Hello, personally the last week was a bit rough, so please forgive this week’s newsletter that sprawls through contemporary music reports and a late 1950s music business book. I’m still collecting questions for my upcoming “Mailbag” newsletter. I’d like to find a better phrase than “Mailbag” maybe “Inbox”? Maybe suggest a name as well. Anyway, just put “Q & A” in the subject line so I know. If you do enjoy this newsletter, the best way to support is always to recommend it to someone or just to send me a note at email@example.com. Now for this week’s newsletter!
Last month New York Times pop music reporter Joe Coscarelli tweeted out a few statistics from BuzzAngle’s 2017 U.S. Music Consumption Report Highlights, a company who recently arrived on the music data scene to offer a bit of competition to the Nielsen’s Soundscan charts. But, there was the part from research that Joe tweet that I found the most interesting:
The main takeaway from the graph was that the top 10% of musical artists accounted for a whomping 99.2% of music streaming consumption. The number on the surface would seem to show that streaming is in fact stratifying the gulf between music’s upper tier vs. the rest of the music. I got an email a couple weeks ago that asked if this gap might shrink or reduce as more people enter in the streaming ecosystem. I wanted to expand on that initial answer in this week’s newsletter, because it captures a lot of questions I’ve been asking around the more abstract future of music streaming. But before looking ahead, I wanted to take a few steps back before the turn of the 20th century.
The music industry, or at least how we personify it today, during the 1800s and the early 1900s centered around sheet music and songwriters, the people who put the notes and words on the page. American music history buffs might remember the phrase Tin Pan Alley, the New York City collection of buildings that housed songwriters, who produced the most popular songs from the early part of the 20th century. Instead of one buying a recorded song, people were buying music so they could reproduce the song on their own at home after hearing it performed by song pluggers whose job it was to convince you that you needed to the latest George Gershwin tune. Before the introduction of personalized recorded music—be it vinyl records, CDs, MP3s—this era of sheet music helped set the stage for the contemporary music business.
That’s why in the early 20th century, when radio started to dominate American life, major music publishers faced an early existential crises, as Hazel Meyer in her 1958 Gold In Tin Pan Alley described: “The publishers were in serious difficulty. People were listening to music, but they weren’t buying much. Radio gobbled it up with voracious gluttony, and the publishers became more and more frightened as it occupied the major portion of a fascinated public’s attention. Sheet music dropped to an alarmingly low as home pianos stood silent.”
The introduction of radio broke an old music industry and created what would eventually stand for the rest of the 20th century. Fear of radio in many ways was sensible, why would people buy sheet music to play songs if they could turn a on box that’d play music at all hours of the day. The need for a physical purchase was gone, except for those truly passionate about personal musical performance. The music industry even when fearing change is always ready to adapt. Publishers figured out that radio could effectively market records, then embraced a format they previously saw as their eventually doom bringer. The old sheet music model of getting people to hear a song, then rush to the store to make purchase was back in business. That model took varying shapes with singles in the 50s, bloated rock albums in the 70s, double disc CDs in the 90s. Despite the changes over the century the music fans that bought Nirvana’s Nevermind wasn’t too far from a fan who bought a piece of sheet music the previous century.
The music industry, or better put the “record business,” was one built around physical consumption. The iPod and the iTunes store broke apart the album through single song downloads, and the physical store where musical products were sold. Still, even with those fairly radical changes, the legal side of digital music consumption followed the music sheet model. One hears a song and they go to the nearest store, physical or digital, to make a purchase. The issue is that once the iTunes arrived the services like Napster in the late 90s already fundamentally broke the music industry like radio did in the early part of the 20th century through the same idea. Why would I buy one item, when I have access to everything? Radio, and the internet to a greater degree, shifted music from consumption to attention.
Contemporary music business via Apple Music, Spotify, YouTube, or whoever, is right now centering around streaming and in the process turning the business into one centered on attention, not consumption. I’ve talked around this issues in previous newsletters, but I’m going to drill down a bit harder here on this for a second. A common complaint held against streaming services is how little they payout per stream versus a digital download or CD or vinyl purchase. It’s one that Damon Krukowski wrote about on Pitchfork back in 2012: “Or to put it in historical perspective: The "Tugboat" 7" single, Galaxie 500's very first release, cost us $980.22 for 1,000 copies-- including shipping! (Naomi kept the receipts)-- or 98 cents each. I no longer remember what we sold them for, but obviously it was easy to turn at least a couple bucks' profit on each. Which means we earned more from every one of those 7"s we sold than from the song's recent 13,760 plays on Pandora and Spotify. Here's yet another way to look at it: Pressing 1,000 singles in 1988 gave us the earning potential of more than 13 million streams in 2012. (And people say the internet is a bonanza for young bands...)” Krukowski’s written a lot about this topic and I often agree with him on certain issues, but over the last few months, especially since I started this newsletter, I’m wanting to push back on this particular critique of streaming or at least the intellectual framing. (Yes, I’m sorry this week is truly in the weeds)
The vast difference between a 7” single and a Spotify stream is one that comparisons like the one Krukowski can quickly flatten. A stream only needs to count for a second register, but what is the one second equivalent of purchasing a 7” record?. Would one say that one second of hearing a song is meaningfully engaging with music? I’d guess no. What about 15 seconds? That’s the amount I may hear a song in a commercial. Is that meaningful engagement? What about two minutes of a four minute song? Again, how many fractions song listens eventually equal fully physical purchase? I understand the desire to connect the dot between a song stream and a digital sales, but even if both lack physical objects an iTunes purchase is much closer to a record than a single stream.
I don’t say this to say that artists shouldn’t be compensated, in fact I’d argue / hope they’d get compensated more—that’s another newsletter. My point is that streams are not analogous to buying a physical or even digital product. A record I bought in the 1988 is still something I can physically hold and it can itself hold meaningful value in a way that 4 seconds of a song stream could never replicate. Even a MP3, which are easily copied and shared can hold some value through digital scarcity.
The outdated conceptualization of music consumption doesn’t make sense in a streaming age, people are making individual transactions with music, their economic choice is happening with where they put their attention not their dollars. Fans are listening to songs, saving to their personal playlists, and perhaps on some their buying tickets and merchandise, but they are not buying music. Attention, not consumption is the measurement here. The issue is that consumption, except for during the early rise of radio, is the only way that people have traditionally contextualized the music industry, not “music” but the multi-billion dollar version of it.
Now after this long preamble let’s get back to that research that Coscarelli cited said that the top 10% of music creators account for 99.2% of the music consumption in the streaming space, but let’s look at digital and physical sales:
Overall the numbers are fairly similar with the top 10% of album sales accounts of 95.1% of sales. That is only a few percentage points difference, but why is that the case? Here’s slightly belabored guess to the reason: Let’s say my local church sells CDs and I buy one for the car ride home. The next day at work I turn on Spotify and listen to what is probably the top 0.1% of music, not even the 10%, where I hear a few Kendrick Lamar songs. Then on the way home in the car I turn on Kendrick Lamar’s To Pimp A Butterfly, while stuck in traffic. Now, before streaming that $9.99 I paid for the church CD and To Pimp A Butterfly would account to the 1:1 ratio of consumption. But, when I turned on Spotify and hear Kendrick, he and his team are still getting compensated, thus Kung-Fu Kenny will gradually out weight my church CD purchase, because I’m constantly engaging with Lamar’s music and I’m in an ecosystem that wants me to keep engaging with artists on his level of popularity. Where previously hearing a song on the radio and buying a CD were completely disconnected from each other, now they sit side-by-side in digitally intertwined world.
The context to view all of this is that in a streaming first world where all of one’s music consumption is recorded. Streaming’s long tail future is a post-surveillance way of music consumption, where all music consumption is monitored and properly consuming creators. So why does that skew towards the most successful artists? Major hold investments in Spotify, so there’s a reason even “Mood” playlists read like Top 40 radio. Even if smaller artists now hold the chance to reach larger audiences that doesn’t compete to the increased attention a Drake is able to siphon. The preferential attachment, where effectively the rich get richer, is almost baked into how these platforms currently work. That tension is in critiques for how little money is paid by the likes of Spotify, where smaller artists can’t achieve the necessary scale to see their income rise like those at the top 1%.
Smaller acts don’t receive access to playlists, algorithmically or human generated, and when attention, not consumption is being tracked streaming numbers will skew towards acts who hold a massive reach. A musical middle class could exist when the marketplace asked its users to make a choice with their dollar. That’s less so the case when all of the money that a fan potentially might spend is spread across many musical communities is placed inside a proportional pot. Every song stream may “help” your favorite band, but each dollar, then penny, then half-penny is being grabbed and divided before it arrives in their bank account.
The initial email I sent back to the reader, express little in hope in that an increase in music listeners will result in a smaller gap between the top and the bottom. I’d go a step further today and say that the trend is moving towards the streaming market stratifying even more, not less. The more that people’s listening habits are quantified in a streaming first ecosystem means popular acts will continue to see their oversized market share increase and further squeeze out those who are on the bottom. Thank you big algo.
Links 2 Read
YouTube Red is “a Music Service” and is About to Expand Around the Globe Says Susan Wojcicki - Music Business Worldwide
“YouTube Red is a Music Service” *Thinking Face Emoji* I rewrote this three times, cause I couldn’t help but be snarky with this quote. Yet, this is still a fairly interesting interview with YouTube’s CEO, even though it does make me again question if any top tech execs actually ever use their platform.
Facebook to Launch Two Smart Speakers in July 2018 - Digitimes
Try and take rumors with a grain of salt, but personally I’m interested to see what kind reaction Facebook would receive if they introduced a smart speaker. That market is already started to get crowded. The Homepod launched earlier this month already well behind the Amazon Alexa and Google Homepod, so what exactly would Facebook be adding to this space? Not quite sure, but why not Zuck. Try it.
The great big Spotify scam: Did a Bulgarian playlister swindle their way to a fortune on streaming service? - Music Business Worldwide
Scammers gonna scam. I’m personally excited to see how many more scamming things will start to point out on these platforms now that people are a little bit more open to discussing this in public.
How I Cracked Facebook’s New Algorithm And Tortured My Friends - Buzzfeed News
Speaking of Facebook, another missive from the world of algorithm gaming. Concerns over changes to Facebook’s newsfeed continue to wrap up the journalism world, so I certainly found this Buzzfeed News story a bit amusing. Not only because it was such an obvious way to game their platform—comment, comment, comment—but how easy it is to forecast eventual exploitation. Anyway, please comment below.
Why Ubisoft Is Obsessed With 'Games As A Service' - Kotaku
I don’t play video games too much anymore, but the video game industry remains a place of endless fascination. Often because trends in the video games space eventually work their ways into other industries—Massively Multiplayer Online games were doing a subscription fee for endless content back in the late 90s. That’s why I’m so interested in the idea of “Games As A Service” potentially within the context of music, where I’ve seen smaller indie labels start offering full year subscriptions of their catalogs. I guess the that old way of doing music consumption changes, it’s a bit more interesting to try and see people working around new paradigms like streaming instead of just sinking all of their resources into a singular mode. Or well, it’s interesting to me.