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Penny Fractions: The Myth of Music Streaming Competition

Hello! First off, I’d like to say thank you to everyone that came out last week to Molasses Books and
Penny Fractions
Penny Fractions: The Myth of Music Streaming Competition
By David Turner • Issue #114 • View online
Hello! First off, I’d like to say thank you to everyone that came out last week to Molasses Books and got a copy of ‘NuMusic: A Gig Economy Solution’. If you’re at all interested in getting a physical copy, please email me because I ran out and plan to do another print run after the holidays. Also, I wanted to share a list of my favorite albums and mixes of 2019, along with all the books I read. Next year, I’m gonna keep a public running list of this, so if you’re ever curious about what I’m reading and/or listening to, be on the lookout for that. 
I also have one small request! If you know of any academic articles on music streaming, platforms, financialization, or even the history of major record labels, I’d love to get my hands on some holiday reading material. (Double points if it’s something you wrote!) This will be the last newsletter of 2019; I’ll be back on January 8th. Otherwise, thank you so much to everyone that’s read the newsletter this year and, as always, if you enjoy it, please forward it to a friend and check out the Patreon

Business press and even non-trade press often frame the coverage of streaming companies through the lens of competition: Why Spotify May Soon Have a Big TikTok Problem, Apple Music Overtakes Spotify in Paid U.S. Subscribers, Amazon Music is growing faster than Spotify, and Why Apple Music Is Starting to Win Spotify’s Game (…wait I wrote that one) are a few examples. I think you get the idea. 
The assumption is that there’s a finite number of people that can stream music and therefore each platform is attempting to gain an advantage over the others. The absurdity of these comparisons is that the broader goals of these companies are so divergent from one another that it’d be hard to claim that they’re competing for the same audience. The battle for a niche market between companies that are at times worth one trillion dollars doesn’t really help anyone understand what’s happening between these companies, yet that remains the direction of press coverage. To close out the year, I want to highlight is absurdity conceit and why it’ll be important to see through it in 2020. 
Billion Dollar Firms Can’t Compete
One could reasonably guess, based on the history of Pandora, Spotify, and Google Play, that Apple Music isn’t a particularly profitable part of Apple’s business. Even if Apple Music made money, if one considers the deals made with major labels, it’d be hard to imagine that this part of the business represents a significant revenue stream for a company that only a year ago was valued at over a trillion dollars. That’s what makes the rather persistent comparison between Apple Music and Spotify so bizarre. Apple Music is effectively just a nice way to expand Apple’s brand and get its awkward executives to rub shoulders with famous people, while Spotify needs to succeed at its core business. Apple Music is almost comically far away from the company’s core business. 
Apple certainly doesn’t want to lose the entire music market to Spotify but there is very little the streaming platform is doing that remotely encroaches on Apple’s other businesses. Spotify isn’t looking to sell a phone, tablet, laptop, or even rent seek, as Apple can through increased digital phone storage or other “services”. There is little reason to view these companies as being on the same level at all, yet that’s been the entire narrative since the product’s launch in 2015 (Apple Music May Not Steal You from Spotify, but It Can Still Win the Streaming Battle or Apple Music Launches to Take on Spotify – and Traditional Radio). Commentators didn’t assume that Apple and Spotify were on equal ground, but framing a product launch in such a way obscures just how differently these companies view the products they’re selling. 
The sheer scale of Apple can be applied to Amazon as well, where Amazon Music is once again often framed as a dark horse player in the realm of music streaming (see my own usage of this trope). There is an understanding that for Amazon music is just a way to get consumers more interested in Amazon Echos and add a little bit more value to one’s Prime subscription. Considering that Amazon’s real way of bringing in money at this point is through Amazon Web Services, it’s similarly difficult not to see Amazon Music and its television/movie offerings as uninteresting brand extensions. Amazon absolutely does not need Amazon Music in order to be successful, but as with the commentary on the “battle” between Amazon and Google over home voice devices, there’s a strange assumption that consumers should care about whoever “wins”. The core products of voice assistants or music streaming platforms might have minor fandoms that prefer one product to another, but ultimately there is a massive company worth hundreds of billions of dollars that’s surveilling one’s living room and/or listening habits. That makes it difficult to conceive of how that competition could help the average consumer. 
The last western company that operated at such an absurd scale was YouTube and its parent company Alphabet. Google tried to make music streaming work multiple times throughout the decade. YouTube Red failed, Google Play is now just folded into YouTube Music, and does anyone remember YouTube Music Key
Google’s ability to hit reset on music streaming speaks to the fact that it doesn’t really matter whether or not a product is successful. It’ll certainly matter to the product teams and their own employment status, but when it comes to the company, it can just hit refresh if one attempt doesn’t work. YouTube’s user base is over two billion people, so there are too many players invested in the platform that it’ll always be striving for some money-generating solution. 
Even this week, Bloomberg reported on YouTube Music allegedly reaching over 800,000 subscribers and headlined the article with the following: YouTube’s Music App Outpaces Spotify, Local Rivals in India. Now, YouTube is used by over 200 million people in India but it cannot be shocking that it was able to peel off less than 0.5% to pay for the service. Last year, I wrote about Spotify’s prospects in India with a particular eye towards YouTube and I thought it was ridiculous to imagine that Spotify would be able to enter the Indian market and find quick success among so many other entrenched companies. So far that’s bearing out due, once again, to the poor framing around Spotify’s ability to “compete” in a market where it arrived late, refrained from partnering with telcos, and just traded on a name brand. 
Until 2019, Spotify’s decade worth of losses should’ve proven that the “competition” idea didn’t actually hold up under much scrutiny. If a company that was used by hundreds of millions of people across the globe couldn’t quite turn a profit, then how exactly is it competing with companies like Apple, Amazon, and Google? If Spotify were to become the largest, and perhaps even the sole, music streaming platform in the world, that wouldn’t even begin to poke at the core businesses of their competitors. This raises the question: If businesses are so oversized that it doesn’t actually matter who controls a market, then why care? Perhaps we shouldn’t forget about the consumers. 
Streaming Stagnation
One assumption of capitalist market competition is that it’ll result in better products for consumers since companies compete in attempting to produce the best possible product. The reason I stress the insignificance of music streaming to these tech companies is that it demonstrates that the aforementioned logic isn’t actually working. Instead, we see that the core products of all streaming services are pretty much identical, duplicative functionalities, and very few innovations in the last few years.
When I cited Nick Srnicek’s Platform Capitalism to talk about Product Platforms and their rent-seeking nature within the context of Spotify, this could actually be applied to all of the products mentioned above. Customers don’t really have any choice and this feels like a core reason why it’s challenging to identify any real progress within music streaming. The major label oligopoly forced music streaming to be the only legitimate music streaming option over the past decade such that even getting MP3s can be increasingly difficult (or in the case of projects like Future’s Beast Mode 2, impossible). If there’s no alternative to streaming, are there any benefits to market competition? Nope. Yet, the press frames this space as a battle between companies while consumers are left with increasingly similar and undifferentiated products. 
Now, the same story is beginning to play out for TikTok (TikTok Owner to Challenge Spotify and Apple With Music Service). There’s an easy way to see through this rouse and it’s found in the music business press, which consistently argues that the real reason to embrace TikTok is that it’s a new product platform created to extract more money from fans without it ever properly matriculating towards musicians. TikTok “threatening” Spotify, Apple Music, and YouTube will become the new narrative used to mask a near-decade of scant innovation and limited change within the core business. Just ignore those stories and ask yourself what it is about TikTok’s streaming service that is different from the rest. And if nothing is different, then who is actually really winning in this seemingly endless battle for consumers? Perhaps most importantly, I’d argue that if we keep the status quo, the real losers of this competition will still be the artists who continue to be squeezed out of the little money that’s owed to them by platforms built on their labor. 
Unheard Labor
Let’s start this section off with some good news! Kickstarter’s management has agreed to remain impartial in allowing its workers to conduct the National Labor Review Board Election. Hopefully, in 2020 we’ll be able to celebrate one of the first examples of a major American tech union. In worse news, Netflix is trying to buy out music composers in order to prevent having to pay out royalties. This is a tactic that’s also being attempted by the Discovery Networks. I cannot state enough that I fully support these composers and songwriters who are trying to fight for what they’re owed by networks and streaming platforms that are attempting to wrestle their way out of properly compensating their employees. Sadly, these music workers are not unionized with the American Federation of Musicians but that is certainly another fight where collectivized power would be valuable. Lastly, I wanted to highlight a podcast that features a couple of members of the band Downtown Boys and Jacobin editor Alex Press talking about musicians organizing and the state of American labor. 
6 Links 2 Read
I was on the New York Times Popcast talking about the death of Juice WRLD and what we should be doing next, as an industry, about the lack of protection given to the industry’s most vulnerable and valuable stars. 
I’ll admit I’m a bit disappointed in the initial reveal of Bytedance’s streaming platform. It just seems so boring. Still, I’ll be covering this more in 2020, so I’m certainly open to being proven wrong. 
Prices will eventually go up for music streaming services and no, consumers will not receive any additional content to justify the price increases. Absolutely no one should believe that this will be to the benefit of artists unless artists are at the table and are able to renegotiate their payouts with streaming platforms and labels alike. 
This is an odd article because it’s fairly clear that there won’t be a Pandora, at least how we understand it, in the coming decade as it continues to shed users and its only value of boosting up SiriusXM users will decrease. I doubt the company will vanish but a nice bit of SiriusXM branding feels like a predictable move once the Pandora brand loses its last bit of luster. 
Cherie Hu goes rather deep into the usefulness of the concept of the “Celestial Jukebox”. I think this holds a lot of cool historical facts and is a great argument to retire this particular phrase and mindset of attempting to understand the value of music streaming platforms. 
This is an absolutely wonderful headline and I can only hope more and more pressure is put on Live Nation’s corrupt business practices in the coming decade! 
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 by graphic designer Kurt Woerpel whose work can at his website. The newsletter is copy edited by Mariana Carvalho, with additional support from Taylor Curry. My personal website is davidturner.work. My current job is Curation Analyst 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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