View profile

Do loot boxes have a place in the music industry?

Happy Wednesday! For those in music, hope you are recovering from a jam-packed, thrilling Grammy Week
Do loot boxes have a place in the music industry?
By Cherie Hu • Issue #19 • View online
Happy Wednesday! For those in music, hope you are recovering from a jam-packed, thrilling Grammy Week. And for those in any world, hope you’re as disappointed as I am about this year’s snubs. While I have immense respect for all the award winners and they certainly worked their asses off to get to this point in their career, we can’t ignore the bigger picture: apparently prejudice against, and fear of, the colorful experimentation that defines pop culture today is still alive and kicking in the Academy.
This week’s letter is inspired by a long-term research interest of mine, namely the intersection between music and gaming. In a previous issue of Water & Music, I ruminated on the merits of “gaming the system” in music, either to make a statement or to achieve certain financial goals (e.g. releasing streaming-only albums of increasing lengths, or EPs that are completely silent). What if we took that phrase a step further and treated music as a literal game? Is that actually what fans want?
In some cases, no. The locus from which I’ll unpack this question is the controversial loot box—a feature that pervades all types of video games from MMORPGs to freemium mobile apps, but also exists in the music industry under different guises.
For those who are not yet familiar, a loot box is a mechanism by which users pay real money for a randomized selection of virtual rewards. The quality of the rewards is often wide-ranging, from harmless but useless cosmetic items like skins to brand-new weapons that can drastically alter a player’s chances of winning or progressing in a game. Such variability encourages users to continue purchasing more loot boxes over time, in the hopes of eventually acquiring the most valuable items possible.
Sounds like gambling, right? That’s because it is—at least according to national law in China, Japan and Singapore, which have all banned loot boxes. The governments of Belgium, Australia, South Korea and France are currently conducting their own official investigations into the practice.
There isn’t any analogous legislation or investigation in the US yet, which has allowed a whole slew of controversies to flourish. Users and press outlets recently complained about the overt “pay-to-win” loot-box gameplay of Star Wars: Battlefront II; a spokesperson for EA, the developer of the game, insisted that “the intent is to provide players with a sense of pride and accomplishment for unlocking different heroes.” Impassioned Redditors saw through this psychological manipulation, and that response is now the most downvoted comment in Reddit history.
Where can we find loot boxes in the music industry? Let’s start with a girl-next-door named Taylor Swift.
Taylor treats her career as a game, full stop. The last 30 seconds of the video for “Look What You Made Me Do” portrays Taylor as something like a video game avatar who can slip easily in and out of a wide variety of skins, depending on what her fans and the market want. Her new Swift Life mobile app, while clunky from a UX standpoint, successfully gamifies social fandom.
Specifically, Taylor’s Verified Fan campaign with Ticketmaster is a loot box with no guarantee of any reward. As a diehard fan, you could buy literal “boosts” that raised your position in line for tickets, from pre-ordering the Reputation album to shelling out $50 for a T-shirt or $60 for a snake ring. But the gears shifting behind the scenes were fully opaque, such that cash-strapped fans never actually knew where they stood in line—and, by the nature of supply and demand, a lot of those fans were left in the cryptic dust.
Interestingly, the only other area of music where I’ve seen de facto loot boxes are vinyl and memorabilia subscription services, which attract less criticism in part because they are framed as gifts. For around $40 a month, companies like VNYL, Vinyl Me Please and The Metalhead Box deliver a handful of mystery vinyl records to your doorstep. With VNYL, you can sync your Spotify, Soundcloud, Instagram, Discogs and Last.fm accounts, which takes some of the surprise out of the picture, but the “black box” nature of the curation behind the scenes still holds. That being said, these products are less financially detrimental to the consumer than the typical video-game loot box or the Verified Fan campaign, as the existence, frequency and quality of the rewards are more predictable.
What fascinates me the most about the slow but steady rise of loot-box business models in music is how it contrasts with the whole movement around transparency for artists. While it’s still a work in progress, an unspoken agreement is growing among various music platforms—Spotify, SoundCloud, Bandcamp, Kobalt, United Masters, Songtrust, even Apple—that when it comes to artist services, it’s better to reduce rather than create friction in the sharing of information. In the digital age, artists can’t make (or count, for that matter) their money without data, and will align themselves with the services who can deliver that data most effectively. To an extent, streaming services want to reduce friction for the consumers as well: Spotify, for instance, diversifies our listening habits by surfacing more emerging acts at the right time through the right playlists at scale.
But as Facebook taught us in the publishing world, and as many ticketing companies and record labels arguably teach us in music, increasing friction, even incrementally, by serving as a “trusted” and far-reaching but still largely opaque intermediary remains a powerful business model. With campaigns like Verified Fan in particular, there’s an imbalance in that maximum transparency given to artists and their teams around fan targeting and “ranking” also coincides with minimal transparency given to consumers about their own positioning and role in the system.
Maybe this isn’t terrible. Maybe music consumers in the aggregate don’t care about transparency in the first place; they just care about accessing hipster music and/or getting as close as possible to their favorite artists and celebrity crushes for the sake of vanity and bragging rights, even if that means throwing $100 into the digital void.
Nonetheless, as the music business is looking more and more to other sectors like gaming for tips on how to monetize, rather than suffer from, the ongoing shift to digital (micro-transactions, tiered pricing, etc), it should stop and think about whether there are competing narratives surfacing around the industry’s future as a result.

My writing
Billboard 40 Under 40 Dinner: Nominees Discuss Tangible Solutions For Diversity and Mentorship
Updates/travels
  • I’m a guest on the latest episode of Beyond the Book, in which I chat with host Christopher Kenneally (Director of Business Development at the Copyright Clearance Center) regarding my recent Water & Music issue about Spotify, Amazon and the power of “reverse skeuomorphism.” I was pleasantly surprised that Chris reached out to me, as Beyond the Book focuses on the literary/publishing world, but I’m always eager to look beyond the music bubble for inspiration.
  • For those attending SXSW, both of my panels will be on the same day, namely March 14 (12:30pm CT and 5:00pm CT). I’d love to catch your own panels and/or showcases if you are speaking or performing—please hit me up!
  • My late spring / early summer travel schedule is gradually filling up, all with conferences I will be attending for the very first time: just added Music Biz (Nashville, May 14–17), IMS Ibiza (Ibiza, May 23–25) and Primavera Sound (Barcelona, May 30–June 3) in addition to Midem (Cannes, June 5–8). Couldn’t be more thrilled to finally visit Music City and catch some Mediterranean sun again!
Good reads
Women in Jazz: Blues and the Objectifying Truth
Obligatory potato
Iceland is now charging a whopping 76% tax on imported French fries. Two local food importers claimed that the tariff “contradicted basic concepts of equality and proportion,” but the Icelandic Supreme Court declared that the high fees were not unconstitutional. Boycott everything.
Did you enjoy this issue?
Cherie Hu

Cherie's updates at the intersection of music, technology, creativity, business, people, travel and potatoes.

If you don't want these updates anymore, please unsubscribe here
If you were forwarded this newsletter and you like it, you can subscribe here
Powered by Revue