In P. Wikström and R. DeFillippi (Eds.), Business Innovation and Disruption in the Music Industry. Edward Elgar (2016)
24 Pages Posted: 26 Nov 2014 Last revised: 1 Jun 2016
Date Written: 2016
In November 2014, pop music icon and New York City’s recently anointed ‘Global Welcome Ambassador’ Taylor Swift, perhaps the year’s most ubiquitous American public figure, made headlines by absenting herself from a hip and increasingly popular venue: the Spotify streaming music service. Swift, whose popularity and income were unquestionably propelled by avid listening on terrestrial radio, YouTube and services like Spotify, had fired a warning salvo with a July Op-Ed in the Wall Street Journal, in which she stated unequivocally that ‘music should not be free,’ because, in her words, ‘Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for.'
This one-two punch set off a firestorm among musicians, music industry executives and music fans, who promptly divided themselves into two opposing camps: Swift’s supporters, who view Spotify and its ilk as exploiters of artistry and debasers of culture, and Spotify’s supporters, who view the service as an exemplar of media economics in the age of digital ubiquity and a bulwark against the deleterious effects of online piracy.
Although both camps seem genuinely motivated by a principled love of music and a fundamental belief in some notion of ‘fairness,’ neither side got the story right, though each version contains elements of the truth. In order to understand fully the role of streaming in the evolving recorded music economy and to evaluate whether it’s ‘good’ or ‘bad’ for musicians and fans, it’s necessary to take a broader and more historical perspective, and to understand streaming in contrast to other modes of distribution and market exploitation.
Since its inception, the recorded music industry – composed of recording artists, composers, record labels, publishers and a myriad of other stakeholders – has been a tumultuous, ever-changing economic battle royale. Each new law, technology or market shift has presented strategic threats and opportunities enabling some to gain a ‘larger piece of the pie’ while others divvy up the dwindling remains. Yet the market disruptions introduced by digital media at the turn of the twenty-first century have introduced a degree of volatility and uncertainty that makes the previous century’s ups and downs look stable and placid by comparison. One effect of these disruptions has been to intensify the ongoing battle – legacy stakeholders seek to protect their margins and market dominance, rival upstarts wish to carve out their own slices and creative professionals see a long-awaited opportunity to exert some financial autonomy and creative control over the product.
To the extent that these disruptions are covered in the press or understood by the general public, the situation is often depicted monochromatically, from the perspective of a given stakeholder. In addition to Swift’s campaign against Spotify, other examples include calls for broadcast royalties for recording artists by musicians like Blake Morgan, campaigns for parity between online and off-line radio royalties by organizations like Pandora and, of course, campaigns for and against peer-to-peer distribution platforms by record labels and technologists.
In this chapter, I present a nonpartisan analysis of past, current and proposed methods of ‘slicing the recorded music pie’ in the US marketplace,1 with the aim to clarify exactly what’s at stake, and for whom, and to correct and counteract some of the more vitriolic and less accurate rhetoric that has governed the public debate of these issues thus far. I shall also provide a side-by-side comparison, in the form of a table, depicting the economic rewards for creators, as well as the cultural rewards and economic costs for consumers, of music distributed via various channels. It should be abundantly evident even without such analysis that there is no ‘silver bullet’ utopian scenario in which every party concerned, from artists to labels to consumers, benefits without a corresponding expense on the part of some third party – in other words, there can’t be an infinitely large pie with an infinite number of slices. Nor can there be a single organization or sector that wins out at the expense of all the rest; compromise is inevitable, and the challenge is in shaping its contours, rather than avoiding it.
Yet, while no single stakeholder in the recorded music economy can expect to see new laws, policies, economies and technologies conform exclusively to its worldview and agenda, there are still more and less equitable ways to divide the industry’s wealth, and to develop methods to insure its continuing growth and innovation. Consequently, this chapter will conclude with a brief analysis of pending policy proposals, outlining what’s really at stake and for whom.
Suggested Citation: Suggested Citation
Sinnreich, Aram, Slicing the Pie: The Search for an Equitable Recorded Music Economy (2016). In P. Wikström and R. DeFillippi (Eds.), Business Innovation and Disruption in the Music Industry. Edward Elgar (2016). Available at SSRN: https://ssrn.com/abstract=2530161 or http://dx.doi.org/10.2139/ssrn.2530161