Unfortunately, it’s being debated very poorly. The assumptions, misconceptions, and flat out inaccuracies underlying today’s debate over streaming music economics are truly staggering.

(Full disclosure: I consult for digitalmusic.org, which counts as members every music subscription service. Among other things, that role includes advocating for the music subscription business. However this is a personal post reflecting personal opinions and does not necessarily reflect the opinions of my employer or any of my other clients.)

So let’s clear a few things up right now.

On the issue of “transparency”:

1. There’s not one digital music service that will disclose the details of their label licensing deals with the press due to confidentiality clauses built into those agreements. Spotify and every other digital music service should train their entire workforce to point that out when these “transparency” questions come up. Grilling executives on the issue is not hard-nosed journalism. It’s the equivalent of punching someone in the face who’s got their hands tied and can’t fight back.
2. Even if there were no confidentiality clauses, from what I’ve learned of these deals, they’re extremely complicated. Most involve some kind of per-user per-month minimum, and a per-stream payment on top. But the per-stream payments vary widely between different services (MOG’s free tier works differently than Spotify’s free tier, and as such the terms are not the same), different pay tiers (i.e.: what Spotify pays for a stream initiated by a free tier user is different than what it pays for a stream initiated by a paid tier user), and different delivery channels (PC vs. mobile). So there is no standard cut, like there is w/ iTunes’ 30% take on all download sales.
3. Finally, even if there were no transparency clauses and the per-stream payment that the services provide to the labels were standardized and easily explained, digital music services still have no idea how labels compensate their artists and should not be asked to comment on another company’s business details. If you want to know how artists are getting paid, ask the label who pays them! They won’t answer you either, but at least you’re directing the question to the right source.

On comparing per-stream payments to per-download payments:

1. Doing so assumes one replaces the other, and that’s not the case. I know of several labels who have pulled music off subscription services just as an experiment to see whether sales/downloads are any way affected. So far, the answer is a resounding NO. What’s more, there’s actually evidence supporting the opposite. Industry-wide, digital music downloads/sales have increased along with the parallel increase in streaming usage and activity. According to Nielsen BDS, streaming activity spiked from 242mm streams in the last week of November 2011 to 495 streams the week of March 4. Yet digital track sales in that same timeframe are up 7%. In fact, digital album sales were up 19.5% for 2011, the same year new subscription services like Spotify and Muve launched.
2. Even if streaming (or “access”) models in time do threaten to eat into download sales, the response should not be to restrict consumer choice, but rather to expand it. Today, the song I stream from Spotify is largely the same as the song I download from iTunes. The discovery experience may be different and the use case (“rent vs. own”) is different, but the actual song is the same. If you want to defend the download model from the access model, then differentiate the product. Create tablet-friendly downloadable albums, do more bundling of digital albums with ticket sales/pre-orders, strike a deal to incorporate lyrics, enhance interactive album art. The music industry for too long has chosen to control user behavior than respond to it with innovation. Let’s not make the same mistake at the dawn of the streaming/access era.
3. Why on earth are artists still being paid on a per-stream basis in the first place? Think about it—artists are currently being paid for their content on access-model services using a sales-model formula. That seems illogical. I’m not necessarily saying artists who claim they should be paid based on a license rather than a sale are correct. I’m saying a whole new compensation model for artists needs to be established. What that is exactly, I don’t know. Maybe labels can start paying artists a regular salary of some sort, with bonuses based on certain thresholds. Or perhaps each artist should be paid a percentage of the overall revenues brought in from streaming/subscription services based on the overall traffic they are responsible for generating. I realize this would represent a revolutionary shift in the traditional economics of the music biz. But that seems fitting because the very transition to an access-over-ownership model is in itself a revolutionary shift in consumer behavior.

And finally, on this notion that the streaming model benefits the label instead of the artist:

1. Name me a time in the history of the music business where artists were not complaining about how they were compensated by labels. The music business has long been a difficult one for artists. The difference is now, with the ubiquity of social media and the growing reach of streaming services, more artists will have the opportunity to carve out a living if they utilize these new tools intelligently. Notice I said “making a living” and not “making a killing.”
2. Why is it that these same artists who pull their music from Spotify and other similar services keep it up on YouTube (which pays less per stream than these others, yet are responsible for an order of magnitude more streams overall) and even SoundCloud (which pays nothing)? Nothing against either service, artists should absolutely utilize both as it suits their needs. But using those services while eschewing other streaming services makes no sense. I assume these artists want just their single available in some social channels to draw attention to the album, in hopes of driving album sales. But that ignores the fact that there are plenty of music fans (like me) who have no desire to own the album. Restricting my ability to access your album on my streaming service of choice won’t make me buy it any more than making it available on streaming services will make someone else not buy the album.
3. Which leads me to this last point, and this will likely be a bit controversial for some: It’s not about the artist… it’s about the FAN. The music industry’s “best chance at survival” won’t be found by focusing on protecting the artist. It will be found by focusing on addressing the needs/wants of the fan. When you place the emphasis on artist needs, invariably things like DRM and rootkits are the result. Now I can already hear the protests of “If artists don’t get paid, they can’t create the music required for these services to exist” and so on. Well first of all, artists rely just as much on digital music services as digital music services rely on artists. Let the artist focus on making the best music, and let the service focus creating the best delivery/discovery experience of that music for the fan. Second, artists ARE getting paid. In fact, they’re getting paid more, because a good portion of the fans utilizing streaming music services were formerly engaging in piracy to acquire their music because the music business was not delivering music to them in the way they wanted it. According to a Columbia University study, 55% of 18 – 29 year-olds in the U.S., and 40% of 30 – 49 year-olds, engage in less piracy because of the availability of monetized streaming music services. (Also see the above point about streaming NOT cannibalizing download sales). And third, I hate to say it, but some artists are going to fail no matter what the model of distribution and compensation is. Maybe because they’re unlucky, maybe they have bad marketing, or maybe they just suck. Nobody’s entitled to the career they want.

Now all these points rely on things like logic and facts, elements sorely missing from today’s state of linkbait “gotcha” journalism. But they should be front and center in any sober debate over how to manage this next transition in the digital music business.

I’ve only been an independent consultant for about six months, but I’m already going through this situation right now with one of the first clients I signed after leaving Billboard. I’m not naming names (for now, anyway) in the hopes that this can still be worked out amicably (although the lawyers are now getting involved).

Everything started off great. The CEO seemed like a straight up guy with an interesting service and we hit it off from the start. We signed a contract for me to help them with strategic communications/messaging for a three-month term, and got right to work. The deal was for me to be paid a flat fee at the beginning of each month to cover my time for that month. But the checks never came. At first I wrote it off to accounting snafus and the typical disorganization of a busy startup. But as we entered the third month of the term with payment still not received, I had no choice but to suspend service until he settled up the account.

The part that really killed me was when I met the CEO in person at a recent conference. We had agreed that he’d just bring me a check and get caught up. He did bring a check, but only for 1/3 the amount owed, promising the remainder was already in the mail. This obviously made no sense, and of course that remainder never showed up. Then he then stopped responding to my emails and phone calls. Now, I’m thinking he was conning me the whole time.

The first reaction I have whenever I churn this over in my head is WHY? Why would he do this? Call me naïve, but this was a person and a company that I was already familiar with from my days at Billboard. I’m not going to go as far as to say we were friends. But we’d shared several meals, swapped photos of our respective children, and amicably bullshitted about other things like food, back problems and so on. I can say I genuinely liked the guy. So why would this happen?

UNABLE TO PAY
When I began asking around for advice on how to handle this situation, one of the first questions I’d get was “do they have the money?” It’s a legitimate question, particularly for startups. I have no idea what this company’s financial situation is and I don’t care to speculate or insinuate about that at all. What I do know is that if they came to me and said they were low on cash, I’d understand and would be happy to arrange some kind of payment plan (smaller installments over a longer period of time, etc.) or something in response. But he hadn’t mentioned any financial problems. The amount owed is not exactly bankruptcy threatening (it’s just a little over one-month’s salary for the average person). But who knows?

UNHAPPINESS
Sometimes companies may not pay because they’re not satisfied with the work performed. I’ve seen this in the conference business, where a company will agree to a sponsorship or a booth, drag their feet on paying, and then gripe after the event that it wasn’t what they expected or something. In this case, neither the CEO nor anyone who I worked with at the company ever had anything negative to say about my work. I wrote and placed four bylined articles for them in two months, secured a handful of interviews in various outlets (included Wired) and got the CEO a panel spot at a conference, all without the company having anything new to announce in that time. Ask any PR pro and they’ll tell you that’s above-average. In fact, at the height of my nagging them for payment, the CEO would still ask if I could help out with this story angle or another. So if they were not paying me out of a lack of satisfaction over my job performance, why would they continue to ask me to do that job? This is why I usually seek three-month projects at first. That’s long enough for me to get up to speed with (and show value to) the client, yet short enough where the client is not making too large a bet in terms of both time and money if things don’t work out. My goal is to convert you into a long-term client, and this is just a three-month paid audition.

INCOMPETENCE
The CEO kept blaming the problem on a bookkeeper that wasn’t paying the company’s bills. And as much as the weeks of not getting paid or hearing back from him on my status requests concerned me, hearing him talk about his lame bookkeeper eased my fears and assured me that payment would one day come. But if that is in fact the case, then the incompetence lies in more places than just the bookkeeper. I’d bet my invoices never even made it to the bookkeeper until they were far past due (if at all, see next graph), and may have been forgotten, lost or otherwise mishandled, not for lack of my calling attention to the matter. No matter where the broken link is, this is still inexcusable.

EVIL
Some people are just plain evil. Big or small, the companies that hire independent consultants have more resources than the independent consultant does. Refusing to pay is a form of bullying. It’s like daring the consultant to sue them, knowing full well that the costs of litigation generally prohibit it as a suitable recourse for collecting the amount of money typically owed in these kinds of cases. Business is war, and companies are going to do whatever they can to twist the bottom line in their favor. I generally regard myself as a pretty good judge of character, and as such I’d be very surprised if this is the case in this particular instance. But I’ve been wrong before.

Whatever the reason for not paying, there are very real consequences when a company fails to pay its consultant—both for the consultant AND the company. For the consultant, this includes:

FINANCIAL
Independent consultants are like the ultimate bootstrapped startup. Most of us didn’t raise funding or take out a business loan. We put a little aside to get started, and then get by day-to-day on the projects we take. In this case, the company was one of my first clients after I struck off on my own. Once I signed the deal, I got to work and didn’t spend a lot of time doing other business development, thinking my financed would be secure for a few months. (One of the things I promise clients is a degree of exclusivity—when you pay for my time, you get my full attention. So I actually turned down other business during the term of this contract).
I’ve not been doing this long enough to build up a reserve pool of cash to cover the down months. Having my very first client out of the gate stiff me like this has really cut me off at the knees and is making my life far more difficult than it needs to be. I’ve racked up some credit card debt that needs paying down. I’ve stopped contributing to some long-term savings plans, including my daughter’s 529 plan. I’ve held off on simple purchases, for months now, thinking this was about to get resolved and only to find it dragging on further.
So let me put this into the proper context:
Withholding payment is tantamount to stealing. And you’re not just stealing from me. You’re stealing from my family.

EMOTIONAL
Quitting a steady job and striking out on your own isn’t something you just do on a whim. It’s a stressful decision. I had several weeks of sleepless nights, agonizing over it, but ultimately decided to bet on myself. When I signed this contract, it was a validation that I had made the right move.
Four months later, I feel like I’ve been kicked in the gut. Sure I’ve landed several other projects since then, but it’s hard not to feel like I’ve been had. I’ve been taken advantage of. Cheated. I’m far too proud to let myself be the victim here, but victimized is what this feels like.
These are not the feelings I sought out leaving my job to strike out on my own, yet there it is. This experience is like a scar that will affect every other project I’ll take going forward in that everyone now will have to pay an upfront retainer or I’m walking. All my negotiations are now fouled with a hint of doubt and mistrust, and that’s not the way I wanted my business to work.

For the companies that stiff their consultants, there are different ramifications:

LEGAL
I’m not completely naïve. I signed a contract with this company, and as such I can chase after them legally to collect what’s owed, which I intend to do. My guess is that this company doesn’t have an in-house counsel, meaning the CEO is going to have to pay some lawyer to deal with the stuff the lawyer that I’m paying will send them, all to just pay me what he agreed to pay in the first place. It seems horribly inefficient, and once again, the lawyers are the only ones who win.

REPUTATION
Strip away everything else, and at the end of the day all a man has left is his word and his honor. Legal contract or no, if you agree to do something, you do it. I honestly don’t know if this company isn’t paying me they can’t, or they won’t, or they just can’t seem to figure out how. All I know is that the CEO said he would pay me when we signed a contract. He said several times that my account would be settled in “just a few days.” And he even once said that a check was actually already in the mail. But none of those things happened. If you give your word that something is going to happen, then you make damn well sure that thing happens, or your word means nothing.

I’ll end with this… I’ve complained about this situation with a number of consultant friends. Some have been in this same situation, and they tell me it’s just part of the business. Sometimes, you get screwed over. But here’s something to consider. I’m a relatively well-connected guy, at least within the digital music industry. Seven years at Billboard covering this space has fattened my contacts list, and working now with digitalmusic.org has juiced me into a whole new area of the business. I know label executives, PR types, analysts, editors, consultants, managers, association heads, you name it, and many of them owe me favors or are willing to do me favors knowing that I’m good for it in return. I’m at most of the important conferences, more often than not on stage or otherwise involved in a rather visible way. I’ve got a decent social media following. I’m very capable at telling a story and spreading my message, good or ill. And I carry a grudge.

So I ask you this: Am I really the guy you want to screw over?

Because when someone of the stature of Steve Jobs passes away, there’s going to be an inevitable period of reminiscing on his life and legacy. But I also feel it’s a time to reflect on our own lives, career and accomplishments; not to see where we measure up, as the vast majority of us certainly will fall woefully short of his standard. But rather to be inspired by the example someone like a Steve Jobs sets for us all.

While I’ve covered his company and products closely over the years, I never actually met the man. Yet a few stories stand out for me that illustrate this point. My first real insight into him came when I first began covering the digital music space. Prior to this I never really gave Jobs or Apple much though. I’d owned an Apple IIe when I was a kid, but mostly owned and used Windows-based devices most my life. I had an iPod and used iTunes to buy music, but I was nowhere near a fanboy. Jobs was to me just another company CEO at the time.

He first landed on my radar when he criticized the security of Napster to the press, disparaging the subscription service rival as a way to prop up iTunes further.

I remember reacting very negatively to that. “How petty,” I thought, particularly knowing how shaky Apple’s Fairplay protection technology was. But Jobs knew how a few mere words could reverberate throughout the press, and this case was no different. It had a lasting impression on me and my subsequent coverage of Apple. I decided then I was not going to be sucked into the Apple “reality distortion field” and be yet another press lemming to carry water for Apple and Jobs’ message.

In the years that followed, I kept that chip on my shoulder, and had a few run-ins with Apple PR as a result. I even tried to keep a neutral position when the iPhone was introduced. But there was no denying the impact it had on the market. I developed a grudging respect for Jobs’ pitching skills as well as the products he introduced.

The next one came much later, just a few months ago, when a friend of mine who used to work for Toyota told me an interesting story. Steve apparently was a big Prius man. He not only owned one for himself, but bought several for his family, household staff, etc. And Steve being Steve, he had an answer for how to make the Prius an even better product. Apparently he wanted to adjust the cruise control to a speed that would optimally allow the hybrid vehicle to maximize the battery over consuming fuel. (Why he didn’t just buy a fully electric car rather than an electric/fuel hybrid is another question).

My buddy told me how he would call up the product manager for the Prius line, totally out of the blue, and give him notes on his suggested improvements to fix this perceived fault. Now he’s not calling the head of Toyota North America here or some other high-level exec accustomed to dealing with the likes of Steve Jobs. This was a relatively lower-level footsoldier who never talks to any customers, let alone Steve Freaking Jobs.

My interpretation of this was that Steve was passionate about products he believed in, not just his own, and also was a dedicated problem solver. But more importantly, he was someone who totally lacked in pretension. Think about most of the CESs you’ve encountered in your day. They surround themselves with the trappings of power, exclusivity and rank. Few would lower themselves to call a lower-ranking employee at another firm to problem-solve an issue. They’d insist on speaking to a “peer” and would direct their “people” to arrange otherwise. Not Jobs. He didn’t care about rank, or image or any of that. He cared about solving the problem. And that’s something to be respected.

Finally, there’s the highly-embedded YouTube video of Steve’s Stanford commencement address. I’d never actually watched it until the day before he died. I had just left Billboard to start my own consulting business—like literally three days in—and was a little freaked out. For some reason, I decided to finally watch that speech of which I’d seen links to for some time. It really is a remarkable message.

Much of it I already subscribed to. I’ve always shared his view of life, and knowing that someday you’re going to die, so live the best life you can.

It’s why I insist on living in Denver, despite the challenges  doing so places on my career (particularly that of a digital media consultant/reporter). It’s why I left Billboard to try doing something on my own, because I believe I have more to offer than what Billboard was allowing me to do. I followed my gut and went for it. I’ve also been fired, and been through the dark period that follows. I watched Job’s speech not as a grad about to go into the world, but rather as someone in mid-career evaluating the choices I’ve made so far and the plans I have for the future. It was refreshingly reaffirming.

And the next day, he died.

I basically have the career I do today because of the industry Steve Jobs created. And as much as I wanted to keep that cynical reporter chip on my shoulder when assessing Steve’s impact on this industry, I have to admit feeling a sense of loss and regret.

I was never a fanboy. But I have to admit that I was a fan. For as much as I may have disliked certain trees in the Steve Jobs forest, the overall view is a thing of beauty… on that should be respected, remembered and preserved.

This is my last day at Billboard magazine, and the title of this post best encapsulates my state of mind as I look back on the last seven years. Actually, to be accurate, it’s my last full-time day. I’m going to remain on as an advisor/consultant for the FutureSound conference that we’re putting together (www.futuresoundconference.com) Nov. 17-18 in San Francisco. And I’ll be writing a few freelance feature stores for Billboard now and then.

But for the most part I’m now striking out on my own. Within the music industry, I’m looking to do some consulting and advising with both startup and established companies. My goal is to see how the unique skill set I’ve developed as a journalist at Billboard can be best translated into other roles. You can find a full list of the projects I’m most interested in on the “about” page of this blog.

I’m also interested in writing about other things as a freelancer. The digital music space is certainly interesting, but I have other interests I’d like to explore. I’m a total food geek, growing my own vegetables and cooking almost everything at home from scratch. I’ve started a food blog that can be found at www.cooked-uncooked.com that covers my growing, cooking and foraging activities. I’m hoping to start writing more about that in other publications. I’m also an avid skier, and am looking for cool angles to cover in that sport. And there’s just all manner of other things that I find interesting and compelling enough to write about. Billboard’s a demanding job… between that and parenting responsibilities, I’ve had no time to engage in these other areas. I soon will.

I have mixed feelings leaving Billboard. It’s been my identity for the better part of a decade, through some pretty major milestones in my life. I walked into this industry with nearly zero knowledge of the music business. This was a time when ringtones were making big money, and Billboard needed someone who know the mobile industry. After eight years covering mobile as a reporter and working in industry development at CTIA–The Wireless Association, I was that guy. The years that followed have been exciting, educational, and entertaining. I’ve met some truly awesome people. It’s really been a blessing.

But basically what I want to do now is experiment with other roles. I’m not one of these golden-parachute executives who can just leave a job and spend 6 months on a beach figuring out what they want to do next. Not only is that financially impossible, it’s just not my style. I’m a doer–I learn by doing. Truth is I don’t know what I want to do next, so the only way to figure that out is to do a lot of different things and see what sticks.

Perhaps that’s business development and partnership building. Perhaps it’s communication strategy. Market research and analysis. Community development. Content. I know I can do all those things, but I’m not sure yet which one I want to do full time. So I’m going to try to do a little bit of all of them.

There’s been a lot of turnover at Billboard, and my departure is sure to stir up more rumors. So let me clear all that up right now. I’m not running away from Billboard. I’m running (well, walking) towards something new. My relationship with the Billboard staff and leadership remains as solid as ever, and there’s not a person there I don’t consider a friend.

Billboard will forever be a part of who I am. It’s a stage in my life I’ll never forget. Now,  I’m looking very much forward to the next one.