The Limits of Music Subscriptions

Hey, hey, hey. I’m very excited for this week’s newsletter, so this introduction will be brief. For those of you who live in New York City, I’ll be on a panel hosted by the Baffler this evening if you’re free. Otherwise, I wanted to say that if you enjoy this weekly newsletter, please recommend it to a friend, post about it on social media, throw it in a Slack convo, or you could also support the Patreon. Options, there are options to show your fandom!

This week’s newsletter centers on music subscriptions, but I first wanted to offer a couple caveats. The subscription model in music isn’t new, so I’ll be honing in on internet-based subscriptions, meaning that no post-60s fan clubs or 12 CDs for $1 catalogs will be mentioned here. My other note is that I make fairly fine separations between subscription offerings, so hopefully my closing argument justifies such exact splitting. Now, let’s go back to the dawn of the web.

Early Online Subscription Days

One of my favorite books last year, Playing to the Crowd: Musicians, Audiences, and the Intimate Work of Connection, spends an entire chapter talking about how the internet altered the relationship between fans and artists. It specifically cites the band Throwing Muses, who back in the mid-90s set up a subscription payment program to fund the band’s future recordings. Baym doesn’t fetishize this as entrepreneurial spirit but recognizes this as artists monetizing off the internet’s already-fertile fan-created spaces. Though the actual business set-up of the Throwing Muses isn’t conceptually too far from Patreon, the frame of centering the transaction as one of a slowly building community, rather than one of pure commercial transactions, sets up a more considered way of seeing one’s fans and art. These early artist experiments built upon formerly scattered fandoms that existed in prior decades without a centralized way for fans, and then artists, to communicate with each other. Sadly, that culture became more diffused and out of the conversation with the arrival of Napster and iTunes, which absorbed all the creative air of what digital music transactions looked like. It’s these early digital corporate efforts that were reactions not only against piracy but also against the premise of music ownership.

In his 2016 book Platform Capitalism, the technology writer Nick Srnicek cites Pandora and Spotify as examples of Product Platforms. The business model is one where, for example, Pandora would lease out record label-approved music for a recurring monthly fee to consumers, but the company wouldn’t create or own any of this music. Srnicek correctly parrots that this model leads to a revival of the record industry. However, due to the decline of music journalism, the constant threat of DIY venues across major cities, and the hollowing out of music’s working class, I find it worth drilling down on who this original model was designed to serve and who ultimately reaps the rewards.

I wrote about this earlier in the year, but initial record label-approved music streaming platforms, pressplay and MusicNet, were explicitly imagined by record labels to remove ownership from fans. These early experiments caused intense artist pushback and never caught on until Spotify, with the full support of major labels, were able to pull off this heist upon music consumers’ wallets. Yet that original tension only increased, as year over year Product Platforms pay out less money to the companies that they’re leasing the music from, but also aren’t developing enough non-major label content to separate themselves from this contentious tango. This subtle conflict is what drives the many subscriptions I’m about to outline.

The Base Subscription

The American baseline price of a music subscription is $9.99 per month. This is a four cent increase ($9.95) over what the Universal and Sony-backed company pressplay launched at in 2001. There are higher end options like Tidal’s HiFi for $19.99, but the base American price is $9.99, whether using Apple Music or Spotify—except Amazon Music Unlimited, which can be discounted to $7.99 if one is an Amazon Prime member. This bizarre fixation at a single price point not only reinforces that the idea that access to millions of songs should always be $9.99, but also boxes in what these for-profit companies could potentially charge. The weight of Amazon, Apple, and YouTube means that there is effectively a subsidized price ceiling for music streaming. Whereas Netflix periodically increase the price across their offerings, music streaming platforms are constrained to this price despite the fact that the price should’ve risen by at least $4 to account for inflation.

Spotify executives often obscure this reality by saying the company needs to grow and doesn’t see much value in increasing the price. My guess is that along with market pressures, each of these companies understands that consumers are conditioned to see little value in recorded music and that increasing the price would reveal the precarity of the entire business.

The Discounted Subscription

I drilled down deep on the Base Subscription because its specific existence is why I proceeded to cut these other subscriptions so finely. The Discounted Subscription is a limited time price reduction that leads to emails offering a streaming platform for only $0.99 a month! Or it’s the student discount that can sometimes halve the monthly cost!

These discounted subscriptions are fairly standard practice, but within the context of music, they play a particularly interesting role in being the emergency button for companies to press when they need to inspire user growth. The reason is that the only barrier to registering as a Spotify Monthly Active User (for example) is to just listen to a song for 30ish seconds; it’s a costly, but simple way to boost that big number that gets shared every quarter. This does push for more subscribers but dilutes just how many people are, and are willing to, pay those $9.99 a month.

The Subsidized Subscription

The go-to example of a Subsidized Subscription would be Apple Music’s original launch that came with a free trial. Nowadays, all subscriptions are subsidized by the company and investors who expect to lose money, with the goal of acquiring new customers. Yet, I want to be a bit exact here. Where the Discounted Subscription offers the low price on a product, the Subsidized Subscription of Apple Music offering a few months for free yells “Music holds no value”.

When Taylor Swift wrote a public letter to Apple (before Apple Music launched) to demand that the company pay artists (“We don’t ask you for free iPhones. Please don’t ask us to provide you with our music for no compensation….”), she was arguing against this idea. The Subsidized Bundle reveals the relationship between streaming platforms and musicians, where payments to musicians are entirely at the whim of the platform, regardless of whether fans are paying or aren’t paying into the system.

The Bundled Subscription

If companies are concerned about people not paying $9.99 for a music bundle, then why not bundle with another product or service? That’s Amazon Prime Music pitch, which offers a couple million free songs to Amazon Prime subscribers. If Amazon can simply subsidize an entire platform just so that its users keep wanting to pay for their Prime subscription, then again, this bundle shows that there really isn’t much value in recorded music.

In September 2017, Spotify introduced a $4.99 student bundle of Spotify and Hulu, which eventually went to all consumers early last year for $12.99. From a consumer vantage point, this is a great bundle to save money on entertainment -- a glimpse into a potential future is last year Sprint revealing a bundle with Tidal, Hulu, and Amazon Prime). Yet, if the major issue of music streaming is that streaming platforms don’t pay enough money, then the Bundled Subscription effectively says there is no real value to be found in music without tethering it to another medium. That provides little comfort in the unspoken idea that a cheap monthly subscription could sustain two separate industries.

The Direct to Artist Subscription

A reason why I champion Playing to the Crowd is that it helps ask why direct artist to fan models were left behind. Right now there are video streaming platforms like Twitch and YouTube, but that’s never caught on within the music space. The fund-raising platform Kickstarter is used by artists and got a lot of early attention through the singer Amanda Palmer, but never quite became mainstream. Even Patreon, which despite going down the dark venture capitalist path still offers a lot of flexibility to support artists. I’d like to imagine an option, or several options, like these could emerge to shift the relationship of musicians not only to music, but also to their fans. Yet that still hasn’t happened. I chose this variant last because I do support the idea of the Direct to Artist Subscription even if the last couple of decades show little movement on seizing the opportunity.

Why So Many Subscriptions

The end result of all of this choice is masking how much money must be paid out to artists and labels, so consumers can think that an entire industry can exist on a few dollars a month. These Product Platforms must grow with the goal of breaking away from the grip of licensing music from labels, so there’s been no music platform that’s succeeded yet. Instead, we just see further consolidation with Sirius XM acquiring Pandora, Sprint buying 33% of Tidal, and even Spotify and Tencent investing in each other. All of these gimmicks are clever ways to mask what is ultimately a business model that’s hard to square.

That’s why it’s sad to see a company like Beatport introduce a streaming subscription explicitly for DJs. Not only is it clear, after nearly twenty years, that streaming isn’t a model that helps artists at all, but it goes against the current conversation among the electronic music community, which shows increased skepticism towards the music platforms.

A major reason for all these various forms of music subscriptions is just to hook music fans into one of these ecosystems and keep them locked in there. Yet, what’s clear to me is that the desperation to conceal the price of music streaming shows that even though profits are rising in the music industry, it’s built on a flimsy foundation. This should be exciting for those interested in Direct to Artist Subscriptions, because it can open the door to other ways of connecting with fans that aren’t built on selling what was, and is now again, an ephemeral product.

Unheard Labor

I just wanted to highlight a couple of quick things. Nastia Voynovskaya, the music editor at KQED Arts, wrote about a recent study that shows that people who are passionate about their jobs are often exploited by their employers. The parallels between this and many, many aspects of the music industry are hard to miss, so definitely check out the piece.

I’m still conceptualizing what this section should cover, but I do feel that music workers airing out industry concerns feels worthwhile. Shawn Reynaldo, who hosts First Floor Radio on Red Bull Music Radio, posted a long Twitter thread where the frankly discusses the wealth inequality within the electronic music scene. I cannot recommend it enough if one enjoys a more critical, but considered, dive into how to imagine a sustainable music ecosystem. Mat Dryhust offered his own little rebuttal via a Twitter thread as well. And while they’re talking about a specific community, these topics are worth pondering for all music scenes.

6 Links 2 Read

How ByteDance May Just Be About to Drive the Next Streaming Paradigm - Midia Research

Earlier this year, I wrote about my concerns around just how far TikTok abstracts music labor from fans, so the idea of ByteDance getting more involved in music streaming feels a bit unnerving. If getting paid from a song stream is already convoluted, then imagine getting paid off of a 12-second clip in a video uploaded by a teenager.

Snapchat Looks to Let Users Add Music to Posts - Wall Street Journal

Insert all of my concerns about TikTok, but replace it with Snapchat.

Universal holds preliminary sale talks with Tencent – but is slow deal progress a danger sign? - Music Business Worldwide

I’m not a fan of the massive corporate consolidation, so yes, please be a danger sign!

Podcasts and music: the opportunities… and the annoyances - Music Ally

This panel sounded great and it’s nice to hear people in the music industry not really hold punches with concerns about what consolidating power into a single platform (e.g. Spotify) would do for the industry.

Shady Numbers And Bad Business: Inside The Esports Bubble - Kotaku

I keep reading articles that cite how labels want to get involved with video games, which is great as there’s an emerging workers movement in that industry. However, I certainly would avoid the Esports hype pushed by video game developers that pretend corporate marketing built on under-aged labor could be a competitive sport.

Fan Sneaks Unreleased Playboi Carti Song to DSPs, Tops Spotify's US Viral 50 Chart - Billboard

The increased popularity of song leaks within the rap community suggests to me that there is a post-music streaming ecosystem that could thrive but would take a rather large rethinking of the current record industry. Mmmh, maybe I should do more of that.

The Penny Fractions newsletter arrives every Wednesday morning (EST). If you’d like to support it, check out the Patreon page or follow it on Twitter. The artwork is by graphic designer Kurt Woerpel whose work can at his website. The newsletter is copy-edited by Mariana Carvalho, with additional support from Taylor Curry. My personal website is davidturner.work. My current job is Curation Analyst at SoundCloud, so all thoughts here represent me, not my employer. Any comments or concerns can be sent to pennyfractions@gmail.com.