The music business is an ever-changing beast. The economics of the modern industry are often simplistically divided into two periods, pre- and post-Napster. Conventional wisdom remembers the file-sharing software — which older millennials once used to illegally download Limp Bizkit songs — as a huge reckoning that caused record sales to collapse at the turn of the century, ushering in a new era. But is it really so simple?
Since Napster’s short but transformative existence, no art form has been as sensitive to technological shifts and changes in consumer habits as music. For the last two decades, record labels and artists have regularly altered their tactics to reach audiences and, ultimately, tap into new revenue streams.
Now, COVID-19 has caused the best-laid plans to fall apart. In a flash, musicians had to cancel entire touring schedules; record stores were suddenly shuttered. Amidst the turmoil, artists are finding new and inventive ways to be creative, reach fans, and raise cash. Lessons are being learned that might just outlast the pandemic.
Boom at the Top
Quickly scan news reports and you might think that the business side of the music industry is in great health — and for those at the very top, it is. Released in February of this year, the annual year-end RIAA music revenues report found that revenue from recorded music had jumped by 13 percent from 2018 to reach $11.1 billion. More recent data reveals that Sony Music alone saw recorded music revenue rise 13.5 percent year-over-year to just over $1 billion in the three months leading up to the end of March.
Observers have long touted the importance of streaming services such as Spotify for monetizing music in a digital era. Indeed, streaming revenues totaled $8.8 billion in 2019, accounting for a huge 79.5 percent of all recorded music revenue. Cash from streaming music alone in 2019 was greater than all the money generated from recorded music — streaming and physical purchases alike — in 2017.
Even though industry spreadsheets looked rosy, this meant little to small- and medium-sized independent labels, or artists who found themselves hustling from paycheck to paycheck. A study published by the Music Industry Research Association (MIRA) in 2018 found that the average American musician earns $21,500 a year.
From a creative point of view, there’s a lot to worry about. It’s simplistic and corny to judge “independent” and “mainstream” as synonyms for “good” and “bad,” or “artistic” and “inartistic,” but if full-time music making is only viable for those with significant chart traction and the occasional rich amateur, the result will be less recorded music, less risk-taking, and a higher percentage of new tunes made to fit the cold outlines of streaming algorithms.
The streaming boom has undeniably been useful by at least tempting people who once illegally downloaded all their music to spend $10 for the convenience of having everything they need instantly accessible. However, the system appears to be working for the very top echelon of artists, whose songs play everywhere from waiting rooms to weddings, not for artists with dedicated but relatively small fan bases.
Over the years, bemused performers have spoken out over the tiny royalty-payment checks that arrive in the mail from Spotify. For many, the ever-increasing number of people using the platform has not yet translated into decent pay.
While it’s difficult to break down the different income streams that make up their reported wealth, the lion’s share of the cash certainly goes to glittery names like Adele, Ed Sheeran, and Taylor Swift (who temporarily pulled her music from the platform in a protest against royalty rates). If you’re an artist getting enough of the pie to consider yourself a full-time musician, you’re one of the fortunate ones.
The sudden cancellation of all gigs — often a musician’s most reliable source of income — has further laid bare the industry’s inequality. In the words of a statement from the launch of Keep Music Alive, a British campaign calling for the protection of artists at financial risk as a result of COVID-19:
This crisis has brought into sharp relief the fact that creators and performers are sustained primarily by the live side of the music business and that streaming royalties are woefully insufficient.
To help artists whose livelihoods have been impacted by coronavirus, the online music store Bandcamp has arranged special twenty-four-hour windows that see the company waive its share — typically 10 to 15 percent — of anything purchased on the site. (Disclosure: I write for Bandcamp’s editorial wing). The first such day, on March 20, saw $4.3 million spent — the biggest sales day in Bandcamp’s history. That was eclipsed when the site repeated the venture on May 1 and brought in $7.1 million.
These events have been helpful, if nothing else, in focusing minds on what it means to financially support music. Forget paying a monthly subscription, with your streams being worth a fraction of a cent — here was a transaction as pure as buying a CD or a t-shirt at a gig merchandise stand, and putting $5 or $10 into the pocket of an artist.
Spotify recently added a button to its platform that, if voluntarily activated by the artist, allows fans to send them money directly. The new feature promises a more purified royalty system. But unlike Bandcamp, Spotify’s system is not a pure transaction — on Bandcamp you are buying a digital download, vinyl record or piece of merch; on Spotify you are simply making a voluntary donation.
Having been introduced by an extremely wealthy organization, this feels like an abdication of Spotify’s own responsibilities to the talent that makes its business possible, or an admission that its model needs major retooling, or both. There was also the extremely sticky fact that artists can use the feature to raise money for COVID-19 relief, putting them in the awkward situation of having to choose between asking fans to give money to them or to charity.
Making Your Own Product
For musicians unable to tour at a rapid pace due to, say, family responsibilities or second-job commitments — or for those not working with traditional labels — Bandcamp has given them options, although it can require either recording at a rapid pace to produce a lot of new music to sell, or getting creative.
At different times, the prolific but ultra-elusive underground rapper Mach-Hommy has charged random figures for albums such as $77.77, $300, and even $1,000. At first, I thought this approach was nuts — until I realized that a handful of fans with deep pockets can spend enough to fund a lot more Hommy albums.
According to Zilla Rocca, an independent rapper based in South Philadelphia:
The amount of streams you would need to make $1,000, you’re talking probably 50,000 streams — probably more than that — and you’re going to get that paid out in little chunks. There are more interesting ways now to be creative, and how people spend money on you, from selling stickers for $5, up to $700 vinyl. But you can directly tap into people now, versus back in the day when everyone was with the label. So, if [the label] decided they want to put money into this: cool. If they feel like they don’t want to put money into it, you can’t do anything about it. You had no freedom on your own to just make your own product.
At first glance, Hommy’s strategy might appear to be a stepchild to the Wu-Tang Clan’s ill-fated Once Upon A Time in Shaolin project. To recap: back in 2015, the legendary rap group sold the only copy of the album for $2 million. The intention was to make a statement about the low value of music in the streaming era. However, that point was obscured when the album fell into the hands of pharma bro Martin Shkreli, who went on to wage an embarrassing feud with the Clan. But Hommy’s exploits seem to be less about commodifying his art and more about a business strategy that ultimately works.
If there was a truth to be found in the Once Upon a Time in Shaolin project, it’s the unlikely importance that physical music has acquired in the digital age. Physical sales totaled $1.15 billion last year, a slight dip from 2018. While CD sales dropped 12 percent, the much-touted vinyl resurgence continued, with growth for the fourteenth straight year, adding up to $504 million in revenue for 2019.
The rise in vinyl has been particularly important to smaller outfits. Take the specialist rap label Daupe!: the company puts out deluxe, limited vinyl and cassette editions of albums by its roster that sell out almost instantly. With small press runs and short-notice announcements — and with all vinyl and cassette sales happening online — the label appear to have nailed down a tactic of short-burst sale runs.
The limited availability of their product taps into a new culture among music fans with a taste for old-fashioned formats who are nonetheless internet-savvy enough to share their collections online, making special items even more sought after. While writing this piece, I tried to nab a special edition of Westside Gunn’s Pray For Paris, pressed onto a vinyl in the color of the French flag.
Like someone waiting to buy festival tickets on the morning of their release, I sat at my computer waiting for the sales links to go live, only for Daupe!’s Bandcamp page to grind to a halt from traffic and sell out before I could claim the piece. Shortly after, copies were on sale on Ebay for as much as £2,000.
With music sales an unreliable income source, many have examined other revenue routes. An octopus business strategy is what famous man-behind-the-music Damon “Dame” Dash calls it — having eight sources of income.
Licensing has become an important part of an artist’s earnings. In her definitive 2013 Buzzfeed treatise on the topic, “How Selling Out Saved Indie Rock,” Jessica Hopper laid out the complete shift in attitudes when it came to forging links with corporations. Those opportunities aren’t just for top-tier stars hawking BMWs. Zilla Rocca works with a company that sometimes looks to license music on a budget:
For a TV show they want a song to sound like this Kid Cudi: they don’t want to pay Kid Cudi $50,000, they’ll pay you $5,000 to make a song similar. So the good news is that with so much content — so many streaming platforms, shows, networks, Amazon Prime, Netflix, Hulu, commercials — there’s so many things out there. You can make money getting one song there one time, versus getting streams 300,000 times on Spotify.
Strange New World
With gigs off the agenda, live streams have become an increasingly popular way for artists to perform for their fans. Many are choosing Instagram Live, and the huge audiences they’ve already cultivated there. The music blog Nialler9 has hosted a series of live performances on the app, sometimes helping guests promote their new releases.
Others have turned to Twitch, a platform popular among gamers that’s more easily monetized as it makes it possible to tip streamers, leading to a tipping culture that doesn’t exist elsewhere. On June 6, Laura Marling performed a ticketed performance at London’s Union Chapel. The show was live-streamed online to a limited number of ticket holders.
Purists will undoubtedly resent any attacks on the traditional live concert, but given the potential for greatly reduced overheads, it seems likely that paid-for streamed performances might become part of the new normal.
Such initiatives reflect the guerrilla nature of getting through the pandemic for musicians. Even now, though, labels have an eye on the future, and the prolonged economic recession that might come on the back of the pandemic. When we spoke during lockdown, Jeff Swallom, the owner of Cultures of Soul Records, voiced his concern about what will happen to music stores:
Vinyl is our bread and butter for revenue streams. All the stores are closed now, so distributors and labels don’t want to put anything out, because no one is going to buy them … in the US for example, some stores are starting to open up in a few weeks … are these stores going to recover? Are they going to stay open? If 50 percent of the stores my distributor sells to close in the next year and a half, we’re all in big trouble.
This strange new world is a scary prospect for labels and artists who have survived for years on fine margins. Struggling to claim their slice of the pie has given them the experience to get through the worst of times, and many music fans have stood up and done their bit. Still, COVID-19 has laid bare a system that keeps the tendons of the industry outside the very top tier weak and vulnerable. Until structural issues are addressed, many artists will be driven out of music, causing relentless damage to the wider culture.