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The Music Industry Has 99 Problems...

Recording Devaluation Problems.

1. The value of the music recording is plunging, and has been for more than a decade.  Across the board, artists are experiencing serious problems monetizing their audio releases.

2. A decade-long decline in recording revenues has dismantled the label system, once the most reliable form of artist financing.  That includes both independent and major labels, once the core of the music industry ecosystem.

3. That introduces fan-funding platforms like Kickstarter, Pledgemusic, and Patreon, all of whom have admirably filled some of that lost financing but haven’t come close to matching the overall funding source.  Moreover, crowdfunding success stories like Amanda Palmer are sometimes viewed as anomalies, especially given the initial investment in her career by a major label.

4. Streaming continues to explode, but not enough to compensate for broader declines in physical CDs and paid downloads.  The overall result is a music industry revenue decline.

5. Even worse, the technological evolution of formats keeps pushing the value of the recording downward.  With every subsequent format, monetization deteriorates: streaming pays less than downloads; downloads paid less than CDs.

6. There is little evidence to suggest that this downfall is being made up by touring, merchandising, or other non-recording activities like ‘experiences’ (see below).  In fact, many argue that artists are being forced into unsustainably long tours, or touring virtually non-stop just to survive.

7. Other attempts to make up the lost revenue have fallen short.  BandPage, a pioneer in trying to monetize artist ‘experiences’ to help make up for lost recording revenues, was unable to scale that alternate revenue source substantially enough. After many years and considerable investment, BandPage was sold at a heavy loss to YouTube.

8. That introduces a number of problems, including artist burnout and an increased risk of accidents while on the road.  According to NYU songwriting professor Mike Errico, the artist injury list is soaring, with Dave Grohl, Sam Smith, Miranda Lambert, Steve Aoki, Little Big Town, Meghan Trainor, Nickelback, the Black Keys and Kelly Clarkson all suffering physical, tour-related setbacks.

9. Streaming is rapidly becoming the dominant form of music consumption, though it is now widely viewed as a cashless loss-leader for artists and songwriters.

10. A big part of the problem is that most consumers now attribute very little value to the recording itself, and most consumption (through YouTube, ad-supported piracy, or BitTorrent) happens at little-to-zero cost to the listener.

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11. On top of all that, the largest streaming platform in the world, Google-owned YouTube, doesn’t think that music devaluation is even possible.  “It’s amazing how often people invoke that word ‘devalue’ as if it means something,” Google executive Tim Quirk said in 2014.  “It doesn’t. You know why?  Because you can’t devalue music. It’s impossible. Songs are not worth exactly 99 cents and albums are not worth precisely $9.99.”

12. Even worse, some major label artists are receiving nothing at all from streaming, even with extremely high play counts.  That is the case for Lady Gaga, whose manager Troy Carter says Universal Music Group paid the singer nothing despite millions and millions of streams on platforms like Spotify.

13. Worsening the situation is a circular ‘blame game’ between streaming giants and labels, with artists ultimately shorted.  Spotify says they pay the labels, though this is often with huge, multi-million dollar advances and/or equity positions attached.  But labels frequently don’t pay their artists, either for legitimate (ie, the artist is unrecouped) or illegitimate (ie, they’re screwing an artist) reasons.

14. A massive, decades-long shift towards free (or near-free) music means that entire generations of listeners have never paid anything for recordings.  And, predictably, will continue to resist any requirements to pay for music.

15. Strategies to recover recording revenues at labels often backfire.  A once-promising shift towards 360-degree models never quite generated enough money for the major labels, even though these labels generally insist on broader rights deals with all new artists.

Album Problems.

16. The album collapse has caused a massive revenue drop for both labels and artists.  The reason is that fans, if they’re even purchasing anything, are no longer ‘buying the bundle,’ or collection of songs.  That’s great for cherry-picking consumers, but often leaves artists unable to recoup their costs or make a decent living.

17. Perhaps more importantly, that bundled product has not been replaced, despite endless attempts to package other items together.  Post-album, artists and labels have failed to establish a lucrative, reliable bundle to monetize their recordings.

18. Even success stories like Adele, whose ’25’ is now approaching 10 million albums sold, are viewed as being potentially damaging to artists and the broader industry.  The reason is that Adele’s ‘unicorn’ success could cause smaller artists and independent labels to strategize around a format that is largely dying.

19. The homemade, CD-burned album, once a huge revenue-generator for smaller touring artists at merch tables, has now dropped to zero.  That has put more pressure on artists to sell other merchandise like t-shirts, while decreasing available cash for touring essentials like gas and food.

20. Many music enthusiasts have argued that the decline of the album has decreased music appreciation and focus.  Gone are the days of dedicated listening, fabulous album artwork, and defined ‘opuses’ that defined a previous musical generation.

Certification and Award Problems.

21. The music industry is currently battling over how to count sales.  In a recent episode, the Recording Industry Association of America (RIAA) certified Rihanna’s ‘Anti’ as Platinum after its first week, signifying one million album sales.  Yet Billboard and its data-tracking partner, Nielsen, only counted 460 copies during the same period.

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22. Separately, a strikingly large number of important artists have never been awarded a Grammy, including Snoop Dogg, Bob Marley, Guns n’ Roses, KISS, and Morrissey.  And those are just a few of the artists never handed an award.

Vinyl Problems.

23. Vinyl LP sales are surging year-over-year, but still represent a tiny fraction of recordings purchased.

24. The production infrastructure around vinyl continues to ramp up slowly, and producing vinyl can be incredibly difficult and time-consuming for artists and labels.

25. Most pressing facilities are using decades-old equipment, though investors are fearful of investing in vinyl machines and infrastructure because it might be a fad.  All of that is stunting vinyl’s growth.

 Streaming Problems.

26. The leading streaming music companies — YouTube/Google, Spotify, SoundCloud, Apple and others — have been routinely accused of treating artists poorly through duplicitous contract structures, low payments, or complete non-payments.

27.  That has created a low-trust environment, and confused fans over who to support.  Just last summer, Taylor Swift battled Apple in a very public manner over royalty concerns; Apple eventually conceded, though streaming platforms are often painted as anti-artist.

28. Compounding the problem is that streaming services like Spotify offer very little reliable guidance on their payout structures.  Artists have very little idea of (a) what they’re being paid, and (b) what they should be getting paid.

29. Against that confusion, companies like Spotify have been accused of deliberately creating complicated payout structures to hopelessly confuse artists and rights owners.

30. Even worse, Spotify is suspected of completely fabricating and/or over-stating its per-stream payout structure, based on discrepancies with extremely low rates published by actual artists (usually on Digital Music News, here, here, and here.)  This issue has not been roundly addressed by Spotify, which has created an even lower-trust environment with many artists and independent labels.

31. Indies and smaller artists also complain that their rates are lower than bigger, major labels.  Some have pointed to different tiers of compensation, though few have a concrete idea on exactly how payouts are structured (see above). [DigitalMusicNews]