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Penny Fractions: The Coronavirus Destroyed the Music Industry

Hello, welcome to Penny Fractions, your increasingly anxiety-filled music streaming newsletter. On a
Penny Fractions
Penny Fractions: The Coronavirus Destroyed the Music Industry
By David Turner • Issue #123 • View online
Hello, welcome to Penny Fractions, your increasingly anxiety-filled music streaming newsletter. On a personal note, I’ve been a bit under the weather the last week or so, hopefully just allergies, and was planning to take off next week to line-up with my birthday. However, due to the coronavirus ripping through the music industry, I’ll be holding off writing for Penny Fractions until April 15th. I may do a short update or two via Patreon and will continue to tweet, but truthfully I’d like to do a little self-reflection during this time of social distancing. Stay safe and I’ll speak to y’all next month! 

Before I begin, a quick mia culpa. Only nine days ago, I didn’t think the coronavirus was going to be that big of a deal. Truly, I blame my trademark American ignorance. Yet, as I started reading about what was happening in Italy and what happened in China, it was clear this was going to be bad. Then, over the last few days, people I know were getting tested and suddenly it was all too real. I haven’t left my apartment since Sunday in an effort to social distance. Thus, during that time, it’s become clear. People are losing and about to lose jobs. Businesses are likely to shut down. Most important, across the country, and the world, everyone is gonna be hit hard by this. These are gonna be a hard few months, not just a couple of unpleasant weeks indoors. 
Thus, I wanted to highlight a personal joy I know I’ll miss: New York City dance clubs. The citywide closure of bars and music venues will make it hard for such establishments to remain open. This is repeating across the United States and many parts of the globe, so if you are able to donate to a venue, food bank, or even your favorite musician in these coming weeks, please do so. Here are a couple of links to New York specific venues like Mood Ring/Heaven or Las Vegas and Nowadays, which are looking for support during this hard time. I’d also like to suggest if anyone lives in New York state to support this petition for a suspension of rent and mortgages, because in a couple weeks of people are going to be out of work, secluded in their homes, and will need to know a rent payment won’t put them under. This is a situation that many within the music industry will sadly face, so I just wanted to mention before I start today.
The Big Picture
We’re in a recession. Bloomberg last week implied we might already be in one and JPMorgan put out forecasts that by summertime the United States and Europe will be in a coronavirus-induced dip. On some level, that isn’t too shocking because there’ve been signs of a looming recession for the last couple of years anyway. The British writer Grace Blakely, who wrote last year’s Stolen: How to Save the World from Financialisation, covered this topic last year by pointing out a number of factors leaning the world towards this inevitable economic decline: “financial instability in China; global monetary tightening (rising interest rates and the end of quantitative easing or QE); the unresolved eurozone crisis; a shock to global trade; and rising private debt in the developed world.” There’s no irony that the coronavirus is seemingly ready to give a sudden kick to all of those areas. 
Last week, we saw some of the worst drops in the American stock market in decades. In particular, on Monday, a mobile New York Times headline said in boldface print: “U.S. Stocks Have Their Worst Day Since 1987 Crash”. What’s disconcerting right now is that even on Sunday when the Fed cut interest rates to nearly zero, the effects on Monday were negligible. This Monday headline said it all: Markets Plunge as a Global Recession Appears Almost Inevitable. Last week, the blog Naked Capitalism drew out a death spiral scenario that involved Italy’s collapse essentially being what could bring down the Eurozone. Somehow that feels almost cheerier when the same blog provided additional commentary earlier this week about how the impact of the coronavirus in China might’ve been understated. Then, in regards to the impact on the American economy, the author wrote: 
A coronavirus lockdown has an economic impact a lot like that of a disaster, like a hurricane, but playing out over a longer time frame. FEMA has found that 40% of businesses shutter in the wake of a disaster. And of the business that reopen, only 29% survive the next two years.
[…] 
And remember, 40% of Americans don’t have enough money or slack on their credit card to handle a $400 emergency. Many workers will be hit with hours cutbacks or job losses. They need assistance pronto or the economic damage will cascade: defaults on rent or mortgages, delinquencies on credit cards, defaults on car payments. And you have societal consequences like hunger, homelessness and suicides. 
What’s happened rather quickly is that people are seeing that the current economic order might not be able to hold going forward. That’s why Mitt Romney suggested giving all Americans $1,000 or why Alexandria Ocasio-Cortez mentioned the suspension of loans, mortgages, and rent. These are all signs that simply letting businesses shut down and people lose jobs, all during a time of social distancing, could have irreversible harms on society. This must be the scale of response to this challenge and within music, there might be an even greater need for radical thinking.
Built on Glass Bricks
Before I fully dive into how the coronavirus is already reshaping the music industry, I want to just talk about its current state. Headlines about the record industry are absurdly rosey: The Music Industry was Left for Dead a Few Years Ago. Now It’s Booming Again, It’s Happened: The Major Labels are Now Generating Over $1m Every Hour from Streaming, and The Global Recorded Music Business Generated Over $50m a Day Last Year – and More Than $2m of it Went to DIY Artists. One would be forgiven to assume that the music business and everyone in it is thriving if only reading glossy business press coverage over the last 24 months. However, an animating factor of this entire newsletter is the skepticism about who is benefiting from such growth and that sustainability. Now a sudden breakdown of the live music industry is proving the fragility of this new model.  
The RIAA (Recording Industry Association of America) reported last year that streaming made up 80% of the record industry’s revenue after only being 5% a decade prior. That resulted in the complete collapse of not only CDs but also digital downloads. This essentially makes recording artists, even those that can see a few hundred or maybe thousand records in whatever format, overly reliant on streaming to sustain them, a one-off lucrative sync deal being essentially a small lotto victory for most. Streaming alone is an unsustainable model (what Damon Krukowski wrote nearly eight years ago in Pitchfork still resonates), even more so when platforms actively fight meager pay increases and much of this is still mediated through poor major label contracts. Thus, the only consistent way to make money for musicians is via touring.  
There are varying accounts of how much of an artist’s income touring can make up, but most would put it at a significant amount. (This is even more extreme with bigger acts who account for a large percentage of the money made off touring.) Therefore, any disruption to touring is going to affect artists across the spectrum. And just how much is the coronavirus affecting touring exactly?
The Final Tour
Last week, both Live Nation and AEG announced suspensions of touring. New York City, the largest city in America, has effectively banned all non-essential places from operating at the moment. Berlin eliminated more than 1,000 people coming together, and still proceeded to close all bars and venues. SXSW, Ultra Music Fest, Tomorrowland Winter, and many more festivals got canceled. Coachella was postponed. Billboard’s keeping a running list of canceled shows and it’s absolutely staggering. 
(Quick aside here: Working From Home is the new normal. Spotify told employees to stay home. Major labels followed suit. Anecdotally I don’t think many people in the industry expect to see their desks in the coming weeks, though I’d even say it could be months. I cannot calculate the immediate impact of that but I’d guess productivity across the entire industry is going to decrease and only more so when more people get the virus and semi-distracted workforces suddenly must deal with a real crisis. There is also the fact that many white-collar music industry jobs are centered around events, promotion, and travel, which are all off the table for the foreseeable future. While some of that work will become digital, much of it will and is already disappearing. 
An extreme example, Lucian Grainge, the CEO of Universal Music Group, was hospitalized with coronavirus and the Financial Times reported that he was in contact with many, many higher-ups across the industry (Tim Cook, you know the Apple CEO), which must be throwing out of sorts at least some corporate functions. The white-collar impact of the coronavirus won’t be seen as immediately but is certainly already being felt.) 
Nastia Voynovskaya, the music editor at KQED Arts in San Francisco, wrote about how the lack of touring is already hurting artists. Her piece and other reporting got at the fact that many semi-professional musicians already work within various parts of the service economy that are currently being shut down due to the coronavirus. Thus there aren’t many options for one to go to his or her day job or even perform music in a way that can bring in a real income. On Twitter, Matt Dryhurst repeatedly stated that it doesn’t make sense to assume that suddenly musicians should be forced to digitally remake their career via a platform like Twitch or another live streaming platform. In a moment of crisis, I couldn’t agree more with this pushback because the notion that an entire class of music workers will be able to sustain themselves via online tips while economies are collapsing is illogical. 
A reason I’ll be taking a break is partly because of an exhaustion that I sense is about to set in within the American music industry once it becomes clear that shows aren’t returning in a couple of weeks. There is a reason why sports leagues across the world have bumped the breaks. Right now, across the United States, states and cities are locking down to only the most essential businesses remaining open and what happens to those businesses and workers after a month of no income but mounting bills? That is an issue that’ll be facing city, state, and federal governments but it’s one that needs to be addressed now. Music, just looking at Live Nation’s stock, is in an even more precarious position. Once the wheels fall off, I hope we’re all there to help each other up, cause we’re gonna need it.
Unheard Labor
Ray Hair, the president of the American Federation of Musicians, called on the government to provide immediate relief for out-of-work musicians. A necessity, when it doesn’t appear that live music will return to American life for weeks, if not months. There’s also been a great number of pieces in Rolling Stone, Billboard, and the New York Times that highlight how the shuttering of the live music industry doesn’t just affect musicians but is devastating to the many behind-the-scenes folks that make shows possible. (Pitchfork covered that many of the same concerns for live music are shared by record store owners). The stories highlight that many of these workers are “independent contractors” without health care, which at a time like this only further adds to their precarity. Lastly, Bandcamp is giving 100% of money spent on music this Friday (3/20/2020) to artists and not taking their normal revenue sharing cut to offer a bit of relief to artists hit by the coronavirus.
6 Links 2 Read
The Coronacene Part 1 / Part 2 - The Antifada 
I figured if I’ll be away for a few weeks, I’d get to indulge in recommending a two hour marxist interpretation of what led up and what might result from the coronavirus. Come for the blow-by-blow recap of the last few weeks, and decades; but stay for the hope for a better future. 
Craig Jenkins wrote a great call for reflection in the music industry right now. He observes that many of the reasons why this feels like a moment of panic go back to putting an undue amount of weight on touring for artists, and once that infrastructure falls apart, the rest of the industry is a rather hollow shell. 
Obviously Liz is a friend and she cited me in your talk here. But I think it’s been a cool journey to see her work grow over the last few years and I think it speaks more to the issues affecting the music industry more than ever. 
I’m sure this will fade to the background in the coming months but the record industry’s on-going fight against TikTok remains a very amusing conflict to me. I also love the idea of a ‘Transparency Center’, real press release hours here!
The fact that Apple was not able to get their “Apple Prime” bundle that would’ve allowed music to be rolled up into their other services makes me feel like it’ll be a matter of when, not if, to expect the company to side into that set-up. 
The record industry appears to believe that everyone who listens to music should be paying a monthly subscription fee, which is a nice dream. Thus, there is increased paranoia over family plans and other ways people can listen to music without a $9.99 fee. One would imagine this would be a good case for the industry to diversify just how it looks to make money over the next decade, instead of looking to squeeze its increasingly sole revenue stream? But why try something new, if one doesn’t?
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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David Turner

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