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.