View profile

Penny Fractions: Amazon, the Future Owner of the Music Industry

Hello, I’d like to mention again my Patreon survey in case anyone missed filling it out last week; al
Penny Fractions
Penny Fractions: Amazon, the Future Owner of the Music Industry
By David Turner • Issue #86 • View online
Hello, I’d like to mention again my Patreon survey in case anyone missed filling it out last week; also if you want to reach me use pennyfractions@gmail.com! I use many emails, but that one is where I do attempt to centralize most newsletter-related conversations. Also, some personal news: I’m the Curation Analyst at SoundCloud now. I’ve been working with the company since the top of the year, which I why I haven’t written about it recently, but I wanted to state this again and include a little disclosure at the bottom of the newsletter going forward. Obviously, my views here are my own but I wanted to refresh that before writing probably too many words about Amazon Music.

Now before I dive fully into the music side of Amazon, I wanted to provide a bit of context around the company, which I’ll circle back to at the end. Last week the New York Times reported that Muslim warehouse workers filed discrimination complaints against the company, over fears of organizing against poor working conditions and the company engaging in worker surveillance. While such tactics are disappointing, it’s not only the domain of Amazon, as Google is also in the news for retaliating against activist workers. I open here to say that the way Amazon treats its workers, who normally lack a voice, should be heeded in how they’ll treat anyone fully absorbed by its ecosystem.
Last week it was reported that YouTube Music, Google’s latest rebranding of its music streaming platform, only has 15 million global subscribers. Most publications treated this number with derision, as it places one of the world’s largest tech companies well behind its competitors: Apple (50 million) and Spotify (100 million). The company that suddenly snuck into these reports was Amazon, which now claims over 30 million subscribers to Amazon Music. Last year, I hinted at the fact that the media’s been eagerly waiting to throw Amazon into the music streaming competition, and this leak of YouTube’s subscriber numbers proved to be the perfect starting point. Now that Amazon sits number three in terms of subscribers on music streaming platforms, it felt like a good time to check back in on the company.
What’s New & Old With Amazon Music
In April, Amazon announced a new free ad-supported tier that at the moment will only be found through Alexa, the company’s audio-representation of home surveillance. There was a bit of disagreement around whether this would be a potential threat to the likes of Spotify, but analysts appeared to believe that ultimately this could be a boon for Amazon’s rapidly growing advertising business, rather than cause the Swedish’s company immediate doom. Still, will Spotify and its peers be happier with Amazon creeping more into its market? Nope, and certainly not in light of its rumored new music streaming product.
Amazon is allegedly in the process of preparing to launch a $15 hi-def music streaming platform. I’ll admit this isn’t a niche that’s of real interest to me (MP3s over everything!) but Amazon effectively creating both an extreme low-end and high-end music streaming product should be a bit disconcerting (The company also sent me a promotion yesterday for 3 free months, so clearly they want to boost that subscriber number). From a consumer perspective, it’s the slow creep to charge more for music subscriptions, and for music and workers within the industry, it’s Amazon capturing potentially more niches. Yet these two announcements also harken back to Amazon’s earliest days of entering into digital music.
Amazon’s digital music efforts date back to 2007, but really came on my radar the following year when the company started to offer digital rights management free MP3s. What now looking back feels quaint, when iTunes dominated the legal music space, Amazon’s DRM-free music was a real step forward in loosening the restrictiveness of non-illicit music consumption.
Years later, Amazon would introduce music streaming, but initially (surprise, surprise) the effort was limited to Amazon Prime subscribers with a limited catalog of about one million songs. This initial offering showed how Amazon positioned music within its broader ecosystem as being one of its many services, not a full stand-alone product. I say that because Apple and Google made real strides into establishing their musical brands (Apple Music and YouTube respectively), but Amazon’s simply leaned on market share.
Eventually, by 2016, Amazon developed a full-fledged music streaming platform to reach catalog parity with its peers called Amazon Music Unlimited. The service existed as a stand-alone product for $7.99, but the company was keen to highlight that it cost $3.99 when used with Alexa-based home surveillance devices. Though Amazon’s domination of the personal surveillance device market started to decrease with the rise of Google Home products, the company continued to contextualize music within a larger subscription package.
Amazon’s Deepened Roots in Music
Rather quickly, Amazon’s music streaming platform went from a limited Prime supplement into potentially one of the most diverse music streaming platforms (in terms of price and ability to sell other products). That’s why it should be concerning that along with Spotify, Amazon appealed the recent Copyright Royalty Board ruling to increase songwriter payments. A reason I highlighted Pandora’s sorted history of fighting back against the Copyright Royalty Board was to emphasize the repeated pattern of private companies exploiting musicians that’s foundational to the business of music streaming. Yet, if Amazon, a company worth (at points) one trillion dollars, would use the same desperate tactics that should be a concern. That’s why it was distressing to read this unnamed industry insider quote in Music Business Worldwide last month:
Amazon will have every tier of recorded music covered, from free streaming through to limited catalog via Prime, a full ‘Spotify rival’ in Music Unlimited and a hi-definition service – in addition to vinyl, CD, merch and more….With Amazon making this move, it feels like a positive step for consumer pricing flexibility, and good news for streaming ARPU generally. Spotify has just been outmaneuvered.
Even at one’s most optimistic, I struggle to see how musicians aren’t also the ones being “outmaneuvered” in this scenario, where so much of the music business funnels through a single private company. Earlier this week, Music Ally reported on Paul Sampson, the CEO of Lickd, at the Great Escape Conference sharing a similarly concerning thought:
Amazon and Apple’s streaming services are loss-leaders for them. If they can get you into their ecosystem, they can make money off you as a consumer in ten other ways…Spotify has to make this work, and if they haven’t raised their prices it’s because Apple and Amazon can afford to cut theirs…
The music industry is experiencing a venture capital-fueled bubble, where wealth concentrates at the top, but it’s ultimately just prolonging the fact that the current model isn’t sustainable. Last year, Sarah Jaffe, an excellent labor reporter, explored the value of nationalizing Amazon, as the company further ingrains itself into particularly American life. This isn’t the first call for such an effort, but Jaffe felt strongest in exploring the pitfalls, by seeing the value in the service it provides without all the profit funneling upward towards Jeff Bezos. That reasoning is what inspired me to write a bit on the American Music Library, Henderson Cole’s rough outline of a nationalized music streaming service. If people in the industry see a company like Amazon as a privately owned one-stop for all music consumption, perhaps it’d be better if such a business wasn’t motivated to fight against wage increases by songwriters.
If Amazon is able to offer all of these different bundles of music streaming across physical devices and eat away at all into the pie of Apple, Spotify, and YouTube, that should be a red flag for the industry. Recently, workers at Amazon started to protest over the issue of climate change and are seeing early signs of progress. If an increasing number of digital and physical distribution are wrapped up in one company (with many sites built on Amazon Web Services), then it may be musicians and average record label workers that, in a vacuum of collective actions, hope such activists shed a light on what may be the bleak path of their industry.
Correction
A reader pointed out that the Verge reported that the Internet Archive was able to preserve just under 500,000 songs on MySpace from 2008 to 2010. Though less than one percent of the overall music was lost, it felt worth noticing that again, it’s not for-profit entities doing this archival work.
Unheard Labor
I wanted to give a brief introduction to the newsletter’s Unheard Labor section. I’ve written on the intersection of music and labor in this newsletter but I wanted to give this a more formal section. This certainly won’t appear every week but it’ll return on a semi-frequent basis.  
Pitchfork, where I published my first piece of music criticism, is still waiting on volunteer recognition by its corporate owner Conde Nast, which is owned by Advance Publications, which is owned by Donald Newhouse, who is apparently worth over $12 billion. That’s only enough money to buy every independent record label a few times over!
The other bit of music union news is that the Brooklyn Academy of Music is currently attempting to organize with United Auto Workers Local 2110, which includes the New Museum, the Tenement Museum, and the Museum of Modern Art. Bloomberg Law reported on a bit of tension between the UAW and the International Alliance of Theatrical Stage Employees over worker representation. Hopefully the workers will be able to form their desired bargaining units, as NYC cultural institutions continue to see power through organizing.
Last thing! Elias Leight wrote an interesting piece for Rolling Stone about a sudden rise in musician activism within the context of labor and the void left by a strong voice for traditional organized labor within music.
6 Links 2 Read
It Goes On - Components
Last month, Liz Pelly, along with the analyst Andrew Thompson, did a little deep dive into a lot of hype around whether popular music is really changing due to streaming. Their results are a little bit yes, no, and who really knows. However, since this is Liz, her deeper critique of how we arrived at such proclamations and the issue of putting so much weight into these media narratives is worth a read. 
Read this story and replace the word “TikTok” with MTV, Vine, or YouTube, and we’re seeing the same story of labels wanting more money, platforms saying no, and artists being forgotten in the middle.
Ingham does a solid job in identifying all the ways major labels are stretching into the “new” frontier of the music business, which is already starting to look like the old one.
I covered this story on Patreon, but I do want to harp on the fact that subscribers, as a singular metric without any other context, doesn’t mean as much as people would like to imagine.
Just another infrequent update on my obsession with Loot Boxes (the unregulated gambling that feeds money into many video games) and its slow-moving collision into government legislation.
Holly Herndon is certainly one of the best contemporary musicians who thinks not only about music but also about technology and who’s pushing for more nuanced ways to approach the complicated questions within these spaces.
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.
Did you enjoy this issue?
David Turner

A weekly newsletter on the music streaming business.

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