The “death of the music industry” is perceived as an elephant in the room, but it’s clearly not because, well, EVERYONE is constantly talking about it.
Since technology allowed music to be captured and played, we’ve seen assorted examples of changes in the industry that were assumed as evidence of the final nail in the coffin. “The barbarians are at the gates”.
It was the end. Allegedly. But somehow the music kept on playing.
In order to change something, understanding is always the first step.
We’d like, then, to present that so-called elephant in the room in the light of six of the most representative examples in which the music industry was sentenced to death, and try to understand them from a less subjective perspective. For simplicity, all examples were chosen from the biggest music market in the world: the U.S. of A.
Act I: The talking machines
At the end of the nineteenth century, Thomas Edison invented the first technological device capable of capturing and reproducing sound: The Phonograph, and, being Edison, placed it in the market as soon as he could (by 1899, USA had produced 151,000 phonographs). Originally, he wasn’t even thinking about music, the concept was for a dictation machine, and the Phonograph ended up becoming his personal favourite invention.
This was the first time we were able to capture sound in a physical format. Before Edison’s phonograph, music could only be heard if it was played or sung live by a person.
Now, fast-forward to 1906: John Phillip Sousa, “The march king”, vehemently opposed recorded music, substituting human beings (musicians) with machines, and wrote an essay about it titled “The menace of mechanical music”, where he wrote:
These talking machines are going to ruin the artistic development of music in this country.”
Then a bit later, in the 1920s commercial radio enters the picture, and thus the generalized perspective that was prompted was to question “who will want to go to live shows if the audience has an option to consume music on demand in these practical personal devices?”
The music industry is dead.
But time went by, and when the dust cleared it was easy to see the value of having a physical format to capture and reproduce sound, and the commercial radio being an invaluable ally for labels and artists, as well as an important income source for the industry at large.
Besides, the radio broadcasts featured live bands, who got paid for the performances, so a page was turned and music carried on playing until...
Act II: Radio and records, happily ever after
Someone eventually came up with the idea of reproducing recorded music on the radio instead of having live musicians perform. It was just more practical.
Record labels were, of course, delighted, but musicians unions cried foul because, what are they supposed to do without the income of live performances on air?
So, records will substitute humans on these hellbound personal devices we opposed in the first place. We were right, and now the music industry is dead.
Again, once the dust settled, we could see how the activities derived from recording processes became an additional income source that consolidated studio musicians and the recording studios’ crucial role in the industry, which remains valid today.
But at the time, the fight was far from over, in fact, the worst was yet to come, because what transpired from broadcasting recorded music, plus low royalty payments to artists, resulted in musicians unions going on strike, a terrible strike that lasted two years on which no unionized musician recorded any new material whatsoever.
Act III: The strike
Capitol records ignores the strike and tries to capitalize on the newly formed relationship between labels and radio stations, sending free copies of their records to the stations as a promotional asset.
Now, evidently the labels were too self-absorbed, they saw the strike as an empty threat, a bluff, and surely thought that they held all the cards because they had enough unreleased material to hold on for as long as it took, or did they?
Musicians’ unions showed some real stoicism and held tight, for two whole years. The strike that started in 1942 lasted way longer than anyone expected, until 1944, and thus no new music was recorded during this period.
The label’s unreleased material obviously ran out. Re-releasing previous hits worked for a bit, some labels even dug as far back as 1925, and that was that, there was not much to be done, apparently.
So musicians were willing to take things to such extremes, and labels were relentless… Now the music industry is really dead.
Well, some managed to stay afloat, like Columbia, who in 1939, released “All or nothing at all”, by Harry James, including a new and unknown singer called Frank Sinatra who got credited in small type on the record.
During the strike, in 1943, Columbia re-released it, now that Sinatra was world-famous, and they re-marketed the single as a Sinatra song with Harry James and his orchestra credited in small type this time. And it became a hit.
In another instance, there was a 1931 song, “As time goes by” released by RCA records, that in 1942 was included in the movie Casablanca. Riding on the movie’s success, RCA re-released it that same year and it also became a hit.
If there's one thing the history of evolution has taught us, it's that life will not be contained. Life breaks free, it expands to new territories, and crashes through barriers painfully, maybe even dangerously.”
There was also an incidental evolution worth mentioning, something probably no one saw coming, an accident of sorts that broke through everything anyone took for granted.
Following Capitol’s steps, indie labels started sending their own artist’s records from lesser-known genres such as Blues and Country, to smaller and local radio stations. These musicians were not unionized, and the genres were largely neglected by the audience, but the strike cut the audience’s options short, and people started paying attention. Here’s where rock and roll was conceived, here’s where the rock and roll revolution of the 50s began cooking.
To boot, these independent and smaller labels were, also incidentally, the factor that consolidated the strength BMI still holds today.
Act IV: Hippies
1969. Woodstock. Three days of a festival of music and art, 32 acts, mud, rain, legends of two babies born and two people who passed away. And the biggest case of upset neighbours I’ve ever heard of, because, well, the organizers reassured the authorities and neighbours that no more than 50,000 people were expected to come, but then over 400,000 people showed up. Think about that the next time you start getting upset because your neighbor's kids are throwing a party.
With the renounce to society, the drug culture, free love, and, well, basically “free” everything, Woodstock lost money. This was the biggest music event seen to date, and it wasn’t profitable.
How are they supposed to afford records and concert tickets if they can’t afford a haircut?
You see? There’s no money in this music thing. The music industry is truly dead.
Now sure, it may have seemed that way at the time, but digging just a little below the surface, it’s easy to find the reason, probably the main one, why Woodstock lost money, it was all about a choice presented to the organizers. I’m paraphrasing, but it must’ve gone something along the lines of:
People are going to show up, and we have limited resources. Do you want to put up the access points to ensure ticket sales, or would you prefer to use those resources to put up the stages, where, you know, the artists are going to perform? Because you can’t have both.
And they chose to sacrifice the entry points and favor the stages, and one can only agree, because there would have been no concert without stages, but there was a concert without the access points. And what a concert, I mean, Woodstock became a symbol that festivals around the globe still aspire to, and the result of the 60’s (hippies and all), was a decade of the 70s supercharged with contributions to music in general, just take a look at what came out of England during that decade.
Even the upset neighbours took advantage, and still do, of the legend behind Woodstock. How many tourists do you think have visited the site over the years? That’s undeniable cold-hard income for local businesses for the ages.
Act V: Personal recorders
Recordable tapes were around since 1963 thanks to the Dutch company Phillips, but it was in the 80s that technological advances consolidated the quality of the tapes, which translated to anyone being able to record a song off the radio, or off a friend’s tape or record, and if this is feasible, who would want to buy the originals?
Digital tapes and compact discs only made things worse.
Now, because anyone could record their own tapes, mixtapes became ubiquitous. anyone could curate a personalized selection of songs, record them to a cassette tape or CD, and give it away. It was a way of showing oneself, similar to, let’s say, writing a letter.
It was also a promotional asset, I’ll fabricate one example loosely based on a true story: let’s say there’s a girl who’s into the skateboarding culture and also likes to write. She runs a small editorial operation writing a zine (if you don’t know what those were, just think of them as an analog precursor to blogs).
She could write a few articles by herself or summon the help of a friend and spend an afternoon watching skateboarding videos and writing articles on a mechanical typewriter, then go to a print shop, run a limited pressing of the issue, and sell them to a close circle of friends who are also skateboarding aficionados.
Now, skateboarding and punk have always been closely related, so if a local indie punk band was trying to promote their new material, they could easily create mixtape consisting of well-known punk songs by established acts, throw their material into the mix, make a few dozen copies and negotiate with the zine editor to have the tape included with every purchase of her next issue, as a value added to her product.
Mixtapes were a very powerful promotional weapon for underground genres around the world, if you’re interested, there’s also well documented and easy to find examples of how the hip-hop scene used them to move their ideals forward.
So, these kids are now copying and distributing copyrighted songs, people are not paying for these copies, the industry is finally dead, right?
Not so much.
Kids actually got excited about the bands they didn't know, and went to their concerts, bought their records, kept making mixtapes and kept promoting these acts. Mixtapes were a very powerful and organic promotional tool.
Sure, the case can be made that more illegal copies were listened to than original records, but then the official numbers from RIAA claim that recorded music sales went from 3.7 BILLION usd 1980 to 6.6 BILLION usd in recorded music in 1989. Not that bad, huh?
Yes, without piracy they probably would have sold more, but the case can also be made that they would also have sold more if they had adjusted cassette tapes and compact disc prices accordingly, since it was in this decade that the production costs for both of these started decreasing substantially.
Today we don’t have mixtapes per-se anymore, but the dynamic is still valid, we are still curating personalized playlists that serve purposes as personal, as varied, as social, or as commercial as those mixtapes did, once upon a time.
Act VI: MP3s
The whole story of digital music is worthy of a whole post by itself, I’ll just focus on the highlights here.
In 1999 some kids made a computer program called Napster. It used an Internet connection to allow peer-to peer file sharing, this means that people were able to browse and download the files other people had on their computer hard drives. It was used mostly to illegally share songs in mp3 format.
That was the year when physical record sales began plummeting, which we haven’t been able to stop, because: Who will want to buy records if anyone with Internet access can download and listen to virtually any song they like, for free?
Record labels had zero clue on how to react, it took them a while. There’s an anecdote of record label execs in a meeting being told that this thing was harming them, and they just didn’t understand how or why, until the Hilary Rosen, of RIAA asked one of them for the name of their latest single, and showed them in the room that it was already available on the platform, free for anyone to download.
So, once they realized what was going on, they tried everything to stop Napster, Napster was eventually ordered to cease operations, but the cat was out of the bag and other services promptly emerged.
The major labels then tried to come together, to try to agree on how to proceed, how to address these digital pirates. Several attempts were made to come to an agreement together, but for one reason or another (egos, mostly), the attempts failed, and piracy kept on rising.
To boot, big acts started reacting in their own way: Radiohead released their album “In rainbows” online, for whatever the user felt like paying. Madonna left Warner Bros and signed with Live Nation (… a concert promoter?), Nine Inch Nails released their first independent studio album, “Ghosts I–IV”, for free, through BitTorrent and PirateBay, sites regularly used to pirate music, nonetheless. Pennywise released “Reason to believe”, their ninth studio album, also online, also for free.
Jane Siberry was the pioneer of this pay-what-you-want model in 2005, under the name “Issa”.
So, major labels can’t agree on how to proceed, how to use this format that doesn’t depend on anything physical; big acts are running for the gates, piracy is on the rise, record sales are steeply declining…
So, is the music industry dead now? We have a verbatim quote here for y’all:
The industry reacted like the end was nigh. ‘[Radiohead has] devalued music, giving it away for nothing.’ Which wasn’t true. We asked people to value it, which is very different semantics to me.”
Enter iTunes. Steve Jobs at Apple, because he was Steve Jobs, starstruck the majors, and, being the great salesman that he was, he convinced all five to sign off their catalogs to his iTune store.
His goal, of course, was to ensure that sufficient content existed both in quality and quantity for his iPod.
Let’s take a moment to understand the importance of what he did, because he was able to get these five monster organizations, who couldn’t agree on anything by themselves, to agree to his initiative: Warner, Universal, BMG, EMI, and notably Sony, who opposed the most resistance, and obviously, I mean, Sony is also an electronic device manufacturer, and their portable music players ruled the land for decades, the walkman and the disc man.
The deal was, and still is, pretty straightforward: Each song sells for $0.99, Apple keeps $0.29, and the rights owner gets $0.70.
Now, Apple is a technology company, and the labels were still in shock after the whole Napster fiasco. In order to address the obvious concerns the labels had on digital piracy, Apple offered an AAC encoding protected by Apple’s FairPlay system, which limited playback to three computers, and could only be played portably on iPods.
The whole thing worked, labels were now able to sell their products digitally and securely, so much so that they were the ones who eventually requested the encoding protection to be removed, so that files bought through the iTunes store could be played on other brand’s portable devices.
Act VII / Encore: Today
Up to this point, it could be said that selling music followed a somewhat fair and transparent process, but today we have another solution, more practical and efficient than downloading, but also one that presents some serious flaws. The reigning king of music formats: streaming.
Now, of course, we’re still talking about the music industry being dead, just go to twitter and search the words “music, “industry”, and “dead.” And by all means, join in on the conversation.
The thing is that the closed-door deals between labels and streaming services are designed in such a way that every time a user plays a song from their account, the rights-owner gets a revenue of a fraction of a dollar, with at least two zeros after the decimal point.
It is a paradox, because music piracy got to unprecedented levels and streaming is genuinely helping mitigate it, and because listening to unlimited music online is a practical and efficient solution for consumers, for a monthly fee or for listening to ads. And regardless of where a song is released, it’s available to fans pretty much anywhere without latency.
But this comes at the cost of right-owners getting a really subpar income, sub-par compared to any other music format we’ve ever sold.
And I used the term “right-owners”. The right-owners generally ain’t the artists, who in a standard record deal would get somewhere between 5 and 15% of that. It’s unsustainable, it’s unfair, it’s bottom-line ridiculous, and it’s what the industry is promoting as the status quo.
Artists, the people who create the product, the songs, are basically giving their creativity and efforts away for close to nothing. Some, if not most, were willing to accept the deal because they still had income for live gigs and merch, right? Well, the global crisis that hit in early 2020 due to COVID 19 caused as the first order of business the suspension of live events, and they will be the last to come back after the crisis is back under control.
So, we’re listening to more music than ever, but musicians aren’t getting paid, and they can’t profit from other income streams -- merch and live gigs, and no one knows for how long. It’s an impossible situation.
Is this the end of the music industry? Are the barbarians at the gates and can the last one to leave please turn off the lights before locking up? Or is it a time to stop and question the way things are done and the way we’re helping, from our trenches, to this situation?
How we as consumers can help
As a consumer, it’s reasonable to think that by paying a fee for a streaming service we’re doing the right thing, but have you stopped to wonder if there are alternatives?
For starters, we could decide to stop being spectators and choose to play our part, to take the chance to do something about it.
We can sign and share those petitions that you agree with on sites like change.org that promote improvement to artist’s conditions in any way.
#brokenrecord, has been around since May 2020, and you can use it on social networking sites whenever expressing your opinion regarding the conditions that musicians are subjected to, or whenever sharing articles on the subject.
You also have the option of using the pay-per-stream each service offers as a key indicator for your decision on who to give our business to.
(Fun fact: Out of the main streaming services available, Napster, yes, that Napster, turned itself into a completely legal streaming service, and IS, at the time of this writing, the best-paying streaming service of them all.)
Interacting with your favorite artists through Bandcamp is also an efficient way of supporting them.
So, is the music industry dead? What do you guys think?
Luis Garza is the head of strategic planning in Estratagema Records.