Hello, hello. A bit of promo to kick off the week. If you’re in New York City on November 9th, I’ll be hosting a five-year anniversary party for this newsletter, where we’ll be doing a dual live podcast recording with Money 4 Nothing and Art & Labor. We’ll also be joined by Liz Pelly and Cherie Hu, so please do RVSP right here. On November 14th and 15th, I’ll be in Athens, Georgia for the Artists' Rights Symposium. Last, Joe Coscarelli, a reporter at the New York Times, just released his first book Rap Capital: An Atlanta Story, so check that out. In the meantime let’s wrap up this exploration of how piracy shaped contemporary digital music.
By the end of the 00s, in the depths of the great financial crisis, the narrative of the record industry’s decline was cemented. The tech bubble burst, kids were no longer into pop divas and boys' bands, and ultimately piracy ruined the golden days for the recorded music industry. Steve Knopper’s Appetite for Self-Destruction offers a deeper critique in finding ways to place blame for this fall at the feet of major labels, but piracy still casts too large a shadow. Now before picking up the story of piracy where we left Myspace and YouTube, we need to go back to a law passed during Bill Clinton's administration.
In the mid-90s, there started to be a push to prepare for the arrival of digital media led by the World Intellectual Property Organization (WIPO). The United States addressed these burgeoning concerns by passing the Digital Millennium Copyright Act in 1998, which included a “safe harbor” provision to allow still emergent digital platforms not to be held entirely responsible for the content uploaded by users. Again this was before Myspace, YouTube, Napster, and widespread broadband access, much less the smartphone.
This exception remains hotly contested but arguably allowed the success of early blogs, video sites, and in particular YouTube, since they weren’t held to police every single piece of content that arrived on their respective platforms. This legal allowance would remain a sticking point for artists decades later who see it as the primary reason such platforms can undermine their copyrighted material, since most artists cannot fight an endless battle to take down their work. The implications of this piece of legislation would take years to be felt but would establish the groundwork for the next wave of online music.
Myspace, founded in 2003 and purchased a couple of years later by News Corporation, unlike peer file-sharing platforms, was far more willing to play the traditional media game. The nascent social media platform was more open to making arrangements that could satisfy major intellectual property owners. YouTube in its early days even received backing from major labels, who were able to cash out early but also thus kept extremely close ties to the company even if negotiations would get thorny. These platforms didn’t allow the easy transfer of files which spooked the industry. Instead, the ability to only stream was something that the record labels were already comfortable with and discussed even before Napster and enacted with the unsuccessful launches of PressPlay and MusicNet.
This early normalization of the streaming model is why many artist groups and advocates still find issues with YouTube’s low artist payouts being the original sin far more than the rise of Spotify. The rise of these platforms along with the emergence of digital music stores from Apple, Amazon, and others showed what the industry thought was acceptable. Streaming, if licensed, was fine and the same for digital downloads, even if artists, or some equivalent representatives, never sat in the room of those discussions.
By the late 00s, music piracy continued to take new shapes. What started to become more popular were sites like the Pirate Bay and other forms of file torrenting that appealed to hardcore collectors that’d seek out entire catalogs from certain artists or labels. Other forms included the usage of sites like MegaUpload and Rapidshare, which could be used by rappers trying to push their mixtape, an archivist, or someone pushing early leaks from indie bands. There were even platforms like Grooveshark, which basically offered an endless catalog of streamable music. Again the industry took a scorched earth view on these sites, where it did not matter if the files being shared might’ve been an official mixtape with all original music, an out-of-print record from the 60s, or a Top 40 hit that came a month ago. Cease and desists orders were the only language being spoken with little attempt to understand any potential legitimate use cases.
While the record industry continued to crack down on these websites, it also triple downed on digital downloads, effectively again abandoning any other potential formats that might be desired by consumers. (Ironically this is when vinyl slowly reemerged before major labels again jumped back into the format.) This might explain why file-sharing remained a top enemy since the industry backed itself into a corner where it effectively undercut all its previous formats and this appeared to be the last one available. This lasted until the mid-2010s when another format change was pushed. The arrival of legalized music streaming again can be dated back to pre-Napster days but really took off with Myspace, YouTube, then ultimately Spotify particularly with the arrival of its mobile application. This adoption began first in Sweden, then the United Kingdom, before making its way to the United States. That’s why the first year of recorded music growth on the back of streaming was in 2015.
The success of music streaming in the late 2010s is thus often solely credited to Spotify even though that denies that major labels already prepared the marketplace for this future for over a decade through certain licensing deals and lawsuits. The legal bounds of how a technology company could use major label copyrighted work were fairly settled before Spotify even left Sweden. This produced a profound economic shift for the record industry, no longer was it reliant on pure album sales but rather on market share-derived streaming totals. And as the adoption of streaming increased to what’s now over 80% of recorded industry revenue comes from streaming, of which 90% is accounted for by Apple, Amazon, YouTube, and Spotify. That’s a radically different environment than twenty years or even ten years when physical sales were still not only dominant but also made the argument around piracy of taking away potential sales easier to conceptualize.
Still, despite this wholesale shift in music’s primary revenue source, concerns about piracy continue to pop up. The target now in the industry is far less upon file-sharing platforms because the decades of litigation and increased digital market options were able to really undermine that practice. Instead, the ire became what’s known as “stream rippers”, which in theory could undermine the streaming economy if folks stopped participating in streaming and hoarded their own MP3s. However there’s been very little evidence of this happening and instead, an IFPI report suggested the practice was on the decline, as again labels aggressively targeted these sites. (Though obvious copyright infringement can happen with ripping sites, it’s also genuinely one of the best ways to preserve low commercial value music that can disappear.) However, the RIAA’s ire over the five or so years really shifted away from “piracy” and instead towards social media companies but the rhetoric remains the same.
Earlier this year I wrote about how an under-theorized terrain of music business battle lines is over social media company deals. The reason is that often these deals are done without much input from actual artists and in the cases of companies like Twitch and Twitter, they’ll do whatever is necessary to avoid a wide-ranging deal that might be signed by the likes of Facebook. The rhetoric of these public squabbles feels fairly similar to older days of piracy where label associations accuse social media companies of exploiting musicians, which basically means that they cannot monetize every potential recording that emerges on the platform. Increasingly the legacy of music piracy over the last two decades is helping to create this contemporary framework for labels to demand payments for every instance of music consumption. Again as Alex Sayf Cummings argues in Democracy of Sound, this shift was a feature not of western piracy fights but rather how now multinational labels cracked down on international piracy, where every CD must be accounted for.
This makes it curious to understand who exactly “piracy” is hurting in 2022. When over 70% of industry revenue is generated by four technology firms, labels are ready to whip up deals with any new emergent platform and are still not afraid to throw lawsuits at those who refuse to play ball. For the relatively niche forms of piracy that do exist it’d be hard to explain the tangible economic impact as the industries shifted away from a physical/digital purchase model and instead revenue is litigated via these complicated licensing deals. The emergence of digital piracy alongside the tech bubble crash provided an easy scapegoat for many other industry ills. However, the real legacy of piracy is far more in the major label’s ability to pivot a narrative of industry sluggishness into an almost all-encompassing regime that says a label must be paid wherever a recording appears, an expansion of copyright reach that would’ve seemed outlandish two decades ago. Maybe the record industry owes those pirates a favor for pushing them towards an even more restrictive path of copyright to offset depressed revenues.
Spotify announced a number of layoffs in its podcast division, which appears to have hit the Parcast Union hard, as workers denounced the company's decision. The Secretly Group Union announced that it reached a deal with management, so congrats to those workers on their first contract. Downtown announced CD Baby and Soundrop layoffs citing every executive's favorite excuse of “economic conditions” and “uncertain times”. BMI, who recently announced cuts after attempts to sell never materialized, is now pivoting towards a for-profit business model. Even if the company announced recent record revenue, the constant shifting doesn’t inspire the most amount of confidence in the company. Last, across Europe different TikTok offices are forming works councils, which will hopefully give a bit more job security to folks at the fast-growing but also shifting technology giant.
A Note of Financialization
Primary Wave announced a number of deals with a banner figure of $2 billion. Brookfield Asset Management, a Canadian investment manager, and Creative Artists Agency, one of the biggest entertainment talent agencies, purchased a minority share in Primary Wave; raised another billion dollars to invest in new catalog purchases, and used $700 million to buy certain rights from Primary Wave’s Fund 1 and 2. CAA inclusion could signal Primary Wave, already a more active marketer for their IP than others, is going to align even more with Hollywood to exploit their IP. The $700 million purchase reportedly only sought after certain rights of those initial funds and that some investors were cashing out, perhaps BlackRock?! Also, last year Primary Wave raised $375 million from Oaktree Capital and sold off a minority share, only further raising the question for myself of who exactly is getting the primary attention over at the company.
In other slightly less complicated news. Influence Media Partners announced an “investment” in the masters of country singer Blake Sheldton. Billboard interviewed Joseph Brenner of Grubman, Indursky & Shire about some of the major catalog deals he helped facilitate (like Bowie, Springsteen, and Sting) with major labels saying the buying frenzy for catalogs is over. (Don’t tell the folks at Primary Wave) Then lastly the Financial Times continues to report on Hipgnosis and the latest is that the company is planning a stock buyback in early December that’ll be financed through the company’s latest round of debt. Gotta make sure those shareholders see some money as the company’s stock price continues to languish.
6 Links 2 Read
Understanding Two Decades of Music Catalog Purchases - Centre National de La Musique Ideas Lab
Last year, the Centre National de La Musique in France reached out to me to help do a study on music catalog purchases. So I worked alongside Henderson Cole, and my former coworker Kaitlyn Davies, on this report on the last twenty years of deals, which also includes a deeper history of American music publishing going back to the 60s. This was an incredibly cool project to work on, so excited that people can read it.
Too Many Songs, Not Enough Hits: Pop Music Is Struggling to Create New Stars - Billboard (Subscription)
The music industry right now is obsessed with essentially blaming all of its woes on TikTok, which if my last two newsletters hopefully showed isn’t a new tactic for an industry experiencing stagnation. Not that TikTok is great for music but that narrowed focus on a single app I think over time will look goofier as things like BeReal and whatever may be next start to eat away at even TikTok’s control over youth attention.
Music Stocks Are Down Over 44% So Far This Year - Billboard (Subscription)
The music industry interlocked its business with technology firms and when those firms catch a cold, the music industry begins to cough.
When the Tinhats Are Right - exiledfan
A critique of how shipping culture (imaginary relationships spawn by fans) pervertedly interweaves fandom and commerce by abstracting real people into products that one can stake entire consumer behaviors behind (specific stan armies fighting each other).
Valuations of Music Catalogs - Ivan Kosyuk and Sasha Stoikov
A short paper looking at Royalty Exchange data shows people underbidding what would be the assumed median price of potential songs. A sign that the paper suggests buyers not being as convinced about the potential of said assets, or need more evidence if a song’s success is organic or boosted by additional marketing efforts. This reminds me of Brookfield and CAA purchasing selected parts of Primary Wave’s earlier funds, likely because at this point folks are getting pickier about the song assets it's like to own.
I enjoyed this piece because people often like to cite the money spent on new technologies (see A.I., NFTs, etc.) as proof of future adoption when in reality it could just mean a lot of rich people have too much money to waste.