Streaming Music

An interesting path to track, when thinking about the impact of technology on our lives, is the music industry.

Originally, the only way to hear music was when someone performed it direct to you in small intimate venues. Larger venues were built and distribution grew. We still needed the performers to perform it though. At the turn of the 20th century, the ability to record music decoupled the listening experience from the artist and enabled mass consumption.

It’s not unreasonable to compare recorded music to the written word in its ability to distribute.

As radio technology improved, the ability to transmit a single source of that music to mass audiences changed how we consumed again. And then production of recorded music improved to records, 8 tracks, cassettes, CDs then mini-discs and it we moved away from radio. When music became digital and the internet decoupled the music from anything material, the industry went through another rapid shift. It took 15 years or so for the streaming business model to work it’s way out, but it’s here. Spotify’s IPO valuation of $27Billion made it one of the most successful tech IPOs in history.

Music is now a subscription service. People pay for access to the library and the distribution channel. The library and the distribution channel are the value. People are no longer paying for an artist. They are making the choice to have access to the music they want on demand, or to not. Last year was the most profitable year in music since 2006.

The music industry was most profitable in the late 90s as manufacturing and distribution of cheap CD’s, sold as LPs at $15 a pop was the business model. Artists make 12% of the profits in the music industry today. That looks to be about a third of what it was in the 90’s.

The question worth asking is that there’s an asymmetry between the outcomes of consumers of music and artists. What we have now is much better than driving to the mall and buying $15 of CD to hear a song when you want to. But it yields less income for the artists. Since we’re not talking about a commoditized good but instead art, does it impact the quality of the music in the long term if artists make less money? Or does the broader distribution and availability make up for that in distribution of creativity.

Another question. Is there a market function in the quality of music or do musicians make music because they must? And are we all just the beneficiaries of the human necessity to create? And if so, aren’t humans amazing in our ability to self satisfy this way.

Categories: Technology

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3 replies »

  1. I think quality music today is at the local level. I refuse to pay $100 to attend a concert with some artists that are living in the past. I see great artist every week at local venues for very reasonable prices.


  2. Yes, we are all beneficiaries of the human necessity to create, and have been from the beginning of time. Publishing has experienced the same trend, as far as individual profit reduction.


  3. yes we do. popularity does not mean quality. live local music for me is the best experience. the only way to make it as a musician is to sacrifice EVERYTHING for a decade and then maybe? I come from Buffalo which has a vibrant musical tradition. I came up in the 80s and new wave/alternative, the bands were many, and the talent pool was deep. the most talented of all, the one who touched the most amount of lives, to the point there is a yearly remembrance for him, is a guy named Mark Freeland. He inspired all of us. He also taught John Rzeznik how to play guitar. John Rzeznik went on the road with his band the Goo Goo Dolls, and toured endlessly. When they were home he barbacked at the Continental, and GGD filled in when ever there was an opening. John et al are extremely talented, but so are at least 10 other people i could name. but they did not sacrifice EVERYTHING. it is a tough life. you have to love it. you have to have no other choice. pretty much the same for every art form. and sports. and science. to reach the highest levels you have to be monomaniacal.


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