TheChek News Flow

Three books on how the success of streaming comes at a cost to how music is made and enjoyed

In the latter days of the past decade, when asked at dinner parties what I did for a living, I would joke that I covered one dying industry for another dying industry. At that point, it seemed as though the newspaper for which I then worked was heading towards a giant financial hole, while the record labels that for decades had, more or less, used people’s desire for a tune as a licence to print money were facing catastrophe. Both industries faced the same problem: people had become used to not paying. The Guardian, my old paper, seems to have turned a corner by asking its readers to just give it money, and the recording industry has, too.

In April, the IFPI — the global body of the recording industry — released its latest annual Global Music Report. For the fourth consecutive year, revenues were up, to a total of $19.1bn, from a low of $14.3bn in 2014. Nearly half those revenues came from music streaming, driven by a 33 per cent rise in paid subscriptions to services such as Spotify, Apple Music and Tidal. Cause for champagne corks to pop? Not quite. It is worth remembering that 20 years ago, the IFPI reported global music revenues of $38.6bn. Today’s “booming” recording industry is less than half the size it was at the turn of the century.

The nadir for the recording industry coincided with the first shoots of its regrowth. In August 2007, the British record company EMI — the fourth of the majors, alongside Universal, Sony and Warner — was bought by private equity firm Terra Firma for $4.7bn; a year later, a Swedish company called Spotify took its music streaming service public. The former was, perhaps, the last gasp of the old way of doing things — less than four years after buying EMI, Terra Firma was unable to meet its debts, and ceded control of the company to its main lender, Citigroup. Before 2011 was out, the process of breaking up the company had begun.

Eamonn Forde’s account of the EMI disaster is surprisingly sympathetic to Terra Firma and to Guy Hands, the fund’s founder and chairman. EMI’s demise was foreshadowed before Hands arrived, with a blaze of hubris in the early 2000s. Forde, a longtime observer and chronicler of the music business recounts the “disastrous and expensive” signings of that era. The most infamous was Mariah Carey: signed in April 2001 for a rumoured £70m; less than a year later EMI paid her £28m to terminate her five-year contract. Then there was the quest for the achingly hip New York electronica band LCD Soundsystem, led by James Murphy, that saw EMI also agree to take on all the groups signed to Murphy’s DFA label — none of whom were within shouting distance of popularity, or a decent financial return.

As illegal downloads scythed through record company profits, it was apparent that the old days of largesse had to end — notwithstanding the launch of iTunes in 2001, which at least offered one revenue stream from the internet — and that someone who could reimagine a business model might transform the industry. Hands thought he was that person. A former trader, Hands had made his reputation in the art of securitisation — selling bonds backed by future cash flow in asset-rich, cost-heavy sectors such as pubs and rolling stock operators. A music business with a weighty back catalogue that included The Beatles and Pink Floyd and a lucrative, royalty-generating publishing division, appeared to brim with opportunity.

Hands also could not understand the logic of a business based on signing 10 artists in the hope one of them might be successful. He realised that the successful artists subsidised the failures, and he also noted that the internet had opened up the possibility of the stars deserting the majors altogether — as former EMI figureheads Radiohead did in October 2007, when they self-released their album In Rainbows — and those subsidies disappearing. Given that was the state of play, Hands reckoned, EMI had to be more efficient in how it went about signing artists.

A decade later, much of what Hands was trying to bring about is now music business orthodoxy. He preached the need to use data when signing artists, not just the “golden ears” of talent scouts; data are now a key part of the talent-spotting process. He also wanted to launch a streaming service on which EMI could promote its music to the public. If the public wouldn’t pay, EMI would give them music for free, and find other ways to make money from the artists, from advertising and branding.

Forde quotes one EMI executive as saying the company’s staff were not resistant to change. The issue was that Terra Firma was looking to impose change from the outside, without being “music people”. “They came in, they didn’t understand, and they tried to change things without that understanding. When you do that, you are going to get resistance.”

Yet change did come, not just to EMI, but to the entire industry. It was imposed from the outside, by some Swedes. Spotify’s founders were also not “music people”, but they understood the promise of the moment: that if someone could offer an alternative to music piracy, they would win both political and industry support. And it completely transformed music, in ways no one would have predicted. Take this fact: to qualify as having been listened to on Spotify, a song has to have been played for 30 seconds. Fair enough, right? Except that means hit songs have become increasingly predictable, offering up all their pleasures in the opening half-minute. Their makers dare not risk scaring off listeners. I was told earlier this year of one major band whose forthcoming album is largely lots of short songs. They get paid after 30 seconds, and the more tracks there are, the more opportunities for payment there are.

Or consider that for all the money that the streaming services have generated for the music industry, very little of it flows back to any musicians except the select few who dominate the streaming statistics, consolidating their popularity in a way that was impossible when radio was still the greatest disseminator of music. As Damon Krukowski, formerly of the beloved 1980s alt-rock band Galaxie 500, puts it in Ways of Hearing: “Most musicians I know are paid much too little, or much too much.” Plenty of money goes back to the labels, though, because the three remaining majors are among the owners of Spotify; they demanded equity in return for licensing their music to the streaming service. Hence the IFPI’s cheeriness about the state of the industry.

Spotify Teardown isn’t the fearsome exposé promised by the fact that the company tried to suppress the research on which it is based. Its title is misleading to tech ignoramuses, too: a teardown isn’t a demolition, but a reverse of building up, to try to make sense of how a platform works by taking it apart from the top. What becomes clear, though, is that the rise of Spotify has been aided by a very old-fashioned ability to create hype. And that hype has helped Spotify deflect attention from the fact that its main business is not helping listeners discover new music (something it’s not very good at), but collecting information about listeners in order to sell its audiences to advertisers. The authors — all Swedish academics — point to the way Spotify has changed its design over the years, away from tracks and artists and search options. Instead, music consumption has been reorganised around “behaviours, feelings and moods” channelled through curated playlists and motivational messages.

All of which, the authors argue, is of great use not just to those buying advertising on Spotify, but to the major labels who license their music to it. The data Spotify collects enable the industry to work out who its market is, where it lives, what else they like, how often they listen to music — almost anything, really. It’s the greatest assemblage of information about music listeners in history, and it has profoundly altered the industry: it has made Spotify music’s kingmaker. These days, when an artist travels abroad to promote a new album, the meeting with the local Spotify office is more important than the TV appearances or the newspaper interviews. As Justin Young of The Vaccines told me last year, Spotify enables him to plan his band’s set lists so they can play the most popular song in any given city.

So what? What does it matter if one model of music distribution has been replaced by another, even if the people in charge of the new model don’t really care about music? It matters because Spotify has profoundly changed the listener’s relationship with music. One thing anyone who interviews older musicians often hears is a romantic reverie about how, when you had to buy your own music as a kid, you listened to it until you liked it, because you wouldn’t be able to afford a new album for another month. Now you simply skip to the next one, and probably don’t give it your full attention. Without ownership, there’s no incentive to study.

Or consider the sheer expanse of Spotify. “Digital music is like grains of sand or something at the beach — like, it just goes as far as you can see,” says music distributor Jimmy Johnson in Ways of Hearing. “And there’s no reason to think that any of those grains of sand is any better than any of the others. You would never build a shelf to store your grains of sand.”

Faced with the impossibly wide choice of Spotify, it becomes easier just to return to old favourites — easier than when flicking through your vinyl or CDs, because the act of looking through your own music makes things you had not thought of in years leap out at you. Spotify actually makes people into more conservative listeners, a process aided by its algorithms, which steer you towards music similar to your most frequent listening.

The volume of music on Spotify and the other streaming services means they are not, and can never be, music companies. “No one at those companies — no one — is listening to everything,” Krukowski writes. “It’s impossible. It’s not a human task, on a human scale.”

The theme of Krukowski’s slim and compelling book is that the changes in the way the music industry works have been about controlling and eliminating excess noise. That’s in a literal sense — digital technology eliminated the crackles and pops of analogue vinyl — and in a metaphorical one, too. Streaming has stripped music of context, pared it back to being just about the song and the moment. But part of what made pop great was the excess noise, literal and metaphorical, that enhanced the signal, the thing we were meant to be listening to. “The real difference,” he writes, “is between a world enriched by noise and a world that strives towards signal only.”

Noise is the context of life. Without noise, the signal becomes meaningless. It is easy to transfer Krukowki’s analysis to other areas, to see how it becomes a metaphor for how the digital revolution has transformed the world.

The world of the old EMI was one of both signal and noise; where myths and legends could be created: The Beatles! Queen! The Beach Boys! Pink Floyd! It was never all about the signal. The world of Spotify is one of signal only, and if you don’t get that signal in the first 30 seconds of the song, then what’s the point of it? And that’s no way to live, if you love music.