It’s a cool fall night in New York City’s Meatpacking district, and the usual mix of downtown hipsters and international wannabees are slinking into the nightclub Cielo. The DJ spins in a booth that is just slightly elevated above the intimate dance floor while the sound pumps out via the state-of-the-art audio system. But while scene is definitely in real time, you better believe that each and every patron has a smartphone; and many see the next couple hours only as a break from what is somehow becoming an increasingly controversial act when it comes to getting a music fix: digital streaming.
To the new millennial tech class, casually experiencing music via streaming is as commonplace as that of their 50’s, 60’s, and 70’s counterparts back in the day playing 45s. And yet, everything from internal industry battle for market domination to industry speculation of how the format may or may not impact download offerings is anything but tame. The stakes are high, the money monumental, and the factors numerous. Thus, here is one of the first, true comprehensive looks at the disruptive trend of music streaming: from the psycho-economic process, to the artist and industry view, to fan perspective. Together, these factors will help predict who the true winners and losers will be in this distribution scenario.
Fasten your seatbelts.
Row, row, row your boat gently down the stream….
Creating music is one thing, but we all know the challenge is actually getting onto the radar of the music fan and getting the creative content actually to him or her. If we all thought this game changed dramatically with the move from physical compact discs to the intangible digital track, we could probably say that streaming could now classify as Industry Shake-Up 2.0.
Ever since streaming hit the scene, concerns and debates have surrounded it. The first wave of issues against streaming came from artists themselves and the whole “freemium” model. But since that time, the scope has widened to include concerns within, among, and between the actual streaming platforms and deeper critical analysis from the record labels. New entrants to the streaming game are tracked for earnings, business models, and adoption almost before they are out of the gate (Tidal, Amazon). Mid-level established players engage more with political policy makers about potential monopolies by the bigger, established players (Spotify). All this on top of the fact that the debate about exclusives tracks and streaming is just barely getting started. Whew! One can barely keep up. Why all the ruckus? Precisely because there is a massive amount at stake. It’s all about the dollar, market share, and who will control the most precious assets as we move deeper and deeper into the Digital Era.
Now, if you want a bit more on the history of streaming and somehow missed the roots, here is a nice re-cap here for streaming controversy newbies, but for those who are well versed, its all about what insiders are currently saying about both the present and future.
In fact, industry sentiment and insight has a larger part in driving what we currently experience as streaming phenomenon. For example, as Nima Etminan, VP EMPIRE expresses what many on the front like believe. Nima says, “Here’s what I think about streaming: it makes timeless/classic music more important. Back in the day, if I bought your album for 10 dollars or bought your song for a dollar, it didn't make a difference to the artists’ pockets whether I listened to a song 1 time or 1,000 times - it was a one-time expense. That's why ‘pre-release’ hype was a lot more important, people spent money based on anticipation.” He continues, “Today, if I stream your song once and don't like it, I'm not going to play it again and the revenue generated is half a penny give or take, depending on the service I used. However, if I like the song and keep on playing it, for weeks, months, share it with my friends etc, I will have generated a lot more in revenue than I would have, had I just paid a dollar for that song. That’s big.”
It is big. And set to become even bigger because listening to music, it turns out, is basically built into our DNA.
Grey Matter
According to health and science site, LiveScience.com, when we listen to music blood flow in the brain actually rises and falls to swells of music in areas associated with reward, emotion and arousal. So music hits us as deeply primal, important drivers.
Music activates the amygdala,” Valerie Salimpoor, a neuroscientist at McGill University recently said in a Time piece on music. “[This area of the brain] is involved with the processing of emotion, as well as areas of the prefrontal cortex involved in abstract decision-making. When we’re listening to music, the most advanced areas of the brain tie in to the most ancient.”
That, it turns out, may be the key to music’s power. And power often leads to money.
The Time piece further revealed that many scientists have also discovered that the songs that triggered the strongest response from both the emotional and intellectual parts of the brain were also correlated with a willingness to actually pay more. “The nature of that reward,” Salimpoor told Time, “based on this and earlier research, has to do with pattern recognition and prediction. As an unfamiliar piece unfolds in time,” she says, “our brains predict how it will continue to unfold.”
“These predictions are culture-dependent and based on experience: someone raised on rock or Western classical music won’t be able to predict the course of an Indian raga, for example, and vice versa. But if a piece develops in a way that’s both slightly novel and still in line with our brain’s prediction, we tend to like it a lot. And that,” said Salimpoor in Time, “is because we’ve made a kind of intellectual conquest. We’ve figured something out, on a subconscious level.”
In fact, Psyche Ploui head of Wesleyan Music Imaging and Neural Dynamics (MIND) Lab sees to concur with Salimpoor. “The brain,” she explains, “expects next chords. So if a piece begins in C major, for example, 12/4 time on beat, there are elementary expectations. It’s called thiridical knowledge of a specific piece. It’s like a schematic. This schematic gets triggered, like when radio plays over and over and over, and it’s what helps you to make future connections in music. It’s really pretty fascinating.”
In fact, the process is so amazing that it can incite war. War that is, for the exclusive right to access your amygdala by one and only one streaming platform. And it’s got many industry insiders, artists, and fans up in arms.
Battleground
Case in point? “Instead of trying to kill each other over with exclusives, streaming services should instead compete on usability, service and price!” declared Vincent James, founder of Keep Music Alive, an organization dedicated to promoting the value of music. “These are aspects that would actually benefit the fans and artists. I’ve had it with exclusives!”
Yet Etminan says, “Well, I understand exclusives from an industry standpoint - it guarantees a certain amount of support, gives the artist exposure and can potentially pay well. But from a consumer standpoint, I dislike exclusives. And unless we're talking Beyonce, Drake or Lady Gaga, the average artist isn't big enough to make a consumer switch services just to hear a specific project.” He adds, “The average person will just listen to something else on the service they already use. If I'm a Spotify user, I'm not going to switch to Apple just to hear an album two weeks early. I'll wait - and potentially lose interest in that release by the time it hits my service. Or, even worse, I'll find a way to bootleg it. But like I said, I get it from an artist perspective, if it's the right deal.”
And speaking of bootlegs…
Download Deletion
Before even the exclusives controversy is even settled, to complicate matters, the rumor that streaming could actually come to usurp the download entered the picture not long ago. It created even more speculation and opinion in the industry.
Will it or won’t it happen? Who knows for sure, but if it does, James believes, “By eliminating downloads, fans lose the ability to “own” a piece of the artists music that they love, and that will have a devastating impact on music and artists.”
Etminan adds, “I'm a fan of letting people consume music the way like to. Humans are creatures of habit and if somebody still like to buy downloads, why stop them? Obviously, everything is shifting to streaming and there's no changing that, but why block somebody from downloading if they would like to? In fact, EMPIRE was one of the first companies to promote all mediums of consumption - vinyl, cds, downloads, streaming and we also frequently partnered with free mixtape sites like LiveMixtapes to do releases. So I hope all that remains just that, a rumor.”
Feelings, wo-o-o-o feelings
And what about the fan? Utilizing both Reddit and additional ethnographic research methods, we researched fan sentiment just on the possibility about downloads being vaporized. 82% of respondents said they would have an issue with streaming as a sole option of obtaining music. Below are some response examples:
I like streaming, but I like having a physical copy of the music I like. If the internet goes to shit, at least I'll still have a CD player and some CDs.
I have no problems with that. I don't buy any physical media, only digital downloads and Spotify.
I wouldn't be a fan. I love Spotify but take solace in my physical media
A major hip hop fan in the Philadelphia area also added, “I don't get the whole streaming thing..Sometimes it's just too much trouble going to an app looking for a artist when I can just go to my music downloaded into my iPod and just hit play. Honestly for me, going straight to my music playlist is so much easier and u don't gotta worry about it cutting up cuz of a bad signal or loading up and for iPods no internet on those.”
Strong responses, and even stronger actions. Because when it comes to all of the analysis around streaming, one scenario continues to baffle the mind. The continued rise of vinyl purchase. If the ephemeral and intangible rules, why the interest in the physical?
Spin Cycle
Eric Levin Criminal Records, Owner; Alliance of Independent Media Stores, President; and Record Store Day, Co-Founder, explains,“Vinyl sales have been increasing for the better part of the last decade for a number of reasons, first and foremost among them, I believe, is the psychological. As humans, we're hunters and gatherers, we like our things, our fetish objects, our collections. Vinyl is simply neat, an important investment in art with a valuable return. You can't re-sell a digital download, after all. Digital is a cool format, too, there's no hate, but there's no inherent value beyond convenience and the ability to preview something a listener might want to actually own.”
In fact, here is how it all breaks down just for the last 3 years alone.
U.S. Vinyl Yearly Growth
Q’1, Q’2 -2016 vs. Q’1, Q’2 -2015: up 17.3%
Total annual sales 2015 vs. 2014: up 30% - 50%
U.S. Vinyl Sales as a % of Total Album Sales
Q’1, Q’2 2016: 3.5%
2015: 2.8%
2014: