How Soon is Now?

Music, as a form of expression, has changed very little in human history; what has changed massively is the way it is produced, distributed and consumed. This is especially true since the advent of digital technology, with all forms of media becoming more ubiquitous and readily available. The shift from analogue to digital has had an unprecedented impact on those involved in the music industry. The way that artists, consumers and all the agents between them interact has become ever more fluid and ill-defined as the industry has attempted to adapt to a dynamically shifting market place. As we seek to understand this evolution we must address how digital innovation has changed music and analyse how new business models have sprung up. These changes have occurred, and continue to do so, both as a consequence of the new technology available and as an attempt on the part of the industry to combat the decline in sales and revenue. While some notable past innovations have now become obsolete, the currents of change keep flowing. There is no shortage of new developments, exemplified by Chance The Rapper recently becoming the first artist to win a Grammy award only through streaming his music. In light of this, now seems like an appropriate time to consider the impact that the digital age has had upon the music industry as a whole.

Barbarism Begins At Home

By the early 1980s, the idea of “home media” was prevalent throughout the developed world, LPs were the first widely available and affordable format to permeate the market fully, and cassettes had followed to allow more mobile audio. The introduction of these technologies set the standard for what consumers expected: the reliable reproduction of high-fidelity content, ease of use, and the ability to play music on the move. However, there were drawbacks; vinyl records are quite delicate and also large, making storage difficult. Cassette tapes suffer from a lack of storage capacity and also degrade after prolonged use and the utility of tapes for copying and sharing music is limited by the loss in quality in transfer. This combination of factors perfectly paved the way for digital audio and the introduction of Compact Discs (CDs). These Discs provided the desirable features of previous formats as well as new benefits; the standard capacity of a CD is 700MB or approximately 80 minutes of audio, more than enough to store the majority of albums. As more types of CD were developed (specifically the CD-R) as well as home computer technology it became possible to “rip” from a CD onto a hard drive (most often as MP3 files) without any compression or loss in sound quality and also then “burn” it to a new, blank CD. Suddenly it was possible to reproduce easily at home a product which would cost upwards of ten pounds in a store, and to redistribute it either for profit or for free. The age of music piracy was born.

By the early 90s, the cassette tape was still in use but it was evident that it was becoming obsolete. The Walkman and the car stereo, areas which the cassette tape had pioneered, were giving way to CD players. Friends were able to borrow legitimate CDs from each other, which they could then copy to their personal computers and burn onto blank CDs for pennies. While this proved to be an effective way for friends to share music there were limiting factors which prevented this behaviour from having a serious impact on music sales, the most important of which was the inconvenience associated with this process. Both the time taken to burn a single CD (in the order of minutes) and the requirement of actually passing it onto to somebody else prohibited this practice from becoming ubiquitous. So while it was cheaper to copy a CD it was by no means easier than purchasing it in a shop and as such record sales were not hugely reduced. In fact, the sales of CDs in the UK peaked in 2004 at around 160 million,[1] well above that of vinyl records in the 1970s.[2] While consumers could have large collections of music stored in their hard drives, they still required access to a CD at least indirectly, so often a large digital library would be reflected in a large CD collection. All this leads to the conclusion that the Compact Disc itself was not a particularly disruptive digital innovation; the business model which had served the industry since the invention of mass recorded music was largely undisturbed as the CD became a substitute and eventually a replacement for analogue formats. The development which truly shocked the music industry was not a new object on which to store music, but a new platform through which to share it.

Shoplifters of the World Unite

As a network of interconnected individual users, the internet derives its power from its ubiquity and permeation throughout the population. The involvement of such a multitude of users and content creators, each one adding to it in some degree, is what makes the internet so seemingly limitless but also what makes certain aspects so unaccountable. Nowhere is this truer than in the sphere of media piracy and specifically peer-to-peer file sharing. While peer-to-peer had already existed for a few years by this point, it was the launch of Napster in 1999 which brought the technology to a wider audience.[3] Napster allowed users to share their libraries of MP3 files to anyone with a computer around the world, limited only by the speed of their respective internet connections. With its user-friendly interface and convenience the service rapidly took off, especially among young people who had little concept of the ethical or legal ramifications. In terms of digital innovation, the service was a giant leap: it opened up an inexhaustible supply of material at literally no cost. Of course this utopia of limitless free discographies was to be short lived and Napster’s success was also to be its downfall. Once the music industry at large grasped the gravity of the copyright infringement taking place it mobilised quickly and with extreme prejudice to tie a legal noose around Napster. The original model of unlimited free file-sharing via a centralised platform ended in 2001 and Napster never recovered. However, despite the best efforts of the Record Industry Association of America (RIAA) the cat was very much out of the bag.

While Napster was based on an easily identifiable central system used to bring together users and the files they want, the platforms which followed it are far harder to regulate. BitTorrent, a platform in which files can be transferred in small pieces from a “swarm” of users matched together by a “tracker” server, now represents more than half of the bandwidth associated with file sharing and is the most prominent means of media piracy in the world.[4] Since the trackers don’t carry the copyrighted files in question, merely the metadata which identifies them, the legal status of their operation is far greyer. Being decentralised, they are also far more difficult to police or regulate. Attempts on the part of the music industry and other concerned parties to close down the websites which host the files containing this metadata have met with mixed results. The most high profile example is “The Pirate Bay”, a large database of these .torrent files which has been subject of a severe degree of litigation.[5] While the founders and operators of the site have suffered legal consequences and many attempts have been made to block the website in various countries it is still easily accessible with minimal effort and remains the preeminent destination for those seeking torrent files. At the time of writing, thepiratebay.org is the 82nd most trafficked website in the world according to Alexa,[6] amazon’s web traffic monitor.

Legal efforts to bring to account the end users of illegal downloading have also proven largely fruitless: prosecutions and fines have been enforced against high volume uploaders in some countries, but the sheer number of people potentially guilty of this type of copyright infringement prohibits widespread prosecution and as such many users feel effectively safe in their actions. What is clear is that currently there is no effective counter measure or deterrent to illegal downloading. The methods described above are just a small cross section of those available to would be media pirates: file sharing is as diverse and pervasive as the technology that sustains it. The ease of file sharing and relative safety of piracy is the direct effect that the digital age has had on the music industry; what follows below are some of the ways in which the music industry has attempted to shape the digital age, to harness the same technology which has had such a disruptive influence in an attempt to adapt and prosper in a sphere which has undergone the most radical of upheavals.

Money Changes Everything

It would be remiss to suggest that all recent business innovations in the music industry have been a direct consequence of negative external factors; this would imply that that these efforts were purely reactive. In fact it is in the interest of the agents involved in any business actively to seek models which will make their products more accessible. In this instance the innovations carried out by Apple essentially define the beginning of the modern era in music distribution and consumption: the iPod and iTunes Store are so dominant in and synonymous with the ideas of MP3 players and digital media retail that they can essentially be used to represent the wider step in overall technology. When the iPod was first introduced it was not the first device of its kind technologically, but it is by some distance the most popular and widespread; the same is true of iTunes in terms of personal music software. iPods provided a convenient and effective means to access a potentially huge personal music library with a pocket sized device. Its aesthetic design and the growing power of the Apple brand cemented its image as a “must-have” item which some would argue was as much of a fashion statement as it was a media utility. Whatever the case, the iPod was hugely successful, selling over 100 million devices between 2001 and 2006 after its release.[7]

Accompanying the iPod was the iTunes software which allowed the compilation from CDs and subsequent management of personal music libraries. Once again, while these were great leaps in terms of the way that music was consumed, it is the internet aspect which really defines this associated new business model. For Apple, this new model was the iTunes Store. Introduced with v4.0 of iTunes, the iTunes Store was a digital music vendor operating solely over the internet. With initial licensing agreements in place with the “Big 5” major record labels and a number of independents, customers had access to essentially the largest catalogue of music possible (with a few notable exceptions) from the comfort of their own homes at prices which were comparable to, or cheaper than those in stores. Consumers could eventually replace CD collections with backed up libraries of digital content.

The added costs for record labels were essentially nil as all they had to do was sell the licenses to Apple who in turn took a slice of profits from sales while also encouraging sales of their compatible iPod products. This new business model was predictably successful and soon became the most popular way in which music was purchased, to the extent that downloads began to be conditionally included in the UK singles chart in 2005. This is a clear example of how digital innovation has benefitted the music industry by extending its reach to customers, allowing for more flexible consumption and the sale and support of associated products. While this business model greatly expanded on preconceived notions of how music was distributed, it still functions on the same notion that money is exchanged for some sort of “ownership” of content. The next act, still ongoing, was divorcing the music listening public from the idea that they had to have any sort of personal music library at all.

You’ve Got Everything Now

The streaming service Spotify was first released in 2008, with free accounts being available on an invitational, and later open basis (premium accounts were open to anyone). Initially all free accounts allowed the user to stream an unlimited amount of music but were frequently interrupted by adverts between songs in order to generate revenue. The business model involved paying for licences from record labels and generating advertising revenue based on the number of streams; it initially operated at a loss while the free service enabled rapid expansion of the user base. Eventually, in May 2011, the quantity of music available to those with free accounts was drastically reduced in an attempt to monetise the service and encourage those who were now accustomed to and reliant on it to upgrade to paid accounts.[8] In May 2014 the service reported that it had reached ten million paid subscriptions, with these now forming the bulk of revenue. While Spotify provided a popular and easy way for customers to listen to music, it also took advantage of other digital innovations in order to provide a more social listening experience. Accounts can be linked to Twitter and Facebook so that users can see what their friends have been listening to and can share music and playlists. This integration into social media means that for many Spotify became part of their daily routine and added a new dimension to the way in which music was consumed.

Other streaming services have now, a little belatedly, begun to compete with Spotify. In June 2015 Apple launched their Apple Music streaming platform, tying it in with their large share of the personal mobile phone music market: it is a very convenient extension of the Apple brand for iPhone users with a service already integrated into their handsets. Tidal, the service now owned in part by rapper and businessman[9] Jay Z, boasts access to higher quality, lossless, audio which sets it apart from other streaming services offering “lossy” MP3 files. Though these are the three most prominent services there are many others and this rapid explosion of competition has put the onus on services to offer things that others can’t. This has manifested itself in the often controversial idea of exclusive artists, meaning that some artists’ music can only be found on one platform and consumers may have to subscribe to two or possibly more services in order to have access to all their favourite artists. Other selling points are content curated by artists; this can mean as little as playlists allegedly put together by the artist in question or as much as hosted radio shows available exclusively to users of a given streaming service, such as Drake’s fortnightly show on Apple Music OVO Sound Radio. While this competition encourages these streaming services to produce unique content, many artists and consumers have complained that exclusive access to artists disenfranchises listeners and puts unnecessary barriers between creators.

What Difference Does It Make?

What’s abundantly clear is that it is no longer enough for artists to just record an album and trust that it will fly off the shelves. Sales of albums have been in constant decline for a number of years[10] and it is often up to artists to attempt to combat this outside the confines of the monolithic music industry. In 2014 when I wrote the paper from which this piece is adapted, much was being made of the fact that Taylor Swift was the only artist to release an album which went platinum in that same year.[11] Although this was part of a long term decline, it is interesting to note that ten albums from the previous year had sold at least a million copies by the end of 2013.[12] Tenth on that list was another Jay Z innovation: his album Magna Carta… Holy Grail was released in partnership with Samsung whereby the company bought one million copies of the album in advance and distributed them to its pre-existing customers through an app available on their phones. [13] The album was thus the first in history to be platinum immediately upon its release. While this model is only open to an artist of the stature of Jay Z it demonstrates the creativity which now goes into coming up with alternatives to the traditional album model, and also the willingness of powerful artists to bypass the outmoded mechanics which had been for so long the only tools for promoting music. As part of the promotional campaign for Magna Carta… Holy Grail, Jay Z spent a whole day in an art gallery rapping one of the tracks as a sort of installation available to the public, also attended by several noted celebrities.

The dynamic throughout all of the business models previously presented has been one in which record companies stand between artists and fans as a middle man. However, in the age of the internet and mass social media this is no longer necessary. Artists are now further exploring the more direct relationships they can now enjoy with fans. This, after all, is the defining characteristic which allowed 1989 to buck the trend somewhat and still sell seven figure numbers of units. Taylor Swift’s unique level of interaction, inviting young fans to secret listening parties at her home for example, engages with fans who increasingly see music as a service which is provided on tap and has less and less to do with artists and albums. Furthermore, fans must be reintroduced to the idea that there is value to be gained from parting with money for music.

Artists have been toying with different business models for longer than just the last few years though, of course. In 2007 Radiohead, one of the most acclaimed bands in modern music history, released their album In Rainbows on a pay-what-you want basis: fans could choose how much to give the band in support of the record.[14] This model – essentially giving music away in the expectation that fans will then support the artist voluntarily either through paying anyway, purchasing merchandise, or going to a live show – is risky but ultimately rewarding. It requires artists to produce music which people are not only happy to listen to through a streaming service that they already pay for, but actually engages with them on a level by which they will specifically support the artist(s) behind the song. Thom Yorke again dabbled in this alternative business model when he released his 2014 solo album Tomorrow’s Modern Boxes as a paid-for torrent bundle. While the large economic power of record companies was once necessary to distribute records, the internet has made it possible to bypass the need for expenditure on a physical release. Where once great outlay was needed on expensive recording space to make a record, home recording equipment means that this is often not the case. Through social media it is now possible to reach a huge base of people without recourse to traditional publicising methods. It is clear therefore that record labels themselves must adapt in order to remain relevant in an industry to which technology has massively lowered the barriers to entry.

The decline in traditional album sales has also rendered obsolete the industry’s metrics for gauging how much customers are listening to music. While the lack of platinum records in 2014 was partly due to a general trend away from paying for music, that wasn’t the full picture; plenty of people were still listening to music, they were just listening to it in formats which the industry wasn’t recognising. Just as there was a lag in the 2000s before digital downloads were included in charting album sales, once again the rating agencies had fallen behind the curve when it came to online streaming. In December of 2014, the Billboard 200 began using a new algorithm which calculated streaming in album-equivalent units. In other words, a certain number of streams of a track from an album is now counted the same as one traditional purchase of the album. The Nielsen mid-year report from 2016[15] sheds some interesting light on how much a part of commercial performance streaming these album-equivalent units have become. For example, Kevin Gates is by no means one of the biggest names in hip-hop, but his debut album Islah went platinum with less than half of the figures coming from sales of the album as a whole. The report also mentions that Chance The Rapper had become the first artist to chart in America through streaming alone; this wouldn’t be the last industry barrier to be broken by the young Chicago MC. The Billboard 200 decision meant that the importance of streaming for recognising trends in music was finally being taken seriously, but it would be a little bit longer before this extended to another music industry institution of dubious relevance in the present day.

Nowhere Fast

The Grammy awards have often been the butt of jokes based on the extent to which winners actually reflect the contemporary musical zeitgeist. In recent memory there has been a string of controversies to do with perceived injustices in the snubbing of acclaimed artists in favour of those who more conventionally appeal to a mainstream and predominantly white American audience. This perception of the Grammies as out of touch has come to a head this year, with both a series of prominent boycotts in the run up to the ceremony as well as heated debate over the decision to award the Album of the Year award to Adele’s 25 over Beyoncé’s critically acclaimed, and politically charged, Lemonade. Arguably the biggest winner at the 2017 show was the aforementioned Chance The Rapper. By winning three awards at the ceremony (best rap album, best performance, and best new artist) he became the first artist to be honoured based solely on online streams since the awards relaxed their rules to allow this sort of entry.[16] Not only does Chance give his music away, he also isn’t signed to a record label and manages his own business affairs. This makes his achievements especially impressive given that most of the other nominees in his categories will have been helped by major label backing in promoting and distributing their music. This is further evidence that record labels are in a fight for their lives as they battle to stay relevant in an era in which their function seems to be being encroached upon more and more by new media.

Please, Please, Please Let Me Get What I Want

What seems clear is that the music industry is now a climate in which it is unreasonable to expect customers to pay ten pounds for an album as there are such viable alternatives. The re-emergence of vinyl typifies this: those who want a physical symbol of owning a record are more likely to turn to vinyl for its improved listener experience and apparent collector’s significance. CDs and digital downloads are caught in an uncanny value where they are not “special” enough to warrant purchasing but more expensive than streaming or torrenting for the more casual fan. It is the responsibility of artists and record labels to alter their practices to reflect this, by adding value to their products and appealing to customers on a more equal basis. Artists must take back the power in their relationships with the industry by taking a more direct approach to fans or they will end up beholden to services like Spotify which financially benefit only the most popular artists. In too many instances the industry has been behind the curve, coming across as outdated as it scrambles to react to changes after they have already occurred. Digital innovations have taken a number of mechanisms which were once the domains of large companies: recording, distribution, promotion etc., and opened them up to everyone. No longer does an artist need a record deal to produce an album and get lots of people to listen to it. The music industry, so long a shining exemplar of a corporate culture which has told those left behind to get with the times, is now at the short end of the stick. There can still be a place for record companies in this brave new world but maybe it is time that they started to think about what they can do for listeners and artists, or they risk becoming the odd one out when the trifecta of industry-consumer-producer becomes a tango for two.

 

[1] “The Blair Years in Statistics”, BBC News, 2007. http://news.bbc.co.uk/nol/shared/spl/hi/uk_politics/07/blair_graphs/html/default.stm

[2]  “Small Data: Is Lots of Vinyl Being Sold?”, BBC News, 1st December 2014.

http://www.bbc.co.uk/news/blogs-magazine-monitor-30250358

[3] Tom Lamont, “Napster: The Day the Music Was Set Free”, The Observor, 24th September 2013. http://www.theguardian.com/music/2013/feb/24/napster-music-free-file-sharing

[4] “Application Usage and Threat Report”, Paloalto Networks, February 2013.

http://researchcenter.paloaltonetworks.com/app-usage-risk-report-visualization/

[5] Cyrus Farivar, “Evasive action: How The Pirate Bay four dodged Swedish justice – for a while”, ars technicha,

4th October 2012.

http://arstechnica.com/tech-policy/2012/10/evasivemaneuvers-how-the-pirate-bay-founders-dodged-swedish-justice/

[6]http://www.alexa.com/siteinfo/thepiratebay.org

[7] Amanda Cantrell, “Apple’s Remarkable Comeback Story”, CNN, 29th March 2006. http://money.cnn.com/2006/03/29/technology/apple_anniversary/?cnn=yes

[8] John Cionci, “Upcoming Changes to Spotify Free/Open”, Spotify, 11th April 2011.

https://news.spotify.com/int/2011/04/14/upcoming-changes-to-spotify-free-open/

[9] And business, man: https://genius.com/Kanye-west-diamonds-from-sierra-leone-remix-lyrics

[10] “The music industry: Scales dropped”, The Economist, 16th April 2016. http://www.economist.com/news/business/21696962-more-people-are-paying-stream-music-industry-still-wobbly-scales-dropped

[11] Eric Kesley, “Taylor Swift gives gloomy U.S. album sales a platinum shine”, Reuters, 6th November 2014. http://www.reuters.com/article/2014/11/06/us-music-taylorswift-charts-idUSKBN0IP2PE20141106

[12] Josh Kurp, “None Of The 10 Highest Selling Albums Of 2013 Went Triple Platinum”, Uproxx, 3rd January 2014. http://uproxx.com/music/none-10-highest-selling-albums-2013-went-triple-platinum/

[13] Rob Markman, “Jay-Z To ‘Write The New Rules’ With Magna Carta Holy Grail Album on July 4”, MTV, 17th June 2013 . http://www.mtv.com/news/1709115/jay-z-magna-carta-holy-grail-album/

[14] Josh Tyangiel, “Radiohead Says: Pay What You Want”, Time, 1st October 2007. http://content.time.com/time/arts/article/0,8599,1666973,00.html

[15] http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2016-reports/us-mid-year-report-july-2016.pdf

[16] Amy X. Wang, “Why Chance the Rapper—who just made Grammy history—gives his music away for free”, Quartz, February 13th 2017. https://qz.com/908815/why-chance-the-rapper-who-just-made-grammy-history-gives-his-music-away-for-free/

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