#037: Today’s Music Economy is a Mirror of The U.S. Economy
“The biggest fish in the room gets that way by never getting caught”
The current music industry is a perfect parallel to show the problems and inequities that exist in the larger U.S. economy. While these problems are still immense, there is a much clearer path to a more equitable landscape for recording artists and music professionals. With music and streaming economics as the focus, see below for three primary focus areas to watch in the years ahead:
Corporate Domination: We have seen corporate domination taking hold across many industries in the United States. It is projected that in 2021, Amazon will surpass a 50% market share of ALL e-commerce retail sales. Within the telecommunication industry, AT&T, Verizon and T-Mobile control 98% of the entire market. Within recorded music, we see this reflected with the historical dominance of Warner Music Group, Sony Music and Universal Music Group. These three companies used to control 80-85% of the global recorded music revenue. With the rise of music streaming and the ability for independent artists to self-distribute, this market share has fallen to 60-65%. We see this same dynamic reflected in music streaming, with Spotify and Apple Music controlling 60%+ of the total U.S. market. The big difference in music is that Spotify has decided to start supporting more independent artists, especially after going public on the stock exchange (which is when the major labels control over the company lessened). This means that it’s inherently easier for a smaller independent artist to break-through, certainly compared to an independent e-commerce retailer going up against Amazon. While the dominance in music is less than some other industries, there is a clear parallel between the music economy and the U.S. economy when looking at corporate dominance.
The 1%: According to an analysis of Survey of Consumer Finances data from 2020, 79% of the wealth in the United States is owned by millionaires and billionaires. This same dynamic exists within the music industry, with the biggest artists dominating the market share of total streams. On March 18th, 2021, it was reported that “13,400 artists generated over $50,000 each in royalty payouts from Spotify in 2020” and that “this means just 0.2% of artists on Spotify are generating $50k per year (a figure which is roughly equivalent to the median annual US wage)”. Additionally, nearly 90% of total streams in the U.S. go to the top 1% of Artists. Both the music industry and the U.S. economy reflect the dominance of the richest and most powerful people. On the surface, I don’t have a major problem with this reality and I don’t think that it should be a surprise that the best business people earn the most or that the best recording artists/songs end up receiving the most attention. The focus should be placed on us trying to expand the wealth that is held by the middle class of workers and recording artists to even the playing field. At least within music, that will happen in the decade ahead with the increase of streaming revenue for all artists. But the goal should NOT be a truly equitable landscape, where the worst business ideas or songs still have a path to success. Great businesses, artists and/or songs should be rewarded and bad businesses, artists and/or songs should fail.
The Free Market: The free market is one of the core pillars of capitalism; but it is also one of the most broken systems in the U.S. economy. The concept of having a free marketplace and the ability for consumers to choose which businesses, ideas, songs and/or artists are best for them is great… in theory. However, when there are dominant players like Amazon in the e-commerce space or the major labels in music, it makes it difficult to see them as a free market. Within music, and especially with the major labels having less dominance within Spotify and Apple Music, it is much easier to see the free market working. Even with a majority of new music discovery coming through the big and curated playlists on Spotify and Apple Music, that is still a form of the free market working. As long as the major record labels aren’t paying and manipulating the curation — which isn’t happening anywhere near the levels that it used to with radio and CD distribution — the best music still has a chance to win.
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JAY’S SONGS OF THE WEEK:
Saba - “Ziplock”
reggie x Monte Booker x Kenny Beats - “AIN’T GON STOP ME”
Justin Bieber - “Unstable” (feat. The Kid LAROI)
Ant Clemons - “Story of My Life”
Justin Bieber - “Peaches” (feat. Daniel Caesar & Giveon)
C.J. Green - "Bad Ass Vibe"
