From Frank Ocean to Beyonce, the problem with exclusive streaming deals

Frank Ocean released his long-awaited new album earlier this month to rapturous critical acclaim. Despite this, many fans will have found it difficult to listen to, as the album is currently only available to stream on Apple Music.

Similar limits applied to Beyoncé’s Lemonade earlier this year: first listening required subscribing to Tidal, another relatively new streaming platform, part owned by Beyoncé and Jay Z. Albums this year by Kanye West and Drake were also launched – at least initially – under exclusive deals to one platform.

Streaming services are now a key battleground for commercial dominance, with digital having overtaken physical sales and streaming edging ahead of downloads in the US. These exclusive deals – a relatively recent phenomenon, appearing with the launch of new platforms – constitute attempts to attract new customers by siloing those artists with the biggest fan bases.

But this trend, necessitating multiple subscriptions to different streaming platforms if one is to keep up to date with new releases, may be unsustainable. At least it looks like parts of the industry think so. Lucian Grainge, chief executive of Universal Music Group, has called time on the practice of offering exclusive deals on albums to specific streaming platforms in an email to the labels under Universal’s umbrella. And as Universal is the world’s largest record company, Grainge’s salvo appears to throw a spanner in the works of a strategy to drive up streaming subscriptions.

There may be some pique involved in this. Ocean’s album was technically a self-release, coming immediately after the “visual album” Endless which, it is claimed, fulfilled his contractual obligation to Def Jam, a Universal label.

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But there’s also a bigger picture. While the appeal of exclusive deals for artists and managers is obvious – a large upfront payout – there are qualms about the long-term viability of the model. Exclusive deals, the argument goes, alienate fans and therefore, importantly from a business perspective, run against the flow of how music is consumed. Industry pundit Bob Lefsetz argues that access is everything and music should be available to all – not just diehards with deep pockets – if sustainable careers and audiences are to be built. As such, the current debate reveals longer standing faultlines in the recorded music market.

At the heart of this is the issue that has bedevilled the recording sector since widespread digitalisation – scarcity. Value accrues from scarcity (diamonds are worth more than quartz, which is worth more than limestone). This was relatively easy to regulate when music was carried on physical products, but file compression and increasing bandwidth made music instantly replicable and distributable, removing scarcity. The arrival of Napster and peer-to-peer downloading services caused a massive disruption in the late 1990s and early 2000s, effectively acclimatising generations of listeners to free recorded music.

Exclusive deals could be seen as an attempt to create scarcity again, and hence monetary value for the product. But this may be a misreading of the wider context. Streaming was initially a way of reintroducing a generation of listeners who had grown up accustomed to free recorded music to a payment model or, via advertising, at least one that remitted money to rights-holders. The “freemium” model – like Spotify’s free tier with paid access to ad free content – helped drive the initial success of such services, although large revenues like Spotify’s can still prove difficult to turn into profits.

Exclusivity certainly isn’t unique to the music market. TV and online services like Netflix and Amazon Instant employ it and Sky Sports, for instance, uses access to live events to drive subscriptions. But fans’ relationship with music is different to, say, a football match or film. The mode of consumption is different and rests on multiple repeated listens. So constant access to a vast catalogue of music was needed to replace the older model of “owning” the recordings.

In fact, fans never really “owned” the music, only the storage medium – like the CD or record – and the right to play it. But the experience was the same. Streaming services, especially once aligned with the convergence of music playback devices with the phones that everyone carries with them, recreated that sense of ownership, or access at will. Having content in silos across different platforms may thus be untenable in the long term. In any case, few can afford multiple subscriptions to Apple Music, Spotify and Tidal. They will opt for one. Or, some fear, opt out altogether.

So Grainge’s diktat could be seen as an attempt to pull the situation back on track. It could also, however, be viewed in the context of other shifts in industry dynamics. Tim Anderson has described the recorded music market as moving from selling content to selling a service. There has been a broader shift of power from traditional record labels like those operating under Universal’s umbrella to newer players in the entertainment ecosystem, which evolved from the IT market – the likes of Apple and Google.

The history of both industries is one of convergence and incorporation – from Universal’s acquisition of smaller labels to Apple’s purchase of Beats Music before launching its own streaming platform. Across this terrain, data acquisition is a key driver – demographic information about fans, and their purchasing habits which, as Anderson points out, can be sold on in aggregate. Exclusive deals may cut record labels out of this loop in the bigger picture.

Also worth remembering is that the current debate mainly concerns the kind of “tentpole” artists who are able, in the first place, to leverage exclusive deals. Smaller players have less clout with either record companies or streaming services. For many, giving music away – even if as a loss leader to drive concert ticket sales – and maximising availability, is still often a reality. So while Grainge’s policy might be good news for fans in the short term, it ultimately represents shots fired in a larger battle, with major labels trying to protect their investment in blockbuster commercial releases, which are ever harder to come by.

This article was first published on The Conversation (theconversation.com) Adam Behr is a lecturer in popular and contemporary music at Newcastle University