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The story of music streaming in the 2010s is entering its final chapters. What barely existed in 2010, at least in legal forms, outside of YouTube and Spotify in Europe transformed into what is now the primary way the major label record industry makes money. I want to stipulate here that when I say “major label record industry” I truly do mean the industry and not artists who actually make the music or the producers behind the boards. The actual creators for over a century struggled to gain compensation for their work and streaming’s offered no solutions to this problem.
Instead streaming right now is simply offering a jolt to an industry that got too greedy by the 90s through inflated CD prices, eliminating the single to drive album sales, and eventually suing music fans for download a few songs, while executives were still sitting in offices on six-figure plus salaries. I say this, because streaming with a slightly long distance view could eventually be running towards a similar eventual cliff.
The First Sign of Chaos
Music industry consolidation is nothing new but SiriusXM’s recent purchase of Pandora is a tangible sign of just how shakey the business of music streaming can be. Commentators are never afraid to point out just how Spotify doesn’t make money and few music streaming services appear to do anything except bleed money. Well I’ve laid this out before but at this point in the United States look at the music streaming market. Amazon, Apple, and YouTube Music are all owned by the largest companies in the world, so while certain content strategies might not work and some features might be ignored the core platforms are here for the long haul.
While that tech triangle of music services might be secure that isn’t quite the case with the more independent companies: Spotify, SoundCloud, and Tidal. I’ll just admit I’m waiting for the day Sprint announces they finally bought Tidal and then T-Mobile and Sprint combine into a telco monstrosity. There just really isn’t another path I see for Tidal assuming the company stays afloat. They could potentially be bought by a non-American telco but Tidal’s long term future isn’t as the playtoy for the 0.1% of musical artists.
Essentially copy and paste the last graph but for Spotify and Samsung. I imagine this tango will take a little while, as Spotify attempts to do efforts in podcasting and video all in an effort to raise their stock value. I said it last week but labels should be fighting for higher, not lower, royalty rates so they’re ready for when Spotify is bought by another company and they can continue to fight for lower rates rather than already be in a race to the bottom. Or perhaps a bigger tech company picks up Spotify, either way I would be surprised if the company stands long by fall 2023.
I don't hold a solid read on what SoundCloud's future beholds. Everything I wrote above could also happen to SoundCloud, but I'll throw a dark horse idea of Facebook picking up the company down the line.
The reason is look at Facebook’s most recent announcement in Billboard about new music features coming to the platform:
Music on Facebook Stories, as the name suggests, will allow users to add a song to photos and videos shared to their stories. Users will also be able to use the new feature on their news feeds by taking a photo or video from their camera roll, tapping the sticker icon and then selecting the music sticker. There are a few other customizable features, such as adding other stickers and effects….With the teased plans to allow users to add songs to a new music section on their personal profiles, Facebook explained the tracks will be pinned to the top of pages so friends and followers can easily see them as well.
This combined with SoundCloud's recent announcement of Instagram Stories integration does raise an eyebrow for me to be honest. These are the kind of features that show the potential of integrating music streaming with social media that hasn’t really seen much of a pull since the days of Myspace, at least in the United States. The author Nancy K. Baym in her book Playing to the Crowd: Musicians, Audiences, and the Intimate Work of Connection argues how most social media platforms even in 2018 offer little for artists:
Platforms like social media sites tend to focus on making money by selling user data to advertisers, yet they offer users few direct ways to make money themselves. What if they took seriously the call to let those who are already using them for career gain earn money through their practices on site? YouTube and Bandcamp provide some models, but there could be many more.
This is ultimately where I keep coming back to this as I bring this newsletter to a close and as I look at nearly a year since I started Penny Fractions. The music streaming model is broken, but so was the CD model, the vinyl model, and the radio model. The issue isn’t with technology so much as it is with record business capitalism. Still what I outline above is that the “record industry” isn’t positioning itself to remain a stand alone industry. Instead the platforms that distribute music are being slowly folded into tech/media behemoths and labels and artists are just at this point along for the ride. My question at this point is who is going to be the first one to meaningfully raise their hand to get off.
Two Weekend Reads
A&R ‘Moneyball’ Is Hotter Than Ever But Will It Actually Improve the Music Business - Music Business Worldwide
I love this overview of how statistics have taken over the A&R side of the music industry, but I more appreciated how Hu ponders if any of this is meaningfully changing the industry. My guess is probably not all that much.
Over the last week I’ve become obsessed with the labor issues surrounding Red Dead Redemption 2 and this piece captures a lot of my feelings not only about video game development but even the my increasingly complicated feelings on the music industry. Not a light read but a piece I’m happy I didn’t overlook.
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