalized incarnation of the same practice. I asked the question in my first Instagram post: "Did $3 Billion turn you into a hypocrite?" 

As far as I'm concerned, you know what the answer is. If Dr. Dre would like to discuss this, I'm all ears. For now, though...

#DrDreisaHypocrite
 
God Bless and All the Best,

T. Kareem Powell
11/25/14

3 comments:

  1. Very well said. I hope this continues to drive debate and ultimately, change.

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  2. Kareem,

    I don't know whether to congratulate you, or say something else on pulling your music from the service that seems to pay more per stream when the user isn't on a free trial. I guess that felt really good at the time.

    And in response to your question to CD Baby about what kind of incentive Apple has to get people to covert people into paying customers - that sounded like a joke, but I must have missed the punchline. I'm not Tim Cook or Dr. Dre, but I'm pretty sure Apple didn't make a $3 billion investment in Beats to throw it all away by giving millions of people a free trial with no expectation that they would pay anything afterwards. If that was a joke, please don't quit your day job for comedy, or as an adviser to Apple.

    Except for the major labels, retailers and a few top artists, recorded music has NEVER been a cash cow for anybody, least of all artists. You always had to sell a ton to make it work, and in the age of streaming, you have to have several times that in plays. That's always been the economics of it, and it's gotten worse for artists who want a major label. For artists who study marketing (which anyone can do), it is now possible to build a fan base using tools that weren't available until very recently. And by allowing streaming you expose people to your music, which allows you to sell performances, merchandise, etc. and maybe make a little money. You will need more people to play your music than you're reporting on your site.

    If you haven't figured out how to make it work yet, then either find a way to make it work, or don't. Even though I disagree with your conclusions, you're clearly a smart guy, although you seem blinded by your interpretation of what's going on to opportunities that are everywhere. Keep practicing your craft so more people will seek you out. You've actually got a promising start, so I hope you don't push opportunities away (Yes, Beats Music IS an opportunity.) And Google "direct response marketing" and "Internet marketing" to see if that gives you some ideas, which I hope it will.

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    Replies
    1. Hi Mr/Ms Anonymous-2!

      Glad to meet you!

      1.) "I don't know whether to congratulate you, or say something else on pulling your music from the service that seems to pay more per stream when the user isn't on a free trial. I guess that felt really good at the time."

      TKP: No need for either, really. Considering all my streams have fallen under "free trial" up to this point, it really doesn't seem to make much of a difference, does it? How do I know Beats Music hasn't selected specific music to place before "free trial" consumers and then select other music for the paying customers? I don't. No one does.

      2.) "And in response to your question to CD Baby about what kind of incentive Apple has to get people to covert people into paying customers - that sounded like a joke, but I must have missed the punchline. I'm not Tim Cook or Dr. Dre, but I'm pretty sure Apple didn't make a $3 billion investment in Beats to throw it all away by giving millions of people a free trial with no expectation that they would pay anything afterwards. If that was a joke, please don't quit your day job for comedy, or as an adviser to Apple."

      TKP: WE'RE the "punchline." The $3 Billion purchase doesn't matter. Apple bought the business "Beats Music." That's its own entity. It's a medium through which people access to music. That's all. Nothing else. They do not make the music. Their infrastructure, the employees, the board... That's all a part of Beats Music. That's all the $3 Billion paid for.

      The artists/labels create the music that Beats Music delivers to its customers. It's the product. Without the product, Beats delivers nothing. People have no reason to use them. Therefore, MUSIC is a cost of BEATS doing business. Just like restaurants pay vendors for the food/ingredients they sell to customers, Beats pays a fee to artists/labels for the music they deliver...

      ...Only, they don't. Beats only pays artists for music that paying customers stream. Does a restaurant give away free food to its customers and tell its vendors that they won't be paid for it? No. THEY EAT THE COST.

      What's more motivating? 1.) Giving away a product you got "for free" in hopes of attracting new customers? or 2.) Giving away a product YOU PAID FOR in hopes of attracting new customers?

      The person in Scenario 2 is going to do a LOT more to attract and retain those customers because he/she has a lot more to lose. Beats Music, of course, doesn't do it. Most of its risk is born on the backs of artists.

      Put simply: If you use my music for your business, you should pay for it. It's a cost of doing business. It's the RIGHT thing to do. For all its fanfare and chest-puffing about "paying more than the other streamers", that's not what Beats Music does. It passes the risk of its "free trial" off to the artists.

      My success/lack of success, Beats' profitability, and the "exposure" argument, while all related and important to context, aren't directly relevant to the matter at hand:

      Beats Music should pay all artists for all the music that all its customers stream. If the artists let this practice continue, then they are asking for the REST of the streamers to follow suit.

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