State of the Music Industry…

Depending on your perspective, the music industry is in fine health. 2023 saw a record year for sales (physical, digital and streaming), and touring artists are generating more income from ticket sales and merchandising than the GDPs of many countries. Even vinyl records, CDs and cassettes are achieving better sales than in recent years!

On the other hand, only a small number of musicians are making huge bucks from touring; while smaller venues are closing down, meaning fewer opportunities for artists to perform.

And despite the growth in streaming, relatively few musicians are minting it from these subscription-based services, that typically pay very little in royalties to the vast majority of artists. (In fact, some content can be zero-rated unless it achieves a minimum number of plays.)

Aside from the impact of streaming services, there are two other related challenges that exercise the music industry: the growing use of Artificial Intelligence, and the need for musicians to be recognised and compensated more fairly for their work and their Intellectual Property.

With AI, a key issue is whether the software developers are being sufficiently transparent about the content sources used to train their models, and whether the authors and rights owners are being fairly recompensed in return for the use of their IP. Then there are questions of artistic “creativity”, authorial ownership, authenticity, fakes and passing-off when we are presented with AI-generated music. Generative music software has been around for some time, and anyone with a smart phone or laptop can access millions of tools and samples to compose, assemble and record their own music – and many people do just that, given the thousands of new songs that are being uploaded every day. Now, with the likes of Suno, it’s possible to “create” a 2-minute song (complete with lyrics) from just a short text prompt. Rolling Stone magazine recently did just that, and the result was both astonishing and dispiriting.

I played around with Suno myself (using the free version), and the brief prompt I submitted returned these two tracks, called “Midnight Shadows”:

Version 1

Version 2

The output is OK, not terrible, but displays very little in the way of compositional depth, melodic development, or harmonic structure. Both tracks sound as if a set of ready-made loops and samples had simply been cobbled together in the same key and tempo, and left to run for 2 minutes. Suno also generated two quite different compositions with lyrics, voiced by a male and a female singer/bot respectively. The lyrics were nonsensical attempts to verbally riff on the text prompt. The vocals sounded both disembodied (synthetic, auto-tuned and one-dimensional), and also exactly the sort of vocal stylings favoured by so many contemporary pop singers, and featured on karaoke talent shows like The Voice and Idol. As for Suno’s attempt to remix the tracks at my further prompting, the less said the better.

While content attribution can be addressed through IP rights and commercial licensing, the issue of “likeness” is harder to enforce. Artists can usually protect their image (and merchandising) against passing off, but can they protect the tone and timbre of their voice? A new law in Tennessee attempts to do just that, by protecting a singer’s a vocal likeness from unauthorised use. (I’m curious to know if this protection is going to be extended to Jimmy Page’s guitar sound and playing style, or an electronic musician’s computer processing and programming techniques?)

I follow a number of industry commentators who, very broadly speaking, represent the positive (Rob Abelow), negative (Damon Krukowski) and neutral (Shawn Reynaldo) stances on streaming, AI and musicians’ livelihood. For every positive opportunity that new technology presents, there is an equal (and sometimes greater) threat or challenge that musicians face. I was particularly struck by Shawn Reynaldo’s recent article on Rolling Stone’s Suno piece, entitled “A Music Industry That Doesn’t Sell Music”. The dystopian vision he presents is millions of consumers spending $10 a month to access music AI tools, so they can “create” and upload their content to streaming services, in the hope of covering their subscription fees….. Sounds ghastly, if you ask me.

Add to the mix the demise of music publications (for which AI and streaming are also to blame…), and it’s easy to see how the landscape for discovering, exploring and engaging with music has become highly concentrated via streaming platforms and their recommender engines (plus marketing budgets spent on behalf of major artists). In the 1970s and 1980s, I would hear about new music from the radio (John Peel), TV (OGWT, The Tube, Revolver, So It Goes, Something Else), the print weeklies (NME, Sounds, Melody Maker), as well as word of mouth from friends, and by going to see live music and turning up early enough to watch the support acts. Now, most of my music information comes from the few remaining print magazines such as Mojo and Uncut (which largely focus on legacy acts), The Wire (but probably too esoteric for its own good), and Electronic Sound (mainly because that’s the genre that most interests me); plus Bandcamp, BBC Radio 6’s “Freak Zone”, Twitter, and newsletters from artists, labels and retailers. The overall consequence of streaming and up/downloading is that there is too much music to listen to (but how much of it is worth the effort?), and multiple invitations to “follow”, “like”, “subscribe” and “sign up” for direct content (but again, how much of it is worth the effort?). For better or worse, the music media at least provided an editorial filter to help address quality vs quantity (even if much of it ended up being quite tribal).

In the past, the music industry operated as a network of vertically integrated businesses: they sourced the musical talent, they managed the recording, manufacturing and distribution of the content (including the hardware on which to play it), and they ran publishing and licensing divisions. When done well, this meant careful curation, the exercise of quality control, and a willingness to invest in nurturing new artists for several albums and for the duration of their career. But at times, record companies have self-sabotaged, by engaging in format wars (e.g., over CD, DCC and MiniDisc standards), by denying the existence of on-line and streaming platforms (until Apple and Spotify came along), and by becoming so bloated that by the mid-1980s, the major labels had to merge and consolidate to survive – largely because they almost abandoned the sustainable development of new talent. They also ignored their lucrative back catalogues, until specialist and independent labels and curators showed them how to do it properly. Now, they risk overloading the reissue market, because they lack proper curation and quality control.

The music industry really only does three things:

1) A&R (sourcing and developing new talent)

2) Marketing (promotion, media and public relations)

3) Distribution & Licensing (commercialisation).

Now, #1 and #2 have largely been outsourced to social media platforms (and inevitably, to AI and recommender algorithms), and #3 is going to be outsourced to web3 (micro-payments for streaming subscriptions, distribution of NFTs, and licensing via smart contracts). Whether we like it or not, and taking their lead from Apple and Spotify, the music businesses of the future will increasingly resemble tech companies. The problem is, tech rarely understands content from the perspective of aesthetics – so expect to hear increasingly bland AI-generated music from avatars and bots that only exist in the metaverse.

Meanwhile, I go to as many live gigs as I can justify, and brace my wallet for the next edition of Record Store Day later this month…

Next week: Reclaim The Night

 

 

 

Vinyl on the brain

In planning to write a blog on vinyl records, I was responding to recent personal experiences and insights on this topic. Then events somewhat overtook me, as I learned of the death this past weekend of Philip Jeck (more on him later). So this post has taken on a slightly different tone.

Image sourced from Vintage Everyday

The initial trigger for this blog came from the realisation that I’ve been spending more time on Twitter engaging with fellow vinyl enthusiasts – and of course, this interest has been amplified by social media algorithms and their “preferences” and “recommendations”. In my experience, most people who post content about music in general (and vinyl in particular) tend to be much nicer than those who indulge in the didactic venom and unfiltered hate speech that passes for “social commentary” these days. But this just goes to prove that you find your audience (and your confirmation bias?) where you choose to seek them.

Part of this on-line engagement is prompted by a passion for collecting, and a love of sharing. Yes, it could merely relate to showing off one’s vinyl stash, and may reveal fetishistic tendencies – but frankly, there are far worse vices. A lot of the commentary details successful crate-digging, charity shop bargains, and re-discovered hidden gems. In fact, the prospect of finding an over-looked classic, unearthing a valuable rarity, or simply completing a gap in your collection often drives this obsession. So much so, that recently I found myself dreaming of records which I know don’t exist, but in so much detail that part of me thinks these artefacts must be out there somewhere!

Like many music enthusiasts, I was first exposed to vinyl records via my parents’ and then my sisters’ collections. For a time in the late ’60s, my dad used to visit EMI on business, and would sometimes come home on a Friday having picked up a new release or two, most memorably the first few singles on the Beatles’ Apple label. I probably got the collecting bug more than my siblings, and still recall the key albums I bought with my own money: “Tubular Bells” by Mike Oldfield, “Autobahn” by Kraftwerk, and “A Clockwork Orange” by Wendy Carlos – which probably confirms my personal bias for instrumental, electronic and soundtrack music.

Then, I started playing in bands with mates from school, an interest that was further fueled by the arrival of punk rock, and the realisation that there was more to music than the Top 40 and old hippies singing into their patchouli-drenched afghan overcoats. One group I was in, Greenfield Leisure, received an airing on John Peel’s BBC Radio 1 programme (the Holy Grail for aspiring musicians at the time), but mostly these bands existed on home-made demo tapes, and were only ever heard (and rarely appreciated…) by our long-suffering families. Later, I worked in a chain of infamous second-hand record stores in London, which, if nothing else, revealed some of the weirder ends of the vinyl-collecting public. It also helped expand my musical knowledge, but at the cost of a fair chunk of my paltry shop wages.

Vinyl is not necessarily the most convenient format of music – it’s not as portable as digital, and not as robust as CD. Records get scratched, they warp, the grooves fill up with dust, and the sleeves get battered and torn. So, despite advances in technology, and the huge market for digital music and streaming services, why have vinyl records endured?

The continued and renewed interest in music on vinyl cannot be explained by a single factor – this phenomenon is as multi-faceted as the genres of music people listen to.

First, whether or not driven by events like Record Store Day, limited edition releases, box set retrospectives or physical copies being shipped with download coupons, vinyl sales are steadily on the up. But as a proportion of how people listen to music each week, purchased music (physical and download formats) comprises less than 10%, while streaming formats account for two-thirds of our listening.

Second, the tactile nature of vinyl records, plus the opportunity they present for creativity in their use of artwork, design and packaging, can generate a more engaging and long-lasting experience. As someone said recently on Twitter, you probably don’t remember the first music you downloaded or streamed, but it’s very likely you remember the first record you bought.

Third, quite apart from the vast amount of artist and label back catalogue being reissued on vinyl, more and more new and contemporary music is being released on vinyl as well as digital – sometimes, there’s not even a CD edition.

Fourth, swathes of back-catalogue can only be accessed via original vinyl editions, having never been re-issued during the hey-day of CDs in the 1990s and early 2000s. In fact, even where current and past releases have been released for streaming and/or download, the vagaries of geo-blocking can mean that this digital content is not available in all territories.

Finally, the economics of streaming (and to a lesser extent, downloads) have revealed that artists receive just a tiny proportion of the subscription revenue generated by Spotify, Apple and others, which can make vinyl purchases more attractive to music fans. This dynamic has also made direct-to-buyer platforms like Bandcamp more appealing to artists and fans alike.

Back to Philip Jeck, a sound artist who transformed piles of dusty old records into a musical experience. Using techniques he gleaned from watching hip-hop DJs and post-modern turntablists, he curated (rather than composed) sound collages built up from layers of seemingly forgotten and anonymous recordings, turning them into live art. I was fortunate enough to see him perform twice. The first was in 1993, when he presented his magnum opus “Vinyl Requiem” at the Union Chapel in North London. The second was in 2008, for a much more intimate solo performance at The Toff in Town, Melbourne. In both cases, the use of streaming could not have resulted in such a strong creative process or delivered such immersive listening.

Next week: Music with literary leanings

Will streaming kill the music industry?

The resurgence in vinyl sales is certainly not enough to save the music business. But will streaming finally cook the goose that once laid Gold Discs?

statistic_id273308_music-album-sales-in-the-us-2007-2014

US album sales (in all formats) are in decline. (Source:  Statista)

What can we learn from the music industry based on the apparent rebound of vinyl sales in recent years? Is streaming doing enough to halt the decline in total music revenue? Will CD’s soon disappear altogether? What future for LPs in a world of “Album Equivalent Sales”, “Track Equivalent Albums” and “Streaming Equivalent Albums”?

Are there parallels here with other content, publishing or entertainment sectors?

Back to Black

Last month the 8th annual Record Store Day was launched with a fanfare of upbeat data for vinyl sales. It was a good news story in an otherwise depressing saga of declining album sales, stagnating revenues, and mixed messages about the impact of digital downloads and streaming services on the music industry.

Coming off a very low base (like, near-extinction levels), the extraordinary sales growth of vinyl (especially in Australia) can be attributed to a combination of factors, although it is difficult to see how any single trend is responsible for this growth:

  • The growing popularity of Record Store Day itself (although it’s not without its problems – see below)
  • Baby boomers buying their record collections all over again
  • Hipster interest in analogue technology
  • Record labels mining their back catalogues
  • Niche market interest among audiophiles, collectors and the cool kids
  • New approaches to packaging vinyl with downloads and other bonus content
  • DJ culture
  • Secondary markets via E-bay and Discogs
  • Retailing switching from megastores to specialist shops

Infographic: Vinyl Comes Back From Near-Extinction (Source: Statista)

Where Is The Money Coming From?

Latest industry data suggests that digital sales (downloads and streaming) are now on a par with physical sales (CD, vinyl and the rest). Overall revenue has stabilised, having fallen from a peak in 1999. And streaming services are enjoying huge growth.

But the true picture is harder to establish:

First, while the IFPI provides global aggregated data, each local industry body (RIAA, BPI, ARIA etc.) likes to tell a different story from its national perspective. So it’s difficult to compare like with like. (For example, while Taylor Swift is supposed to be a worldwide phenomenon, she does not figure at all in the BPI data for 2014…..) One brave soul has tried to compile data for the past 20 years.

Second, because of the changes in distribution and consumption, music sales have to be counted in different ways:

  • Wholesale revenue vs retail sales
  • Physical sales vs digital sales
  • Per unit download sales vs streaming equivalents
  • Product revenues (e.g., album sales) vs licensing revenues (e.g., soundtracks)
  • Subscription fees (e.g., Spotify) vs per download revenue (e.g., iTunes)
  • Advertising income from video streaming vs royalties from broadcasting and soundtracks

Third, when more and more music is accessed via video platforms like YouTube, Vimeo, and Vevo, streaming platforms like Spotify, Pandora and Omny, or apps such as Bandcamp, Soundcloud, Mixcloud and Shazam, “sales” data starts to become less and less relevant. (And some people are still hanging on to the ailing MySpace platform….).

The bottom line is that despite the growth in streaming services, digital sales (in whatever format or media) are not yet enough to compensate for the continued decline in album sales in particular, and music overall:

The peak era of CD sales is over. (Source: Talking New Media)

Record Store Day Woes

The success of Record Store Day has divided opinion as to whether it is actually a “good thing” for the industry. It started as a campaign by independent record labels, distributors and retailers to revive the habit of buying records in-store. Labels produce limited edition and often highly collectible items for the occasion, and there are rules as to how, when and where these releases can be made available to the public.

At first, it really was driven by the independent labels, many of whom brought out interesting product that otherwise wasn’t available, such as label samplers, unreleased material and one-off artist collaborations.

Now, the major labels have jumped on board, meaning the market is flooded with unnecessary re-releases (do we really need Bruce Springsteen‘s ’70s and ’80s albums reissued on vinyl?) drawn from their extensive back catalogues (no need to pay for recording costs or new artwork!).

This means that smaller labels who release new vinyl records on a regular basis (not just once a year) get bumped from the production line, as the major labels exert their purchasing power over the pressing plants.

In addition, some Record Store Day releases are so badly distributed that stores are unlikely to take delivery of the items in time for the event. Or bad decisions lead to over-supply of certain items, which end up in the bargain bins (major labels again especially guilty of this offence).

Some store owners appear reluctant to participate because they feel embarrassed about the prices they may have to charge for many of the limited releases, which get bought by speculative customers, rather than collectors, fans and enthusiasts – a fact borne out by the immediate listings and inflated prices on E-Bay and Discogs….

As one store owner I talked to commented: “Every day should be record store day…”

What Else Does The Data Reveal?

For all the new young pop stars that the industry keeps churning out, there’s nothing like longevity and back catalogue to prop up the sales numbers. For example, Barbara Streisand was in the Top 10 for US album sales (and with new material!), and the likes of Pink Floyd, Led Zeppelin, Miles Davis, Bob Marley and Oasis feature in the top-selling vinyl records. Will Record Store Day 2025 herald the vinyl release of Justin Bieber’s pre-pubescent “demos”?

The decline of album sales has been particularly steep in the genres of Hip-Hop and R&B, while rock and pop continue to dominate the market. Some industry commentators have suggested that music sales are merely “in transition” as consumers switch from buying CD’s and downloading music to subscribing to streaming services. Meanwhile, in the US, country music’s #4 position by overall consumption reflects substantial album sales, as streaming is still a small component for the genre.

And those vinyl sales numbers? They’re simply a blip on the chart and largely driven by avid fans willing to shell out for deluxe editions….

The future is streaming?

Apple and others certainly believe (or hope) that streaming will save the music industry. Having demolished the market for CDs, iTunes is in a battle for its own survival among competing streaming services, where Apple itself is about to lead the charge having acquired the Beats platform.

But others are not so sure, predicting that streaming is already in decline, along with download sales:

First, the streaming platforms are yet to make a profit. Part of this is due to the cost of content that has to be licensed from the record labels and artists. Part is also due to the cost of acquiring customers, even if this can be done via social media, because the decline in music buying has been so abrupt, so the industry may be permanently damaged that streaming cannot bring back paying customers.

Second, even though streaming may overtake downloads by next year, there’s still nothing certain that teen pop fans (the target audience) will pay $7.99 – $9.99 per month to listen to music via so-called “freemium” services. Evidence suggests that consumers are happy with the free services, even if they have to put up with ads.

Third, while I agree that the freemium model is a fixture in the digital economy, the problem with Spotify et al is that they are not growing the market for music, but simply cannibalising it by displacing existing platforms (commercial radio, digital downloads, physical sales), while being tied to third-party distribution channels (the internet) and devices (smart phones, tablets and computers).

Anyway, subscription-based music streaming is nothing new, and was first launched over 100 years ago (and thanks to Mark Brend’s “The Sound of Tomorrow”, I learned that Mark Twain was the first subscriber).

If the “old” record companies are charging streaming services too much to license their content, then the streaming services should just find other sources – there’s plenty out there – but then, just like the major record labels, they are not really interested in music, only in shifting product and promoting “artists” (even if they are still figuring out how to make digital pay). The record labels don’t help themselves with their reliance on back catalogue, and their archaic territorial licensing practices either – forcing customers to circumvent geo-blocking barriers (legally or otherwise…).

Unfortunately, file sharing, illegal downloads and “free” streaming have meant customers don’t feel compelled to pay for digital music content. Personally, I prefer to curate my own listening, and not let someone else dictate what I hear, even if the service “knows” my preferences…

And the moral of the story is…?

More distribution platforms, more formats and more content may not be enough to save ailing industries, whether it’s music or television, newspapers or movies. These businesses will have to learn to live with lower margins and/or smaller market shares. The quality of a home-made movie uploaded onto YouTube may not be anywhere near that of a Hollywood blockbuster, but if cat videos are what grab punters’ attention (and by default, pull in the advertisers), the studios may have to find alternative strategies. And if music fans prefer to use free streaming services, the industry has to do a better job of producing content that consumers may be willing to pay for.

Ironically, in publishing, one sector that has been written off ever since the arrival of CD-ROM’s and the internet, teen consumers are still happily buying and reading print editions, alongside e-books. More so than other content industries, publishing has rapidly adapted to the new user-defined model: aspiring authors find it easier to self-publish (e.g., via Tablo and dedicated crowdfunding platforms such as Pubslush and Unbound); they can easily connect with an audience (especially in the realm of fan fiction); and a platform like Wattpad allows writers to test material before they commit to formal publication, and lets readers vote for what they’d like to read more of.

Next week: Making connections between founders and investors

 

 

 

#SoundCloud app update fails Product Management 101

The Golden Rule of Product Management is ‘under-promise and over-deliver’ (otherwise known as ‘managing expectations’). If anyone needs a case study on how NOT to release a new app upgrade, SoundCloud is proving to be a rich source of material…..

Background image via SoundCloud - post-production editing by the author

Background image via SoundCloud – post-production editing by the author

Last week, SoundCloud broke the Golden Rule by releasing a new version of its iOS phone app before it was finished. It did so without telling its customers in advance – not even the paying subscribers. Only after a considerable backlash on Twitter and Facebook (and a growing number of 1-star ratings in the iTunes Store) did the company start addressing customer complaints, via a rather anodyne blog. Based upon user comments, this response has failed to placate subscribers. While SoundCloud admitted that the shiny new release was not the final product, it was unable to give any indication when the rollout will be completed.

For the uninitiated*, SoundCloud is to audio what YouTube is to video. It allows customers to upload audio files that can then be shared with and downloaded by the community of users. It is entirely powered by user defined content:

  • content created and uploaded by content creators, and
  • content curated by users (via re-posts, playlists and social media interaction).

Audio content takes the form of:

  • music, mixtapes, podcasts, radio programmes and spoken word contributions.

Social media content takes the form of:

  • likes, feedback comments, and data on the number of plays, likes, downloads, followers and re-posts.

Many content creators are Pro Users, who pay upwards of $70 a year for the privilege. In return, they get a platform for hosting and distributing their content, and access to a global community of listeners. However, unlike other music streaming services such as Spotify and Pandora, SoundCloud does not charge listeners (yet), nor does it carry 3rd party advertising or sponsored content (yet).

Although SoundCloud has been highly successful (thereby contributing to the decline of MySpace?), it faces a range of competitors – from Twitter Music and Bandcamp to Mixcloud and 8tracks (as well as the aforementioned subscription streaming services).

In recent months, there has been some industry speculation about SoundCloud’s next business move, mostly in relation to increased monetization. There has also been some commentary about copyright infringement, a new cookie policy, and access to SoundCloud’s back-end data by major record labels. Leaving aside the usual conspiracy theories (Big Brother is listening in on you), future commercial relationships with major labels could mean that record companies with more marketing budget than talent may be given preferred access to listeners’ accounts and activity, in order to promote the next generation of Lady Gaga wannabes. And this prospect has no doubt contributed to some concerns among the user community, especially content creators that fuel SoundCloud’s platform.

From the start, SoundCloud has done a couple of things really well (in addition to the widgets for embedding sound files in 3rd party websites, and a few other technical tools): first, it has made it easier to discover new music; and second, it has enabled thousands of independent and unknown musicians to get some public exposure. The mobile app has now seriously compromised both of these features, because a lot of the existing functionality has been removed or suppressed pending the ‘full’ release (admittedly, these functions are still supported on the desktop version).

In short, the new app release has created the impression that SoundCloud is focussing on listeners (rather than content creators) and plans to make it much easier for major labels to connect with consumers, thereby squeezing out the independent musicians, producers and labels who have helped to make SoundCloud successful in the first place.

*FOOTNOTE: Declaration of interest – I maintain a Pro User subscription to SoundCloud under my nom de musique.

ACKNOWLEDGMENT: Credit is due to ‘Do Androids Dance?’ (itself a beneficiary of the SoundCloud user community) for continuing to cover this developing story