Music’s Future is Here: It’s Called Streaming (Part 2)
Hello, hello, hello. Last week, I included a reader survey but the link didn’t allow someone to properly submit responses. Here’s round two with a proper link to the survey. If there are any issues, just email me at pennyfractions@gmail.com. Otherwise, let’s get back to my macro view of streaming.
The financial dominance of music streaming remains in its early days, at least to my estimations. In the United States, streaming didn’t overtake other forms of recorded music revenue until 2018. This places the country behind the trajectory of countries like Sweden and South Korea, but considering the centrality of the US in the record-selling business, that’s understandable. The prolonged life of the CD in countries like Japan would suggest that many factors beyond technology account for how music culture shifts over time. My last newsletter discussed the decades-long run of dominant record industry formats like vinyl and CDs, as a way to convey that even with the arrival of new technologies, previous formats can persist. My assumption is that streaming is not even within its first decade of industry dominance and that the desire to escape it speaks towards both cultural and economic frustrations with this arrangement. This resulted in a rather consistent curiosity to seek out a new economic path, even while accepting streaming’s cultural hegemony.
A consistent topic within music business reporting is raising red flags about potential peak streaming. The concern is that streaming platforms might tap every potential customer and drain the industry’s main source of new growth. (I’m not immune to recycling the idea.) However, I’d like to reiterate previous concerns about the concept. The unstated reason for caring about “peak” streaming is that it might cut down on the last five years of record industry hype about its recovery from its post-90s sugar high. There’s also clearly a desire to increase monetization around fans, be it higher subscription fees or pulling a small cut of fans directly paying artists. That anxiety induced by streaming is shared by both record labels who’d happily take higher streaming prices and artists dissatisfied with this arrangement. This created an opening for new narratives to explain how artists can make the most of a system built without them in mind.
I’ve written numerous times about NFTs and the “metaverse” and my skepticism, especially the latter, especially in an era of high inflation and rising interest rates is only ever increasing. Millions of dollars may flow into these music technology ventures, but the prospect of replacing streaming is foreclosed. That these projects are emerging a decade and a half after the arrival of YouTube shows a conceptual limitation around these startups. Many fixate on monetization and try their hardest to fit music into an ownable digital framework. That these projects are emerging a decade and a half after the arrival of YouTube shows a conceptual limitation around these startups.
These technologists aren’t in the tradition of those who created the CD or even the MP3, where the experience of audio consumption, not monetization blueprints, was a higher-level concern. This isn’t limited to recent web3 ventures, quite a bit of energy is devoted to incremental increases in audio quality that don’t excite mainstream music fans. Mediums like vinyl, CDs, digital downloads, and streaming all altered the average music listening experience, but contemporary music technologies aren't offering the same leaps. If technologists cannot imagine beyond streaming, then artists' advocacy groups and unions see their battle with streaming just beginning.
Last year, the United Kingdom launched its investigation into the digital recorded business and produced a strong 100+ page report full of recommendations on how to better address issues artists face with this current streaming regime. Not to the same scale, the Union of Musicians Allied Workers launched their #JusticeAtSpotify campaign to call out the streaming giant. Even just last week, Belgium signaled it may be interested in paying a form of equitable remunerations where platforms would be required to pay music collection societies to payout out to artists. All of these international efforts to reform the streaming system aren’t entirely new, because many organizations voiced concerns about streaming since its earliest days. However, the now dominance of streaming and the after-effects of the coronavirus pandemic appear to have opened a door for greater interest in changes.
The success narrative of music streaming fell out of favor over the last two years. In 2019, paid streaming accounted for over half of recorded music revenue in the United States according to the RIAA, an impressive stat for an industry that believed fans would never return to paying for music. However, for much of 2020, the industry’s concerns rightfully were about the coronavirus’ impact on live music and office life, and much more than the relative stability of streaming fell to the background. Then over the last eighteen months seeing a gap in the narrative, novel crypto projects that saw artists raise thousands of dollars in second appeared exciting. Then on the other side was a now much louder, and coherent, voice speaking out against the major streaming platforms. Either side of these responses reveals just how accepted streaming is as the established method of how people listen to music.
Unlike prior music formats, music streaming revenue isn’t predicated directly on sales. Instead, it’s a mixture of tech-subsidized paid subscriptions, whether that’s the unprofitable Spotify; an Apple or Amazon absorbing a financial hit for the product, or even the many telecom companies that bundle these services onto cell phone plans across the world. Music industry revenue now mediated through large licensing deals, rather than explicit sales, shows an intense reliance on excessive tech industry capital. New processes emerged over the last fifteen years to shape this digital-first music era (online distributors, playlists, etc.) but much, if not all, is predicated on immediate access to music. The ubiquity of streaming emerged out of a post-financial crash era where companies secured their cultural footprint without the fricative parts of the previous era (recording in a studio, producing a record, promoting a record, getting a record in stories, etc.) or even turning profit. Those favorable conditions at least in the foreseeable future aren't about to be replicated.
Unheard Labor
A bit of news from New York state that should be on the radar of music industry professionals. Earlier this month, the New York assembly passed the Freelance Isn’t Free Act, which would allow freelancers to appeal to the state if they’re owed over $250 from a single vendor. This effort was led by a coalition including the National Writers’ Union, of which I’m a member, and the Freelancers Union, which protects works for all kinds of freelancers. The bill still needs to be signed by governor Kathy Hochul, but hopefully, that should happen and provide another layer of protection for workers. The other bit of fun news is that the National Music Publishers Association (NMPA) is looking to wage a campaign against apps that are licensed. Just as I wrote last month, there’s quite a bit of money to be squeezed out of these technology firms by different arms of the music industry.
A Note of Financialization
A new challenger appears. Music Business Worldwide reported on Beyond Music, a South Korean song rights firm, which compares itself favorably to the Hipgnosis Songs Fund. The company raised hundreds of millions of dollars from a mix of Korean banks and international private equity companies. Now with all that capital, the company bought KNC Music, FNC Investments, and most recently got all the neighboring rights from the record label Interpark Music. That Beyond Music’s press statements mirror American and British song rights companies increases my curiosity if there are any other below-the-radar non-western firms pursuing a similar strategy.
Primary Wave is still collecting song rights with its most recent purchase of the publishing catalog of Tom Whitlock, behind the song “Danger Zone”. Then Harbourview, backed by Apollo Global Management, bought the catalog of the R&B duo Dre & Vidal, which basically means every song I heard at a middle school dance is now owned by a private equity firm. Beautiful.
6 Links 2 Read
Hard Landing: The End of Free Money and The Future of the Music Industry - Money 4 Nothing
Our favorite co-hosts Sam and Saxton put on their economist hats to try and tease through what might happen to the music industry facing an economic recession. I found this episode incredibly helpful in thinking through these last couple of newsletters to better contextualize the streaming era of music as one financed by low interests and the ability for firms to float on venture capital cash. A slightly different outlook on this last decade-plus if indeed the economic winds are turning.
TikTok Is Turning Music Marketing Into a Labyrinthian Game - Pitchfork
Cat Zhang teases through increasingly confusing signals being sent by pop stars, and major labels, about the role TikTok does or doesn’t play in 2022 hit-making. Billboard reported on TikTok’s decreasing hit-making ability, which should reinforce that the importance of platforms for hit songs is often just a press narrative. A band might go “viral” on TikTok, or years ago Vine, or before that YouTube, but these songs are often exceptions, not rules.
Four Tet Wins Streaming Royalties Battle with Domino - Could It Now Set a Legal Precedent? - Music Week
The lawsuit between Four Tet and Domino ended in a settlement that could hold potential ramifications for future lawsuits over digital works.
Sound Money: On Bandcamp, Neil Young Derivatives and the Financial Imagination of Music Production - Bellona
An expansive essay on crises of capitalism, music financialization, and a call to better understand how musicians can better exploit the gaps that still exist for independent nodes within music’s broader economy.
A New Era: A Stronger FTC to Defend Working Families and Honest Businesses - American Economics Liberties Project
A walkthrough of early accomplishments with Lina Khan’s Federal Trade Commission. Again cannot help but mention the FTC’s lawsuit against Nvidia's purchase of Arm not only stopped potentially one of the largest technology mergers but also hurt Softbank’s bottom line. Real two birds with one stone action right there.
The Great Rock N(FT) Swindle - Music Business Worldwide
Eamonn Forde takes a few shots at the music NFT space, but more critically sees an industry ever more desperate to make money out of whatever new technology might emerge.