Long ago, some "sage" probably said that change is inevitable. I've seen plenty in my own lifetime. Change can be good, change can be bad, and change can be neutral.
Right now, in at least two of the industries near to my heart -- Radio, and the Music industry -- big changes have been happening that puzzle some observers. Recently there was yet another article on the prevalence of older music being pushed over radio and the hit charts. The Atlantic magazine had an article about the exact same subject several months ago, where Ted Gioia complained about the prevalence of old music over new music on radio and in the hit charts.:
The more recent article where Mr. Gioia is interviewed can be read here.:
The writers of The Ringer article and the original Atlantic magazine article both complain about the trend of older music being so prevalent in the media, while there is a drop in consumption of new music overall.
Unfortunately, they both fail to identify the actual cause -- the increased prevalence of Music Streaming and the new, Subscription Model of music consumption. So far, when accounting for inflation, the new Model is losing the music industry, and radio, a lot of money.
To explain this, a lot of background is necessary.
CHANGES? SURE, I'VE SEEN CHANGES
I not only worked for a time in journalism, I also worked in one part of the music industry (radio) for well over a decade. I'm also a musician, and know many musicians -- some who made it, and many who didn't. Like many musos all over the world, I tried to "make it" in the music trade. Four demo CDs later, I determined that the stars weren't quite aligned for that to happen.
I am stating this to illustrate the fact that I have a fairly wide view of the state of music and radio. I'm not the only journo or radio observer who has expressed concerns over the direction the twin industries of music and radio are taking. Many, like the writers of the two previous linked articles, are concerned that the days of the big singing stars are over, and some are concerned that the record industry is pushing "old music" (like classic rock and classic hits) and pushing new musical artists into the sidelines.
They may have a point.
In the radio industry, many are concerned about the big 'hit' that radio has taken, revenue wise, since the early 2000's. They're also concerned about radio's gradual loss of listeners. For decades, radio was where music fans discovered new artists. Today, that is less and less the case. Critics sometimes blame the music industry and record labels for not promoting any big new stars, and relying on the classic rock and pop stars to make them money instead.
They may have a point, too.
But the thing that many are missing is that the business model of music and radio has changed, and it is killing the music industry.
It's not killing MUSIC, mind you. That can never happen. But the new business model of the way that people consume music is slowly de-monetizing it, compared to just 20 years ago.
This article is a journey into how and why this is all happening; it's fairly in-depth, because that's the only way that it can be explained accurately.
A VIRAL PICTURE OF ROCK STARS MAKES A POINT
Recently a Facebook friend sent around an interesting picture. It was a virally posted pic of the classic rock band Led Zeppelin in their luxury airplane, travelling from city to city in 1975. The viral caption beneath the FB pic talked about how the picture was an example of just how "great music was back then" -- to where a band could have their own plane -- to how "crappy music is today", where none of the artists have their own jet.
Of course, the original writer of the caption was wrong -- dead wrong. There is indeed music today which is very good. The fact that no artists have their own plane is beside the point.
But the picture does illustrate a different point from the one the caption writer intended: the music industry, and most rock and pop artists, do not have the kind of money that Led Zeppelin had, because they're not making as much money as Led Zeppelin -- or its record label -- made.
That sort of money simply isn't being made today, because the industry itself makes less money.
To explain why this is all happening, we need to take a journey through the wonderful world of music and radio. Unfortunately, we won't be flying in our own plane, though. :-)
The 1970s rock band Led Zeppelin, who were so massive that they travelled the United States in their own jet airliner, a full sized Boeing 720, which was so dolled up it even had a (non-working) fireplace installed. This is one example of just how much money was floating around in the music industry in 1975. Even more money was being generated in 1999, the peak year for music revenue in the US.
It is fairly certain that no star is big enough to have their own jet today. And there are reasons why that is.
[EDIT: Since the writing of this article, I have discovered that Taylor Swift had her own large jet in the early 2010s -- I saw a picture of it taken during her 2014 tour -- and she apparently has a small personal jet today. So I stand corrected, although my bigger point here still stands.]
Sometime during the middle of the last decade, the 2010's, the term "Subscription Model" began to get more and more mention in the music and radio businesses -- two businesses with which I've been associated over most of my working years.
As an ex-radio industry employee, I still frequent internet forums that cater to radio industry people and radio enthusiasts, and although I never directly got involved in the music industry, as the music industry drives radio, and vice versa, I am reasonably acquainted with how the music industry operates. I also know a few musicians who were involved with the industry, and during my time as a collegiate journalist, I interviewed several, fairly prominent rock artists.
During those interviews I got a fair amount of info on the rock musician's view of the industry, and the process of achieving success in that industry.
FIRST, WE NEED TO GO BACK IN TIME.....
That said, to truly understand the statement I have made in the title of this blog article -- that streaming is slowly killing the music industry -- a slight history lesson is in order. First we must go back to a time when both the music and radio industries made a lot more revenues they are making now (in real dollars accounted for inflation), the year 1999. In the year 1999 the American music industry made the most money it has ever made. In the radio industry, it was similar, revenues were much higher than today.
It's a fact: the turn of the 21st Century -- 1993-2002 perhaps -- were banner years for music and radio.
Back in 2000, for example, radio was the prime medium for introducing people to new music. Radio was used by the Recording Industry to introduce people to new music as well. Both industries worked hand-in-glove. Radio also made a fair bit of money. So did the music industry, when compared to today.
Record companies would sign a music act, front some money for recording an album, dish out some money for promotion and for merch, and send the act out on the road to promote the album, and simultaneously send radio stations copies of albums and singles for the stations to play. The radio stations would play the tracks, which would hopefully gain airplay and increase the popularity of the musical act, gaining interest for people to see the act live. The record company made money off the sales of the recordings, and they made a cut of touring revenues, as well as some publishing (radio airplay) revenues.
And then -- if the music act's new album sold -- the process would be repeated the next year.
This was the standard music and radio business model which predominated from the mid- to late 1950's until around 2005 -- the rock years, basically -- about 50 years.
YOU HAVE TO DO THE MATH
Thanks to this successful business model, in the years 1998-2000 the American music industry made the most money it has ever made, when accounted for inflation -- approximately $24 billion dollars in 1999 alone. I don't have the American radio industry revenue numbers for that year, but I know from reading some data that most American radio markets had twice the revenue in 2005 that they have today -- which roughly correlates.
Last year, 2021, the music industry made $15 billion dollars. Now, you might think that the difference between 2021's $15 billion and 1999's $24 billion isn't that much -- a 30% difference, perhaps.
But since when is a 30% loss a sign of success?
Add in the fact that the music consumer base grew by 15% over the same period, a 30% loss of revenue looks even worse.
You want to know why your favorite new artist isn't getting signed, recorded and/or promoted by one of the big music labels?
They don't really have that kind of money to risk on it anymore.
This also affects radio. Some radio stations don't receive new releases from record labels anymore. And stations don't get the promo singles from record companies like they used to. It's all digital now. Radio stations will sometimes look at the streaming sites and choose the hot new tracks there that are getting played. In other words, streaming sites are breaking a lot of new music, and because music isn't being actually SOLD (by people buying LPs, CDs, MP3s, etc.), no one is really making a lot of money in the process.
So, the next time you look at the Billboard Hot 100 and see 10-12% of it taken up by one or two artists plastering the chart by mass-releasing half an album's worth of music, and you see another 5-10% taken up by a couple other artists -- all hoping those 15-20 tracks will somehow hit it big, now you know why.
In fact, at the moment I write this, 9 spots on the Billboard Hot 100 are taken up by one artist, and 8 spots are taken up by a second artist, and neither are massive names in music. That means 17%, or just shy of ONE OUT OF FIVE tracks on the Hot 100 are two medium level singing artists.
This didn't normally happen in the past. The Beatles had a run where they had 4 or 5 songs on the top charts in 1964, and Michael Jackson might have had three on the charts when Thriller came out in 1983, but this sort of thing happens every time I have looked at the Hot 100 over the past few months. It's like the charts are so hungry for 'hits' that anything goes. An artist's music slams the chart for a couple weeks and then is replaced by another one that does the same thing. Very few artists (Harry Styles is probably an example) have hits with longevity.
It's because music popularity is no longer based on music sales.
It's a symptom of the streaming model taking over the music industry.
Music and Radio is sick. They won't admit it, but compared to just 15 years ago, they're bleeding revenue.
And why is this?
The Cell Phone -- or, more importantly, the Smart Phone: it has replaced the CD, the Cassette, the LP, the DVD, the VHS tape, the Newspaper, the Magazine, the Tech Manual, the Paperback Book, the Road Atlas, the Radio, the Tape player, the MP3 player, the Tape Recorder, the SLR, the Video Camera, the Home Stereo System, the TV, Cable systems, and it has replaced even the Movie Theatre. Arguably, with the legalization of online Gaming it has started replacing the Casino.
It has eliminated the Pager, and in many industries it has replaced the Mobile Radio and Handheld Walkie Talkie, and some argue it has replaced Ham Radio. It has contributed to the demise of the Brick and Mortar store (you just buy stuff online using your phone). In some situations, it is replacing the Credit Card, Debit Card, the Wallet and actual Money. It has started to replace HR in hiring, and it may soon make actual Libraries unnecessary, along with other institutions, eventually. It may be slowly replacing the Personal Computer and Video Gaming Console. If such apps can become secure enough, it may ultimately replace the keys to your car and house.
All with just one device.
Answer: THE SUBSCRIPTION MODEL.
The "Subscription Model" is the latest form of revenue earning taken by record labels as well as other industries -- software, video, computer gaming, as well as other content creation. You can't buy a piece of software anymore without its developer wanting you to rent it, via subscription, instead. It's the same with most content creators -- and this includes the book publishing industry, which is also heading in the same direction.
Now, the meaning of the word "Subscription" today is slightly different from what it was in the 1970s and 80s, when it meant you paid a certain amount of money per month, and you got physical media (magazines, newspapers, newsletters, books, etc.) arriving at your mailbox in return.
"Subscription" today means you're renting a media service, and once your subscription ends, you really have nothing to show for it. It's more like paying for cable TV or satellite TV or radio, than subscribing to a newspaper, book service, or magazines.
To explain how different today's 'Subscription' and Streaming music business model is from the old way of doing things, and how it hurts the music and radio industries, we need to go back in time -- and 2000 is a good year to look at. After all, in 2000, CD sales alone brought in nearly twice the revenues that Streaming Subscriptions make for the music industry today.
In 2000, a music artist would be financed to record an album. The label would release the album (usually a CD) to the public. The public, if they liked the music, would buy the CD, and the record label would make money. The artist would also make money.
The songs by that artist, when they got played on the radio, would make a very small amount of money from broadcasting them, usually paid through a music publisher (BMI, ASCAP, SESAC, etc.). However, the broadcasting of music, in itself, never made the record companies and artists a lot of money.
Instead, broadcasting got the music into the ears of the consumers, who then bought CDs, Cassettes, LPs and MP3s. The music companies, and musicians, got their investment back through those music sales. This is why a platinum record made record labels millions of bucks, and made artists like Michael Jackson, Elvis, the Beatles, Led Zeppelin, Van Halen, Nirvana, Taylor Swift, and Katy Perry millionaires.
And this business model for music worked. It wasn't perfect for musicians by any stretch, but it made enough of them a lot of money. I know a guy who was in a signed, touring rock band that had two songs that made it on the rock radio charts in 2000 -- one of the tracks made it to around #9 or #10 or so on the Rock charts, and the other one made it to maybe #18 or #20.
My friend claimed that his cut of the record sales, and touring revenues, helped him buy a house.
This normally doesn't happen today. So -- what happened?
Some say that the rise of the MP3, and file sharing killed the record business. They might have a point, but even in the 1970's people made and shared their cassette mixtapes. Taping has been around since portable tape players have been around, since the late 1960's. Taping didn't kill the music industry. It didn't even dent it. The music industry went on to make record profits, from the 1970's, all through the '80's and '90's to their $24 billion peak in 1999-2002.
And even during the years after file sharing was introduced to the internet (the late 1990's), the recording industry still made its biggest revenues ever.
Take a look at this chart.
The RIAA's website -- the graph above is down the page, and click "accounting for inflation" on the right to get the real dollar revenue amounts.:
For RIAA data on 2020 and 2021 alone.:
If one digs deeper into the recording industry's data, they'll see that Streaming -- which is the dominant music revenue model in the 2020's -- brought in $12.4 Billion last year (the rest being some CD and MP3 sales).
That's half of what the industry made overall in sales in 1999. The "future" of music revenues -- Streaming -- isn't bringing in the money that LP's, CD's, and even MP3's used to. The new way of making money off of music -- Streaming, instead of actual music SALES -- brings in half of what they made in 1999 and 2000.
And remember, in 1999 the US had 280 million people, about 15% less than we have now at 331 million. We have more music consumers, but 30% less overall music income than 1999.
Think about it: 50 million more people, and 30% less music revenue. How is that working out?
We've already ruled out file sharing as being the culprit. So, if file sharing didn't kill music, what did?
The Subscription Model.
Ironically, 1999 was the year that the music industry made the most money it has ever made -- when accounted for inflation -- something those GenXers and younger Millennials rocking out to Korn probably didn't realise.
THE RISE OF THE MP3, AND THE DOWNFALL OF RECORD SALES
But, before dealing with the Subsciption Model directly, we first need to travel to 2001, with the introduction of the IPod, and ITunes. The IPod, Apple's MP3 player, wasn't the first MP3 player on the market, but it was the first really popular one.
That same year, 2001, Apple came up with a store to supply their customers' IPods with music. They intended to create not only a new music marketplace, with their own charts -- which were even published in music industry periodicals -- but they were introducing a new music revenue business model.
I remember reading an interview with an Apple executive -- it might have even been Steve Jobs, but I don't remember if it was him or another exec. Either way, that exec said that the Record Industry's business model was faulty. It was old fashioned. It needed to be changed to fit the times.
The Apple exec talked about the old days (referring to the 1940's and '50's, during the days of 78 r.p.m. and 45 r.p.m jukebox singles) when a band would be signed by a record company on a limited basis -- the company would fund a single, and just the single would be released for maybe the price of a dollar, and if it sold, or made enough money off the jukeboxes which were in every diner and dive bar in the U.S. -- then an album would be funded.
Similarly, when radio began playing singles with the advent of "Top 40" radio in the 1950's, a lot of artists were signed to make a single only, and if it sold enough copies, the record company would have them sign a new contract, to make an album.
This new "singles based" model was the model for the ITunes store. Individual songs would be sold for 99 cents. Album sales would be unnecessary -- consumers would only buy the individual songs they liked -- "cutting the chaff", so to speak. So, instead of a consumer liking what they heard on the radio and then buying a CD full of 12 tracks, or even a CD single with a couple extra tracks -- and the record label and musicians getting money from the sale of all those extra tracks -- the consumer would pay just 99 cents for the single that they heard on the radio.
Consequently, the record label and musicians would only get their cut of the 99 cents for the sales of that single.
Not only did this alter the music buying business model, it eliminated the "B-side".
And, further: it eliminated the importance of the ALBUM. Some artists saw album sales drop as consumers ignored them in favor of individual tracks. Other artists (like the Norwegian electronic pop music group Röyksopp) gave up on making albums altogether.
Looking back, it's amazing that musicians went along with this 99 cent, MP3, "singles only" concept, as did the record companies. After all, their thinking went, how could it hurt? MP3's were the future, right?
Unfortunately, they didn't really do the math.
I mean, think about it: will the sale of one 99 cent single, or the sale of an $18 CD make you more money? A five year-old could give you the answer. And although the MP3 download invigorated the image of the recording industry, as an industry truly entering the digital age, from 2005 onwards the revenues began to dive.
Now, before the reader might think that I am implying that Apple somehow single handedly ruined the music industry, one has to remember that in the late 1990's there was a lot of illegal MP3 file sharing, that had cut into musicians' and record labels' revenues. Some artists publicly denounced file sharing services like Napster (popular in 1998-1999 for illegal file sharing) for hurting their own bottom line. And they may have had a point.
So Apple (and some other online retailers) decided that introducing the MP3 "singles only", 99 cent download model was the best way to battle illegal file sharing, by giving consumers a low cost alternative, through which musicians and record labels could still make decent money.
Although their intentions were probably good, the new "singles only" MP3 model had a negative side effect of killing revenues for the music industry in a different way.
First, CD and album sales began to dip. Individual MP3 downloads began to improve in number, and make the labels some money, but the revenues that the MP3 sales made didn't match what the industry was making during the CD, LP, and Cassette years. When the industry got rid of the album, they got rid of a lot of revenue. From 2000 to the start of the pandemic in 2020, record industry revenues continued a long slide downwards, despite the convenience of buying MP3 downloads, or buying single songs off digital music stores like ITunes.
The actual units sold (individual CDs, or individual MP3s sold) went up in 2005, and peaked between 2009 and 2014, the highest year for units sold being 2011, with 1.4 billion MP3 sales -- after which the units sold numbers began to dive. With the rise of streaming in the mid-2010's, the MP3 was all but done, with CDs already finished. And revenues only followed that track down the side of the cliff.
In 2011, it may have appeared to movers and shakers in the music industry that the units sold numbers may have been evidence of brighter days ahead. But unfortunately, 2011's music revenues were HALF what they were in 1999.
Once again: The year with the most music units sold (2011), under the new MP3, "singles only" model which was sold to the industry by Apple, brought in HALF the revenue of the best year under the old model (1999), the albums / singles model that served the industry so well since the 1950s.
For a fairly balanced, more Apple-friendly view of the introduction of the IPod and ITunes, and its effect on the music industry, this article in Macworld does a pretty good job.:
The CD was a boon to the music industry, making them their most money, ever.
It was also a boon to radio, because the sound quality of music broadcast over the air improved.
Winners all around. Not so much anywmore.
THEN CAME STREAMING.
While the MP3, "singles only" download model started the decline, it didn't kill the music industry.
Streaming killed the music industry.
To explain, one must understand the business of streaming. Streaming is merely the digital version of radio broadcasting. The main difference is the medium used.
Streaming started being a big business in the mid-to-late 2000s. Spotify, one of the largest streaming sites, started operations in 2008. Pandora, another streaming service, got into the music streaming business a bit earlier, in late 2005. As the next decade took hold, streaming took off like a wildfire -- as the RIAA/Economist chart above indicates. Around 2014, streaming started spiking upwards.
Now, a lot of music industry people tout streaming as great for the music business. You'll see such sentiments on some musician related websites, as well as on music and radio forums. But if one looks at the actual numbers with even a dollar-store calculator, the truth lies elsewhere.
To get into the idea of how streaming is destroying revenues, we have to look at how radio itself operates when paying for broadcasting music, because streaming is similar.
RADIO AND BROADCAST ROYALTIES: STREAMING'S PRECURSOR
Radio stations broadcast music to the consumer for free, the "payment" being the advertisements the stations play on the radio, which the listener hears.
Radio stations still pay a small royalty to the music labels for each 'play' of a song that they broadcast over the airwaves, through BMI/ASCAP/SESAC and similar royalty collection organizations.
Streaming services do exactly the same thing for each song they stream over the internet, by paying digital royalties through a different process. The amount of the royalty is a bit higher for the streaming service than it is for over-the-air radio play, but it's still much, much lower than the money record labels and artists received for every LP, Cassette, CD, or MP3 download they sold.
It used to be that a consumer heard the song on the radio, and if they really liked it, they'd buy the LP or CD. The record company and musicians would make money.
Now, with the flexibility that streaming services provide, where a consumer can make up their own playlists, NO ONE BUYS RECORDED MUSIC ANYMORE. The only money that makes it to the musician is through the digital royalty.
Here is an example from the RIAA data, which can be seen at the RIAA website linked previously.: In 2021, paid subscriptions for streaming services (the new business model) brought in about $8 Billion.
In contrast, in 1999 the industry made $21 billion off of CD sales alone. That's way over twice the revenues, even when accounted for inflation.
The dominant music delivery method today -- paid subscription streaming -- makes less than half what the dominant music revenue method made in 1999.
It's not exactly a sign of financial boom times for music revenues. As soon as the industry got rid of actual music sales, those revenues dropped.
To further illustrate this, we can go back in time again, and look at songs that were big hits on the radio, but flops when it came to sales: the "turntable hit."
THE 'TURNTABLE HIT' -- AND THE MODERN VERSION
In the past, sometimes a song was a "turntable hit". In other words, it got a LOT of plays on radio, and was high on the charts because of that, but it didn't sell many copies. People would request the song on the radio, but they wouldn't buy the record.
Turntable hits were considered to be flops by record companies, because they didn't make money off of them, and neither did the musicians and songwriters. The little money they got from the BMI/ASCAP/et. al. as broadcast royalties didn't really make up for the massive loss in actual record sales.
Fast forward to 2022. Nearly all music consumption is done via streaming, which is just like broadcasting. The listener hears the music for free (or by paying a small subscription fee), and the musician or songwriter gets a small digital broadcast royalty. They hear the song many times perhaps, but never buy it.
Every modern track that hits the charts -- because it's all streaming today -- is a modern version of a turntable hit. What used to be considered a FLOP is now considered the STANDARD BUSINESS MODEL for music.
Got that? What was once a FLOP is now the preferred music revenue model.
And musicians are having to deal with this loss of revenue. All they really have is the streaming royalty -- which, as I have just shown, is much lower than what musicians, singers, and record companies made off of CD and LP and even MP3 sales.
With the openness and more egalitarian business model for streaming -- where any muso or singer can put a track on YouTube or another streaming service and make a few cents -- still, less money is being made overall. And, of course, because the new streaming model allows for anyone to put product up for streaming, there is much more competition.
You could put it this way: More musicians are making less money.
You could also look at it from the perspective of the local, working musician: you spend all this time and money recording your songs with an expensive set up -- ProTools or a similar, expensive recording software; high quality microphones; expensive processors and/or the plug-in digital equivalent -- and when you put the music out there, probably only one or two songs get played on streams, and the rest get ignored or no play at all.
In the past, a CD sold for maybe $15 would at least provide a small, Do-It-Yourself muso a few sales, and maybe they'd make $100 or $200 selling it at a few shows. Maybe more, if they were playing a lot of shows and were popular.
Now? They're probably making pennies to the dollar, comparatively.
A RACE TO THE BOTTOM
Some call the new subscription model a "Race To The Bottom". I've seen it mentioned that way in the book world -- which increasingly uses the subscription model -- but I've also seen similar comments in musician circles. Many musicians think they're getting screwed.
They may have a point.
Let's look at the actual math:
Estimates of the money an artist gets today, from one stream of one song, vary from one tenth of one penny per play to just under one penny a play, depending on streaming site, and also depending on what they count as a "play" (ten seconds of a song? or the entire song?). The estimates I've seen are similar to what ProducerHive put in their chart above -- from one tenth of a cent to eight tenths of a cent on the most popular sites, with one site paying about a penny a play.
So, let's use the CD Album example. In the past, a CD with 12 tracks would generally sell for around $15. That's roughly a bit more than a buck a track, about $1.25.
When the 99 cent, MP3 download model was in vogue, from 2001-2014 or so, that album would bring in $11.88. That is IF a fan downloaded every song from your album. If they only bought three tracks off that album, the musician made much less.
Today, if someone decides to stream every song on your 12 track "album", you'll get between 1 and 9 cents on most popular sites (depending on whether it's a $.001 or $.008 digital royalty).
Got that? In just 20 years we've gone from albums selling for $15, to "selling" for maybe 1-9 cents.
Think about that one: an album that used to bring in $15 now goes for maybe 9 cents!
A "race to the bottom", indeed.
And if you factor in inflation -- that $15 from 1999 or 2000 would be worth $27 today, which makes the drop in revenues even worse.
Now, remember. Most pro musos have producers, small record labels, or managers that all get their cut of that 1-9 cent album. So the individual musician or artist is making even less.
It's an example of why the money really isn't in music anymore. For many of us, it never was. But now more and more musicians are being added to our vast numbers. How many less-than-one-penny-a-play streams does it take to recoup the cost of all that expensive equipment you used to record that album?
Hundreds of thousands of plays, perhaps? Millions of plays, maybe?
And with the tens of millions of tracks available on every streaming and video platform on the planet (82 million tracks estimated on Spotify alone), what are the chances of YOUR song getting hundreds of thousands of plays?
Think about it.
Look at the pic -- everything is perfect. Selena's hair is perfect, her makeup is perfect, the way she poses for the camera is perfect, her dress was perfect, the way her dress moved was perfect, and the choreography was perfect. This takes MONEY.
For a track that -- despite how excellent a song it is -- ONLY MADE IT TO #35.
Here is the actual video.:
There are a few current videos that show that a record company put out some money. Some of Billie Eilish's videos are well produced. But still, there's a difference between hiring a high quality, HD video drone to fly around and have a snake moving around on your lap, and having an entire crew filming you and a small cast of extras in the desert. The record companies are more selective with who and what they spend their money on, obviously.
THE INTERNET IS ALSO AN EQUALIZER, WITH MIXED RESULTS
The one big plus for the musician today is that anybody can play the game now.
Katy Perry can release a new song... But then, so can the girl down the street. Katy Perry may still have more money to make a cool, high tech video to promote her song, but there are nobodies who get thousands of hits on YouTube and TikTok, who become famous 'influencers', and content creators -- all thanks to modern technology and the egalitarian reach of the internet. They may or may not make money off those hits, but they are being heard. But the days of the big singing star are over.
One radio industry expert once said "when everybody is a star, nobody is a star." He had a valid point.
And these new trends are killing Radio. Because of this new music delivery model, as a new music delivery service, people are bypassing Radio, and consequently, Radio's revenues are less than half what they were in 2005. Individual radio companies are still turning a profit, but it's much less than what they made 17 years ago. About 50 percent less, roughly. Radio still reaches around 92-93% of the American public, but they don't listen as much. They increasingly get their music elsewhere.
The listeners are ditching radio, and streaming instead.
Listeners are also playing video games, or involved with other entertainments on their laptops, phones, tablets, and other computer devices. The internet offers all sorts of entertainment content, not just musical -- a lot of which wasn't readily and instantly available in 1999.
And being that many, if not most, media consumption is done on just one device -- the smartphone -- the various media are all competing for that device's screen time. Radio is competing with Facebook, TikTok, and even OnlyFans; and CNN and Fox News are competing with Pandora, Spotify, and whatever gaming app the user may have on their phone.
The record labels -- although they are divisions of massive, multi-national entertainment and media conglomerates -- are in the same boat as the radio companies. They are struggling to maintain position in a shifting, expanding world of "content". Their profit margins have increased somewhat due to their outsourcing nearly all of the production costs to the individual musician, and the fact that MP3 delivery to streaming services costs less than printing CDs and LPs. But they still make less money than they did under the old, CD / LP / Cassette sales model.
Get the picture?
RECORD COMPANIES = SUPERFLUOUS
Add to all this the fact that with improved home recording technology, as well as improved video editing technology, individual artists no longer need to depend on "getting signed" by a record company to be recorded and promoted, and they no longer need to depend on "getting played" on radio to be heard -- and thanks to the internet, they can directly enter their MP3's on a streaming service, completely bypassing a record company and radio altogether.
In fact, the new freedom that the internet provides the modern musician has made record companies and radio SUPERFLUOUS. I.e. -- completely unneeded.
For the time being, radio and recording companies will still survive -- huge industries die slowly. The transition from horse and buggy to the automobile took at least 20-30 years to really settle in before most Americans had a car, and horses and buggies were only something Grandpa had on his farm.
We're in the middle of the change right now. The fact that the streaming model isn't really bubbling with economic success is reflected in the fact that the biggest streaming sites are still struggling to make a decent profit. According to this article, Pandora still hadn't made a profit by 2019. It finally turned a profit in 2020. But the number of listeners they had last year was lower (at approximately 52 million) than the 81 million listeners they had 2014-2016. The various stats for 2021 and before can be seen here.:
Of course, the streaming industry is still -- at 20 years old -- quite young. There is no indication that it can't succeed in the long term.
At the same time that the big streaming services are trying to make money, musicians and record labels are pressing the US Congress to increase the streaming royalty here in the US, because they feel they're not making enough money off their content. If the digital royalty is increased, it will only cut into the streaming services revenues. Subscription costs may have to go up. Maybe there will be more commercials, even for subscribers. Who knows?
Meanwhile, as said before -- NO ONE BUYS RECORDED MUSIC ANYMORE.
A 30 PERCENT LOSS ISN'T A SIGN OF GREAT SUCCESS
There's no question that streaming is the future, but financially, streaming has a long way to go, to even try to replace the radio and record company business model that worked as well as it did for well over 50 years.
Obviously, there's no putting the genie back into the bottle, despite the fact it's damaged the music industry. Digital streaming, and the new ways of music consumption that go along with it, are here to stay.
Now, I don't think that the music industry is going to entirely disappear. Neither will the radio industry. But it's already changed, and been diminished in importance. But even so, when you have an entire industry, which has tens of millions more consumers than it did 20 years ago, making only two thirds of what it made back then, that indicates that there is a problem, doesn't it?
It's a good question, and the answer is way over my pay grade to even try to come up with an answer.
One thing is for certain: it's not really the industry's fault, because the big change to MP3-singles only sales, and then to streaming was probably inevitable. Maybe the RIAA, record labels, and musicians in the industry embraced the new MP3 single sales model introduced by ITunes as an additional revenue source, and embraced it with good intent. Maybe they cut deals with the streaming services seeing it as additional revenues, and simply didn't see how it would be destroying their bread and butter -- CDs and actual music SALES. But they have to live with it now, and the future is a bit dicey for music revenue.
And other industries are following the record companies' footsteps. I see it happening with book publishing, where a form of what could be called book 'streaming' is taking hold, where publishers and authors get paid by the pages read, instead of actual book sales.
It's the same type of model that music streaming follows: the piecemealing of media, headed for a sales-free future, where everything is borrowed at low cost all around.
The subscription model -- where you temporarily rent access to media -- is taking over.
IN SUMMARY
So, the next time you wonder why radio sounds so homogenized, and -- if you're a rock fan especially -- the next time you wonder why there is so little interesting new music played on the radio, and why there are no new, great rock albums being made, and no great new bands being promoted, you probably have at least part of the answer: there just isn't enough money behind it to promote new artists and groups.
The rock musician has been consigned to a drone who turns out MP3 and MP4 singles which now and then get enough 'plays' (i.e. streams) to make a handful of bucks. Sure, the Rolling Stones and Pearl Jam probably make millions off of streaming. But the new band in your town? Not really. I see enough comments by musicians online to verify this. They don't see streaming as a big moneymaker. It's merely a promo tool for live shows. It's as if we've turned back the clock to the early 1900's for musicians.
Although rock music has taken the biggest hit, Country music still has big stars. Hip-hop and rap still have some big stars. Pop music has a handful. But -- aside from classic rock artists from the 1970s -- Rock is gone, Jazz is all but consigned to the dustheap (commercially -- there will always be jazz players and aficionados), and you can forget about any other genre of commercial music. The money isn't in it anymore. After the demise of the CD album, the revenue went away.
And the reason the money isn't in it anymore, is because despite the fact that there are 15% more consumers in the US since 2000, the music industry has had a 30% loss in 20 years, thanks to the new music industry business model. As a consequence, the corporate conglomerates have left the rock musicians high and dry.
THE INEVITABLE
Looking back, perhaps this decline in the music industry was inevitable. The internet changed media in general. It killed local newspapers nationwide, and even the large, important national newspapers took a big hit, with many of them going from having tens of employees -- or even hundreds of employees in some cases -- to a mere handful.
The internet killed magazines, and it changed book publishing. It decreased the importance of the big TV news networks. With email it mostly eliminated the business and personal letter, and then texting eliminated the importance of email. The internet has reduced junk mail and other paper advertising -- but now you get the modern version of 'junk mail' via spam ads popping up at you on websites.
The internet changed political discourse. It definitely changed radio broadcasting -- killing off the need for Shortwave Radio as an international broadcast medium (except when countries cut off internet access to their citizens). It is presently killing FM and AM, slowly. Due to lost revenues radio companies are laying off workers nearly every year.
The internet has changed the world. And a lot of those changes have been good ones. It is now much easier to communicate with people on the other side of the globe. I have readers from all over the planet. In fact, half of my readers are outside the U.S. and Canada. Even as late as 1990 or 1995, it would have been utterly impossible for me to communicate to readers -- especially overseas readers -- like this.
In fact, I wouldn't have been able to write an article like this one, without being the employee of a newspaper or magazine, or being lucky enough to freelance this article to a periodical. The internet allows me to post articles like this one on a blog.
I have friends I talk to via the internet in Austria, Germany, Australia, and even in Norway. It used to be that you had to write postal letters that took forever to get to a destination across the globe, or talk on dodgy sounding copper wire telephone lines if you wanted to talk to someone in another country. Even during the early cellphone days, in the 2000s, long distance phone calls were a little rinky-dink, when compared to all the communications options available today.
Today I can communicate with my Austrian friend instantly, via chat, email, or PM. My German and Australian friends I communicate with via social media, which is instant.
The internet made it possible.
The internet is undoubtedly still changing society in ways that may not be apparent for years to come.
But it can't be denied that the use of the internet for streaming and MP3 sales and the introduction of the Subscription Model as THE standard for media consumption has altered, diminished, and even destroyed business models that benefitted musicians, journalists, authors, and other content creators for decades. They've all had to adapt to survive.
It's a new world, baby. :-)
So, the next time you switch on your radio, and hear the same old gem you heard in 1989, or maybe 2002, you have at least one reason why.
Now I'm going to listen to the radio, and maybe pop in a CD and listen for a while. You could say it will be my way of rebelling. :-)
Until next time, folks, Peace.
C.C. July 5th, and July 24th, 2022.
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RELATED ARTICLES:
I previously wrote an extensive blog article on the Decline of Mass Media in general, where I discuss a lot of issues related to the Music Industry issues discussed here. It can be found here.:
This blog article also discusses the Decline of the Radio and the Music Industry.:
The photograph of Led Zeppelin in their own Boeing 720 Jet Airliner in 1975 is from this source. There are other pics on his blog article of the inside of the plane:
ADDENDUM: March 7th, 2023:
When illustrating the difference between an album sale in 2000 and the equivalent "sale" of an album, today, I forgot to account for inflation. The $15 CD album would be worth $27 today. So an album sale in 1999 or 2000 would bring in $27 of revenue in today's dollars -- where the modern day equivalent 'sale' of an album brings in about 9 cents. I added two lines explaining this, about 2/3 down the article, because I feel it's important to factor in inflation when comparing revenues from 20 years ago to revenues today.
