April 25, 2022 • 44 mins
In a continuation of last week's episode about tech and the music biz, we look at how different media had a huge impact and how digital downloads and streaming would change everything.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Welcome to Tech Stuff, a production from I Heart Radio.
Hey there, and welcome to tech Stuff. I'm your host,
Jonathan Strickland. I'm an executive producer with I Heart Radio.
And how the tech are you. We're going to continue
what I started last Monday, which was an episode about music,
(00:28):
tech and business, and boy howdy does this get complicated?
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
(00:50):
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
(01:10):
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
(01:31):
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
(01:54):
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
(02:16):
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
(02:36):
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
(03:01):
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
(03:22):
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
(03:45):
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
(04:09):
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
(04:30):
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
(04:52):
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
(05:14):
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.
(05:34):
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.
(05:58):
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
(06:21):
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
(06:42):
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,
(07:04):
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
(07:26):
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.
(07:49):
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
(08:09):
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
(08:33):
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
(08:55):
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,
(09:17):
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
(09:38):
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
(10:01):
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
(10:22):
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,
(10:43):
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
(11:06):
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,
(11:27):
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
(11:48):
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
(12:08):
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
(12:30):
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
(12:51):
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
(13:13):
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
(13:34):
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
(13:57):
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
(14:19):
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
(14:43):
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
(15:08):
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,
(15:31):
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.
(15:51):
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
(16:11):
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
(16:33):
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
(16:55):
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
(17:18):
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
(17:40):
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
(18:00):
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.
(18:21):
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
(18:42):
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
(19:03):
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
(19:25):
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,
(19:47):
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
(20:09):
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,
(20:29):
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
(20:51):
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
(21:14):
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
(21:34):
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
(21:55):
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,
(22:17):
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.
(22:41):
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
(23:03):
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
(23:23):
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
(23:46):
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
(24:07):
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,
(24:30):
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
(24:52):
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,
(25:14):
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
(25:35):
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
(25:56):
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
(26:21):
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
(26:42):
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
(27:04):
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.
(27:28):
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
(27:51):
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
(28:11):
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
(28:32):
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,
(28:53):
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,
(29:13):
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
(29:33):
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
(29:55):
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
(30:15):
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
(30:45):
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
(31:08):
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.
(31:30):
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
(31:52):
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
(32:14):
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
(32:37):
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,
(32:59):
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
(33:19):
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
(33:41):
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
(34:02):
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
(34:24):
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
(34:45):
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
(35:08):
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
(35:31):
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
(35:54):
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,
(36:15):
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.
(36:35):
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
(36:57):
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
(37:20):
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,
(37:43):
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
(38:06):
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
(38:29):
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
(38:50):
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
(39:11):
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
(39:35):
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.
(39:55):
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
(40:17):
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.
(40:39):
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
(40:59):
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
(41:20):
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,
(41:40):
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
(42:04):
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
(42:26):
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
(42:46):
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.
(43:07):
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
(43:27):
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
(43:48):
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
(44:09):
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
(44:32):
you listen to your favorite shows.
Welcome to Tech Stuff, a production from I Heart Radio.
Hey there, and welcome to tech Stuff. I'm your host,
Jonathan Strickland. I'm an executive producer with I Heart Radio.
And how the tech are you. We're going to continue
what I started last Monday, which was an episode about music,
(00:28):
tech and business, and boy howdy does this get complicated?
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
(00:50):
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
(01:10):
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
(01:31):
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
(01:54):
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
(02:16):
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
(02:36):
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
(03:01):
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
(03:22):
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
(03:45):
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
(04:09):
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
(04:30):
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
(04:52):
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
(05:14):
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.
(05:34):
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.
(05:58):
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
(06:21):
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
(06:42):
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,
(07:04):
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
(07:26):
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.
(07:49):
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
(08:09):
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
(08:33):
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
(08:55):
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,
(09:17):
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
(09:38):
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
(10:01):
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
(10:22):
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,
(10:43):
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
(11:06):
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,
(11:27):
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
(11:48):
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
(12:08):
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
(12:30):
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
(12:51):
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
(13:13):
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
(13:34):
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
(13:57):
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
(14:19):
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
(14:43):
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
(15:08):
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,
(15:31):
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.
(15:51):
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
(16:11):
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
(16:33):
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
(16:55):
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
(17:18):
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
(17:40):
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
(18:00):
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.
(18:21):
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
(18:42):
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
(19:03):
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
(19:25):
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,
(19:47):
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
(20:09):
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,
(20:29):
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
(20:51):
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
(21:14):
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
(21:34):
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
(21:55):
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,
(22:17):
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.
(22:41):
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
(23:03):
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
(23:23):
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
(23:46):
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
(24:07):
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,
(24:30):
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
(24:52):
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,
(25:14):
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
(25:35):
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
(25:56):
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
(26:21):
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
(26:42):
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
(27:04):
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.
(27:28):
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
(27:51):
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
(28:11):
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
(28:32):
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,
(28:53):
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,
(29:13):
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
(29:33):
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
(29:55):
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
(30:15):
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
(30:45):
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
(31:08):
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.
(31:30):
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
(31:52):
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
(32:14):
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
(32:37):
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,
(32:59):
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
(33:19):
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
(33:41):
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
(34:02):
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
(34:24):
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
(34:45):
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
(35:08):
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
(35:31):
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
(35:54):
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,
(36:15):
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.
(36:35):
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
(36:57):
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
(37:20):
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,
(37:43):
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
(38:06):
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
(38:29):
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
(38:50):
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
(39:11):
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
(39:35):
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.
(39:55):
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
(40:17):
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.
(40:39):
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
(40:59):
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
(41:20):
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,
(41:40):
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
(42:04):
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
(42:26):
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
(42:46):
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.
(43:07):
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
(43:27):
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
(43:48):
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
(44:09):
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
(44:32):
you listen to your favorite shows.
TechStuff News
Hosts And Creators
Oz Woloshyn
Karah Preiss
Popular Podcasts
United States of Kennedy
United States of Kennedy is a podcast about our cultural fascination with the Kennedy dynasty. Every week, hosts Lyra Smith and George Civeris go into one aspect of the Kennedy story.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com