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TheStreet Open House

#DigitalSkeptic: Why Streaming Music Is Old Hat

Stocks in this article: PAAPL

NEW YORK (TheStreet) -- Musician and Web entrepreneur John Pointer is seeing the music business missing the boat yet again. Just as the rise of digital downloads took the CD-based industry by surprise, the new streaming music services are overlooking the rise of other, more practical Web-based services connecting artists and audiences.

"The biggest issue that streaming music services face is they are confused as to why people listen to music in the first place," Pointer explained during a long and wonderfully rambling phone call from Austin, Texas. "They are serving a consumer model of 'pay me $7 per month and I will give you bajillion songs.' But that's not what music is about. It's about expressing and connecting emotions.

"And streaming music just does not address that need."

Pointer's take on Spotify, Beats Music or Apple's (AAPL) streaming music service, is one of the most unique and refreshing these ears have ever heard. After graduating with a bachelor's degree in cello performance from the University of Texas at Austin back in the late 1990's, he spent the next several decades making his living as a full-time gigging musician and entrepreneur in the miasma of gigging musicians and entrepreneurs that is that central Texas arts town.

Pointer has been a cellist and percussionist in the Mexican vocal group Trio Los Vigilantes. He's sung "big beat a cappella" with Schrodinger's Cat and served on the Austin Music Foundation, a nonprofit that offers career development and music business education. And in 2009, he founded an early crowdfunding platform, called Patronism.com http://patronism.com/, that allows audiences to directly fund musicians and artists.

"Part of what really drives me is, whenever everyone goes one way, I instinctively look the other direction to see what everyone is missing," he explained. And to Pointer, the issue that looms for all streaming music services -- Spotify, Pandora and Beats -- is blunt and dramatic: It's all about taste. Or the lack thereof.

"What something like a Spotify needs to know is why people get hungry and what is it that they are hungry for," he said.

"But instead, all they really are doing is selling this mindless buffet."

Not Connected to the Audience

Investors gaming the odds of streaming music services may be right to wonder whether they have already become too complex and obtuse for today's connected, demanding digital consumer.

Pointer has a solid track record of artists establishing direct connections to their audiences, with little help from Web middlemen. In his own career, he has inked the backing of several dozen fans and audience members who pay him small monthly stipends for his recordings, notes and other pieces of work.

"I still have to work gigs to make ends meet, but my 80 patrons make a real difference in how I earn my living," he said.

And Pointer's direct patron model dramatically lowers the cost of producing meaningful content. "If I want to make minimum wage on Spotify, I think I need 4.2 million streams. And for that, I need a professionally produced album." Instead, he concentrates on what his audience wants and then provides simpler bits of content at a far lower cost.

"When I weigh the benefits of getting on Spotify, I look at the hurdles there. To me, it makes more sense to work directly with my audience, share the content I make at home and post it when I want."

The Direct Funded Musical World

Real business success is also clearly possible when musicians form deep and direct relationships with their patrons and backers. The biggest success story, says Pointer, is Austin-based Steam Powered Giraffe. During 2012, this performance art ensemble used his Patronism platform to fetch over $10,000 a month in direct payments from over 8,900 fans.

Even a quick tour of today's fast growing crowdfunding platforms shows how downright trendy it is for customers to deal directly with musicians. The music section on the likes of Indiegogo and Kickstarter are chock full of consumers perfectly happy to relate directly to artists. And several well-funded global startups are deepening and targeting these types of direct connections in ways streaming services can't. United Kingdom-based PledgeMusic or London-based Sponsume, or even Belgium's SonicAngel, now serve an entire generation with slick and elegant ways for consumers to connect directly to musicians.

"Patrons are more interested in what they are doing with their money than what they getting for their money," he said. That means, says Pointer, that streaming music services are at best a niche concept that run against the deep, inner grain of how music connects to customers.

"When you learn an instrument, you simply fail until you succeed. The music business turns out to be the same thing: What's important is admitting when things are not working, staying creative and finding another way.

"Saying that streaming music is somehow the final answer, I am not hearing that one."

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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