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Penny Fractions: Streaming Saved the Record Biz, Not Artists

Hello, hello! I’d like to say thank you to everyone who hopped on the first Penny Fractions Reader ca
Penny Fractions
Penny Fractions: Streaming Saved the Record Biz, Not Artists
By David Turner • Issue #126 • View online
Hello, hello! I’d like to say thank you to everyone who hopped on the first Penny Fractions Reader call, I can’t wait for another one again soon! That’s why I actually wanted to say if you’re interested in RSVPing for the next call on May 13th, then on 24th, please fill out this form here. Once I hammer out the details I’ll send information to folks who are interested. I should mention I’ll be off next Wednesday, so I’ll be back on May 13th. Last note for the week is that I made a call last year for academic papers but I’d like to extend that again because I’ve finally got back in a reading mood : ) Well, okay let’s look at how streaming helped revive selected parts of the record industry. 

The Record Industry Is Back, Get Excited
Headlines about the record industry the last couple of years have taken on a more upbeat tone: The music industry was left for dead a few years ago. Now it’s booming again, Streaming Fuels Music Industry Boom, The United States is about to become a $10bn recorded music market again – for the first time since 2007, and last but not least Spotify Saved the Music Industry. Now What? Record labels are suddenly very hot! After the collapse of the CD, there wasn’t much hope within the music industry as digital downloads took over but never returned to the inflated profits of the late 90s. This revival is credited often to Spotify, or streaming more broadly, and is often another example of technology advancing a slow moving industry. If only. 
The authors Steve Knopper (Appetite for Self-Destruction) and Stephen Witt (How Music Got Free) showed just how much more messy those transitional years turned out to be. The RIAA (Recording Institute Association of America) did sue Napster and individual downloaders, but considering that a number of musicians, including Madonna, sought out investing in Napster, before its collapse, shows that even by 2000 online digital music was understood to be the clear future. 
Subscription-based music streaming existed throughout the 00s and even Napster experimented with the model. Thus a Spotify-like “solution” for the record industry was always on the table, even if labels publicly tussle with the company, it was a model with healthy buy-in years before Daniel Ek entered the picture. Yet, the issue always was that the platform whether Napster, the major-label backed Pressplay or MusicNet, artists were never in control over the platform that was supposed to house their labor. Instead it was major labels that were really seeing the money flow their way. Yet, even if the money was making it into the c-suite that didn’t quite mean the entire industry was thriving. 
The Good Old Days
The 90s were, according to extensive reporting, a great time to be in the record industry. CD sales were only going up, the internet hadn’t disrupted the businesses, and MTV still played music videos! Now, it’s certainly true that the labels were pulling in record breaking amounts of money but there were some specific factors, which concentrated monetary wealth, for that reason.  
The record labels aggressively eliminated the single format, which forced consumers into buying CDs even if they only wanted one of the tracks. Those same firms colluded with each other to artificially keep up the price of CDs, which according to the Federal Trade Commission cost Americans $500 million from 1995 to 2000. Sony’s $2 billion purchase of CBS Records in the late 80s helped bring in a new era of finance, then private equity/venture capital into the music industry (Hello: Blackstone, the Carlyle Group, Terra Firma). As the record labels were being consolidated into what are now only three major labels, the executives of these companies were seeing payouts worth tens, maybe hundreds, of millions. (Chris Blackwell got $300 million for Island Records; David Geffin $550 million for Geffen Records; and Richard Brandon got $950 million selling Virgin.) Radio saw a similar wave of consolidation spurred by the Telecommunications Act of 1996 that led to thousands of job losses across the country. While record labels and radio options were shrinking, retail offered few bright spots as chains like Best Buy and Walmart continued to exert an outsize influence on CD sales. Who wouldn’t miss those days
Steve Albini’s Baffler essay ‘The Problem with Music’ showed the other side of this success, where bands were funneled through this system to in quick obscurity with little financial reward. Now this excess did trickle into seven figure music video budgets, large record deals (R.E.M.’s $80 million Warner contract), but overall as Alan Krueger mentioned in this book Rockonomics: “Total expenditure on music—including concerts tickets, streaming fees, record sales, and royalties—$18.3 billion in the United States in 2017….In other words, less than $1 of every $1,000 in the U.S. economy is spent on music.” The music industry isn’t a large industry but even still the money, especially when things are good, is trapped at the top. 
Sadly, the techno-utopian promise of the internet creating endless opportunities for artists didn’t fix that issue. We’re entering a third decade of chasing fleeting viral hits but replacing Myspace, YouTube, or Vine with TikTok. Only now, instead of potentially selling an artificially boosted number of CDs or amassing a top track on the iTunes charts, everything is centered around streaming. This, unfortunately, requires achieving an absurd number of streams to make a living wage, which is why there are increased calls to raise how much streaming platforms pay. A complaint that similarly dates back nearly two decades, which just shows how little has changed for aspiring artists since the early days of the digital transition. 
Earlier in the year, when I first thought about this topic I didn’t envision the entire music industry being put into what feels like a never-ending limbo due to the coronavirus. So, now that it’s happening I wanted to end on a slightly different note. The streaming-first record industry is one where not only are majors still very much in power but the format closes the box towards other ways of fans engaging with one’s music. If the concern about Napster was that artists lost control over their work and it could be accessed for free, that’s not changed at all except that now the entire industry agreed to this new set-up. It isn’t clear what form it’ll take for artists to really get concessions from streaming platforms but this moment is opening the door. Streaming platforms introduced donation buttons, which is a feature folks have wanted in some capacity for a while. For the hype around the record industry success to be meaningful for artists and music workers, rather than empty headlines, there need to be more moves towards allowing artists and music workers to not only have greater financial, and decision-making power over the industry. 
Unheard Labor
Last Thursday, Spotify introduced a donation/tip button on the platform. The Guardian made a solid intellectual critique of the effort that saw it as a minor band-aid on the challenges facing musicians during this pandemic. My main issue is a bit more minor. The entire narrative thrust of Spotify the last few years has been to encourage passive consumption. Suddenly, the company is encouraging artists to actively engage with an actively passive audience they’ve built on this particular platform. I wouldn’t be too keen on the success beyond a few cherry-picked cases. 
Related, but a bit sad, Patreon let go of 13% of its staff last week, which unsurprisingly follows a sudden burst of PR around an influx of creators (Insert M.I.A. news here). That Patreon is self-admittedly unsustainable in its current form and is making cuts while seeing growth doesn’t speak too great about the company’s prospects if you’re a worker or creator.
6 Links 2 Read
Just so we’re clear, when labels start eyeing cuts and pulling back budgets. Please if you work at a label and aren’t entirely blinded by careerism, note how across many white-collar industries CEO and executives are taking no salary or deep pay reductions to prevent company layoffs. Executives in the music industry certainly are going to struggle through this downturn. 
A great piece diving into the way that contemporary rap production works, which is often exploiting young producers all who hope to get their fleeting 15 seconds of fame. The trend pointed out here is no different from ghost production but the piecemeal mode of song construction is a bummer. I’ll admit. 
An update from the ever growing world of livestreaming, which shows there’s still a lot that needs to be considered about the future of the medium, if it wants to sustain the careers of artists.
A nice look at the impact that shutting down live music is having across Europe. Both pieces affirm the potential of needing to think on a deeper level about the future of live music, not only post-pandemic but also re-emerging during a global recession. 
This is a fairly particular niche complaint…but the word “indie” in this article and others like it are always fairly misleading to me. Especially when “indie” is used for venture capital-backed firms that are challenging major labels, it feels like a misuse of the phrase in a way. As the goal of venture capital firms certainly wouldn’t be that different than already established players. Nothing about UnitedMasters sounds better than UMG/Sony/Warner, which feels worth mentioning, if they’re supposed to be the industry’s future. 
Just pinning this with the “financialization of the music industry” tag, so I don’t forget this little fact for later. Also, worth mentioning that Facebook was looking to add in monetization options for their live video platform, so by the summer nearly all platforms will offer a way towards direct monetization.
Blog Roll
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 done by graphic designer Kurt Woerpel whose work can be found at his website here. The newsletter is copy edited by Mariana Carvalho, with additional support from Taylor Curry. My personal website is davidturner.work. A list of my favorite 2020 albums, books, and mixes can be found here. My current job is Emerging Creator Lead 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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