A revolution is underway in the music industry, well described on Ft.com by former Spotify chief economist, to understand the change underway, significant data is enough: in 1984 in the UK 6 thousand music albums were released while today the streaming services make 55 thousand new songs available every day.
There is more music and there are more musicians, but most of them can’t live with music alone.
This is happening in the complicated period of the pandemic.
As we have written several times in previous Amy’s blog posts :
music was one of the first industries affected by the digital revolution and the world of music has become the laboratory of the next cultural industry where the pandemic has further accelerated the process of transformation, towards the virtual space.
When digitization removes the barriers to entry, there is much more of everything and the consequences of the exponential increase in the supply of content are not easily predictable.
Indeed in recent years, we have been accustomed to being consciously persuaded by the economic and commercial model coined by Chris Anderson with “The Long Tail”, in which revenues are obtained not only by selling many units of a few objects but also by selling very few units of many different objects.
The incredible growth in supply and also in consumption does not produce a proportional growth of the business, and of the distribution of wealth: on the contrary, until today there has been an impoverishment of the players who take part in this phenomenon.
Erik Brynjolfsson and his team of collaborators at MIT’s Sloan School of Management analyzed the digital evolution.
His research examines the effects of information technologies on business strategy, productivity and performance, digital commerce, and intangible assets.
Amid this abundance will also be wrenching change. Professions of all kinds will be forever upended.
Recent economic indicators reflect this shift: fewer people are working, and wages are falling even as productivity and profits soar.
The most interesting phenomenon is the DIY (do-it-yourself) of the artists which has led to the flowering of new and revolutionary scenarios.
This is the inevitable consequence of the downgrading of artists who are trying to face a stormy market further shaken by the pandemic.
Explosion of artists
In 1984, 6,000 music albums were released in the UK.
Today, streaming services make a volume of 55,000 new songs available every single day!
The numbers say that there is not only more music, but there are also more musicians.
Since Spotify’s launch in 2009, the number of British songwriters has risen to 140,000, an increase of 115%, while that of artists releasing songs by a staggering 145%.
Twenty years ago there were five major British labels and at most two dozen independent distributors; Today Spotify hosts music from 751 suppliers.
The increase in the offer of content, in the number of artists and operators in the sector, also corresponds to the growth of musical genres to classify songs and musical pieces.
In 2000, the industry classified all the music in the world into no more than a dozen and a half genres.
Today, “everynoise”, Spotify’s acoustic map, offers 5,224 genres, including Coptic anthems, Russian romanticism and, of course, the new lockdown hit, the shanty.
An incredible offer of content
Music was one of the first industries hit by the digital revolution. Its evolution anticipates what will happen in the future throughout the cultural industry.
But the future becomes unpredictable when the numbers grow exponentially.
Last year there was a flood of new content (more than 3.5 million books, although only a fifth were new titles), almost a million podcasts (885,000 new episodes – almost two new podcasts every minute), a huge number of mobile games (88,000, up 50% compared to 2019) and original TV series (493 in the US alone, more than one per day).
Right now, investor resources are cascading into new media. In the past two years, there have been seven podcasting company acquisitions for more than $ 100 million each.
The downgrading of artists
This phenomenon, however, did not bring more resources for creatives. Indeed, in the vast majority, it is the artists who lose the most from this revolution.
All of this is happening while the established music industry is actually making a lot of money from streaming.
However, the resources are not sufficient for everyone and the gap will probably increase in the future.
The distortion of the system
The three largest music labels, which gross more than $ 1 million an hour in streaming revenues, have defended this well-established model, which sees the majority of artists receiving a 20-25% royalty on streaming listeners.
As the earnings go first to repay any advance, this means that an artist who receives a € 100,000 advance must sell € 500,000 worth of music before receiving more fresh money.
Here lies the whole contradiction of the system. When a music label has shelled out a large advance for a star, it is forced to invest more in the promotion and advertising necessary to turn songs into hits.
For lesser-known artists, however, it is customary to give only small advances and simply wait to see if any of them go viral.
It is a bit like the mechanism of finance: if you owe the bank 100,000 euros, you have a problem, if you owe it 1 million, the problem is theirs.
DIY is the natural answer to the system
The artists’ response to this state of affairs is “let’s do it ourselves”.
Rather than signing a 30-page record deal, which sometimes requires the intervention of an expensive lawyer to negotiate a few points, many musicians are turning to DIY services like Distrokid and Emu-Bands.
Distrokid’s groundbreaking deal with Spotify has begun to shake up the entire digital distribution space and has begun a journey that will likely never go back.
Their offer is built around three simple points: you pay a fixed fee, keep all your rights and keep all the income.
DIY is under development.
In 2020, the big labels released 1.2 million songs; the “do-it-yourself artists” have published 9.5 million. It’s an 8 to 1 ratio between the artists who do it themselves and the labels that do it for them.
The “panacea” for streaming
Most artists who choose “DIY” do not have the ability to develop the same type of promotional investment as labels, so streaming is an opportunity but at the same time levels the differences.
Within streaming, DIY artists can increasingly draw on many of the same data and dissemination tools as the big labels.
YouTube, SoundCloud and Spotify offer artists tools to access analytics to manage their fan communities.
Twitch’s live video streaming platform, owned by Amazon, had trillion-trillion minutes watched in 2020, with music now playing a prominent role in Twitch.
Patreon, a platform that allows artists to sign up and receive membership fees, today distributes $ 2 billion to creatives.
It took the global music industry 12 years to achieve the same result with streaming revenue.
These are just a few tools are available, and more and more independent artists are using them.
The pandemic has shut down live music
The live performance, which is the main source of livelihood for most of the artists, suddenly failed due to the Pandemic.
So for most artists, these tools are the best hope of survival.
… and the future?
The pie is much bigger, but the number of artists who want a slice increases even faster.
So the crumbs remain and the outlook does not seem to improve.
The world is changing and the music industry is a mirror of this change.
The paths to survive and emerge to prosperity are all to be charted and understood.
But surely a key point will be the renewal of education in the world of music as well so that it prepares people for the next economy rather than the last, by designing new collaborations that couple the power of digital with human creative ingenuity and embracing policies that make sense in a radically transformed landscape.
Source: Will Page, Music makes more money but has more mouths to feed, in “The Financial Times“, 20-21 February 2021.