This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

#DigitalSkeptic: Why Streaming Music Is Old Hat

Stocks in this article: P AAPL

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 - Get Report) 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.

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,221.70 -165.51 -0.95%
S&P 500 2,007.66 -21.89 -1.08%
NASDAQ 4,648.5970 -32.90 -0.70%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs