The Chaos of the Music Industry

And before we jump right into streaming, which is kind of where I left off in the last episode, there actually are a few things that I should cover that I skipped over in that last episode about how music, technology and business are all intertwined. They all have a massive effect on each other. I mentioned the concept of royalties in the last episode. That is, it's it's a fee paid to a composer or copyright owner for the

use or purchase of a work. So if I write a song that's included on an album, and presuming I've got a contract that guarantees me a certain amount of royalties a percentage, then I am owed a bit of money for every sale of that album. It might actually be a very tiny amount of money. And first, you know, if I were if I was paying advance, that advance must be paid off before I start getting royalties, But eventually I do get that cash. But what about public

performances of my song? Like, what about if my song is played on the radio, or if it's played on the sound system of a restaurant or a bar, or a theater or something like that. Well, technically I mowed royalties for that as well. This was determined in the United States way back in nineteen o nine when the Copyrights Act was signed into law, and in the very earliest days, it was up to the individual composers and IP owners to reach out and royalties and licensing fees

from the parties that were publicly performing those songs. And as you can imagine, that's time consuming and difficult, especially if you know you're talking about like a single composer reaching out to every radio station that might be playing your work. That gets really tough. And keeping them honest and being able to get them to pay the royalty fees that actually really the licensing fees so that they

can legally play your work on their stuff difficult. Now. Granted, in the early days of radio we were mostly talking about live performances anyway, and not recorded once, but you

get my meaning. So in nineteen fourteen, a whole bunch of composers and publishers, led by Victor Herbert, founded an organization in the US called the American Society of Composers, Authors and Publishers a k a as CAP, a s C a P. This organization would perform the services of licensing music on behalf of its members and electing royalties on behalf for those members. So, in other words, if you if you belong to as CAP, you didn't have

to worry about doing this yourself. So joining the group would give the publishers and composers and i P holders the benefit of not having to go after various public performance venues, as CAP would do it for them. So if you ever hear about as CAP fees, that's what it refers to. It is just one of many organizations that performs this task. As CAP is not the only one by any stretch of the imagination. Now, as time

went on, more groups like as CAP would form. As KEPT mainly focuses on America, the United States in particular. It does maintain offices and a couple of other countries as well, but really it primarily focuses on America and American artists. Also, as CAP has had a pretty interesting history itself. I could probably do a full episode just about as CAP. Prior to nineteen forty, as KEPT would demand a five percent royalty fee for broadcast perform says

of songs. So, in other words, whatever revenue the radio station was bringing in at that particular time, five percent of that would go to the license holder because of that that fee. In nineteen forty, the nonprofit organization increase that fee up to a staggering fifteen percent. Now, let's say that you run a radio station. Okay, so you're

on the other side of this. Your job is to figure out what music you're gonna play in order to fill up air time, and you happen to see that any song that's covered by as CAP comes with a fifteen percent royalty fee for that time that you're actually broadcasting that that song. You're probably gonna look at music that's an outside of as CAP, and that that case right, because it's such a high fee, and a bunch of broadcasters did just that. The broadcasters did the same thing

that the composers had done back in nineteen fourteen. They got together and they created a different performing rights organization. This one was called Broadcast Music Incorporated or b m I. So if you've heard about as CAB or b m I, that's where this comes from. Now, upon the formation of b m I, the members of as CAPS saw a serious threat here, Like it was very clear that, uh, those who were covered by b m I were definitely gonna get radio play and those who are covered by

ASCP definitely were not because of those higher fees. So as CAP then readjusted their royalty demands all the way down to two point eight percent royalty instead of fifteen. And again, there are tons of other performance rights organizations out there, you know. One of them is so can s O c A N that's out of Canada. There's

BOOMA b U m A that's of the Netherlands. But there are dozens of these and each country pretty much has its own, and more than one in several cases, and they all pretty much do the same thing on behalf of their members. They license music and they collect fees. And we'll come back to them in a it because

the way they work with music streaming services matters. It matters a lot, and it is one of those cases that we often hear about whenever a music streaming service is making an argument that the fees they pay out might be might lead to their destruction. Pandora has had that argument a couple of times. In fact. All right, now, let's cover something that a Twitter follower named John Weber

pointed out last week. They pointed out that the changes in media formats from vinyl to eight track, to cassette to c D two, MP three all had an impact on consumers and the industry, and I didn't really touch on that how the actual changes in media had an impact on how the industry made money and how artists got paid. And the reason I didn't go into it was largely because it just gets super duper complicated. But it's a valid thing to point out, so we're gonna

try and cover a little bit of it. Keeping in mind, like I said, this gets really complex. Now. First, a really obvious way that the creation of eight tracks and cassettes would have on the music industry was that, for

the first time, recorded music became really portable. So vinyl records are great, and they allow us to listen to our favorite songs or albums when we're at home or you know, if there's like a jukebox that has vinyl albums in it or something like that, but it's not typically the kind of format that lends itself to portable listening. Not that some auto manufacturers didn't give it the old

college try. There actually are a few different auto mounted phonograph type devices, and in fact it goes back decades. Um Chrysler offered a highway high FI baggage on several car models in the early sixties. The system required proprietary records that spun at sixteen and two thirds rpm, so you couldn't just put your own vinyl collection on there. You had to buy all new records that were designed to rotate at this particular speed at sixteen and two

thirds revolutions per minute. Only Columbia Records was making those albums, by the way, so the system wasn't a huge success. In fact, it was a flop, probably due to it both being really expensive, like it was a big upgrade too, you know, have it installed in your new vehicle, and you were also really limited to just those special records

that Columbia produced. So not only were you only limited to artists that were represented by Columbia, uh, it was the subset of those artists that Columbia actually made these special records for that you could even choose from, so not great from a consumer standpoint. There were a couple of other attempts to bring vinyl albums to cars, and in fact, you can find an examples of this if

you look around. In fact, I'm sure there are cars out there on the market that still have some of these things installed, but they typically had really big drawbacks, like even the ones that were designed in such a way where you wouldn't get skipping with the needle, because you know, you would think, like, if you're driving down, say a bumpy road, then the needle is going to

skip around on your record. That's gonna be terrible. Well, they found ways of making sure that the needle would stay connected to the album even if you went down a bumpy road. However, that also meant the needle would wear out the album faster. So in other words, the more you listen to a particular record, the more you were wearing it out and you would eventually have to replace it. So this really made way for the birth of cartridge and cassette technologies, which would store music on

magnetic tape rather than in grooves on a disk. So in the early nineteen sixties, you got the cassette tape, but the original cassette tape was terrible and so it really didn't take off. Like in the early sixties, the cassette tape tried to make a dent, but the audio quality was so bad that no one really wanted it.

But then the Ampex Magnetic Company partnered with our Cia Records, the Lear Jet Company, and the Ford Motor Company, and collectively they designed the eight track tape specifically for the purposes of having an in car audio system where drivers could bring along their own music and not depend upon radio broadcast casts. Now, at this time, really most cars only had an AM radio. FM had not made a lot of penetration yet, and so a M was pretty limited.

And this was considered to be a big, big boost, and the technology began to make its way into vehicles in nineteen and by the end of sixty five there were more than sixty thousand four vehicles that had an eight track player installed in them. Now, eight tracks had some big advantages over vinyl, particularly the systems that had been developed for car. For one thing, the audio quality

was really good, at least at first. For another, they were far more portable than vinyl, albums and and vinyl players. The exteriors of these cartridges were pretty durable, so you didn't have to worry about getting you know, like a scratch on your cartridge and then your music is gonna skip. But these eight tracks also had some big downsides too. One is that the eight track had a sort of never ending loop inside it, which was one way only, so you couldn't rewind to listen to an earlier song.

You had to go around the horn, You had to go through the entire length of the tape to come back around to the song again. I think, In fact, I know several times in the past I've talked about turning over an eight track. That's not right. No, it's that there's a never ending loop inside the eight tracks. So eventually the loop comes back round again and you're able to listen to the music that's on that part of the loop. Um, but you can't rewind, you can't

go backward. Um. You. Another big down downside two eight tracks was at the capacity of your average eight track tape was less than what you could fit on a full vinyl album, So the eight track would not be able to hold all the songs that you would find on the full vinyl album version of whatever you were buying. So if you went out and bought UH the vinyl and the eight track of the same artists album, the

eight track would be missing a few tracks. Typically. Also, the magnetic tape and the eight track would degrade over time, so one common issue was that sound from one track would start to bleed into the next track, kind of like what happens when UH you are listening to a radio station and you start moving into another radio station's broadcast range and they start to mesh with each other.

Very disconcerting. Also, the tape was pretty flimsy, so if it caught on stuff, it could easily break, and that was another big downside to them. They did have at home eight track players, which helped the medium quite a bit, so it wasn't just in cars. Cars are are where it got its start, but they were at home versions of eight track players too. Now, eight tracks had a

bit of a heyday in the nineteen seventies. They kind of peaked at around nineteen seventy eight, but even at their peak they were still just a fraction of the market of vinyl, and then cassettes were catching up. When eight tracks first arrived on the scene. The cassette tape already had existed, like I mentioned, but was, for lack of a better word, total pants Uh. They were just

awful with terrible sound quality. But that would change, and ultimately the smaller form factor of the cassette and the greater capacity that cassette tapes had, like they could hold more material, that would spell doom for the eight track in the long run. Anyway, even when eight tracks were at their peak, they were at about four billion dollars in revenue, and vinyl was still at around sixteen billion dollars.

This is adjusting for inflation, by the way, so vinyl was about four times more successful in turn of revenue then eight tracks. Eight tracks would never overtake vinyl, but cassettes would, and the cassette was doing pretty well by the late seventies. They overtook vinyl in nineteen eighty three, and then cassettes hit their peak as late as nineteen

nine and around twenty two billion dollars in revenue. Again we're talking about by revenue here, um, But the compact disc was a big thing and had overtaken cassettes way back in ninety two. This was also when we started

to see a decline in music sales. This would also be around the time when Napster was really active, and so the industry pretty much pounced on piracy as being the reason why music sales took a downturn, and that's when we got all these massive and um overenthusiastic I think is a good word over enthusiastic lawsuits against napster itself and then specifically users of Napster really meant to terrify users so that they wouldn't pirate music, and it

was insane. Some of the damages that they sought against various users of the platforms really painted the music industry in a bad light at the time. All Right, we're gonna take a quick break. When we come back, we will continue to talk about cassettes and then we'll get into some of the complicated issues when it comes to trying to figure out what these different forms of media, what kind of impact they had on consumers and the

music industry in general. But first let's take this quick break. Okay, So cassettes could fit an entire album on them, unlike an eight track, So that was one bonus for cassettes. They could be rewound. There was another big bonus. They were more portable than eight tracks, and the magnetic tape tended to be a bit sturdier than what you found on eight tracks. The quality of a cassette tape could degrade over time, so you know, the more you played it,

the less good it would sound. But generally speaking they were received as being a bit more durable than the eight track format, and the music industry treated cassettes a lot like the way they treated vinyl, and that you could buy full length albums, or you could buy cassette singles, which would contain a few songs but not a whole album. This gave customers some options. They could buy just the singles they liked, or they could get the whole album.

I don't know how popular cassette singles were, Like, I have anecdotal things I could talk about, but that's worthless. Right In my own experience, I almost never bought a single. I almost always bought an album instead of a single. But I did have a couple and there were some downside succettes, a big one being that the amazing album art of the vinyl era was reduced to a tiny

fraction of its normal size. That's one of the things that vinyl collectors often bemoan is that, uh, the when vinyl started to have a downturn, we started to see the end or the perceived end of an era of amazing cover art. But convenience made up for most of the downsides for most people. And now when the compact disc started to get popular. So the compact disc debuted all the way back in the early eighties, but took a while to get popular. Once that happened, things changed

a bit. Uh. Yes, there are different CD formats out there, there are CD singles and things, but here in the States, the full sized compact disc was pretty much the standard and in some markets the only format available. I'm also not going to go into stuff like digital tape because going through all the other, at least in the US, the other minor media formats would just be overkill. Anyway, the music industry was really focused more on selling full

albums at this point and not singles. That meant, if you wanted to get that hit song that you really liked, you had to buy the whole dang album if you were determined to get CD quality that is, and c d s are an optical format, meaning CD players use lasers and the lasers read little pits and lands that are on the surface of the c D lands. By the way, that's just a word. That means the span between pits and the pits and lands correspond with bits.

That is, zeros and ones and songs are represented as digital data. So unlike vinyl eight tracks and four tracks and cassettes, those are all analog formats, right, those are not digital. C d s are digital. Now, I'm not going to go into the long debate between digital versus analog because I've talked about it in previous podcasts and they would push this episode into truly epic length. So we're gonna leave that debate behind. It's not really important

for the purposes of our discussion anyway. So, by the average music customer was spending around sixty four dollars on music per year, so assuming you're buying CD s, that's somewhere between three to five CDs per year roughly. Now, all through this time, the music industry was making huge amounts of money. We're talking like around forty billion dollars in nine in the United States, and much of that was due to the packaging of music the bundling of music.

Like I said, CDs pretty much forced people into buying whole albums even if they only wanted a single song. Even cassettes which did have those cassette singles were priced in such a way that I think a lot of folks just elected to buy the whole album rather than spend more on a per song basis, Like a cassette

single would be less expensive than the full cassette. But if you were looking at it on a per song basis, like like you're looking at it like grocery shopping, like how much is this per ounce, then a full album was more economically uh sound, I guess. But in the late nineties, digital music al formats were poised to make a huge difference to create the opportunity for consumers to buy music in a different way, an unbundled way, because

you could start buying songs individually rather than buy full albums. Now, before I get into that, I need to add that the year that recorded music peaked is another one of those things that I find conflicting information on a lot of sources suggest that it was ninety nine. That's what the Recording Industry Association of America says that recorded music, as in music, you would go out and purchase a copy of like a physical copy of peaked in nine

But that's where the United States. If we actually look at the global market, the peak was even further back in nine six. That was with a global revenue of around sixty billion dollars. As for artists cuts of you know how much did artists get for these different kinds of media. Those changed over time too, So back in three for example, and artists would get about eight percent off the sale of an al boom costing eight dollars cents. This is from a book by Steve Knopper called Appetite

for Self Destruction. Now is the same year that the compact disc debuted. It would only only early adopters really win after CDs that that at that point because they could only they were the only ones who could afforded CD players when they first came out were a couple of thousand dollars. So it wasn't the sort of thing that the average teenager could rush out and purchase, at

least I certainly couldn't. And uh, once you get to the point where c d s were starting to become the standard, where cassettes were starting to fade away, and artists share off a sixteen dollar c D was just five. So remember the final album, they were getting an eight percent cut off of what was like an eight dollars cents sales price, and with the c D it's a five percent cut of sixteen dollars. So the CD cost more, but the artists got a smaller percentage of the sale. Now,

gradually CD prices increased and artist shares also increased. They went up to ten. By the way, when it really comes to comparing how much artists earned and how much music was worth across different formats, it quickly becomes a jumbled, chaotic mess. It. I mean, it really does become impossible to talk about in any meaningful way. The fact is there's just not really any rhyme or reason to it

when you really look across the years. Pitchfork has a really great article about this that came out in two thousand fifteen, so it is dated, but the article is titled how much is Music Really Worth? I recommend that article.

That's a good read if you want to learn more about this, and it really lays out that the price of music has gone all over the place over the years, So Pitchfork adjusts all the prices to match two thousand, fifteen dollars because that's when the article came out, and you see really crazy amounts, like like a an eight track album of Jimmy Hendricks's Are You Experienced in nineteen sixty eight cost fifty three dollars ninety six cents for for that one album, keeping in mind that eight track

albums can't hold as much as vinyl. Uh It also points out that it would cost forty two dollars forty three cents to buy a cassette tape of Simon and Garfunkel's Bridge Over Troubled Waters album in nineteen seventy and when you look at those prices, coughing up about twenty five bucks in two thousand two for a CD of The M and M Show seems quite the bargain. But wait, it gets more confusing because generally speaking, the price of an album like a single album, declined between nineteen seventy

nine and nineteen eighty four. It went from around twenty two dollars eighty one cents per album in nineteen seventy nine to sixteen dollars eighty one cents per album in night. But then the price of albums began to climb again up to two thousand four, and by then it was up to eighteen dollars forty two cents. Remember, all of these prices have been adjusted for inflation, so it's not just that inflation made these go out. The actual cost

was increasing. The cost would drop again to fourteen dollars cents by two thousand nine. So Pitchfork came up with these figures by averaging the per unit sales across all media. So that's a combination of all the available options for each album. Right, So in the seventies and eighties, you're talking about everything from you know, averaging together the vinyl, the eight track, the cassette, tape, um, all the different

versions that you get of that album. That's where that kind of averages out to, whereas in the more recent days it would be things like c d s, maybe cassettes, digital, that kind of stuff. So what I'm getting at is there is no apples to apples that we can really talk about here. In fact, we can't even really do apples to oranges. It's more like we're talking I don't know, apples too. Can openers or something that. But let's let's get onto downloads and streaming and talk about how that

disrupted the music industry. We started to see the unbundling trend with the rise of digital music stores, primarily iTunes, which started in the early two thousands. Two thousand three, I think is when the iTunes store launched. Now, at that stage, artists were getting about four off a full album that was purchased off iTunes, and typically and a full album off iTunes cost about nine dollars cents, that

is according to David Byrne of The Talking Heads. But another format was also going to shake things up, and that was streaming. So let's talk about streaming. Streaming really is what it sounds like. You're streaming data from one source to a destination device. In this case, that data represents audio. One group created a streaming audio technology that they then incorporated into a music service called tune to dot com um that's t U n E t o

dot com. That was an online radio service. They also worked with a more on demand streaming audio concept that they called Aladdin. In two thousand one, Listen dot Com purchased tune to dot Com. Listen dot Com meanwhile, also owned an online music directory. So pairing the Aladdin concept of this on demand streaming service with this large music database, Listen dot Com created a new service that they called Rhapsody.

This would be the first streaming music service and it launched in late two thousand one, so it actually came out before the iTunes Music Store did. To Listen to Rhapsody, customers would have to fork over a monthly subscription fee. Over the following year, Rhapsody built out their library further by making deals with major music labels. The company Real Networks are e A l at Works would go on

to acquire Listen dot Com. This stuff happens all the time in tech, particularly during this era, because there's always a bigger fish, and that happened just as the iTunes Music Store launched. And just to bring Napster back into this, in two thousand sixteen, Rhapsody, which was by this point an independent company. In a you know its own history is worth an entire episode, Rhapsody would rebrand as Napster.

There was no real connection to the original peer to peer network that had caused the music industry so much headache back in the two thousand one time, but it did have the same name. They bought the rights to the name, so we could say that streaming really got started in late two thousand one early two thousand two. Also in two thousand two, last dot Fm would introduce a feature that would become important for later streaming services

like Pandora. That feature would track user activity, meaning which songs the user was gravitating toward, and then use that information to make recommendations of music that the listener might not be aware of, but they could potentially really like based on their preferences, Like if you listen to a lot of band A, maybe you'd also like band B that sounds a bit like band A. Pandora would take this concept and push it much harder, growing out of

something that was called the Music Genome Project. You've probably heard me talk about metadata in the past. Metadata is information that is about information. For example, for each episode of tech Stuff, I create metadata, and the metadata includes a brief description of the episode. It also includes keywords that relate to the subject matter, so if you're searching for a specific tech stuff topic, uh, it's more likely

to pop up. Metadata helps computers contextualized content in some way, because computers aren't natively able to understand what content is. So with songs, the Music Genome Project would break down a lot of the basic components of the music in order to quote unquote understand what that music was. And actual human beings were doing this work, by the way. It wasn't like the computer was scanning a song and saying, oh, this song has you know, a very strong power lead guitar.

So the Pandora employees would include tags of songs like female vocalist or up tempo beat or long guitar solo or whatever. You know. They'd use different ways to describe the music, and the Pandora service would later use those descriptions to create dynamic playlists of music for listeners based

on a seed song or artist. So you might go in there and say, like, I want to create a Pandora radio station that uses They Might Be Giants as the seed band, and it might pull other artists like I don't know, bar Naked Ladies, which you know, you could argue whether or not that's similar to they Might Be Giants, But there's a lot of overlap in the

listening habits there. That's kind of the idea. So the listener puts in the starting point the Music Genome project bit says, Okay, what are some of the characteristics of the song and or artist and what other similar artists and songs can I draw from in order to create a playlist. It was and is pretty darn cool. Well, we're gonna talk a bit more about Pandora in particular and the tribulations that it faced when it came to figuring out things like licensing fees after we come back

from this break. So Pandora's features and similar ones that were designed to do, you know, pretty much the same thing created the backbone for lots of streaming services. Of course, not all streaming services are dynamics. Some follow more of a broadcast model. For example, I listened to the I Heart Radio broadway station a lot that's more like a streaming radio station, where they're doing the programming on their side ahead of time. It's not like it's just dynamically

pulling the next song. If I listen to a Pandora station, like a Pandora Broadway station, I'm hearing music that is at least in part curated based upon whatever I used two seed that station. Now, when it comes to music streaming, the music industry would treat that kind of consumption similar in a way to radio broadcast, similar but not identical. In fact, in many cases, the industry would effectively penalize streaming platforms, and at multiple points companies like Pandora faced

the possibility of having their entire business model threatened. Alright, So this this part the story gets even more messy than it already has been previously. I mentioned as CAP so as CAP and other performance rights organizations seek out licensing fees and royalties, right, and there are certain percentages that they seek out for radio broadcast where they will negotiate a percentage that they'll look to claim for songs

that are broadcast on radio. In the early days of internet radio, there was a real imbalance between what terrestrial radio stations were expected to pay and what streaming services were expected to pay. In some cases, streaming services were expected to pay twice as much for streaming a song as the radio would be charged for broadcasting a song.

And you also see like the difference in operation makes a huge effect here too, Right, because radio station broadcasts a song, they might have to do sort of a Nielsen review to figure out how many people are listening to that radio station, right, But streaming services can theoretically anyway track exactly how many people are listening to a specific song. And while a song might broadcast over the radio three or four times in a day, you know, how do you count. Do you count that as a

single performance? Do you count that against the percentage of you know, how many people are listening to that radio station. With streaming services, there was no limit to how many times a song could be streamed in a day. It would all depend on how many people were wanting to listen to that song. But this got really complex, thanks large and largely because the ruling of a a U. S agency called the Copyright Royalty Board that formed in two thousand four as part of the Copyright Royalty and

Distribution Reform Act here in the United States. The Board includes a panel of three judges who quote oversee the copyright laws statutory licenses, which permit qualified parties to use multiple copyrighted works without obtaining separate licenses from each copyright owner end quote. Because obviously, if you're running a broadcast service, it would be impossible to seek out a license for each copyright holder. And still, you know, have a service.

Now in two thousand seven, the CRB created new regulations for online royal teas, which many platforms claimed would mean those platforms would have to pay out more in royalties than they were making an ad revenue, meaning the royalties were actually threatening the very business of internet radio. A lot of companies got upset with the CRB, including the one I worked for. Of course, back in those days, it was not known as I Heart Radio. It went

by the name Clear Channel Communications. Now, the rates for streaming started out at point zero zero zero eight dollars per play, so not even a penny per play per listener back uh or per listener rate, I should say, back in two thousand and six, But it would increase all the way up to point zero zero one nine per play per listener rate in and that's where it would stay. Now. Despite the proclamations that this would bring

an into streaming radio online, it didn't. But then it was also complicated to just keep track of which tracks were playing and how often they were playing on which platform they were playing, so it really got hard to determinative streaming platforms were actually paying out royalties properly or not. In fact, most people guests that they weren't that artists weren't getting what they were owed um, and that there

were a couple of different reasons for this. Some of them were kind of honest ones and that it was genuinely hard to know whom you were supposed to pay, and others were maybe that some of these platforms were lying on the fact that it was so complicated and opaque that they could kind of get away with not paying Now. In two thousand eighteen, US Congress passed the Music Modernization Act in an effort to get a handle on this problem. This set up a nonprofit agency called

the Mechanical License Collective or MLC. Starts to sound like a dystopian science fiction novel, anyway, the MLC is responsible for maintaining a database of the owners of mechanical licenses for copyrighted works. The MLC collects licensing fees from music streaming services, and the database makes it much easier for these streaming services to identify the owners of the licenses so that the streaming platform can make sure that the right person is credited and ends up getting what they

are owed. Heading up to two thousand eighteen, this was really a big challenge again because there wasn't the centralized database, so the MLC was working to change that. The MLC is also responsible for paying out those fees to the proper license holders. There's actually a couple of steps in that as well. Streaming services can still negotiate directly with license holders, but otherwise they have to pay a compulsory fee to the MLC to do streaming of those songs.

But what does this mean for the actual license holder, the artist or rather the composer typically, how much are they getting paid? Well, let's say you got yourself an album and that album is available on a service like Spotify, and first Spotify generates revenue through subscriptions and such and takes a big cut of that incoming revenue. So Spotify takes around thirty of all the revenue. The rest goes into a pool that gets divided up among all the

other parties involved and getting music on Spotify. So that includes your record label, your music publisher, your distributor, and you. And depending upon how frequently folks were streaming your particular album, your pool might be much smaller than someone else's um because you're all sharing that amount, right, that's left over after Spotify takes it's like it's cut that's left for everybody to divvy up based upon how frequently there's you know,

those songs were played on the platform. So what this means is that by the time everyone else has taken their cut, there's very little left to go to the artist. Plus, record labels have been a little opaque and how they pay out artists, so it makes it even more complicated. Business Insider reported that an artist might receive somewhere between point zero zero three three to point zero zero five four dollars per stream, so less than a cent per stream.

In fact, it would mean that someone would have to listen to a song multiple times before, or several people would have to listen to the same song before an artist would even see a single penny. That penny would still get split with the publisher and other entities like as CAP. That money, by the way, also, like I said, does not go directly to the artists from Spotify. Instead,

it goes to whichever distributor handles your music. The distributor receives the royalties from the streaming platform, then pays more likely your record label, and then your record label will eventually pay you on whatever schedules all of these different entities are working on, so payment can be a bit erratic. This is largely why the live events space is so important for musicians, because while you can make money streaming songs on platforms like Spotify, you need to be really popular.

I mean, you need to have thousands and thousands of people listening to your songs in order for that to really become something where you can live off of it. So really streaming is you know, at least getting a decent revenue from streaming is really limited to extremely popular acts already. If you are a small independent act, you're

probably not getting a significant amount of money from streaming. Uh, you might get more by selling your music directly through platforms like band camp, or maybe you're getting a regular support system through something like Patreon, or maybe you're just making money by playing live venues, selling merchandise. Maybe you're even pressing your own vinyl and selling it. That gets really expensive to It's if you've ever wondered if you've ever gone to a show and they've sold vinyl and

it's from like twenty five bucks or something. If you've ever wondered why it's twenty five dollars to buy a vinyl album. It's because producing vinyl independently is really expensive. You have to pay a certain amount of money just to get the master reduced, and then on top of that, the actual pressing of vinyl costs a good amount of money.

Typically it gets a little more economical if you're producing larger runs, but then you have to sell more in order for those larger runs to be worthwhile, right, Otherwise you've got a garage filled with vinyl that you can't move. So, yeah, it's a complicated thing. The recorded and streaming businesses of music really tough, like specifically tough on artists. Particularly if you're an artist who didn't write your music, then you're really not looking at a whole lot of money and royalties.

The person who wrote your music might be looking at some, especially if the song goes really super popular and viral or something. But otherwise it's a very tough gig. And yeah, it's super complicated. Uh, it always has been. The music companies typically are the ones that end up making out like bandits here, You're you're talking about like now billion dollars,

billions of dollars in revenue every year. But they are also the companies that are promoting artists and spending money to try and get people to be aware of the artists that are under their label. So there's a trade

off there. Still, I suspect a lot of record executives out there probably make more money than um, then maybe they need to, like, maybe some of that money should be trickling down to the folks who are actually making the music as well as you know, the people responsible for making sure that the recording of that music is good, like all the technicians who are working there. I think that probably there needs to be a bit more redistribution

of that, but they all. I I feel that way about pretty much every industry everywhere, that the people who are responsible for the work deserve more credit than what they typically get. Well, there you go. There are a couple of episodes about the music industry and how technology affects the way the business of music works. There's more to say here, By the way, For example, the rise of the MP three would end up changing the way

music sounds quite a bit. That was largely because the way that MP three files compressed data often also incorporate compression of music, compression in the sense of reduced dynamics, so you have a reduction in the difference between the softest sounds and the loudest sounds. That means that you start to have more, you know, music that has more of a uniform loudness to it, and that lack of dynamic feature in the music is something that was driven

by technology. Some people bemoan that because they say, well, now the music is less complex, less nuanced, and uh, and it can all start to sound very similar to each other, even when you're talking about different instrumentation and everything. The fact that you have this kind of standard loudness becomes an issue. So there are other elements that we could talk about as far as how technology has affected music.

And of course there's also the whole story of electrification of music, everything from electric guitars to the rise of synthesizers and uh, you know, syn synthetic drum kits and that kind of thing. But that would just go down more rabbit holes. And plus I've covered some of that in the past. But if you do want me to talk more about music and tech and how the two are so closely related, let me know. You can still let me know on Twitter. As I record this, we're

waiting to find out. If Twitter actually does completely, you know, agree to the sale to Elon Musk. That's something that's happening just as I'm recording this episode. Um, and if that does happen, I might, I might just I might just piece out of Twitter for a while. But even in that case, I will make sure that there will be another means of contact me if you do want to contact me on Twitter. The handle for the show is tech Stuff H s W and I'll talk to

you again really soon. Y. Tech Stuff is an I Heart Radio production. For more podcasts from my Heart Radio, visit the i Heart Radio app, Apple Podcasts, or wherever you listen to your favorite shows.