What is the Future of the Music Industry?

Sam Cooke sang about a change that is going to come and while he was about 50 years off, the music industry has indeed begun to change. The other day as I was listening to one of my favorite podcasts, Sound Opinions with Greg Kot and Jim DeRogatis, they discussed the viability of services like Spotify, Rdio and Pandora versus the traditional models. The two best and most recent examples are Taylor Swift and Mumford and Sons. I found myself wondering about this myself so I did a little research and some interviews.

Let’s take Taylor Swift first. She is one of, if not the biggest music star around today. To date she has sold 1.75 million units of her latest album Red without the use of any streaming services. In fact, she used traditional models to push the album. It’s the way her team has been doing it for years. Take this 2010 New York Times piece from Ben Sisario where Ms. Swift sold just over one million records then without the use of streaming services in a market where no one buys albums any more:

Selling a million records in one week has always been big news; according to Billboard it has happened only 16 times since 1991. But Ms. Swift’s tally was orders of magnitude greater than anything else now in stores. Last week “Speak Now” sold more than the next 61 titles on the chart combined, and almost 11 times more than its nearest competitor, Sugarland’s “Incredible Machine” (Mercury Nashville), which had 89,000. “Speak Now” accounted for 18 percent of all album sales last week, and individual tracks from it have been downloaded 2.5 million times.

Ms. Swift’s team is sending her albums to radio stations, marketing through stores such as: Target, Walmart, Best Buy, iTunes. She’s also using her Twitter account as a personal sales pitch to her fans with tweets like:

Taylor Swift ‏@taylorswift13

Some people have been asking about songs like “Girl at Home”-At Target, you get 6 extra songs. That’s one of them.

Taylor Swift ‏@taylorswift13

This is the stuff that comes with the cd if you get Red at Wal Mart. (Everything except the pumpkin bread I http://instagr.am/p/RTUjM8jvJa/ 

Taylor Swift ‏@taylorswift13

They just told me Red sold 1.2 million albums first week. How is this real life?! You are UNREAL. I love you so much. Thanks a million 😉

With a Twitter following of over 20 million people, Ms. Swift has a conduit to fans that many do not have. In 2010 that number was 4.5 million. It’s hard to deny that Taylor Swift is a juggernaut, but more on that later.

Let’s talk about another band that sold a huge number of albums in their first week, Mumford and Sons. Babel, their sophomore album, sold 600,000 units in its first week, but the bigger story there was that 420,000 were digital. People were not going to Target or Walmart or Best Buy to purchase Mumford’s album they were clicking onto sites like Amazon and iTunes in droves. To put that in perspective, Green Day, another Swift-like monster, sold only 139,000 units their first week (which might be owed to a slew of negative publicity leading up to its release, including Billie Joe Armstrong’s epic rant at the I Heart Radio Festival).

Mumford and Sons, however, did the opposite of Ms. Swift, they allowed their album to be streamed on Spotify and it racked up over eight million listens in the first week alone, according to Spotify’s numbers. Again, to put that in context, that’s three times more than any other streamed album. So the questions then start to mount up. Did the streaming service help or hinder Mumford and Sons’ sales? Is Spotify a viable sales tool? Do the traditional models still work or are artists such as Taylor Swift, Justin Bieber and Lady Gaga branded in such a way that they are impenetrable to failure? What is the future for online streaming services? And do people now listen to albums before they buy them?

I posed these questions to three different groups of people. First I spoke to consumers with no ties to the industry whatsoever then I asked writers that I respected and got their opinions, and finally I spoke to industry insiders to see, from a business standpoint, what they thought of the future of the music business which they are keenly apart of.

First, we’ll go with the consumers, since they are the ones that are the target of all this intense marketing. I wondered how they, saw the streaming services and what their buying habits were. Rachel from Norwalk, California said, “I love Spotify. I listen to it religiously in my office every day. I prefer to hear an album first before I buy it.” This seemed to be a concurrent theme with many of the consumers I polled. Sara from Petaluma, California said, “These days I rarely buy physical cds and mostly get the digital album on Amazon or something. I don’t use Spotify, but Pandora, friend recommendations, and the regular ol’ radio are places where I usually hear new music that make me want to hear more.”

I’ve spoken before on how the old radio model is dead, but perhaps dead is the wrong term. According to the Pew Research Center’s Poll on Audio: By the Numbers people still report listening to the radio weekly and the numbers have remained remarkably static for the past decade, but those numbers are misleading. Not misleading in that they’re wrong, but a decade ago there weren’t online streaming services or at least they weren’t nearly as prevalent. Now, among the 93 percent of people that say they listen to the radio, 34 percent say that those times they did were online. One in three Americans or about 89 million people are primarily listening online. That is a staggering sum and is only getting larger. Since 2008 the number of hours people have spent weekly on online music services has climbed from about six hours a week to nearly eleven.

Another reason people purchase is name recognition and children. Marla from Whittier, California said, “If I really like the artist based on previous albums, for example, the Killers, I would buy their album before hearing it, regardless. I downloaded Taylor Swift for my daughter for her iPod. So anything for her, for instance, it has to be bought.” One of the problems with Spotify is the portability factor. If you want to listen to a certain artist you have to make a playlist out of it and then you can listen on your iPhone. That is, unless you purchase a subscription, which will cost you about 10 dollars a month or as Pat from Rockland, Massachusetts told me, “Spotify changes everything. I wind up listening to much much more new music that I normally wouldn’t have a chance to hear, all for the price of one CD a month.”

It’s cost prohibitive for many people. People are narrowing their purchases down to things they need to buy and perhaps that’s a product of a sluggish economy or perhaps it’s for reasons Katie from Hermosa Beach, California stated, “I pay monthly for Spotify but don’t purchase music elsewhere. If I like an album, I spend my money on seeing them live.” The only sales that are up in the past few years are sales of vinyl, but those sales amount to about what Taylor Swift will end up selling in her first month of sales. The digital age didn’t take everyone by storm, Kevin from Sandpoint, Idaho explained, “I’m super random, but I’m on the older edge of the spectrum. Sometimes I buy cds through Amazon, sometimes I download through iTunes. I bought the new Mumford & Sons and Dave Mathews at Starbucks. I do prefer to own the album still.”

So what about writers? What do writers think the viability of the streaming services is for the future? Again this is without getting into the profits of artists from these sites, which was well explained by Damon Krukowski of Galaxie 500 on Pitchfork. No, I just want to know if the traditional model is dead for artists that are not mainstream. In regards to Taylor Swift, Ian Port music editor for the SF Weekly said:

“Spotify, Rdio, etc. are here to stay. Swift is a cultural titan, who would sell tons no matter what. I’d guess staying off Spotify helped [her sales]. I think Swift’s ubiquity made not being [on Spotify] smart, because people were going to want to hear Red. Mumford is still climbing the mountain. They probably benefit, if not in money, then from more people listening to them.”

The point being that for someone like Mumford and Sons, a still unknown quantity, they are going to have to build their brand. That may be easier said than done as Daniel Kohn from the LA Weekly said, “I think it’s the first of many techniques to evolve, Swift got it through traditional while Mumford couldn’t have.  Mumford was shocking and definitely an anomaly, because the album was generally panned. Album three should provide answers.”

Mumford and Sons album was generally panned, though I enjoyed it thoroughly. Quality, however, has never been a deterrent to the general public at large. It takes a certain type of branded artist to push their own album and 600,000 seems to be the threshold for an artist that is equally prevalent on Spotify and traditionally as was the case with Drake a year ago. The impetus for this whole article was the podcast with Greg Kot from the Chicago Tribune and Jim DeRogatis from WBEZ.org. So, I went to them and asked what they thought the future held. Kot replied, “The traditional approach can still work for a certain type of artist, but the pool is shrinking. No doubt that streaming is the future. The traditional model is based on marketing dollars and payola. Name recognition helps, but big bucks and big corporate tie-ins can break a new artist.” Artists such as boy band One Direction, who won the British version of the X-Factor and have done a commercial with former NFL Super Bowl XLIV MVP, Drew Brees for Pepsi.

Derogatis said, “Yeah the old techniques still work, but only with a few very specific genres like teen pop. Spotify is here to stay.” That seemed to be the general consensus among the writers, that Spotify wasn’t going anywhere. In fact, more and more you see like-minded companies trying to glom onto what Spotify and Pandora have done. The difference being that Spotify may have more staying power in that it allows you choice. Many people still find Pandora useful, especially if they are seeking out music that sounds like something they enjoy. For instance, if I’m a Killers fan and I want someone that sounds similar, the music genome project is going to find something that will be in the same vein and allow me to “discover” something that I may not have had a chance to otherwise. It’s a discovery machine for those that don’t have the time otherwise to do so.

Finally, I asked Zach Weinberg from Redbird Management if services like Spotify were necessary evils and he replied,

“Absolutely, I’ve had many debates about this while working at both record labels and management companies.  Ultimately it’s the reality of my generation; we’re the generation of subscriptions.  We want to pay our fee and have unlimited access to everything that’s out there.  That’s the demand, and that’s what we’re going to get whether the music industry likes it or not.  Once that reality is realized, then it’s up to the streaming services to figure out how to profit from this new model.

That Taylor Swift still sells albums is a microcosm of today’s music industry.  It’s the final frontier…selling crap to 14-year-old girls.  Their parents buy them whatever they want, they have no concept of money, and they’re too naïve to realize that they’re being screwed over by “The Man”. If you can make music that America’s little princesses have to have, you can make money selling music. Elsewhere, the market is more educated.  If you want us to buy overpriced tickets to your shows, buy your merchandise, share your Tweets with our friends…if you want us to become your fan, then you have to give us something back in return. You have to let us fall in love with the music, and you can’t charge us for that. Now, if Spotify wants to charge us for access to the world’s library of music, that’s another story, but, I’m not going to pay you (the artist) just to see if I like your tracks. This is how business works in the 21st century. Look at Google. Look at Facebook. You create something cool, something people want. You get them hooked, and build a following. Then you figure out how to make money. It’s something we’ve come to expect, and you can try to cling to the old model, but it won’t work anymore.”

Have we really become that jaded as consumers? Are we really that spoiled? Are we setting ourselves up for a future where albums are released free, period? Weinberg retorted, “The reality of streaming and piracy – in the 21st century at least – is a reaction to the ridiculous pricing of music compared to how much it costs to make and distribute music.  The recording process costs a fraction of what it used to, the amount of music that’s available to consumers is far greater than when Jimi Hendrix and Led Zeppelin were putting out albums, labels aren’t paying artists millions to sign with them anymore, and in the digital age it costs just as much money to make one copy of an album as it does to make a million.  So why should I still be paying $10 for an album on iTunes?  If the music industry abandoned physical merchandise back before the Napster days, created their own iTunes, and albums cost 99 cents (like apps do), I’d probably still be buying albums today. But it’s over. The war was fought, and the music industry lost.  Now, we’re a streaming society. Get on board, or get left behind.”

The consensus from insiders, writers and consumers all seem to be that Spotify and like services are here to stay. As far as a sales tool, for the right artist it can help, but as we’ve seen with many hip-hop artists the wait between albums is often broken up with free “mix-tapes” on sites like Dat Piff, which specializes in free mixtapes from artists trying to keep themselves relevant or building their brand. Theophilus London was getting endorsements before he even released his first album and the same goes for Wiz Khalifa. They both have released numerous free mixtapes just to build a following.

These services are branding themselves as the easiest way for discovery and listenability for the music lover that doesn’t want to buy and in the process creating a system that is allowing artists to subvert the entire label system. Record labels aren’t handing out large bonuses anymore and artists like Radiohead have proven that with a little money you can create your own album and sell it at your own price. Rappers aren’t the only ones that know how to market themselves as Noise Trade is the Dat Piff equivalent for Indie artists. The Internet changed the game and now while it takes over our lives on a huge level it has created a system that is no longer tenable for the traditional model of the record companies. The fleeting artists like Taylor Swift, Selena Gomez and Justin Bieber are the only thing keeping them afloat. As they seek new ways to stay relevant, a new crop is making itself famous off free services like YouTube.

Pandora, Spotify, YouTube, Rdio, etc. are the wave of the future. They are making records irrelevant and live shows easily watchable. Those that once bought vinyl might do so again, but vinyl is merely a novelty for the true audiophile that enjoys that. I, myself, rarely buy a new record. Instead, I purchase older records from my childhood or before. As Bob Dylan stated in his epic song “The Times they Are a-Changin’, “Your old road is rapidly agin’, Please get out of the new one if you can’t lend a hand, For the times they are a-changin’.” Changin’ indeed and if the call is not heeded by record companies in the not so distant future they will find themselves bankrupt, much like before.

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One thought on “What is the Future of the Music Industry?

  1. Pingback: Music & Technology | Olandacherie2013

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