Alexandre Saboundjian, CEO of Llama Group, advocates for a significant shift in artist compensation within the music industry, emphasizing the need for artists to access diversified revenue streams beyond streaming platforms. In light of Emmanuel Macron’s criticisms about unfair remuneration in music, Saboundjian highlights the growing awareness among artists about their financial challenges. With the launch of the Winamp Creator platform, the aim is to empower artists to manage their careers more effectively and establish direct relationships with fans.
Alexander Saboundjian, CEO of Llama Group, which manages the Winamp platform, expressed a bold vision for transforming how artists are compensated in the music industry. Following the release of their results on October 17, he emphasized the need for a shift in the music revenue landscape, noting that streaming platforms should only account for a fraction of artists’ income.
“Currently, artists utilizing music streaming services aren’t receiving fair compensation,” stated Emmanuel Macron in a recent interview with ‘Variety,’ criticizing an “unjust” remuneration model. What’s your perspective on this?
We fully support President Macron’s assessment, particularly when 99.1% of artists on these platforms report dissatisfaction with their earnings. However, it’s important to recognize that while companies like Spotify or Deezer may seem exploitative, they are also dealing with their financial struggles. Launched in 2007, Spotify occasionally records losses each quarter, indicating it isn’t profiting excessively at the expense of artists. The real beneficiaries of the current system are the major labels.
Furthermore, it’s essential to differentiate between various types of streaming services. Some see streaming as a business, while others merely use it as a marketing strategy to appeal to different audiences—think of major tech companies like Amazon, Apple, and Google with YouTube.
Are artists becoming aware of the platforms’ limitations?
Indeed, there’s a growing realization among artists; the long-promised miracle solution of streaming, intended to compensate for declining CD sales, is proving to be a false promise. Streaming is just one part of the solution. Today’s artists must explore diverse revenue channels. Digital technology now enables artists to operate more independently, offering them greater freedom and control over their earnings.
How has the role of major labels changed?
Major labels are enjoying enormous profits with relatively minimal effort. Traditionally responsible for production, distribution, and manufacturing, their current role has shrunk significantly. Nowadays, they mostly upload files online, and while this simplicity is efficient, it creates an unsustainable imbalance as the disparity between their minimal effort and lucrative income grows. This has led many prominent artists to recognize the need for independence in a changing industry.
Why is diversification of income sources crucial for artists?
There’s no single solution. While streaming services shouldn’t vanish, they should ideally contribute 30-40% of an artist’s revenue, raising the question of where to secure the remaining 60%. Artists must cultivate direct relationships with their fans, who are essentially their customers. The current generation is already moving towards direct subscriptions with influencers and similar models in gaming—so why not apply this to the music sector? Fans could enjoy exclusive content, like ‘golden seat’ access to concerts or unique memorabilia. It raises the question of why artists should rely on social media platforms that profit from their content without giving back.
You recently shared your half-year results and mentioned a significant investment in Winamp Creator. Can you elaborate?
Yes, we divested our point-of-sale music distribution business, akin to a B2B Spotify, in 2019, and in 2022 we sold a digital business focused on audio streaming ad insertion. These moves were intended to reward shareholders and pay down debt, but most importantly, to reinvest in the Winamp initiative.
This platform is designed to be a comprehensive solution for artists to manage their careers, currently in its launch phase. Think of it as an industry software package similar to SAP, enabling artists to oversee their activities beyond just creation. Instead of juggling multiple platforms, independent artists can manage everything from copyright and licensing to distribution and marketing with the assistance of AI tools.
What are your goals for this new platform?
We aspire to serve hundreds of thousands of artists and, ideally, reach up to a million. The current offer is favorable; we charge artists just 50 euros a year, which is quite reasonable, with a plan to transition to a model where we take 15% of their income in the future.
Propositions collected by Matthieu Richard-Molard