Penny Fractions: How Streaming Saved, but Flattened the Record Industry

Hello, folks! Will keep the introduction short this week. Check out my end of year reader survey here. If you enjoy this newsletter, please consider sharing it with a friend, colleague, or even an acquaintance you only kind of know. Otherwise, let’s just dive into music streaming’s current landscape. 

Listen to artists when they warn of record industry greed. In 1979, a handful of major record label purchases foreshadowed the record industry’s turn to mass consolidation: Thorn Electrical Industries’ purchase of EMI Ltd., Bertelsmann buying Artisa Records, and MCA Records picking up ABC Records. A year later, Tom Petty and the Heartbreakers wound up in a fight with MCA Records over the company wanting to increase the price of their upcoming album Hard Promises (originally this said Damn the Torpedoes). This fight would lead to the group leaving the record label, but the negative effects of record label consolidation were still in the early stages and would eventually lead to a Federal Trade Commission investigation into major record labels colluding to inflate CD prices. 

Taylor Swift’s late 2014 decision to pull her music off Spotify in an act of protest against deviance over the company’s poor payouts predated a broader understanding of the effect of Spotify and its future peers. That same fall, the American recording industry would bottom out before returning to growth the following year that paralleled due to the hype of Justin Bieber’s Purpose, which broke previous streaming records. Swift’s decision was extensively covered by the press but the implications of her decision wouldn’t be felt for years to come until the arrival of a new set of music platforms.

In October 2014, YouTube launched YouTube Music Key, one of Google’s many attempts at a for-pay streaming platform. What made this attempt different from regular YouTube or even Google Play Music, launched in 2011, is that Music Key clearly took its inspiration from Spotify. (The Guardian wrote an article titled, ‘YouTube Music Key Takes on Spotify as Streaming Music Battle Heats Up,’ covering its launch.) The Swedish music platform launched in the late 2000s and only arrived in the United States in 2011, but held an outsized impact on the design and direction of subsequent aspiring global music streaming platforms. The best (or worst) that a tech writer could say about YouTube Music Key and its competitors is that it wasn’t a Spotify “killer”; just an acceptable replacement. 

Jay-Z, the rapper turned entrepreneur, introduced Tidal with a star-studded launch event, but like YouTube Music Key, it followed Spotify’s path (except the slightly more artist friendly touch). Apple Music and its Beats 1 radio show debuted that same summer and were immediately compared to Spotify. (Apple Music May Not Steal You from Spotify, but it Can Still Win the Streaming Battle). Not to be outdone by its new competition, in July 2015 Spotify introduced the Discover Weekly feature, signaling the company’s full commitment to a playlist-first platform strategy. A year later, playing a bit of catch up, Amazon launched Amazon Music Unlimited, its multi-tier music streaming platform. Those twenty-four months established the contemporary music streaming landscape. 

This rather sudden shift contrasted with the previous decade of music streaming. While largely dominated by YouTube, the 2000s saw the early days of Spotify, Google Play Music, and Rdio; the rise and fall of Myspace; SoundCloud pre-major label deals; online distribution sites like Datpiff and Livemixtapes; and even proprietary video content on sites like Pitchfork. Part of the reason for this diversity is that most streaming was still happening via desktop in the late 2000s and early 2010s, and there hadn’t yet been a shift to mobile. The shift in music consumption toward mobile apps suddenly made many of those web-first products a bit outdated and unable to keep up with the changes introduced by the mobile-first platforms. 

A big exception to this convergence of trends during the mid-2010s was Vine. The gone too soon, short-form video app was not a music streaming app, but music played a fairly integral role in the videos on the platform. Though much of the content that grew popular on Vine in many ways mirrored early YouTube, the fact that it was a mobile app helped songs experience a sudden burst of virality (similar to TikTok). This moment was rather short-lived and without any viable monetization options, so creators walked away from the platform and it was eventually shut down by Twitter in early 2017. Thus, while Vine was struggling to hold on, digital music streaming moved to mobile and started to allow the industry to return toward growth.

The defining characteristic of the last six years is that rather than a burst of innovative new features or clever experiments from the billion-dollar platforms, there’s been a convergence. Spotify continues to set the tone for all other streaming platforms. This might explain why Spotify receives the most public scrutiny, even though the industry’s current worst practices were established by YouTube’s early agreements with major labels and Pandora’s endless attempts to avoid properly paying artists. Spotify’s aesthetic vision–if not its economic one–for how one should consume digital music is still dominant. 

The best example of this would be its Discover Weekly feature. Apple Music’s original push into streaming was centered on Beats Radio 1, now Apple Radio 1, which was supposed to encourage more traditional (rather than algorithmic) gatekeeping. It was even rumored that there might be Beats Radio 2, 3, 4, you get the idea. Instead, Apple and nearly every other major streaming platform ended up creating their own weekly personalized playlist. Streaming’s imagination was stifled by Spotify’s self-declared playlist success. The imagination of streaming stifled by Spotify’s self-declared playlist success. 

When YouTube launched YouTube Music in 2018, it was hard not to notice that its user interface pulled heavily from Spotify. I wrote about this for Gizmodo in 2018, saying: 

The copycat nature of the industry led to nearly every platform adopting a playlist-first promotional method, despite there never being a clear path for artists to build a career via playlists. 

The trend of limited imitation extends Amazon buying up billboards explicitly to advertise their playlists with the help of major artists. I covered this last year when writing about Billie Eilish; but Apple, Spotify, and YouTube all brought out the red carpet marketing treatment for the teenager’s debut album. The entire industry rather suddenly converged towards a playlist-first, highly personalized music streaming experience, where the “curation” serves major labels and big indie priorities. A rather stark contrast to the diverse landscape of only seven, eight years ago. 

The flatness of music streaming might explain the increased attention around two music-adjacent platforms: Twitch and TikTok. Twitch isn’t a new player in the realm of music, as a number of electronic labels saw early potential value in the platform a few years ago. However, the arrival of the coronavirus this year only heightened the platform’s interest in doing more with music. And while right now the company is embroiled in a back-and-forth with major labels and the National Music Publisher Association, this signals that Twitch may be a new player in this domain. The same is true of TikTok, whose popularity skyrocketed in 2020 and is seen as a key growth vector for the record industry with the stagnation of streaming subscriptions. 

I’ve written previously about Twitch and TikTok, and I’m typically a bit more “kind” towards the platforms because it’s useful to think of digital music outside of the boxes of streaming platforms. What’s interesting about many of the cultural, not monetary, critiques around contemporary streaming is that they’re relatively new (see: Liz Pelly’s piece on streambait pop). Concerns over digital payouts are now decades old, but the centralization of these larger streaming platforms is a more recent phenomenon. This is what Mat Dryhurst and Holly Herndon have advocated for on their podcast, Interdependence (I know, I mention it all the time). The point is that the current streaming paradigm not only wasn’t created with artists in mind, but as it matured it’s only further calcified into favoring established artists and encouraging isolated music listening. Perhaps more folks can get behind attempting to buck that trend as we look to a new year.

Last week, it was reported that iHeartRadio is undergoing another round of layoffs, which the company blames on declines in advertising. Billboard, however, notes the company is massively indebted, which may point to the real reason for the cuts. US senators Dianne Feinstein and Marsha Blackburn revealed the bipartisan HITS (Help Independent Tracks Succeed) Act, which would allow artists to deduct up to $150,000 in recording expenses on their taxes. Certainly a nice reform and one that shows that music remains one of the few industries that can encourage across-the-aisle compromise. Finally, Liz Pelly wrote a short profile in In These Times on the United Musicians and Allied Workers (UMAW) and their efforts to organize musicians during a pandemic.

Yesterday, it was reported that Universal Music Publishing Group spent over $300 million to buy Bob Dylan’s publishing catalog, in a move to counteract the growing number of financial actors in the record industry. There’s certainly more to unpack there in the coming months but I wanted to provide a brief history of UMPG.

Back in 1964, MCA Inc., the billion-dollar media conglomerate that ran Universal Studios, bought the Leeds Music Corporation to enter the publishing business. In 1990, Matsushita made the then-largest purchase of an American firm with its $6.6 billion acquisition of MCA Corp., which included its film (Universal Studios) and music (MCA Records/Publishing) businesses. Only five years later, Seagram bought an 80% stake in MCA Corp. from Matsushita for $5.7 billion. Then, in 1998, Seagram bought Polygram Records for $10.6 billion. The merger of the two publishing houses created the third-largest music publisher at the time, according to Billboard. Less than a decade later, in 2006, Universal Music Publishing Group bought BMG Music Publishing for $2.1 billion to create today’s UMPG. With that kind of history, we can say that we should’ve seen this coming from our lovely friends at UMPG. 

In other news, Downtown Music Publishing bought the catalog of the Motown songwriter Mickey Stevenson, and Stevie Nicks sold a majority share of her publishing catalog to Primary Wave Music. What’s interesting is that this deal also includes Nicks’ name and likeness, which implies they’ll be actively working to get her more sync opportunities for her catalog. An important note to remember about some of these deals is that there is an assumption of continued investment into the artists’ brands, even as they are further removed from any financial compensation for their work.

#Wrapped and Sold - The Baffler 

More Liz Pelly your way, this time on Spotify’s #Wrapped campaign.

Social Media, Not Streaming, Is the Music Industry’s Future - Rolling Stone (Subscription) 

A good preview of next week’s newsletter here in Tim Ingham’s perceptive reading of Warner Music Group’s latest financial report. The report showed a slowing of streaming growth, whereas revenue generated by social media platforms like Facebook, Instagram, and TikTok is growing. Again, I circle back to artists feeling forced to unload their song rights just as the record industry is figuring out better ways to interlock itself with technology firms, and thus make a higher return on such materials. A troubling convergence of trends, folks! 

Music Streaming Makes Major Labels Rich, While Musicians Like Me Go Broke - The Guardian / ‘Right now, hit songwriters are driving Ubers’ - BBC News 

The drum beat for digital music business reform in the United Kingdom continues. 

Americans Want to Tax Film Franchises to Fund the Arts - Data for Progress 

This is a fun bit of polling information from the political firm Data for Progress. I’m less interested in the specifics of taxing film franchises than in using profits from the private entertainment industry to fund public arts projects. The American Federation of Musicians’ strikes in the 1940s effectively created this for the record industry for a brief period, so perhaps it’s worth reconsidering. 

Twitch and TikTok Help Breakthrough Artists to Bypass Big Music - Bloomberg (Subscription) 

This headline is doing a little too much work, but the piece still shows an increased desire for “outside the box” thinking within music right now. 

Indie label The Other Songs Carves Out New Songwriter Royalty - Music Ally 

If anyone reading this knows anything more about this effort by Other Songs (or any similar efforts), I’d be curious to know. The idea of allocating certain percentage of a label’s income for songwriters is interesting to me. So, if someone knows more, do send me an email!

Art and Labor 

Art + Museum Transparency: The Newsletter 

Buy Music Club  

First Floor  

Heated 

Interdependence 

Notes on the Crisis   

Strikewave 

Tech Worker Coalition Newsletter  

WBAI

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. 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.