The History of Streaming Music

When Napster reared its head in 1999, it marked the beginning of the end of the compact disc era. Today, we trace the history of the slowly evolving death of physical music media. 

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Episode Transcript

Speaker 1 (00:01):
Welcome to stuff you should know, a production of iHeartRadio.

Speaker 2 (00:11):
Hey, and welcome to the podcast. I'm Josh and there's
chalk and it's just us streaming along merrily on our way, right, yeah,
how it goes. This is off to a terrible, terrible start.
Life is but a dream? Right, Yeah, but aren't they
talking about a stream.

Speaker 3 (00:30):
Merrily, merrily and merrily ringer on the rosies pocket little No.

Speaker 2 (00:35):
No, that's not it. That's about like the Black Death
or something.

Speaker 3 (00:39):
Yeah, let's just move on.

Speaker 2 (00:41):
Okay. So we're talking today about streaming music. That's why
I made that joke. I should make scare quotes for joke.
We're talking about streaming music, the history of it, and
I love this, Chuck, this is a great idea of yours.
Was this your idea? Listeners suggested idea.

Speaker 3 (00:56):
No, this is just me. I was maybe waxing philosophic
about I'm wearing with somebody, and then I was like,
that would be kind of a fun episode.

Speaker 2 (01:04):
Well, you were right. And one of the things I
love about this is this is history, like world changing
history that we lived through and not like as kids,
like this happened very much in like our adult lives.

Speaker 3 (01:17):
You know, Oh, yeah, for sure, just a seismic shift
in how music was released and consumed and the finances
around it. And yeah, I thought it was super fascinating
that there was a point in history not so long
ago where people were spending a lot of money comparatively
on buying CDs and physical media until they just said,

(01:41):
you know what, I'm going to buy music anymore. I
want it. I want it for free, like screw all
those musicians and trying to make a living.

Speaker 2 (01:49):
Yeah, pretty much. And it's not so the musicians were
caught in the middle. It was the labels that were
the greedy fat cats that pushed it too far because
it didn't matter whether it was the clunkiest album or
the best that Richard Marx had to offer, both ends
of the spectrum. You were paying nineteen ninety nine for

(02:10):
that thing, whether you liked it or not.

Speaker 3 (02:12):
Was that how much they were?

Speaker 2 (02:14):
Yes, absolutely, I don't remember being that much. Yeah, they
definitely were. I think they got down toward the end
in maybe the twelve ninety nine fifteen dollars range, that's
what I remember. They were very much nineteen ninety nine.
For a while, you paid it was like twenty bucks
of CD like that was a birthday present, right there?

Speaker 3 (02:31):
One CD YAO who initially fought the big fight and
refused to release a record unless it was I can't
remember how much it was, but it was quite a
bit less.

Speaker 2 (02:42):
Who Tom Petty baby Man, what a cool dude.

Speaker 3 (02:46):
Yeah, RP.

Speaker 2 (02:47):
So, like you said, people just kind of got tired
of overpaying. But at the same time, this was a
time where frequently albums were released where no one, even
the band probably thought that more than one or two
songs were worth The rest were just crud. What you
didn't get burned time and time again buying an album

(03:08):
and being like, I only like the two songs I
heard on the radio. Everything else on this album is terrible.

Speaker 3 (03:13):
No, I was a little different. I wasn't a singles guy.
I never bought a singles that was always an album guy, right,
And so I would buy albums that were good and
not albums that had one good song.

Speaker 2 (03:25):
But if that's that's what I'm saying, you didn't know
how good or bad the other songs were until you
got the album because you only had heard the one
good song on the radio. So you would hope, hope,
hope that the rest of the album was as good
as the song on the radio, and it never was.
There was like an avalanche of difference between the quality
of how good the radio song was and how bad

(03:47):
all the other songs on the album would be. That
was my experience, at least.

Speaker 3 (03:50):
Well, I didn't follow as prey to it, I think
because and I'm not like some snob or anything, but
most of the albums that I would actually invest in
buying because you know, I had a limited amount of money,
we're like good, really great bands.

Speaker 2 (04:05):
Okay, whatever, let's move on. I think we've missed one
of our famous stumbling blocks. I'll stick with my guns,
you stick with yours.

Speaker 3 (04:13):
Well, I just didn't have the kind of dough to
be like, Ooh, I like that song, I'll get that album.
I like had to really know it was awesome.

Speaker 2 (04:18):
I didn't either, and that's why I hated it so
much that I'm still upset about it today. Maybe I
was better at it, Yes you were. I think that's
ultimately the point you're driving. I'm glad you just came
out and say it.

Speaker 3 (04:31):
So everything changed from the big Heyday leading up to
the nineteen nineties into the two thousand's when a teenager
from Massachusetts, a hacker named Sean Fanning, got together with
a finance partner named Sean Parker, who would later go
on to be the very famously the first president of Facebook,

(04:55):
got together and said, Hey, we got this new thing.
It's a file software. It's a peer to peer thing,
so you can get music for free, basically by trading
it with your friends. And initially it was just I
believe Sean Fanning was like, I just want to trade
music with my friends who live on the other side
of the country. Then they realized they could get investors

(05:16):
make it into a real business, and that was Napster.

Speaker 2 (05:20):
Yeah. And one of the other things that was required
for this to work were CD ripping program software that
came out around the same time, where you could put
in a factory made, label produced CD and rip all
the music from it and turn it into MP three's.
As you did that time and time again, your MP
three collection would build up, and when you installed Napster,

(05:42):
it would find all those MP three's and then you
could trade them with other people like you were saying,
And it was such a hit, Chuck, that within two years.
We'll talk about Napster shutting down. It only lived for
two years. Originally, by the end of two years it
had something like fifty seven million users in.

Speaker 3 (06:01):
Two years, Yeah, I saw eighty million.

Speaker 2 (06:04):
That's I believe it. That it was sensational and the
idea that it was a teenager that not only introduced
this to the world but completely changed the way that
music is made is just satisfying but also just mind
boggling because things have been done a certain way for
so long and the labels were so in control. The

(06:24):
idea of this guy coming along, it's like the original disruption.

Speaker 3 (06:28):
Yeah, at the peak of Napster there were twenty seven
billion transfers per month song transfers, So it's just incredible.
And this is another great stat that LVIA found at
one point supposedly sixty one percent of all traffic on
college servers were people sharing MP three's.

Speaker 2 (06:51):
Totally by that too, man. So, like we said, musicians
mostly got caught in the middle of this. It was
the labels that were really taking the hit, and some
musicians are like, this is great, this is a great
way to spread music and awareness. Chuck d was very
famous a proponent of it early on, but there were
also the exact opposite. Some artists were like, to heck

(07:13):
with that. I think it was a famous quote from
Doctor dre And he ended up joining Metallica, A and
M Records, the RIAA and started filing suits against Napster,
and some of them, including the RIAA and Doctor Drake,
started suing Napster users, that is, their fans for pirting

(07:34):
their music, like suing them directly personally individually.

Speaker 3 (07:38):
Yeah, they went after them under the Rico Act, the
Racketeering Act. Metallica was specifically seeking ten million bucks. And
what they didn't realize was this was, you know, this
was an online thing, so you could get another software
program like if you know. What they ended up doing
was they ended up getting a list of more than

(07:59):
three hundred thousand in it's like three hundred and thirty
something thousand who had shared Metallica's music and got Napster
to ban them. And what they didn't realize was that
all they had to do those users was get another
piece of software to allow them to get into Napster
under another name. And so it was a pretty quick workaround.

Speaker 2 (08:21):
Yeah, and so Metallica got such a bad name for this.
This is such bad pr for them. And I can't
remember the name of their basis, their original basis or
there maybe their second basis. He left in protest saying
like this is wrong Newstead, but it was it new
said okay, they they were there's still today people are

(08:42):
like Metallica's who they're fans. They did not. They found
the names of their fans and had Napster banned them,
and there was a screen you would get that said,
at the request of Metallica, you are not allowed to
access Napster any longer. But they didn't sue any individual fans.
The ria ir AA did, and so did doctor Dre
And I read about one twelve year old girl, Brianna Gahara,

(09:06):
who had to pay two thousand dollars because the RIAA
sued her and she had to pay two grand a
twelve year old girl. That's what it was like. That's
how upset the labels were at this point.

Speaker 3 (09:19):
Well, she probably didn't think about that when she was
getting two thousand dollars worth of free music.

Speaker 2 (09:23):
Well essentially it's what they were doing. But she still
ended up paying like two dollars a song, which is
really that's outrageous. Today in twenty twenty four.

Speaker 3 (09:30):
Yeah, it's double yeah. At least so one thing this
did was just you know, brought it to the news
and a lot of people that weren't sort of on
the on the front edge of that technology, we're like, oh,
wait a minute, there's a site where you can just
go get music traded. So it actually it was sort
of like the barbar streisand effect it ended up creating

(09:53):
more users. Napster tried to hang in there. There was
an attempted acquisition at one point for ninety something million
bucks that a judge shut down for some reason that's
not worth getting into. But they tried to become like
a legitimate player. They paid royalties, eventually about twenty six
million dollars of royalties. They tried different models, they tried subscriptions.

(10:17):
Nothing really worked, I think because that time. By that time,
there were other like I mentioned LimeWire that was the
one I used. I never used Napster, Kazah, frost Wire,
these other ones. Competitors came along, and so Napster, while
like completely changing the game because they were the first ones,
didn't end up being some big huge They couldn't get

(10:37):
some big acquisition for it.

Speaker 2 (10:39):
No, they just like you said changed the game. But
one of the things that also was changed from Napster
in its brief two years and then its follow up
successors like kaza is the idea that, like, people aren't
going to pay yeah, fifteen or twenty dollars or even
twelve dollars for a CD anymore. It's not how we
want to do it. That's ridiculous for not doing it.

(11:00):
I would rather take my chances at getting sued by
the RIAA and get music for free than pay for
an album that I'm only going to like one song on.
That's what I said. And it was just the everything
was completely upended. And Apple came along in two thousand
and three and brought massive stability to this huge c change,

(11:24):
but it didn't go back to the way it was.
They said, we're gonna we have a model here that
can actually accommodate both in this new kind of environment
of how music is created and delivered.

Speaker 3 (11:35):
Now, Yeah, I want to jump back a second. I
wonder if because I think it's a real shame that
you know, you know, maybe at fifteen dollars is too
much for a CD considering how cheap they were to produce.
But I think it's a real shame. People were like,
I want to pay zero dollars for music now, like
I think it should be free and screw everybody that

(11:57):
makes a living doing this under if initially, if the
record labels had immediately just gone down to like six '
ninety nine for a CD, if that would have changed
the game.

Speaker 2 (12:10):
I don't know. Maybe. I think one of the things
that did change attitudes like that was a general public
awareness that was spread that the artists were being harmed
by this.

Speaker 3 (12:19):
Yeah, like you're taking.

Speaker 2 (12:20):
Music did deserve you did deserve to be compensated for
the music you made, like it shouldn't be free. Year
So it was kind of like the It was like
the pendulum of development, you know, but with music instead.

Speaker 3 (12:33):
All right, so I agree you mentioned Apple and specifically
iTunes is what came out in two thousand and three
and the iPod and they started selling songs for ninety
nine cents. One thing we didn't mention was that if
you had a PC and you were on LimeWire or napster, like,
there was a decent chance you might get a virus.

(12:53):
They were pretty rife with viruses, so you could you
could avoid you could avoid that danger and you could
pay ninety nine cents. You can get that single song.
If you're if you're You, if you're Josh, and you
don't want to take a chance on buying a full album,
you could just get that single Richard Mark song it
don't it don't mean nothing, and you would be super excited.

Speaker 2 (13:14):
Well that was the thing. Richard Marx is a bad
example because I think his two major albums both had
multiple hits on them. So all right, I'm just gonna
say it. Well, let's go with UTAs Saints. They're a
perfect example from roughly this era. They were I don't
even know where they were from, maybe British electronic.

Speaker 3 (13:35):
I think I remember that that song, yes, because that
was a.

Speaker 2 (13:38):
Song, right, it's samp something good. It sampled Kate Bush
and they would say like you toss Saints. Yeah, yes,
that song. So you bought that album. To the album,
you would just be like.

Speaker 3 (13:50):
God, well that's your problem, you know, buy LP.

Speaker 2 (13:55):
I was big time into electronic music at the time,
and people weren't coming out with albums like every week
that were you know, electronic. It was still very guitar heavy,
so I know you had to work with what you
got and frequently get burned. Sorry Utah Saints if you're
out there listening.

Speaker 3 (14:13):
So, overall, statistically, from and this is a pretty staggering
stat from two thousand and one to twenty ten, when
this first started. Over that next decade, physical music sales
dropped sixty percent all over the world, about fourteen billion
dollars in revenue loss. Digital sales rose about four billion,

(14:34):
But that left a ten billion dollar annual discrepancy and
what the music business was bringing in.

Speaker 2 (14:42):
Yeah. If that doesn't get it across, I don't know
what does.

Speaker 3 (14:45):
Yeah.

Speaker 2 (14:47):
So yeah, because at that point it's basically just Richard
Marx keeping the music labels afloat. The fact that they
had any money was essentially one hundred percent tributable to him.

Speaker 3 (14:57):
Well, you know what they say, It don't mean nothing
until you sign it on the outed line.

Speaker 2 (15:00):
That's right, that's what he's talking about. My man.

Speaker 3 (15:05):
Should we take a break?

Speaker 2 (15:06):
Yes? Okay. So while Napster was like, hey, we're into
file sharing, some other ones were as well. At the
same time, roughly an alternative model was developing, and that

(15:28):
was just streaming, right, So rather than like downloading an
actual MP three that you would keep on your hard drive,
you could burn onto CD do whatever. This was like,
there were like music servers. This is this is crazy.
To bear with me for a second. That would actually
you would stream the music over the internet through like
a player on your on your computer. Usually had to

(15:50):
download the player itself. This is before they called them apps,
and you could sometimes select songs and then other times
it was more just like an f radio station where
they would almost play it plates whatever, random songs that
you had no control over.

Speaker 3 (16:06):
Right, well, you did have control in that you could
skip songs and stuff. You just couldn't pick the songs.

Speaker 2 (16:11):
Sometimes though, you could only skip a finite number of
songs before it's like nope, you have to listen to
this CARDI one.

Speaker 3 (16:17):
Yeah, but that was the big problem with Launch Media
that they probably could have gotten away with it if
they didn't give you the ability to skip songs, right
because it was a little more like radio. But because
they had that fast forward button, the RIAA got involved
again and was like, we don't like that because one
thing I don't think we mentioned is radio. It was

(16:40):
a way for people to listen to songs and music
and get turned onto new stuff.

Speaker 2 (16:43):
It was a live transmission.

Speaker 3 (16:45):
Yeah, but what radio also was was a free advertisement
for those bands. So you know, every time a song
gets played on the radio, that's an ad to little
Josh Clark, like, hey, mis Sucker, go out this album
if you like this.

Speaker 2 (17:02):
Yeah, Utah Saints are great.

Speaker 3 (17:04):
This is this disrupted everything. The fact that you could
skip songs. That's why the IAA got upset because you know,
they're like, well, this is a lot like radio, but
you can't skip songs of the radio. We want people
to hear these songs because they're little ads.

Speaker 2 (17:18):
Right exactly. So that was a big problem. The streaming
services were as big a problem, maybe not as big,
but pretty close to the same amount of problem as
file sharing services were, too. They weren't like any kind
of solution as far as the music industry was concerned.

Speaker 3 (17:34):
Yeah, and those were you know, like Launch Media, who
eventually became Yahoo Music. Those again, though, were just playing.
There was like a I don't know if it was
a real person programming, but it was as if a
DJ was playing music. The first legit on demand streaming
surface was Rhapsody in two thousand and one, which started
out as part of listen dot Com, was bought by

(17:57):
a company called Real Networks, and then eventually, in sort
of an odd twist, it bought Napster and in twenty sixteen,
rhapsoly was rebranded as Napster.

Speaker 2 (18:09):
Yeah. Do you remember Real Player That was one of
those that software you had to download to stream music?

Speaker 3 (18:15):
Oh? Yeah, I remember that.

Speaker 2 (18:16):
I went and looked at old real Player skins and
it's just like, oh my god, those things were so ugly.
But they I mean, they're super. They look super two
thousand and five.

Speaker 3 (18:28):
Just seeing that little LimeWire lime actually gave me some
feels because I was doing by the way, I was
doing the same thing. I'm not saying, like when I said,
it's a real shame that people just said I want
my music free, like I was doing it too at
the time.

Speaker 2 (18:43):
Oh okay, well, I'm glad you said that.

Speaker 3 (18:45):
I was part of that, that real shame.

Speaker 2 (18:47):
You know.

Speaker 3 (18:47):
I was like, oh, great, LimeWire, I can trade music.
But pretty quickly I was I mean, I kept buying
CDs for a while of the bands I loved, and
pretty quickly I was like, wait a minute, there's something
about this. It doesn't feel right.

Speaker 2 (19:00):
Hey. One other thing that's occurred to me Chuck Is.
I'm sure somebody's like, well, yeah, CDs might be like
fifteen dollars a piece, but don't forget Columbia House, where
you get like ten of them for a penny.

Speaker 3 (19:11):
I never did that.

Speaker 2 (19:13):
You didn't. Did I ever tell you my Columbia House story?

Speaker 3 (19:15):
You did, But I think people need to hear it
if they haven't heard it. Okay, so told me last
week at a Cubs game. Was it just that recent?

Speaker 2 (19:24):
Huh? And I got to work on my memory. I
need some prevag in. So like you would send off
for those of you who don't know, you would send
like literally you tape a penny to a postcard and
send it into Columbia House and you could you could
check like what albums you wanted them to send you,
and like magic, they would send you those ten albums
for a penny, But then you were automatically signed up

(19:46):
for their subscription service and they would send you albums
that you didn't want it like two times the price.
So it really wasn't a good deal unless you could
get out of it with just those first ten albums.
And I did exact factly that because when they sent
me the first first handful of records that I didn't want.
I sent them back with a letter explaining that I

(20:09):
was twelve years old when I entered into this contract.
There's nowhere in the United States that it's legal for
a twelve year old to enter into a contract, So
please stop sending me albums. And they did.

Speaker 3 (20:20):
I love it. Very precocious kid.

Speaker 2 (20:23):
Thanks. I like that story. So I was a little bastard.

Speaker 3 (20:27):
Yeah, you mean like the rapper.

Speaker 2 (20:30):
No, that's old Dirty Bastard, right.

Speaker 3 (20:32):
I was thinking Low Wayne and Old Dirty Bastard got together.

Speaker 2 (20:35):
Right, little Bastard. That's my new rap name.

Speaker 3 (20:39):
Not tepid t all right. So Panta Pandora, not pantorra
Pandora came along in two thousand and five. It began
as Savage Beast Technologies, and they were founded on this
idea of the algorithm to recommend songs to where it
would curate like this is Chuck's station. And the way

(21:01):
they did this was through something called the Music Genome Project,
which I remember just thinking it was the coolest idea
and thing ever back then, and it was a cool thing.

Speaker 2 (21:11):
It was.

Speaker 3 (21:12):
It was basically that they would analyze four hundred and
fifty unique attributes of every song that exists from you know,
as simple as like what genre is it to like
how nasally somebody's voice was.

Speaker 2 (21:24):
Wow.

Speaker 3 (21:25):
Then they would evaluate it on a scale of one
to five with half increments, and the end result would
be the songs you know, quote unquote DNA. Initially, they
had a musicologist that did this by ear in the
hand and it took like fifteen to thirty minutes a song.
Eventually AI took over, but it was that was the
big attraction for Pandora was like this super cool project

(21:48):
where they're categorizing music so specifically that it will start
to learn what you like and you can curate your
own radio station.

Speaker 2 (21:56):
That's nuts. I never heard of that music genome project before.

Speaker 3 (22:00):
Oh really, it was sort of all the rage at
the time.

Speaker 2 (22:04):
Pretty groundbreaking. I mean, I'm taking it this is in
the early two thousands.

Speaker 3 (22:08):
I mean it was when Pandora started. That was sort
of the basis of how they worked.

Speaker 2 (22:11):
Wow.

Speaker 3 (22:12):
So yeah, two thousand and five.

Speaker 2 (22:13):
Okay, So Pandora also started to try a subscription model.
Were they the first They may.

Speaker 3 (22:20):
Have been, Well, I think Naster tried it but it
didn't work.

Speaker 2 (22:23):
Okay, So Pandora was the first I guess that was
successful at it. It was I think three dollars a
month for streaming music with no advertising, which sounds like
a deal, But there are only like ten songs on
the internet at the time it's it did, and they
tried like ten hour free trials kind of like those
AOL sample discs. Yeah, but only one. They only had

(22:47):
like a one percent conversion rate.

Speaker 3 (22:49):
Yeah.

Speaker 2 (22:49):
And one of the reasons why I think that doesn't
get mentioned very often is that we're talking this is
like the mid oughts two thousand and five. People were
not at all comfortable with giving their credit card information
out over the internet. Yeah, and that's the only way
you could buy.

Speaker 3 (23:07):
Back then, Yeah, when it just seemed like the most
like top secret thing you could even have as a
part of your life, right.

Speaker 2 (23:13):
Yeah. So I really truly think that that was one
of the reasons why this got a slow start. People
were just so comfortable with paying for things using their
credit card over the internet. And that's I mean, how
else you're gonna build some but you're gonna send them
a physical bill for your online streaming service.

Speaker 3 (23:28):
You get a letter from a twelve year old after that.

Speaker 2 (23:31):
Yeah, exactly imagine Pandora getting checks mailed to them every month.
That'd be hilarious. But I mean, I guess that's what
you'd have to do to get business going.

Speaker 3 (23:39):
Yeah, I think you're totally right. Those early days of
e commerce, I think a lot of us had some
trepidation about entering those digits online, you.

Speaker 2 (23:45):
Know, Yeah, and it might become it might be is
a confirmation bias where I, like, I was like that,
so I just assume other people were as well. But
most of the people I knew were not comfortable giving
out their credit card info at that time.

Speaker 3 (23:59):
No, I think you're right on the money, no bias whatsoever.
You're just right cool.

Speaker 2 (24:08):
So Congress got involved, actually in the United States at least,
and they came up with the Copyright Royalty and Distribution
Reform Act of two thousand and four. That's how disruptive
napster was. Yeah, in four years, Congress had passed an
act essentially trying to help smooth this over. I'm sure
it was largely in the favor of the labels, but
it set up the US Copyright Royalty Board where these

(24:32):
these software companies and streamers would come and take claims
or be taken to this board by music labels to
figure out who owed who what.

Speaker 3 (24:41):
Right, Yeah, which was a big, you know, through a
big wrench in the plans of a lot of these
companies that were just emerging. I think the ones that
were sort of smaller gave up pretty quickly because it
was such a legal quagmire. Like Yahue Music wasn't even
you know, a smallish one. They shut themselves down.

Speaker 2 (25:01):
Yeah for sure. So again Apple kind of rides to
the rescue. And in two thousand and seven they introduced
the iPhone. Because I don't know if we said it
or not. Before the iPhone came along, if you wanted
to listen to downloaded music anywhere away from your PC,
you had to buy an iPod or one of it's

(25:22):
also ran competitors like Zoom or something like that, but
you had to have like a physical device to listen to.
When the iPhone came out, it was like throw all
that crowd away. Now you can not only listen to
your MP three's that you're buying off the iTunes store,
you can listen to streaming music. You can do everything
you can on the internet, you can do on your iPhone.

(25:43):
So it provided a super stable, safe platform, not at
all skanky. You weren't going to get viruses or anything
like that from downloading apps from the App store. And
Pandora actually saw the writing on the wall very early,
and they had an app like I think the next
year that was available for the iPhone that was a

(26:04):
Pandora streaming app. And I think the first year, within
nine months that the app that the App store came out,
the Pandora app was on almost a quarter of all
iPhones in the world.

Speaker 3 (26:16):
Yeah, this also brought back funny memories of this is
kind of like when we were getting going with the
TV show.

Speaker 2 (26:25):
Ish really at those twenty thirteen.

Speaker 3 (26:29):
Well, I'm just talking about no, no, no, I'm not saying
the launch of the iPhone. I'm saying the apps being
like the end all be all. Like I remember very
specifically in some of those TV meetings some of the
guys on staff, like all they could talk about was
apps and look at this new app and it does this,
and it does this cool thing, and it does this
cool weird thing, and it was just app, apps, apps,

(26:51):
And it's just funny to look back how that is
at least changed for me. I mean, maybe people still
use all kinds of funky apps, but almost every app
I have is utilitarian and serve some kind of like
function for doing something right.

Speaker 2 (27:05):
But if you wanted to razzle dazzle a C suite
executive who is like ten years older than you at
the time, all you had to do is even let
them know you were thinking in terms of apps, and
they would just automatically promote you. I totally remember that time.
We've survived a lot of weird times, haven't we.

Speaker 3 (27:21):
Hey we have, including the great stuff you should know.
Fire of eight.

Speaker 2 (27:26):
Yeah, right, death of Richard Marx.

Speaker 3 (27:29):
Oh he didn't die, did he.

Speaker 2 (27:31):
No? Okay, that was a terrible joke. I'm sorry, Richard Mark, Sorry,
Utah Saints, Sorry Richard Mars Right.

Speaker 3 (27:40):
Uh so we have to talk about Spotify. Should we
do that or take a break?

Speaker 2 (27:45):
First, let's talk about Spotify, all right?

Speaker 3 (27:50):
Spotify comes along. They changed the game. Pandora was still
trying to be you know, kind of like radio in
a way. Spotify was like, know, we're really going to
be on demand and this is kind of what everyone's
been waiting for. It was a company out of Stockholm, Sweden,
very famous for swedeness, for encouraging and supporting their tech industries.

(28:14):
That's why there's somebody coming out of there. But they
launched in two thousand and six, and then I think
Weighted had to wait until twenty eleven to launch in
the US because they had to you know, they were
I guess smart enough early on to pre negotiate with
record labels and kind of get all that settled, so
they weren't just dragged into court right away.

Speaker 2 (28:36):
Right so early in their early years, even when they
were just available in Europe, in Western Europe, they had
ten million users and at one point six of them
were already paying users. Right So before this thing even
hit the US, it was valued at a billion dollar
Spotify was, and when it hit the US, it it
just reached this incredibly massive level. One of the things

(29:00):
that Spotify did, I think today there they're at like
six hundred and fifteen million active users something crazy like that.
But one of the ways that they managed to kind
of come in and be like, hey, peace everybody, was
that they really paid royalties to the artists and the
labels or whoever owned the copyright of that song. They

(29:22):
paid like seventy percent of their revenues went to pay royalties,
and so they have been losing money every year since
at least twenty eleven, probably back when they debuted in
two thousand and six and I think twenty twenty three. No,
the first two couriers of twenty twenty four, yes, they

(29:44):
they made record profits, and because they lost money every
year up until then, a record profit for them could
have been one dollar. But they finally turned profitable essentially,
and they're saying, like, now we're going to be profitable,
profitable from here on out. One of the criticisms they
took is that they became profitable by going through massive
rounds of layoffs and jacking up the price of their subscriptions.

(30:06):
But the point about to know about Spotify is they
created a new standard by saying we're going to actually
pay real royalties to the people who own this music.

Speaker 3 (30:16):
Oh for sure. So I think we take that break.

Speaker 1 (30:19):
Now, Okay, we'll be right back, all right.

Speaker 3 (30:33):
So twenty fifteen, a little several new players came on
the scene. Title you might have heard a lot about
at the time, all capitals TIDL. This was an artist
owned alternative kind of like you know, United artists and
movies back in the day. Like musicians actually got together

(30:54):
under the guidance of jay Z to buy a company.
Initially it was an Norway based company called a SPIRO
that we're developing. It stood for wireless music player but
the WIMP and it was higher bit rates, supposedly better
quality and also like real human editors making music recommendations.

(31:18):
So jay Z gets on board. He's like, man, we
can't call it whimp in the United States. It's not
tough at all. So they changed it to title, right.

Speaker 2 (31:27):
I read an interesting article. Also, big ups to Olivia
for helping us with this one. But she found an
article from Loud and Quiet dot com written by Stuart
Stubbs called five years on a very silly launch of
Title and if you like, just kind of laughing a
little bit at the misfortune of super egotistical, wealthy people

(31:47):
like that article a lot. Yeah, he just slams like
this launch and I haven't seen it because I can't
bear to watch it based on his description of how
awkward it is. But apparently it was one of the
most awkward star studded events ever held.

Speaker 3 (32:02):
Yeah, I've seen it. It was awkward. It was just
I don't know, man, Sometimes companies just screw it all up,
you know, right.

Speaker 2 (32:10):
I think one of the big screw ups was to
basically tell the audience not to clap for anything, which
I'm sure was a decision because you don't want it
to seem like these stars showed up so that they
could be applauded for everything they said. Yeah, but instead
it made it super awkward and quiet. From what Stuart
Stubb says, it is.

Speaker 3 (32:29):
Very weird for Madonna to walk out on stage and
be met with silence. It was slightly surreal.

Speaker 1 (32:35):
Yeah.

Speaker 3 (32:36):
So Titles Deal was another company obviously because they were
artists that wanted to pay through pretty well and musicians
got a seventy five royalty on each song. It wasn't
too long after that they were being sued for underpayment
and it ended up not being a financial success as

(32:58):
a company, right. A bit of a mess, it seemed like.

Speaker 2 (33:02):
But it got bailed out by Jack Dorsey, the co
founder of Twitter. He was leading a company called Block Inc.
And in twenty twenty one he used Block Inc funds
to buy an eighty six percent share in Title for
three hundred million dollars. Yeah, and essentially the shareholders in

(33:23):
Block sued. They sued Jack Dorsey for this because they're like,
you did this as a favorite to jay Z. You
can't do that to us. This is a terrible deal.
And they actually had the lawsuit dismissed.

Speaker 3 (33:35):
Yeah, I think. I mean, if you want to compare,
I believe that jay Z, what did they pay like
fifty something million?

Speaker 2 (33:40):
Everybody chipped in fifty six million?

Speaker 3 (33:42):
Yeah, okay, so then flipped it for three hundred to
his friend.

Speaker 2 (33:47):
But really it was probably worth half of the original
price by this time because it was not a success
at all, and even still today, I saw it has
about five million users, it says, but that that's even
disputed by people outside the company. And like I said that,
judge dismissed the case against Jack Dorsey and he said

(34:08):
that that there's nothing legally wrong in approving it, even
though it was quote a terrible business decision.

Speaker 3 (34:14):
Yeah, man, that's pretty funny.

Speaker 2 (34:17):
I was so mad.

Speaker 3 (34:19):
Oh yeah, I wonder if you've snuck up behind jay
Z and looked at his phone what he's playing.

Speaker 2 (34:23):
With the real player he's ogreat I.

Speaker 3 (34:27):
Did look up that logo, by the way, and it
was a wave of nostalgia. Might another one that came
out in twenty fifteen. You might have seen Neil Young
screaming at people on your television set right around then.
It was Pono that was his this is actual device.
It was a player, the Pono player, and it was
a crowdfunded campaign that raised about ten million bucks. And

(34:49):
the whole pitch here was from Neil Young, especially was
MP three's are garbage and that compression stinks and this
is all the night. Like Neil Young was much more
critical and probably cussed a lot more, but he's like,
the quality here is better, and this is the way
music should be listening. It's a travesty how we're listening

(35:09):
to music these days. And that company, I mean, I
guess Neil Young failed to realize it. By and large,
most people don't care about the quality to that level.

Speaker 2 (35:18):
Yeah, a lot of people just can't detect it. It's
not even that they don't care, it's that once you
get to a certain bit rate measured in kilobytes per second,
that's how much how many bits are being transferred per second.
So obviously the more bits transferred, the more of the
song that's captured, the better the sound quality. Somewhere outside
of two hundred and fifty six kilobytes a second. When

(35:40):
you start going over that, people generally can't tell the difference,
especially if you're just using like earbuds or something like that.
You know, we're just playing it through the speaker of
your iPhone.

Speaker 3 (35:49):
Especially, Yeah, oh god, do people do that?

Speaker 2 (35:54):
Very obnoxious people do.

Speaker 3 (35:55):
Yes, A CD, just for comparison, is a little over
fourteen high hundred kilobits per second. And you said two
fifty six is where people can't tell much of a difference.
That's like, that's like people with a good ear they say,
if you're around ninety to one hundred and you're not
the most discerning listener and you're not playing, you know,

(36:16):
through something great, then you probably won't be able to
tell the difference.

Speaker 2 (36:19):
Right. But again, if you're Neil Young, yes you're really
upset about this, but it's a course. He really missed
the mark by assuming that everybody felt this way about it.
And yeah, I mean you can you can get just
great quality of music from a fairly compressed rate. Yeah,
I agree.

Speaker 3 (36:38):
Twenty fifteen also, and this kind of surprised me. It
felt like it had been around longer. But that's when
Apple Music, not iTunes, but the Apple Music streaming finally
was launched surprisingly late to the game, supposedly because Steve
Jobs didn't like the idea. So Apple and Amazon, who

(36:59):
had been selling MP three's just like Apple had, they
launched about a year later. So they're both giants that
were kind of late to the streaming game.

Speaker 2 (37:07):
Yeah, Apparently Steve Jobs thought that it was basically piracy
to make people rent music rather than own it, and
that people didn't want to rent music, they wanted to
own it, so therefore subscription streaming services were basically just
taking advantage of their users. And he kind of said,
if you pay one hundred dollars a year to listen
to your favorite song over ten years, you paid one

(37:28):
thousand dollars to listen to that song and you don't
even own it, rather than just buying it once for
a dollar or something like that. And he makes a
good point, but he's also leaving out all the other
music that you've listened to over that ten year period.
It's a weird way to put it. Yeah, it's a
little disingenuous, but he was very much opposed to it,
and Apple was not about to get into the streaming

(37:49):
game while he was alive.

Speaker 3 (37:50):
He's like, if you're wealthy like me, you'll pay for
a different streaming subscription for every song you want to
hear exactly, just to make it fair.

Speaker 2 (37:59):
And that's madness.

Speaker 3 (38:01):
Pandora, we should Mention was bought by Sirius XM and
twenty nineteen, and we should, you know, talk a little
bit about how the finances worked today, because it was,
you know, there was a bit of a things have
regulated just a bit. You know, things really went in
the tank. I think that the twenty fourteen was that

(38:23):
the lowest point in dollars for the music industry. They've
come back now. In twenty twenty two, revenues hit twenty
six point two billion, which is about a twenty five
percent drop compared to when CDs died. But that's a
seventy percent increase from where they were in twenty fourteen.

Speaker 2 (38:41):
Yeah, I mean that's a that is a low point
for sure.

Speaker 3 (38:45):
Yeah. So they've sort of course corrected enough to where
I think they're like, hey, it'll never be the heyday
of CDs again, right, but not every Like people are
actually paying for music now with these subscriptions.

Speaker 2 (38:57):
Yeah, And it does turn out that Steve Jobs will
absolutely wrong. People are generally totally cool with renting their
music through subscription services. I think eighty four percent of
music revenue comes from paid subscriptions. Yeah that's a I mean,
that's significant. And one two thousand and ninth study found
that piracy had dropped because of the affordability of legal

(39:18):
ways of consuming media, not because of enforcement, not the
threat of being sued by Metallica, but just the fact
that it was easier and by this time people got
used to putting their credit card info on the internet.

Speaker 3 (39:33):
The threat of Lars Ulrich's coming into your room and
speaking to you for twenty minutes. Yeah, that's enough right
there for sure. As far as what they pay, I mean,
Spotify's the biggest dog in the market. They have about
thirty percent of the streaming market and like you said,
more than six hundred million active users. But these royalties,

(39:53):
Title pays the most at one point three cents, Apple's
point seven, YouTube music point seven. Spotify pays point four
cents per stream, same as Amazon and then Pandora's down
to point one. You're obviously making a lot more money
off of Spotify because they're the biggest player, so it's
less per stream. But as an artist, if you're a

(40:15):
hit on Spotify, then there's a lot of money to
be made.

Speaker 2 (40:18):
Right Yeah. I think Spotify paid over nine billion dollars
in royalties in twenty twenty three, three times more than
they paid six years earlier. And there've been studies about
how much money is actually made by the artists. There's
sixty six thousand artists that make ten grand or more
a year on the platform through music sharing, eleven thousand

(40:42):
of them make more than one hundred thousand dollars a year,
and then twelve hundred of them make a million plus.
And of course most of the twelve hundred are names
that you've heard of that are already making tons of
money anyway. But you know, toward the lower end of
that scale, there are indie artists that never in their
life would have made a million dollars in a record
label deal that are now like making producing, sharing their

(41:07):
own music, running their own social media, and they're making
a million dollars a year more from their music, which
is That's one of the ways that this completely changed
the game, not just in taking money away from the
music labels, but also in making it easier for independent
artists to just exist without the music labels.

Speaker 3 (41:29):
Yeah, yeah, for sure, I got a couple of things
for you here on that line, our beloved Pavement that
we both love. Sure Harness Your Hopes was a B side,
kind of throwaway song, not throw away, but a B
side from nineteen ninety six. It never made it onto
their album. It went viral on TikTok last year. You

(41:50):
know about all this, right, No, so the song goes
viral on TikTok for some reason. And like huge Pavement
for eight song from nineteen ninety six got one hundred
and forty eight million streams on Spotify. Wow, which, if
the math is right, close to six hundred thousand dollars
just from Spotify from a you know, B side from

(42:14):
nineteen ninety six.

Speaker 2 (42:15):
That's awesome.

Speaker 3 (42:16):
That's amazing. So that kind of stuff can happen, which
is great. And then I looked up I was curious
who the most stream like, the most streamed song ever
on Spotify is. My guess would have been a Taylor
Swift song. Believe it or not. Taylor Swift has the
her highest charting Spotify as far as number of streams
go is the forty second highest. What is it?

Speaker 2 (42:38):
Just so she has so many songs that that it
counts for her streams, I guess because she has tens
of billions of streams.

Speaker 3 (42:46):
No, that's for a song like one specific song.

Speaker 2 (42:49):
Oh oh, I see you're saying in dollar amounts and royalties.

Speaker 3 (42:53):
No, no, no, in streams like her. Her Her most streamed
song is Cruel Cruel Summer, and that is number forty
two on the list.

Speaker 2 (43:01):
First of all, that's Banana rama. And secondly, I think
my point still stands. She just has so many songs
and variations of her songs that when you put it
all together, she has like thirty eight billion streams a
year of Spotify. Yeah.

Speaker 3 (43:17):
Yeah, that's for her whole catalog, which is incredible.

Speaker 2 (43:19):
So who's number one? That she's way down at forty two.

Speaker 3 (43:23):
The weekend, which one his song Blinding Lights Wow, is
the most downloaded song on Spotify And I did I
think it was. I can't remember. I think it was
like four or five billion streams. And I did some math,
and I may not be right, but if I did
my math right, it looks like that that dude has

(43:44):
made more than one hundred million dollars on that song
off of Spotify.

Speaker 2 (43:48):
That's just off of Spotify, right, Yeah, that's not including
like YouTube music, Amazon music sales of the actual MP
three year album.

Speaker 3 (43:56):
How many ways can I say? Only Spotify.

Speaker 2 (44:00):
In hindsight, even that doesn't quite make sense. I'm not like, ah,
that makes sense. It's funny how the internet can do that.
I would have guessed Gongam style, but that's a little
little dated, I guess.

Speaker 3 (44:12):
I just like, if that math is right, that's that's incredible.

Speaker 2 (44:15):
Yeah, for sure. But that's the kind of money you
can make off that. I saw Drake made like three
hundred million dollars off of Spotify in a year recently.
So yeah, and if you're again, indie bands are now
at the table. They can do this all themselves. They
can just split it among themselves as bandmates. And you know,
if you just hit it just right, you can go

(44:38):
viral like that Pavement song did and really make it
not just money wise, but your career. You can expose
yourself to so many people virtually on social media or
streaming music, is what I mean. But also there's an
other side to it as well, because record executives haven't
gone anywhere. There's still plenty of them, and so when

(45:01):
you do have a contract with the label. They'll very
frequently be like, hey, this song has to have an
amazing hook that's no more than ten seconds long because
we want to get it viral on TikTok. Go make
a viral video on TikTok. Essentially is what they're saying,
and so that's shaping how artists are making music, and
a lot of them are not happy about that.

Speaker 3 (45:22):
Yeah, it's also reshaped, you know, the sort of the
album era is kind of dead. I mean, there's still
plenty of albums and still plenty of artists doing that,
but it's almost, like Livia points out, it almost is
like going back to the days of the forty fives
in the nineteen fifties where it was you know, these
singles are being released and that's interesting. I know that.

(45:45):
You know, one thing we should mention is that there
is they're trying to get it pushed through now the
Living Wage for Musicians Act through the house, where they're
basically saying, hey, minimum royalty should be a penny per stream. Like,
I know, you make a lot more on Spotify because
it's the biggest player, but they're paying four cents and

(46:05):
like if everyone paid a cent, that would be a
huge difference.

Speaker 2 (46:09):
Yeah, and if you're like I totally agree with that,
you can go to Actionnetwork dot org and look for
Living Wage for Musicians ACT. This morning, they only needed
four hundred and thirty two more signatures to reach their goal,
so apparently it automatically becomes law at twelve thousand signatures.
If I'm not mistaken, nice work.

Speaker 3 (46:28):
I'm glad you put that out there.

Speaker 2 (46:31):
I am mistaken by the way. But yeah, there was
one other thing I wanted to point out to the
way that it's evolved. Because there's not a huge gamble
in making music like there was when you have a
whole production going on in a label and you're actually
physically producing the albums. There's way more availability and potential

(46:52):
for artists to explore genre bending, genre fusing all sorts
of gambly risky new types of music that they would
never be able to try if they had like a
major album or a major major label contract and that
label was not willing to take those risks. So that's
another way that shaped it positively.

Speaker 3 (47:12):
Yeah, I mean, you and me could get together and
put out a song and get it out there and streaming,
like we could do that.

Speaker 2 (47:20):
Okay, what should we do? Should we call ourselves pendulum
of development? And we're gonna play Both of us are
going to play the mandolin, but neither of us know
how to play the mandolin? Is the hook?

Speaker 3 (47:32):
Well, who's our slide whistle player? Jerry? Okay, sure, we're
gonna cut her in on this.

Speaker 2 (47:41):
Well, no, I mean, but she can still be the
slide whistle player. Oh okay, great, you got anything else?

Speaker 3 (47:47):
I got nothing else. This is a fun little trip
down memory lane.

Speaker 2 (47:50):
Yeah, it was agreed. Good choice, And that's it. Everybody
for streaming music, which means, of course it's time for
listener mail.

Speaker 3 (48:01):
Yeah, I'm gonna say this is we're sort of correcting
our omission of our Minecraft episode when we couldn't think
of the kid's name.

Speaker 2 (48:10):
Oh, Kober.

Speaker 3 (48:11):
It was a kid in the audience, and we could
remember his name. So we got a letter from Boden's mom.
Oh hey, guys, my son. Boden was the kid who
asked about Minecraft at the Medford show. He was the
one with the glasses who also made the joke about
being a retired factory worker.

Speaker 2 (48:27):
Was so great.

Speaker 3 (48:29):
That'll make sense if you've seen this show. He didn't
ask about mobs, and in fairness, there were probably ten
other kids after him who also asked about Minecraft. I
don't think that's true, so I'm not sure if he's
the one you're thinking of. Well, he was, Sarah, but
she says regardless, I'm pretty sure he considers this to
be his greatest contribution to humanity to date.

Speaker 2 (48:49):
Man, that kid is so cool.

Speaker 3 (48:51):
Sincerely thanks from a very grateful parent. And that is
from Sarah, so big. Thanks Boden. Yeah, and I'm glad
we could get your name out there.

Speaker 2 (48:58):
Yeah, thanks a lot. Boden, was a great idea and
we appreciate your mom writing in. That was Sarah.

Speaker 3 (49:04):
Yes, awesome.

Speaker 2 (49:05):
Well, if you want to be like Boden and Sarah,
come to one of our shows and suggest an episode.
You can also just make it easier on yourself and
send it via email, Wrap it up, spank it on
the Minecraft, and send it off to Stuff podcast at
iHeartRadio dot com.

Speaker 3 (49:23):
Stuff you Should Know is a production of iHeartRadio. For
more podcasts my heart Radio, visit the iHeartRadio app, Apple Podcasts,
or wherever you listen to your favorite shows.