Making money from music on the web is a tough business – especially for classical musicians and labels. Is the Swedish streaming service their saviour? Clemency Burton-Hill investigates.

Septuagenarian opera singers aren’t the first people you’d expect to speak out about music in the digital age, but few have been more articulate on the matter than the great Spanish tenor Placido Domingo. “I believe passionately in the right of artists to earn a living from their craft,” he says. “It is only if artists, and those who invest in them, have their rights promoted in the digital environment that they can continue to make the music we all love.”

Over the past fourteen years, since the launch of peer-to-peer filesharing service Napster, those rights have been harder and harder to protect, whether you’re Domingo, Dylan or Diddy. The recent news that global recorded music revenues are growing for the first time since Napster’s launch in 1999 must therefore be cause for tentative celebration – even if the growth is only 0.3%.

But the menace of illegal music-sharing still looms large. “Our markets remain rigged by illegal free music,” says Frances Moore, Chief Executive of the International Federation of the Phonographic Industry, whose latest findings estimate that a massive 32% of all internet users still regularly access unlicensed music sites.

This turns what’s left of the legal online music space into a vicious turf war where the rules of engagement change constantly and a titan like Apple – which, according to Asymco analyst Horace Dediu, controls around 75% of the $9.3bn digital music space – must watch its  back. Witness the launch later this year of iTunes Radio, intended to counter the attack from subscription services like Spotify and Pandora, that now boast tens of millions of users worldwide and whose profits make up more than 10% of overall digital revenues.

But if life in the small, legal digital space is tough for the mainstream record industry and content-distribution companies, it’s even more precarious for those in classical music, whose audience has traditionally exhibited very different buying, listening and collecting habits to those in the pop world.

Change of tune

Quite apart from the fact that the average classical listener is older and possibly less tech-savvy, the nature of the music and its constant re-interpretation by new artists over the decades means many enthusiasts seek out multiple recordings of the same piece. But as with other forms of music, the rise of digital technology has drastically altered how people consume classical.

Where previously, building a library meant shelling out cash on vinyl, cassettes or CDs to grow a collection over a lifetime, now it might mean downloading a slew of iTunes tracks, checking out a dozen different interpretations of the same piece for free on YouTube, or, increasingly, joining a streaming service like Spotify.

It’s hard to see how this trend, an echo of what is happening in all other media spheres, will be reversed. “There’s a difference between listening and collecting, and there’s an ownership pride in classical music which exists and which I don’t think is going to change,” says Jonathan Gruber, managing director of the leading classical music digital consultancy Ulysses Arts and the former head of digital at the Universal Classics label.

“For me the point is really about the inevitability of digital,” he says. “It’s not a question of having a choice, of either embracing this or letting it go past: if we don’t embrace it, it will develop in a way that we’re not happy with. And classical music will run the risk of becoming less relevant if it doesn’t engage with the way the rest of the world is moving.”

Spot on?

The Spotify model is radical because it both satisfies impatient consumers who have become used to enjoying vast amounts of music at their fingertips and compensates the artists and rights holders who create it.

By protecting artists’ copyright, Spotify has therefore been hailed, however gingerly, as a possible saviour of the beleaguered recording industry. In his lime green office near the High Line in New York’s Chelsea, the company’s Chief Content Officer Ken Parks tells me how a passion for music and a deep respect for those who make it is the lifeblood of the company. He also says how excited he is that Spotify can help serve more “niche” genres like classical and jazz by opening up vast catalogues to new listeners who are willing to engage with it in a risk-free, serendipitous digital adventure. And he points out that the young Swedish company has already delivered over half a billion US dollars in royalties back to rights holders and looks set to return a further half billion by the end of 2013.

A billion dollars is not a sum to be sniffed at, especially in these straitened times. And the more the model scales up, Parks insists, the more cash heads to the artists’ bank accounts, irrespective of genre. This is in addition to any lateral benefits – concert tickets, physical album purchases – that a less mainstream artist might enjoy from the exposure of being on a major digital platform like Spotify.

But what does the ever-shifting digital landscape really mean for the livelihood of classical artists and the labels that once invested so handsomely in them? Many pop artists grumble about infinitesimal royalties from Spotify and other streaming services. Classical makes up only a fraction of the market, so these numbers are invariably even smaller.

“If we had to rely on income from streaming services only, we would shut within a couple of months,” admits Simon Perry, head of the leading classical label Hyperion. “Services like Spotify and YouTube are great for the consumer, but they’re training an audience into thinking that classical music has no intrinsic value in terms of money. And the Spotify model does not work for classical because as a proportion of listeners, there is not enough traffic for it to generate the sort of income a label needs to invest in a performer and recording.”

Perry does not license Hyperion records through Spotify, although he has embraced digital technology elsewhere. “Physical sales are down 25% on last year, so we have to find other ways of generating income. Digital downloads, which we make available through our own website at a very high quality and with loads of metadata like artwork, commentaries, texts and translations, are on the rise. Although not enough to make up the shortfall from physical sales.”

“These are interesting times,” he adds. “And we’ve got to find ways to adapt. I’m generally an optimist, and without wishing to sound naive, we’ve got 80 new recordings being made this year alone. There is still a healthy market for what we produce.”

Switched on

While it is clearly tough for those who remember the golden age of recorded classical music, many young artists are sanguine when it comes to the new digital world they face.

“Anyone who records classical music now is reconciled to the fact that you don’t do it to make money, you record for artistic reasons; to make a record you are proud of,” confesses Alisa Weilerstein, the outstanding 31-year-old American cellist who records exclusively for Decca. “And you are just lucky and incredibly grateful if you can get the projects you want recorded and distributed well. So if it’s on Spotify: great. Any artist of my generation who hasn’t got used to ‘the way things were before’ – we are just happy if we know people are listening to our music by any means.”

Weilerstein is also happy proof that a prominent presence on Spotify’s classical catalogue needn’t cannibalise physical record sales. Her recent debut album for Decca, a breathtakingly powerful account of the Elgar and Carter cello concertos, has sold over 23,000 copies to date – a whopping number given the climate. “For a classical debut artist, that way exceeded expectations,” she admits. “So maybe the digital thing took away from some sales, maybe it added to sales. But I think mostly it helps because it increases accessibility and awareness, and that has to be a good thing.”

Gruber ends on a similarly upbeat note. “Am I optimistic?” he asks. “Listen, classical music has always been a tough business, and the digital world is a quantifiable expression of new challenges. And of course there will be more new challenges, but the exciting parts are so exciting, how can you not be optimistic?”

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