Defining Music Services: Artist-facing vs. Listener-facing
Introduction
When people think of music services they often think of streaming services like Spotify, Apple Music, and the like. While these are the largest players in the music services industry, streaming is far from the only service provided in the music industry. Music services can largely be split into two categories: listener-facing and artist-facing services. Listener-facing services are those which are geared towards helping listeners find new music (music discovery), save and store music they like, and listen to music by streaming remotely (Spotify) or playing from local storage (iTunes). Artist-facing services are defined as follows: “One, it makes money for the artist, and two, it helps them to acquire and engage fans. So anything from ticketing, email marketing, retail, strategic technology, licensing and now the Songkick concert-discovery business” (MusicAlly). Additionally, distribution and discovery services help artists host their music on streaming services and get found by new fans, so they also fall under the definition of artist-facing services. I would add that services which facilitate the creative process are also artist-facing services because although they do not directly make money or draw fans, they play an important part in creating the music which does.
Going back to music streaming services we can see that they incorporate both listener-facing and artist-facing services. While most streaming services began with the primary purpose of providing listeners with access to all the songs they want to listen to, the ability to save/store music offline, and recommendation systems to aid music discovery, they also, maybe even unknowingly, provided a huge service to artists in terms of generating revenue and building a fanbase. Furthermore, the largest streaming service by subscriber count, Spotify, used to be more focused on the listener but is now building out an entire marketplace containing products and services for artists. Some streaming services, like SoundCloud and Lüm, were made with the artist solely in mind, seeking to help new, emerging artists become discovered by potential fans and grow their brand, but also providing listeners with the ability to find all this new, exciting music. Therefore, streaming services incorporate both listener-facing and artist-facing services into their product, although they may differ on which is the greater priority.
This raises an interesting and important question: when building the next generation of music services, streaming and otherwise, is it better to focus on one specific user group, either listeners or artists, or build a product that incorporates services for both groups? I argue that a product that starts out mainly targeting listeners must incorporate artist-facing services at some point, but products that start out only targeting artists–including record labels and their in-house services–can stay in their lane and flourish financially, and, depending on the service, may even be negatively impacted by trying to shoehorn in a listener-facing feature.
Artist-Facing Services: SoundCloud Case Study
There are a number of useful and successful artist-facing services that hardly even consider the listener/fan. There are those that facilitate creative expression like Tunelib which provides artists with pre-cleared samples; plan and book tours like Eventric; and provide valuable analytics like Chartmetric. These services would be hard-pressed to add any features which appeal to fans and are better off focusing on their core audience, the artists. There is another music service that started off solely serving artists, but then decided to offer more services for listeners. This proved risky and resulted in a dire financial situation for the company, SoundCloud.
The initial idea for SoundCloud was a service that would facilitate collaboration between artists, by enabling them to share recordings easily. As a tool that aided in the creative process, this was, by definition, an artist-facing service. The founders were, however, quick to realize the strength of their product as a platform for artists to self-publish their music and allow people to find and listen to it. So, they were almost immediately incorporating functionality that served listeners as well as the artists. With that said, the main focus of the product was still on the artist and allowing them to share their music and grow their audience. As of yet, SoundCloud had not fully embraced their listener-facing service.
Then came a climactic moment in SoundCloud’s corporate history, the copyright strikes began. Large record labels like UMG and Warner began filing complaints to have their licensed content removed from SoundCloud, including uncleared sampled usage. SoundCloud faced a momentous decision: they could either protect the artists and their content by fighting the copyright strikes, or they could grant the labels the power to remove any content they believed to be in violation of their licenses. They chose the latter, and sure enough Universal leveraged the ban hammer they had been handed (TorrentFreak).
By siding with the labels, SoundCloud turned away from artist services as their core product and embraced the listener facing service. They paid the necessary licensing fees so that listeners would have access to all the music they’d want without fear of a given song being removed due to some arcane copyright violation. But the listener-facing service which they pay licensing fees for is a financial loss for SoundCloud. In the interest of financing those fees, they began to offer a premium subscription plan. According to Forbes, however, of their 175 million total users, “very few have signed up for SoundCloud Go, the company’s premium streaming offering” (Forbes). So the licensed music they pay to offer, which you can only listen to with a premium subscription, isn’t generating much revenue and is costing much more. In fact it’s the free service they’d always offered, allowing artists to share their original content and listeners to find it freely, which is much more popular, further highlighting where their focus should have been.
That’s not to say SoundCloud is a failure by any means. SoundCloud is a wildly successful streaming platform that has some of the highest subscriber counts and repeat visitors. They could have, however, benefited from focusing more on their artist services as opposed to trying to get licensing in the interest of providing a more robust listening experience. Furthermore, they lost out on several promising exits by getting embroiled in legal disputes with labels over licensing issues. Sony Music pulled all their songs from SoundCloud and Twitter pulled out of an acquisition offer. This could have better been solved by not paying the licensing fees, complying with legitimate copyright concerns, and staunchly protecting the original content that was shared on their platform.
Listener-Facing Services Need Artists
Listener-facing services are, for the most part, beneficial to artists as well, to some degree. There are examples of services that solely serve listeners, like Stamp which allows a user to easily port their music from one streaming service to another. But generally, services geared towards listeners aim to help discover new music, listen to music, and store music, and this benefits artists too, by growing their fanbases and getting them more streams/listens. But these services are still mainly focused on providing a great experience for the listener, as those are the people who pay subscriptions. Benefitting artists is more of a helpful byproduct as a result of connecting the artist and the fan. Since listener-facing services depend entirely on the artists and their creations, they need to do more to provide services specifically for the benefit of the artists. Furthermore, services geared towards listeners stand to gain a lot from building out services for artists, from getting rights to exclusive releases to tapping into the money labels are willing to shell out for useful artist services.
Firstly, listener-facing services make all their money off of the artists’ creations. While they may provide a nice platform to listen to music or find new music on, there would be no base product without the music created by artists. Therefore, listener-facing services are immediately indebted to artists and need to compensate them properly.
Furthermore, in order to capture a sizeable portion of the streaming market, whether that’s measured in subscribers or dollars, a listener-facing service must get exclusive rights to key new releases. Even if you have a brilliant, innovative new way of delivering music, the listener will always care more about the content you’re able to provide. If they can get the same thing with their existing service people won’t switch to your service. Therefore, providing valuable services to artists makes it more appealing for them to grant exclusive releases.
Finally, there is a lot more money in artist-facing services because of the significant financial investment on the part of the label (360 deal) and the low cost of subscription services nowadays. Since streaming skyrocketed to become the top medium for music consumption, record labels have started to offer 360, holistic deals to artists which gives the labels a stake in every aspect of an artists career (touring, merchandising, digital/physical sales) for an advanced payment–which is recoupable. As a result, labels have a financial investment in the artist and would be willing to pay top dollar for services that increase the likelihood of that artist’s success. Furthermore, listener-facing services that leverage subscription models in order to monetize will find it difficult to break into the market due to the low costs existing services are able to offer. Therefore, the real profit will come from providing valuable services to the artists.
When and How to Incorporate Both Services
As a starting point in the music services industry, it’s always easier to build a listener-facing service. This is because you will get much wider adoption among music consumers than you will among the creators. Making music is a process, and once an artist settles on a creative process they are unlikely to change. The switching costs with DWA’s, like FLStudio, are much higher than the switching costs related to your music streaming provider. Furthermore, listener-facing services tend to benefit more from network effects and virality. That’s not to say artist-facing services don’t flourish, there are many examples above of services that only appeal to artists that have proven successful. But in order to break into that space, you need a very innovative idea that will entice artists to switch and it helps to have connections within the industry to help with adoption.
If you’ve already built a successful, widely-used listener-facing service, you are in possession of a unique offering for artists. More specifically, you presumably have a database of listener preferences and habits, which can provide valuable insights to an artist such as what songs of theirs are hitting, in what contexts, and how long listeners are staying engaged. Therefore, it’s useful to build out a listener-facing service that achieves some level of growth before considering building out features that serve artists.
Record labels, however, are in the unique position of being able to directly offer services to artists without having to attract listeners. This is because they already have a userbase made up of all the artists signed to their label. Therefore, record labels can develop in-house artist services without having to worry about adoption, and if you’re focused on building services for artists, record labels should be your number one customer priority.
Ultimately, music services can be divided into two categories: artist-facing and listener-facing. Listener-facing services are built with the intention of driving music discovery, streaming accessibility, and playlist generation. When building music services, listener-facing services are often the easiest to grow in terms of adoption, as they benefit the most from virality and network effects. Artist-facing services, on the other hand, are more profitable and are hugely important in the interest of getting exclusive rights to certain hot content. Therefore, when building music services it’s best to start by building out and growing a listener-facing service to gain traction. But it’s imperative to then start building out artist-facing services in order to compensate artists properly, retain their services (content), and profit from their labels.