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Penny Fractions: How Is the Record Industry Surviving the Coronavirus?

Hello! Hope folks are doing well and staying safe this week. I’ll be taking off next week due to Than
Penny Fractions
Penny Fractions: How Is the Record Industry Surviving the Coronavirus?
By David Turner • Issue #147 • View online
Hello! Hope folks are doing well and staying safe this week. I’ll be taking off next week due to Thanksgiving in the United States, so I’ll be back on December 2nd. Otherwise, if you enjoy the newsletter, here’s the usual spiel of forwarding it to a friend or supporting via Patreon, please. Also, because of the long holiday, I hope to work my way through a backlog of emails; I’ve just been a little overwhelmed with other work lately. But now let’s jump into this week’s newsletter!

Unfortunately, countries across the world are experiencing another round of surging coronavirus cases, business closures, and soft shutdowns. To isolate the music industry, this looming winter represents another extended break from live music without a clear sense of when touring will return. I wrote about this earlier in the year and my pessimistic writing off of 2020 feels at this moment reasonable with a little hindsight. Musicians, and the many folks that work in often overlooked parts of the live music industry, are still barred from their chosen career, but this dire outlook isn’t shared by record labels. 
Record Labels Are Still Making Money
Earlier this year Cherie Hu put together a graphic that shows the interconnectedness of major streaming platforms (Tencent, Spotify) and record labels (Sony, Universal, and Warner). (The graphic doesn’t even include Access Industries’ ownership of both Deezer / Warner Music Group). When I wrote about how music streaming was disproportionately helping those at the top, I wanted to stress that major label collusion, as seen in the 90s to maximize CD profits, wasn’t an exception but the assumed norm of a highly consolidated industry. Perhaps I might overstate the uniform nature of these firms but considering how they’ve worked in locksteps over the last few decades, that there is now direct mutual shared ownership, it’s harder to keep up the facade of “competition” among major labels and streaming platforms. So, let’s look at some headlines to dive a bit deeper into that: 
Perhaps let’s look at a few regional headlines: 
The last headline about the french distributor Believe say a lot. The reason record labels are weathering the pandemic is because of streaming platforms. Music consumption in many, though not all, markets is largely decoupled from physical sales and instead money is derived from either advertising consumption or subscription fees from primarily Apple, Amazon, Google, or Spotify. Thus those headlines in a way speak to the health of the tech sector, rather than music.
Even if there is more severe economic fallout from the coronavirus arriving, it’s hard to imagine what exactly would cause a severing of music subscriptions when so many are part of telecommunication company deals (see: Tidal and Sprint), tech packages (Amazon Prime), or are deeply discounted like Spotify’s family plans. Now, publishers and songwriters aren’t quite so lucky as there have been a number of alarm bells ringing about the expected dip in revenue within those sectors. Still, even in those places, a bright spot is often found in streaming revenues. 
The broader recording industry’s reliance during this crisis can also be found, to a smaller degree, even with record labels that operate outside of that streaming-first web. Shawn Reynoldo in Beatportal spoke to a few electronic record labels that were experiencing steady, if not increased, demand during 2020. A reason cited is that most people buying records are doing so for home listening and due to the limitation of other types of spending, the market for record consumption only went up, not down. (I’m going to make a hypothesis that audiences might’ve been on the upward swing of this “K-shaped” recovery or lived in a European country that provided more concrete relief for workers, compared to the United States.) 
For a bit of cold water reality, I’d like to quote a couple of tweets from New York City-based producer DJ Wawa: 
to the i miss clubbing crew: you have no idea how many jobs in music have been lost and will not come back. Booking agents, journos, label PR people and a number of jobs that ppl have been working their entire adult lives at just disappeared over night…It’s cool you have a day job that doesn’t involve music but some ppl were so good at dance music and the things that surround it that it was their day job. 
The headlines quoted above miss what DJ Wawa says here, which is that the “record industry” is more than capable of surviving and thriving without much of the live music industry during this period. Right now there are continued calls for government assistance to save venues in the United States, which certainly should happen.
The National Independent Venue Association got a number of music industry players onboard to stand for struggling music venues, a major couple of exceptions are Live Nation and AEG, who’ve created their own lobbying initiative. Yet, I’ll champion the persistent demands from the New York City-centered Music Workers Alliance who’ve rallied behind demands for continued unemployment insurance. The urgency of this demand, especially for American music workers, captures the real divide within the broader music industry where there are plenty of folks, self-included, doing okay, while other parts of our interconnected worlds are falling apart. 
Yet, to close I wanna go further back in time. A couple of years ago, I wrote the American Federation of Musicians 1940s strikes and how one of the concessions from record labels was the creation of an fund that was financed by record industry profits and funneled back into free public concerts that paid fair union wages. Certainly, there isn’t an organized musician labor force that could force record labels to do such a thing, but when there are endless headlines about diversity initiatives and getting more black faces in high places, my mind wanders to firmer commitments. If record industry revenue continue rising, as wall street forecasters tend to believe, then what about all those that aren’t benefiting from the same success. Otherwise, the next year will be filled with more stories about increased record label revenues while many American music workers are left abandoned by their country and industry. 
Unheard Labor
The Columbus Symphony Orchestra, represented by the Central Ohio Federation of Musicians Local 103, was able to avoid many of the layoffs facing orchestras across the country. The main reason reported by Columbus Business First is that the orchestra was able to lean more on donations, rather than direct concert revenue. This allowed the musicians to perform free outdoor concerts, partner with local schools, and better connect with the Columbus community in ways they had not previously prioritized. Again, I’ll continue to advocate for public, rather than private, investments into the arts but it’s inspiring to see this symphony use this as an opportunity to build deeper community ties, even in an era of social distancing.
A Note of Financialization
A lotta news this past week. On Monday, Variety reported that Scooter Brauch sold the master recording of Taylor Swift’s first six albums for $300 million to an undisclosed financial firm. Further reported it to be Shamrock Capital, whose latest fund of $400 million was backed by “pension funds, sovereign wealth, endowments and foundations, institutions and family offices”. Swift is reportedly actively working to re-record her material, which could potentially devalue her original recordings. This saga continues to unfold and remain tremendously frustrating to follow in real-time. 
The Round Hill Royalty Fund went public on Friday after raising $282 million, a bit short of their $375 million goals, not too dissimilar to the Hipgnosis Song Fund’s recent IPO slightly missing its own target. Missing that initial goal might show some softness in the market for this particular company but I’m more optimistic about the company’s future given how much activity there remains in this space.
Now speaking of Hipgnosis, the company bought 50% of Rick James catalog, which included master rights an increasingly familiar move on the company’s part to not just be stuck only with songwriting credits. Last Larry Mestel, the CEO of Primary Wave, was interviewed by Music Business Worldwide, which is exciting to me to hear directly from one of the firms I cover week-over-week here in this corner. Loads of pablum but still worth the 30 minutes runtime. 
6 Links 2 Read
Who knew it was so hard to be a music executive and not make racist social media posts? Certainly not me. Good on all those speaking out against such repugnant behavior despite what seems to be BMI’s lack of interest in addressing underlying issues. 
Perhaps next year I’ll dive a bit more into this topic because I’ll admit I don’t quite hold strong thoughts in this latest showdown between major labels and Twitch. Is Twitch being cheap? Yeah. Are major labels overstepping their boundaries with these takedowns, I’d say yes. Will be interesting to see what kind of agreement is eventually met within this space. 
Typically I’m not all that interested in the activities of elbow-licking social climbers but Clubhouse does appear to have some tangible hold on the record industry. However the app’s easily foreseeable growing paints and coolness drop off doesn’t excite me. (I’m sorry a friend who did send me an invite!!) 
Geiger’s “plan” of buying up distressed music venues across the country, personally sounds horrific. Again, I’d rather public investment into music spaces so they’re neither owned by someone looking to eventually make a quick buck or subsumed by Live Nation. Still, the article is a rather personal Live Nation directed diss at March Geiger, which put a smirk on my face. 
A nice check-up on the growing musician discontent with the current streaming paradigm, alongside a chilling effect that wafts over music workers fearful of speaking out against these billion-dollar companies. 
Believe often touts supporting “independent” artists, while its main investors are Technology Crossover Ventures, Ventech, and Siparex Group. Hard to know what “independent” means if financing is all outta venture capital pockets. Now if only the trade press could contextualize the record business outside of the major and independent framework.
Blog Roll
The Penny Fractions newsletter arrives every Wednesday morning (EST). You can support via Patreon or follow on Twitter. If curious, here is the newsletter’s budget sheet. If you’d like to join our monthly reader calls sign-up here. Artwork is produced by graphic designer Kurt Woerpel, and the newsletter is copy edited by Mariana Carvalho, with additional support from Taylor Curry. My current job is Program Manager at SoundCloud, so all thoughts here represent me, not my employer. Any comments or concerns can be sent to pennyfractions@gmail.com. 
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David Turner

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