The summers are getting hotter and Penny Fractions, your one-stop newsletter on the ever-changing world of music streaming, marches forward. Before I hop into this week’s main topic I wanted to point out my readers towards…yes, another survey. Nancy Baym, a researcher at Microsoft’s New England Research Lab, released another survey centered on how people use music streaming services. I linked to her previous one about workers within the music industry, so I figured I’d mention this new one. Last note, the footer of this email contains background information on myself and Penny Fractions for any new readers!

Don’t say it too loudly but platform-exclusive music is creeping back into the music industry. Last month, the French rap duo PNL signed a deal with Apple Music for timed-exclusive tracks and agreed upon marketing/promotion. Spotify proclaimed last week that the company doubled podcast listening since the top of the year, as they’ve spent over $400 million to break into that space. In June, Tidal received a two-week exclusive Prince album of previously bootlegged work. Then, last year it was reported that Amazon, following Spotify’s footsteps, was recording and releasing original music by artists, even if the record labels kept the rights. 

Who said Frank Ocean killed exclusives? 

A few years ago in music streaming, exclusive music was the accepted norm. Kanye West’s The Life of Pablo and Frank Ocean’s Endless needed to fork over the subscription fees to Tidal or Apple Music respectively, or start looking for torrent sites. Ocean, according to industry reports, with his bait-and-switch on Universal by releasing Endless to get out of his Def Jam deal and then following up immediately with his real album Blonde, upset Lucian Grainge, the CEO of Universal Music Group, enough to halt any future platform exclusives. 

I certainly believe the music industry can turn on the capricious whims of a single CEO, but obviously, exclusives weren’t dead. Months after Ocean’s surprise move, Amazon Music was offering exclusive Garth Brooks music and even if Universal said no, plenty within the industry carved those lovely tech checks. If exclusive music is re-entering the mainstream, what’s changed over the last four years within the overall business to make them worth revisiting?

Let’s review a few facts about the largest music platforms: Apple Music is owned by Apple. Right now, Apple is spinning its narrative to be a services company that cares about privacy. Apple is also a company that routinely gives no fucks about abusive labor practices for its products, so I take either push with little credence. However, because Apple is seeing that it can’t replicate the iPhone’s success more than a decade out, it’s simply forcing its consumers to pay more money for basic things like storage space, access to news, or whatever else falls under the “services” umbrella. Apple Music, likely a current loss leader, isn’t going to exist perpetually as something that can allow the company to lose money. 

Spotify isn’t owned by a single company but rather a hodgepodge of venture capital and other firms. However, back in 2017, Spotify performed a stock swap with Tencent, the Chinese company that also owns a number of Chinese music services such as Riot Games (League of Legends), Epic Games (Fortnite), and minority stakes in nearly every major video game publisher. Last year, Spotify announced a cross-product partnership with Samsung; on Monday, AT&T announced that Spotify will be included in their most expensive entertainment bundle and that the company will be offering a six month free trial for other subscribers. In case anyone is wondering why Spotify doesn’t need to hint at profitability, here are three companies ready to absorb the company into its already well-integrated ecosystems.  

YouTube or, well, YouTube Music, is owned by Google. Google continues despite the fact that worker protests against military contracts and systematic mistreatment of its workers are racking in the fucking dough. However, there is increased questioning around how much YouTube does contribute towards Google’s bottom line. That such stories are hitting the press along with reports that YouTube Music, including former Google Play users, only has 15 million subscribers, could imply a rather tepid business that also must shoulder constant bad press. 

Pandora, which in 2015 wasn’t a healthy company but wasn’t losing listeners quarter-over-quarter like they are now, were bought by SiriusXM last year. Tidal, which in 2015 was a plucky artist-run start-up, saw Sprint buying one-third of the company in 2017. Last but not least, Amazon Music, which is owned by…Amazon. I’d guess that Amazon Music is an entirely money-losing venture for the logistics/web services company, but at least they’ve got a nice Taylor Swift concert!

My reason for this extended breakdown of the current market is to say: The music streaming ecosystem is shrinking. The idea that these firms are competing with each other is largely one of media myths and mostly just serves record labels, who desire more favorable licensing agreements. The reality is that streaming music in 2019 requires interacting with massive multinational companies that are interested in your data for advertising, money for phone plans, or massive content bundles. The exclusive content isn’t meant for different individual music platforms but rather virtue signals towards vastly different ecosystems. 

This makes for a ripe environment to reintroduce exclusive content. In the early 2000s, the initial attempts at major label-approved music streaming resulted in bifurcated music catalogs in the form of streaming services (PressPlay and MusicNet) with competing major label backers. The fact that nearly every music streaming service offers the same content with little daylight between them is truly a bizarre fact of the major label oligopoly. However, my “fear” is that with little reason to subscribe to multiple services, they’ll be a push to fold existing services into phones plans or content packages, while if one wants to hear music outside of that ecosystem, that’s when people will be forced to pay more money. (In this world, where Spotify is the default music player on an AT&T plan, if someone wanted a new Ariana Grande album they may be forced into Apple Music simply because major artist content is divided across platforms, which is essentially where music streaming was at back in early 2016.)

However, I hold no qualms with siloing music across disparate platforms. I could easily see a world where platforms are artists-owned, detached from multinational companies, and aren’t filtered through endless performance rights organizations, which could offer an exciting way to recontextualize music communities. Yet, the current trajectory of a half-dozen different firms offering fractionally different content to lure people into more expensive ecosystems is a fairly boring outcome for what could offer rather unique worker-first possibilities.

A small update to last week’s newsletter is that British publication Record of the Day did a survey of how much people paid for In Rainbows and found the average amount was closer to £3.88, not the $2.26 from Gigwise.com I quoted last week. 

On Monday, the New York Times reported that a number of Democratic Senators in the United States wrote a letter to Google’s Sundar Pichai calling for the company to make its over 120,000 contracted/temporary workers into full-time employees. Senators on board for the letter include presidential candidates Kamala Harris, Bernie Sanders, and Elizabeth Warren. Google’s abuse of workers, two-tier caste systems, and anti-organizing practices are fairly well known. 

However, I included this here because a number of workers at YouTube, the world’s biggest music platform, are contractors that aren’t paid the same as full-time YouTube employees (of course, I’d like to parallel with Pandora’s own early history of simply not paying workers back in its start-up days.) This is a practice that happens across the tech industry and should be abolished for the material harm it puts upon workers across industries. Credit should be given to the Google Walkout organizers who made the issues of temporary and contract workers within their core demands. Do better Google.

Tencent in talks to buy 10% of Universal Music Group - Music Business Worldwide 

What’s more fun than corporate consolidation? Corporate consolidation within an industry that I deeply care about! Vivendi’s been shopping Universal Music Group for a while so this isn’t too shocking and Tencent was always on the list. However, that Tencent owns part of one of the largest major labels and one of the largest music streaming platforms (Spotify) feels bad. 

Are Spotify’s Shareholders Failing to See Something Painfully Obvious? - Rolling Stone 

I’ll open this up to the floor: Do you think Spotify shareholders believe Spotify will ever be a sustainable company? My answer is absolutely not, but it’ll continue receiving money and floating along until it is bought by Samsung, Facebook, or some other multinational giant. Sound off in the comments with your thoughts!

Pandora user base fell by 6.5m in Q2 – but parent SiriusXM posts record $2bn in quarterly revenues - Music Business Worldwide 

The best part of this story is that SiriusXM thanks lower royalty costs for its great quarter. Everyone in the record industry must love to see that. 

Reaction Videos Are Helping UK Rappers Reach a U.S. Audience - Pitchfork 

I really, really should do an entire newsletter about reaction videos because it’s a topic I’ve found interesting for years but recently lost interest in as it just sort of became a normalized part of the YouTube music scene. 

Who are the two ‘major labels’ that have signed new deals with Spotify? Clue: not Universal or Warner. - Music Business Worldwide 

I truthfully put little stock in there being real high tensions between Spotify and major labels when it comes to getting licensing agreements. However, if the lawsuit between Warner and Spotify in India is any indication, then maybe these negotiations will still hold some unforeseen drama. 

Industry Groups Share Anti-Piracy Wish List With US Government - Torrent Freak 

Music piracy remains a topic I would love to spend more time talking about but, of course, most measures against piracy are prospering up to the corrupt copyright system. No big shockers there.

My name is David Turner and I started Penny Fractions back in November 2017, as a way to think through various topics within the world of music streaming. Since then, the newsletter, which is delivered every Wednesday morning (EST), has grown to reach over twenty-four hundred subscribers with an archive that can be found right here. I’m currently a Curation Analyst at SoundCloud, so all thoughts here represent me, not my employer. Prior to this, I wrote for Music Business Worldwide, Pitchfork, the New Yorker, Noisey, Rolling Stone, and Spin. I also create content on Patreon to help cover email billing costs and to compensate my copy editors, Mariana Carvalho, and Taylor Curry. The artwork is by graphic designer Kurt Woerpel whose work can be found here. My personal website is davidturner.work. Any comments or concerns can be sent to pennyfractions@gmail.com.