Here are some thoughts about streaming and recorded music from recent reading. In some sense, this is a dump of links for future reference, but I hope I connect some dots, too.

Ben Sisario told the story, in yesterday’s New York Times, of a songwriter name Perrin Lamb, whose independently released song ended up in a popular playlist on Spotify and earned him $40,000.

Which reminded me of Rosanne Cash’s comment that 600,000 Spotify streams earned her $104. She called streaming “dressed up piracy,” but I think she misses what’s happening here. The streaming services are often owned, at least in part, by the big three labels, and the labels collect money and distribute it to their artists (while taking their own cut, just as they did off records). As the artist in Sisario’s story shows, if you don’t have a label more money passes through to you.

One problem with the idea that streaming services are ripping off artists is that the streaming services are all losing money. Pandora announced huge losses this past quarter, plus ended settling with music publishers for three times the cost it want to pay for the rights to stream music written before 1972. Pandora has tens of millions of customers. If it’s still losing huge numbers and it’s costs are going up, how is it going to survive? Spotify is in a similar position, losing lots of dough despite being the leader in subscribers.

Making money on recorded music, this guy Philip Kaplan argues, was a historical accident. Records were meant to be a spur to get people to buy record players, but the software companies that eventually emerged figured out ways to make more money selling copies of music than the machines to play it on. Streaming services, Kaplan argues, are simply restoring market efficiency to a process that was exploited by the labels.

A guy who has a blog called Startups and Shit, pointed me to a NY Times article from 2007 about how cultural hits, like hit songs, happen. According to the experiment Duncan Watts writes about, predicting hits is so hard because there is no single line of taste that hits have to cross. Not quality, not simpleness, not nothing. In fact, hits erupt out of apparent quality blips, in which a small network likes something which somewhat randomly spreads to other related networks simultaneously. When enough networks light up, there it is, a hit!

These network explosions amplify the perceived quality of the hits, though objective analysis among any of the individuals in the network would show a small advantage in quality. Watts calls this a “rich get richer effect.” Watts writes:

This, obviously, presents challenges for producers and publishers — but it also has a more general significance for our understanding of how cultural markets work. Even if you think most people are tasteless or ignorant, it’s natural to believe that successful songs, movies, books and artists are somehow “better,” at least in the democratic sense of a competitive market, than their unsuccessful counterparts, that Norah Jones and Madonna deserve to be as successful as they are if only because “that’s what the market wanted.” What our results suggest, however, is that because what people like depends on what they think other people like, what the market “wants” at any point in time can depend very sensitively on its own history: there is no sense in which it simply “reveals” what people wanted all along. In such a world, in fact, the question “Why did X succeed?” may not have any better answer than the one given by the publisher of Lynne Truss’s surprise best seller, “Eats, Shoots & Leaves,” who, when asked to explain its success, replied that “it sold well because lots of people bought it.”

The Startups and Shit piece links the hitmaking effect of networks with the network the major labels control most tightly, namely radio.

His suggestion for the streaming services is to sign their own artists and try to break them on their own radio services, much the way Perrin Lamb, who surprisingly earned $40,000 for a song from an album that wasn’t even on Spotify when it broke on Spotify.

In this way, Spotify and other services, could break the discovery grip of the labels on radio, and arrange to get more money to artists at a lower cost. Win win.

Well, not for the labels.

This leads us back to Philip Kaplan, whose piece ends with a link to a band called Extinction Level Event’s lead guitarless metal viral hit, Entropy, and to his own band’s self produced and promoted metal band, Butchers of the Frontier. Rockers, he says, from recording, promoting, selling tickets and merchandise, are doing it for themselves, as they should be.