74 Comments

I think a key sentence is: “The inevitable result is that, a decade later, most consumers don’t think music is worth much.” This makes me think of the ways in which a baby’s cognitive abilities develop as they physically interact with the world. Crawling leads to math, right? So I’m wondering how much of my allegiance to the music of my youth is related to my relationship with the tangible—with the album, 8-track, cassette, and CD. And how much of my disinterest in most new music is related to the ephemeral nature of Internet streaming. I spend a lot of time in bookstores taking chances on physical books, hoping they’ll be good. And, yes, one great book is worth buying one hundred mediocre ones. I used to make those same gambles in record stores. But I don’t do that anymore.

Expand full comment
May 1, 2022·edited May 1, 2022Liked by Ted Gioia

Hi Ted, thanks for your piece, excellent as always. One tangent I think is worth exploring is between the tension of Spotify being a "new technology" and your very prescient point here:

> A crappy interface with mediocre audio quality that provides almost no information on musicians will inevitably lead to declining fan loyalty...

I would argue that music streaming applications (but I'll pick on Spotify in particular) are nowhere near their potential, even given existing technology. For instance, Spotify has yet to integrate a label page feature that doesn't involve knowing a hidden, arcane search parameter, even though I regularly see serious music listeners beg for it. The technical effort here is negligible, and would please their core audience immensely. Similarly, for all the supposed bells and whistles that recommendation algorithms offer from the form perspective (for instance, Spotify's music is catalogued by BPM, instrumentation, vocal style, "danciness" and other such parameters that they aggregated via acquisition of Echo Nest's data scientists), there's little to no cultural analysis going on on their end. After all, genre is only a loose proxy for culture or politics—in the algorithm's view of things, these are simply collapsed along aesthetic lines. Similarly, I can't search music by thematic content, which as a curator, is another vital ask. The resulting question is "Who is this platform really for?" and inevitably the answer is not serious music listeners but instead people who require endless, indistinguishable, background music. Assuming we also solve the task of paying artists, I imagine a streaming platform of the future that creates relationships along more than just matters of auditory analysis; including geographic, historical, and cultural axes would turn any application into a part of the music-making-and-understanding ecosystem, instead of a mere spreadsheet.

Expand full comment
May 1, 2022Liked by Ted Gioia

As a recovering Wall Street technology analyst, I find your analysis spot-on. A couple of observations:

1) Music has become Major League Baseball (except without cableTV money) - a few superstars, a lot of .240 hitters, nobody pitching complete games, and drastically reduced ability by the fans to identify a player/performer with a team/band.

2) The entertainment industry has been plagued forever by parasites leeching off the performers. Lewis Wasserstein at MCA might have been the archetypal case, but hardly alone. United Artists was a great concept, but the problem is always likely to be that creative types are fundamentally Artists, not fundamentally United. For God's sake, if you have a kid or a friend who's in a garage band or going into Conservatory or any other performing effort, insist that they take an accounting course - they need to be inoculated against those who will suck the financial reward out of their efforts.

3) Technology will always be a two-edged sword: it will create enormous markets and it will drive production costs to very low levels. Best of luck trying to ride that bull.

It took 13.73 billion years to get from the Big Bang to the "Bang Bang" video. Much of that amazing video was based on technology that had been developed in the previous 13.73 billion seconds. I don't have the foggiest notion how we as a species stand a fighting chance in contending with that sort of development compression.

Expand full comment

Great piece, Ted. I think all the streaming services are missing the boat on capturing listeners that are younger than 18 with their subscription model. I think free streaming services like freegal and hoopla are being used by young people to "borrow" music for two weeks from public libraries. And of course, most just use YouTube to listen to music. Youtube ad free is $4.99/month for students. I think it's important for music aficionados to have a streaming service/purchase option to build a music library, not an algorithm analyzing their music interests and future possible purchases.

Expand full comment
May 2, 2022Liked by Ted Gioia

I worked for a big entertainment company for a short period of time in the late 90's ... it was basically ground zero for all the bad economic decisions and head-in-the-sand management of the time. But one thing that sticks with me is someone ... I think it might have been David Geffen ... saying at the time, before it all went south, that the music business was the hidden gem financially ... it costs very little to make a record and they generate revenue forever (or something to that effect). At the time it was an insight, at least to me, because I didn't know much about the business of entertainment and it seemed to make sense (at least compared to movies which were a total disaster financially). That was a looooong time ago ...

Expand full comment

I am afraid Sherman is right about many consumers and the worth of music. Many people have little regard for the sacred in music. It is a shame for the musicians are the ones who suffer. Then again we all suffer from treating music as merely another form of content. By that I mean the culture as a whole suffers. We live in a plastic throw away consumer culture that is starving like King Midas.

Expand full comment

Good piece, as always. I have to admit the idea, from a business perspective, that a recurring $10/month fee would be able to provide a better business model for the music industry where previously >$10 per CD/album/'unit' sales dominated always seemed far-fetched, even if Spotify had lower costs of doing business than earlier models. As you note though, operating out of fear or perhaps the delusion of ever-increasing subscription numbers might convince you otherwise, at least temporarily.

In light of this and some of your other writing about streaming economics recently, I'm curious if you have any further thoughts into the recent acquisition of Bandcamp by Epic Games. There have yet to be any major changes to the former by the latter (yet), and of the companies you noted as potentially capable of taking on Spotify, it seems the most likely candidate to do so (at least in my opinion). Or does it remain too early or uncertain to say anything for certain on that?

Expand full comment
May 1, 2022Liked by Ted Gioia

I like Bandcamp. That looks like a great alternative for musicians.

Expand full comment
May 1, 2022Liked by Ted Gioia

I'm gobsmacked at how easy you are making it for would-be entrepreneurs to come up with an alternative to the crappy distribution and production of good music that would pay off well even after compensating artists well for their work. So far no one seems to have taken advantage of the wealth of ideas you lay out in this blog. I'm much more of an artist than a business person but surely there must be someone out there with the temperament and talent who could do so.

Expand full comment

I'm not sure that streaming WILL replace music ownership - at least not for the most serious music fans. I want to OWN the albums in my collection - CD, LP, 45, reel to reel (at least the Sinatra!), digital. At work, I listen to a hosted radio station from Tahiti - tiarefm - and when I hear a song I like (they provide artist and song names on their app), I'll buy it from 7digital, a French digital music store with a reputation for fair royalties and DRM-free purchases. For stateside bands, I try the band's website first, then BandCamp, then 7digital.

Ted's readership may not be representative of music fans as a whole - I'd wager most of us here are far more serious about music than most. I have dozens of playlists on iTunes, and when there is a song I want to hear, I want to hear it - not find out that it's no longer on my streaming service.

So I subscribe to zero streaming plans - unless you count the FM radio in my car.

Expand full comment

I DO NOT and never will Spotify, Pandora or anything else that takes the place of OWNING a CD. I want to OWN the medium my music plays on. I want to have it on my shelf, catalogue it and appreciate the beautiful artwork of the cover and/or the liner notes. WHY didn't somebody just ASK us consumers what we WANTED? I'm old but I still BUY music but not unless it is on a CD.

Expand full comment

Most of this makes sense, but I think puts too much blame on the record companies for "decisions" they were forced to make. Spotify wasn't competing with $18 CDs. They were competing with $1 iTunes downloads (a price that the record companies tried to fight but basically lost) and, most importantly, $0 mp3s. Legal streaming had to a) have nearly the entire historical music catalog, and b) be really cheap, to survive.

I think these companies probably made the best of a bad set of choices.

Expand full comment

There already ARE higher quality streaming services. Tidal and Qobuz spring to mind. Both offer lossless streaming. Qobuz offers 24 bit audio streaming. A fair price is paid per month and artists are paid fairly. Both are doing quite well.

Bandcamp offers lossless streaming as well. I will be highly pissed of the video game company messes with Bandcamp in a negative way. It is too easy to say "Well, people just don't want to pay for music". I pay. Through the nose. Almost 2,000 purchases from Bandcamp alone. Lots of members have bought far more.

Spotify is just a cheapjack outfit streaming mostly mainstream music people have either heard for 50 years or by artists people have hardly heard of. They pay their artists less than a penny per play. That would be enough for me as an artist to drop them entirely and certainly enough for me as a listener to ignore them into oblivion.

Treat both artists and customers with respect and give customers an opportunity to stream lossless. mp3 is a blight on the face of recorded music. It's a swindle and a fraud. It always HAS been. What Spotify streams is less than webcast audio. Give a subscriber the choice between 16 bit and 24 bit streaming options.

I hope Spotify collapses tonight. It can't be soon enough.

Expand full comment

I’m still buying CDs, perhaps three or four most months, sometimes more, occasionally vinyl, but I keep Spotify for auditioning purposes, to avoid rash and impetuous purchase decisions based on glowing reviews that aren’t warranted, to hear music that is not physically available at a reasonable price for one reason or another (lots of that), and because shelf space is now at a premium and I’m not in the mood to ditch any of my collection (although I probably should). So, whatever the shenanigans behind Spotify’s financing, it sounds like a scam from the beginning, I hope it continues in operation without becoming worse. In its way, it rather reminds me of Tower Records back in the ‘70s and ‘80s - everything you could want (with a few exceptions) and more at low, low prices. Yes, I know - look what happened to Tower! One of the real tragedies of the music business.

Frankly, in many ways, Apple Music already looks better than Spotify, but I don’t like its default commingling of my own downloads collected over the years and its streaming service. At the end of the day, whatever the moans of musicians, the looting by music companies, the inadequate online experience, I think it is quite utterly amazing that, if one has the curiosity, one can hear a huge amount of the world’s very varied and mostly uncommercial in American terms music at your request even while walking down the street. Whatever the future holds, I hope we never lose that ability.

Excuse me, I must go and check my Dusty Groove shopping cart - and Amazon. Things are piling up.

Expand full comment

It's incorrect to say that Spotify "convinced most fans to give up their physical albums". Spotify competed against downloads. In 2010, when Spotify was getting its stride, physical albums were already deeply in their secular decline. https://en.wikipedia.org/wiki/Record_sales

Unfortunately the music industry probably just isn't a very profitable one considering all of the entertainment alternatives that exist today. Maybe they should just charge TikTok more for the rights. And maybe there should be fewer middlemen who take a cut.

Expand full comment

The NTS radio (based in London) model does not seem very profitable either, but their voluntary subscriber's approach in exchange of a few little advantages encourages people to listen more, discover more and love music more...

Expand full comment