My MP3 collection is better than yours.
The iPod that I stocked was filled to capacity with top-shelf music. Like a goldfish, my collection grew to fill the space that allowed it. It expanded to the edges of the latest version of the iPod, as it gradually grew from 5 GB to 10 to 50 to 120.
The files came from CDs I ripped from my own collection, the library, new and used bins at record stores, and my friends’ car portfolios. The downloads all came from the iTunes store, and only from the iTunes store—not anywhere else, I promise. I overheated several CD-R drives and slowed down bandwidth for hours at a time to put it together, over the course of more than a decade.
The result: my iTunes library has 20,525 song files formatted in AAC, MP3, and MPEG. That’s 106.01 gigs of music that would take 59 days, 14 hours, and 24 minutes to play sequentially. It contains the complete discographies of The Beatles, P-Funk, Nas, Jay-Z, Built to Spill, J. Dilla, Sleater-Kinney, Miles Davis, Al Green, Nirvana, Amy Winehouse, Wayne Shorter, and UGK. Most importantly, my iTunes collection contains hundreds of curios and rarities that I picked up somewhere or another.
When I was working or gaming on my computer, I would open iTunes and play the whole library on shuffle, skipping around until I heard something that met my whim. On the bus, I’d plug my headphones into my iPhone and do the same thing.
But I haven’t played a song stored on my hard drive in iTunes or on my iPhone 11 for at least that long. Now, I stream cloud files on Spotify.
I’m not alone. Today, listeners rent music instead of buying it. Since 2010, the record industry has become a music rental business, rather than a music selling business. That radical, slow-motion transition to a new business model staved off an existential crisis—and is essential to understanding how our listening habits have changed.
How Streaming Saved Record Companies
For the first 100 years of the recording industry, we would buy a product from a store and let it take up space. Until the 2000s, that product was a vinyl record, CD, or tape from Tower Records or your neighborhood record store.
After the debut of the iPod, Apple gained a dominant market share in that same business. Apple wrenched the music purchasing business away from complacent brick and mortar retail by way of a better selection, shop-from-home convenience, instant gratification, and lower prices. (Sound familiar?)
In doing so, Apple wasn’t just putting Tower out of business. It was also helping to wipe out the major labels’ profit margins. Physical formats, especially CDs, are significantly marked up, to pay for a complex, physical supply chain and the shady habits of record executives.
In 1995, The New York Times broke down how a CD’s revenue was then distributed: “35 percent of the retail price goes to the store, 27 percent to the record company, 16 percent to the artist, 13 percent to the manufacturer and 9 percent to the distributor.” Record companies enjoyed a healthy margin by that reckoning, taking in about $4.31 on a $15.99 CD. The U.S. record industry thrived, with $14.6 billion in 1999 revenue.
But U.S. music sales and licensing revenue declined by more than half from 1999 to 2009. The labels thought they could return to the halcyon days by switching to downloads, instead of CDs. On paper, it made sense: in 2007, a $0.99 iTunes download sent $0.69 to the majors, and Apple collected $0.10 for its trouble. Retail digital music downloads eliminated most of the supply chain, and sent most of the savings towards the labels.
Music companies had to change things up. They made a big bet on streaming, and it paid off
But the lower price point for an average purchase—$0.99 per song, rather than $15-20 for an album—didn’t stop the slide, even though the margins were better. At the same time, illegal downloading made the volume of music purchases drop dramatically. People simply bought music less often, and paid less for it. Listeners also stopped having to buy separate, redundant CD copies of the same favorite record for home, car, and work.
As with a hundred other industries, internet disruption killed off an analog cash cow. The music business’s unique threat—illegal filesharing—did the rest.
So music companies had to change things up. They made a big bet on streaming, and it paid off. Most music listeners made the transition from their hard drives to the cloud with me. The recording industry’s global trade group, the International Federation of the Phonographic Industry’s (IFPI), tracks music listening habits. According to the group’s 2019 annual report, released in September, 89 percent of global music listeners “listen to music through on-demand streaming.”
Now, streaming revenue is the key to the industry’s dramatic recovery. According to the Recording Industry Association of America (RIAA), 80 percent of the U.S. music industry’s revenue now comes from streaming, and streaming revenue grew by 26.4% when the first half of 2019 is compared to the first half of 2018. The U.S. music industry earned $9.8 billion in 2018 and is on track to earn more in 2019.
How YouTube, Spotify, and Labels Killed Torrenting
In creating this growth, the record industry did something truly amazing: they got people to pay for something that they’d been getting for free.
Based on my own experience, there are several reasons why. But the main reason is convenience. Paying about $7.50 per month for my share of the Spotify family plan is just easier than having to ferret out paid downloads of the new and new-to-me music that I want to listen to. I don’t have to find, buy, and rip CDs and, uh, my “friends” don’t have to poke through shady torrenting websites like the infamous Pirate Bay to download files.
In the lawless 2010s, the crate digger’s quest yielded unprecedented highs in both risk and reward. But let’s not romanticize that experience: those downloads were of widely variable quality. Some were low bitrate MP3s and contained malware, while others were lossless audio of impossible-to-find live performances. Hardware also played a role. Most PCs no longer ship with CD-R drives, and plenty of up and coming artists don’t bother to release CDs at all.
Piratical sharing still happens, of course—but instead of being shared P2P, it all happens on YouTube. You can find any coveted b-side, limited release, or obscure live cover simply by searching for it there. It’s a far nicer and safer process than looking finding a Torrent file and suffering through an hours-long download whose latency is determined by the whims of a hive of Eastern European server farmers.
Sometimes less-than-legal YouTube videos get taken down, but most don’t. There’s just too much content uploaded to YouTube—500 hours per minute this year—to moderate it all, which has some minor downsides.
YouTube’s comprehensiveness and free price are two reasons why it’s the most popular streaming service by far, with 77 percent of music listeners using the platform on a monthly basis.
There are some downsides to using YouTube for music. Ads pepper the queue time before the next video, and you have to keep the app open and running on your phone to keep the audio going. But if it’s a bother, you can just pay for YouTube Premium. Not that anyone does—it kind of misses the point.
Listeners didn’t just migrate to streaming on their own, however. Labels attacked every level of the torrenting ecosystem, suing ISPs, server hosts, and even individual listeners into oblivion for illegal downloads. Now, ISPs cooperate with labels and other intellectual property holders in shutting down high-volume torrenters.
Looking back, the beginning of the end of the torrenting era was in 2014, when police across the world acted in concert to arrest the founders and then-operators of The Pirate Bay. You can still get out there and download songs if you want to, but doing so requires a lot more VPN and Tor-related misdirection than it used to.
The Music Industry in the Streaming Era
The labels won the download wars by making downloading less attractive. They’re well-positioned to prosper in the streaming era.
The download era taught the recording industry how important it is to control their own technological destiny. Labels have experienced their greatest periods of prosperity when they dictated the format of recorded audio to consumers, instead of the other way around. The recording industry prospered the most in the 1960s, when they persuaded consumers to purchase high-markup LP records. The same thing happened in the 1990s with CDs, and labels also benefited from the added bonus of convincing consumers to re-buy records they already owned.
The move to streaming proves that the labels have learned that expensive lesson. Now, labels have licensing agreements with tech platforms like Spotify, Apple Music, Amazon Music, and the less scruffy parts of YouTube, which the labels have wrangled onto their Vevo joint venture. Through Vevo and equity stakes in Spotify, the labels have a measure of control over advances in streaming tech, and get a piece of the ad revenue that the platforms collect.
The results of this new business model are actually pretty good for artists, with some caveats. Most importantly, illegal downloading has dropped dramatically. That’s good news for artists, who didn’t get their cut when someone torrented their whole discography.
Labels are spending as much, if not more, money than ever before on signing new artists. There is some downside there. Those artists might not get the kind of promotional attention that they used to, and releases from up-and-comers are harder to highlight with a firehose of content.
while the torrenting era is over, the streaming era creates unprecedented opportunity for musicians to take control over the direction of their careers
Yet artists can get their own content out under their own terms, if they have the right combination of timing, talent, and luck. 2019’s breakout star, Lil Nas X, cut song of the year “Old Town Road” at a personal cost of about $50—$30 for a beat from an online beat store via producer YoungKio, and $20 for an hour of discounted Atlanta studio time. He then posted it on SoundCloud the next day. It goes to show that music production is cheaper and more accessible than ever—but that’s a separate post.
Lil Nas X signed to a major label deal with Columbia after a furious bidding war, but he had the clout to stay independent if he wished. The late Juice Wrld enjoyed a similar beginning to his major-label career, leveraging SoundCloud success into an Interscope deal featuring a $3 million signing bonus. Established stars like Frank Ocean have spurned the majors in recent years, since streaming platforms allow them to self-release at minimal cost and keep the profits to themselves.
How to Find New Music for Your Bluetooth Headphones
Despite all this turbulence on the business end, not a whole lot has changed for listeners. We still listen to music via car speakers, home speakers of varying scale and quality, and portable plastic boxes connected to headphones. But there are some differences: namely, internet-based promotion, streaming, and Bluetooth.
For listeners, the way we find new music is probably the biggest day-to-day change wrought by emerging tech. SoundCloud—a website most people hadn’t heard of in 2010—has a global chart that is arguably a more accurate indicator of the musical zeitgeist than the Billboard Hot 100. Making Spotify’s opaque streaming charts and being featured in an influencer- or company-curated playlist can be a breakout moment for new artists. Gaming the YouTube algorithm is a viable career strategy for SoundCloud rappers and white supremacists alike.
Streaming also makes more music than ever before instantly available to listeners. It’s easier than ever to discover legacy artists or obscure has-beens—which is a significant business opportunity that the majors have been slow to exploit, if not outright negligent.
Streaming also offers consumers consistently higher-fidelity audio. My beloved iTunes library had files of dramatically different quality, ranging from high-quality label-sourced files to 96kbit/s, mongrel travesties. The the default Spotify format for unpaid account PC users streams through a 128kbit/s AAC format. It’s a respectable file type that is about as good as a 2010 iTunes store download. Premium users can stream 320kbit/s on mobile devices with strong signal (Audiophiles will surely argue with all of this paragraph. Don’t @ me.)
Gadgets have changed subtly since 2010. Then, listeners were already starting to migrate music from their iPods to iPhones and Android devices. The main difference is where the file is stored. Now, users don’t need to continually update the library on their phone’s hard drive. Instead, the file is streamed from YouTube or a premium Spotify or Apple Music account.
One of the two main developments on the gadget front is the ubiquity of Bluetooth. Wireless speakers are dirt cheap, and sound pretty good. Expensive ones even allow you to move from room to room with the same song. You can also take your favorite jam straight from a Bluetooth shower speaker to the car, allowing for uninterrupted karaoke time.
Smart speakers are the other significant hardware advancement for music listeners. Now, listeners can skip the step of picking what to listen to, or pushing a button to do it, and have Alexa do both for them. Smart speakers grant users a small convenience, but there is a potentially high price for it, as tech giants and hackers now can listen to all of our most intimate moments.
Still, for as much as the music business and the experience of listening to music have changed, radio—of all things—remains the most popular format for people to listen to music. According to the IFPI, the most popular listening format for recorded music is terrestrial radio, which still draws 29 percent of the time people spend listening to music across the world.
Smartphones are coming up quickly behind it, with 27 percent of overall listening time, but the same IFPI report notes that a significant portion of radio listeners actually tune in via smartphone or smart speaker. The iHeartRadio app is also popular for some reason.
Still, though Apple may have put Tower Records out of business for good, the best, most resilient independent record stores are doing fine. (The same is true, incidentally, of Amazon and independent bookstores.) Hardcore fans—musicians, DJs, and audiophiles—still delight in vinyl records, and value the places where they are sold as places to discover new music and forge communities.
Vinyl listeners’ numbers are growing, according to the RIAA. New vinyl sales are growing at a nice clip—12.9% in the first half of 2019 when compared to the first half of 2018. And that doesn’t even account for used record sales and the venerable art of crate digging, which has always been your favorite DJ’s favorite thing to do.
So while the torrenting era is over, the streaming era creates unprecedented opportunity for musicians to take control over the direction of their careers—and put their work directly into the hands of listeners who can hear anything they want, at any time, in any location.
And with that in mind, I can’t wait to hear what music sounds like in 2030.
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