Who Will Survive in America: Winners and Losers in the New Music Industry

-- By SjoerdOppenheim - 16 Oct 2014

Radiohead’s frontman Thom Yorke recently made national news by releasing his new album not in the conventional CD stores or on iTunes and Spotify, but via the peer-to-peer content sharing program BitTorrent. Circumventing the traditional music corporations, the album was bought and downloaded more than a million times in just the first week. With the 90% share of the revenue artists will get by using BitTorrent for their releases, Thom York made much more profit than would be possible if he had released his album through more traditional routes, in which you earn at most 10% of the earnings if you’re lucky. In addition to that, by creating and releasing the album by himself, Yorke had complete creative control over the music he wanted to make. It is a clear example of how the internet can liberate musicians with the unlimited possibilities it offers. but one might wonder whether these changes are good for everyone in the music industry. And the very fact fact that everything can be downloaded freely on the internet poses challenges for the music industry, and changes the whole system. One might therefore wonder who are going to gain from this transition and who are not?

The famous artist

The music companies historically always use to have a tight grip on their musicians. Not only did they retain most of the profits their artists’ music has made, they also limited the artist’s creative aspirations by forcing him in some commercial direction. Elliott Smith couldn’t be more spot-on when he once hatefully sang: ‘the method acting that pays my bills, keeps a fat man feeding in Beverly Hills.’ Whereas in the pre-internet age you’d be totally dependent on your label to get your albums distributed and to attract attention and air time, nowadays you can cut the middle man by reaching out directly to the public, with the music you want to make and your fans want to hear.

The beginning musician and the fan

In the sixties until the early nineties, the only road to success for an aspiring musician was to get a record deal from one of the big labels. However, the record labels would only care about their top selling artists and you’d be their lowest priority until you managed to get some success by yourself. With the internet, thousands of possibilities opened up to be heard and get paid for it. In an advice for the starting artist, Nine Inch Nail singer Trent Reznor said on his forum: “Music is free whether you want to believe that or not. Every piece of music you can think of is available free right now a click away. This is a fact. So have the public get what they want FROM YOU instead of a torrent site and garner good will in the process.”. This explains the successful emergence of crowd-funding websites such as Kickstarter and the music download site Bandcamp. Instead of the more traditional producer-consumer model, these websites make it possible for the artist to create a whole community of fans and for the fans to participate in their favorite artists’ projects. Also, this new structure is beneficial for the music fan as he has a much wider choice of music to listen to and to support an artist he finds promising, who otherwise would not be able to record his music.

Copyright organizations and big record labels

In the pre-internet era, copyright was a way to receive a substantial amount of money through royalties when a song was distributed or played somewhere. In the new world however, copyright is bound to be dead. It is still alive, desperately fighting against the new reality and trying to maintain the role it once had. But its status is inevitably fading, and sooner or later all that will remain is the dust of the papers that gave it its power in an earlier age. With the internet, there is no stopping to the distributing of music. The music industry might be able to win a battle once, but fighting the internet is like Hercules fighting the Hydra: when you chop off one head two others will return for that. Therefore the only royalties organizations like BMI, ASCAP and SECAC can collect are those for songs played over the radio and on television. Missing out the bigger chunk of the pie, these organizations will become less and less important.

The same can be said of the traditional record labels. As they become less vital for the success of the musician, there role becomes confined to promoting only the most popular artists and to produce spectacular live shows in collaborating with the artist in order to make some money. However, with their diminishing market share their importance and thus their power will decline in the following decades and when the internet’s possibilities gets successful and wider known they will eventually cease to exist.

New business models for distributing music

New high quality streaming services such as Spotify provide users with an all-you-can-eat business model for listening to music. While Spotify is quite popular, it success totally depends on the willingness of the musicians to have their music available on Spotify. Big classical bands such as Led Zeppelin and the Beatles aren’t available, and Thom Yorke and Atoms for Peace recently withdrew their music from the streaming service, criticizing the company’s business model by saying that it ‘stifles’ the new artists, who only get approximately half a cent per stream per song. In order to be a valuable addition to the music industry, Spotify has to fix this otherwise more artists will be unwilling to collaborate with the streaming service.

The internet is a place where in theory everyone is equal. The old notion of consumer producer won’t hold anymore. While this may be devastating for the old music industry, it creates a lot of opportunities for musicians and fans to interact in a more direct way with one another. Everyone who fails to understand that, will have to play the second fiddle.