Speaker 1: Welcome to Tech Stuff, a production from I Heart Radio.
Speaker 1: Hey there, and welcome to tech Stuff. I'm your host,
Speaker 1: Jonathan Strickland. I'm an executive producer with I Heart Radio.
Speaker 1: And how the tech are you. We're going to continue
Speaker 1: what I started last Monday, which was an episode about music,
Speaker 1: tech and business, and boy howdy does this get complicated?
Speaker 1: And before we jump right into streaming, which is kind
Speaker 1: of where I left off in the last episode, there
Speaker 1: actually are a few things that I should cover that
Speaker 1: I skipped over in that last episode about how music,
Speaker 1: technology and business are all intertwined. They all have a
Speaker 1: massive effect on each other. I mentioned the concept of
Speaker 1: royalties in the last episode. That is, it's it's a
Speaker 1: fee paid to a composer or copyright owner for the
Speaker 1: use or purchase of a work. So if I write
Speaker 1: a song that's included on an album, and presuming I've
Speaker 1: got a contract that guarantees me a certain amount of
Speaker 1: royalties a percentage, then I am owed a bit of
Speaker 1: money for every sale of that album. It might actually
Speaker 1: be a very tiny amount of money. And first, you know,
Speaker 1: if I were if I was paying advance, that advance
Speaker 1: must be paid off before I start getting royalties, But
Speaker 1: eventually I do get that cash. But what about public
Speaker 1: performances of my song? Like, what about if my song
Speaker 1: is played on the radio, or if it's played on
Speaker 1: the sound system of a restaurant or a bar, or
Speaker 1: a theater or something like that. Well, technically I mowed
Speaker 1: royalties for that as well. This was determined in the
Speaker 1: United States way back in nineteen o nine when the
Speaker 1: Copyrights Act was signed into law, and in the very
Speaker 1: earliest days, it was up to the individual composers and
Speaker 1: IP owners to reach out and royalties and licensing fees
Speaker 1: from the parties that were publicly performing those songs. And
Speaker 1: as you can imagine, that's time consuming and difficult, especially
Speaker 1: if you know you're talking about like a single composer
Speaker 1: reaching out to every radio station that might be playing
Speaker 1: your work. That gets really tough. And keeping them honest
Speaker 1: and being able to get them to pay the royalty
Speaker 1: fees that actually really the licensing fees so that they
Speaker 1: can legally play your work on their stuff difficult. Now. Granted,
Speaker 1: in the early days of radio we were mostly talking
Speaker 1: about live performances anyway, and not recorded once, but you
Speaker 1: get my meaning. So in nineteen fourteen, a whole bunch
Speaker 1: of composers and publishers, led by Victor Herbert, founded an
Speaker 1: organization in the US called the American Society of Composers,
Speaker 1: Authors and Publishers a k a as CAP, a s
Speaker 1: C a P. This organization would perform the services of
Speaker 1: licensing music on behalf of its members and electing royalties
Speaker 1: on behalf for those members. So, in other words, if
Speaker 1: you if you belong to as CAP, you didn't have
Speaker 1: to worry about doing this yourself. So joining the group
Speaker 1: would give the publishers and composers and i P holders
Speaker 1: the benefit of not having to go after various public
Speaker 1: performance venues, as CAP would do it for them. So
Speaker 1: if you ever hear about as CAP fees, that's what
Speaker 1: it refers to. It is just one of many organizations
Speaker 1: that performs this task. As CAP is not the only
Speaker 1: one by any stretch of the imagination. Now, as time
Speaker 1: went on, more groups like as CAP would form. As
Speaker 1: KEPT mainly focuses on America, the United States in particular.
Speaker 1: It does maintain offices and a couple of other countries
Speaker 1: as well, but really it primarily focuses on America and
Speaker 1: American artists. Also, as CAP has had a pretty interesting
Speaker 1: history itself. I could probably do a full episode just
Speaker 1: about as CAP. Prior to nineteen forty, as KEPT would
Speaker 1: demand a five percent royalty fee for broadcast perform says
Speaker 1: of songs. So, in other words, whatever revenue the radio
Speaker 1: station was bringing in at that particular time, five percent
Speaker 1: of that would go to the license holder because of
Speaker 1: that that fee. In nineteen forty, the nonprofit organization increase
Speaker 1: that fee up to a staggering fifteen percent. Now, let's
Speaker 1: say that you run a radio station. Okay, so you're
Speaker 1: on the other side of this. Your job is to
Speaker 1: figure out what music you're gonna play in order to
Speaker 1: fill up air time, and you happen to see that
Speaker 1: any song that's covered by as CAP comes with a
Speaker 1: fifteen percent royalty fee for that time that you're actually
Speaker 1: broadcasting that that song. You're probably gonna look at music
Speaker 1: that's an outside of as CAP, and that that case right,
Speaker 1: because it's such a high fee, and a bunch of
Speaker 1: broadcasters did just that. The broadcasters did the same thing
Speaker 1: that the composers had done back in nineteen fourteen. They
Speaker 1: got together and they created a different performing rights organization.
Speaker 1: This one was called Broadcast Music Incorporated or b m I.
Speaker 1: So if you've heard about as CAB or b m I,
Speaker 1: that's where this comes from. Now, upon the formation of
Speaker 1: b m I, the members of as CAPS saw a
Speaker 1: serious threat here, Like it was very clear that, uh,
Speaker 1: those who were covered by b m I were definitely
Speaker 1: gonna get radio play and those who are covered by
Speaker 1: ASCP definitely were not because of those higher fees. So
Speaker 1: as CAP then readjusted their royalty demands all the way
Speaker 1: down to two point eight percent royalty instead of fifteen.
Speaker 1: And again, there are tons of other performance rights organizations
Speaker 1: out there, you know. One of them is so can
Speaker 1: s O c A N that's out of Canada. There's
Speaker 1: BOOMA b U m A that's of the Netherlands. But
Speaker 1: there are dozens of these and each country pretty much
Speaker 1: has its own, and more than one in several cases,
Speaker 1: and they all pretty much do the same thing on
Speaker 1: behalf of their members. They license music and they collect fees.
Speaker 1: And we'll come back to them in a it because
Speaker 1: the way they work with music streaming services matters. It
Speaker 1: matters a lot, and it is one of those cases
Speaker 1: that we often hear about whenever a music streaming service
Speaker 1: is making an argument that the fees they pay out
Speaker 1: might be might lead to their destruction. Pandora has had
Speaker 1: that argument a couple of times. In fact. All right, now,
Speaker 1: let's cover something that a Twitter follower named John Weber
Speaker 1: pointed out last week. They pointed out that the changes
Speaker 1: in media formats from vinyl to eight track, to cassette
Speaker 1: to c D two, MP three all had an impact
Speaker 1: on consumers and the industry, and I didn't really touch
Speaker 1: on that how the actual changes in media had an
Speaker 1: impact on how the industry made money and how artists
Speaker 1: got paid. And the reason I didn't go into it
Speaker 1: was largely because it just gets super duper complicated. But
Speaker 1: it's a valid thing to point out, so we're gonna
Speaker 1: try and cover a little bit of it. Keeping in mind,
Speaker 1: like I said, this gets really complex. Now. First, a
Speaker 1: really obvious way that the creation of eight tracks and
Speaker 1: cassettes would have on the music industry was that, for
Speaker 1: the first time, recorded music became really portable. So vinyl
Speaker 1: records are great, and they allow us to listen to
Speaker 1: our favorite songs or albums when we're at home or
Speaker 1: you know, if there's like a jukebox that has vinyl
Speaker 1: albums in it or something like that, but it's not
Speaker 1: typically the kind of format that lends itself to portable listening.
Speaker 1: Not that some auto manufacturers didn't give it the old
Speaker 1: college try. There actually are a few different auto mounted
Speaker 1: phonograph type devices, and in fact it goes back decades.
Speaker 1: Um Chrysler offered a highway high FI baggage on several
Speaker 1: car models in the early sixties. The system required proprietary
Speaker 1: records that spun at sixteen and two thirds rpm, so
Speaker 1: you couldn't just put your own vinyl collection on there.
Speaker 1: You had to buy all new records that were designed
Speaker 1: to rotate at this particular speed at sixteen and two
Speaker 1: thirds revolutions per minute. Only Columbia Records was making those albums,
Speaker 1: by the way, so the system wasn't a huge success.
Speaker 1: In fact, it was a flop, probably due to it
Speaker 1: both being really expensive, like it was a big upgrade too,
Speaker 1: you know, have it installed in your new vehicle, and
Speaker 1: you were also really limited to just those special records
Speaker 1: that Columbia produced. So not only were you only limited
Speaker 1: to artists that were represented by Columbia, uh, it was
Speaker 1: the subset of those artists that Columbia actually made these
Speaker 1: special records for that you could even choose from, so
Speaker 1: not great from a consumer standpoint. There were a couple
Speaker 1: of other attempts to bring vinyl albums to cars, and
Speaker 1: in fact, you can find an examples of this if
Speaker 1: you look around. In fact, I'm sure there are cars
Speaker 1: out there on the market that still have some of
Speaker 1: these things installed, but they typically had really big drawbacks,
Speaker 1: like even the ones that were designed in such a
Speaker 1: way where you wouldn't get skipping with the needle, because
Speaker 1: you know, you would think, like, if you're driving down,
Speaker 1: say a bumpy road, then the needle is going to
Speaker 1: skip around on your record. That's gonna be terrible. Well,
Speaker 1: they found ways of making sure that the needle would
Speaker 1: stay connected to the album even if you went down
Speaker 1: a bumpy road. However, that also meant the needle would
Speaker 1: wear out the album faster. So in other words, the
Speaker 1: more you listen to a particular record, the more you
Speaker 1: were wearing it out and you would eventually have to
Speaker 1: replace it. So this really made way for the birth
Speaker 1: of cartridge and cassette technologies, which would store music on
Speaker 1: magnetic tape rather than in grooves on a disk. So
Speaker 1: in the early nineteen sixties, you got the cassette tape,
Speaker 1: but the original cassette tape was terrible and so it
Speaker 1: really didn't take off. Like in the early sixties, the
Speaker 1: cassette tape tried to make a dent, but the audio
Speaker 1: quality was so bad that no one really wanted it.
Speaker 1: But then the Ampex Magnetic Company partnered with our Cia Records,
Speaker 1: the Lear Jet Company, and the Ford Motor Company, and
Speaker 1: collectively they designed the eight track tape specifically for the
Speaker 1: purposes of having an in car audio system where drivers
Speaker 1: could bring along their own music and not depend upon
Speaker 1: radio broadcast casts. Now, at this time, really most cars
Speaker 1: only had an AM radio. FM had not made a
Speaker 1: lot of penetration yet, and so a M was pretty limited.
Speaker 1: And this was considered to be a big, big boost,
Speaker 1: and the technology began to make its way into vehicles
Speaker 1: in nineteen and by the end of sixty five there
Speaker 1: were more than sixty thousand four vehicles that had an
Speaker 1: eight track player installed in them. Now, eight tracks had
Speaker 1: some big advantages over vinyl, particularly the systems that had
Speaker 1: been developed for car. For one thing, the audio quality
Speaker 1: was really good, at least at first. For another, they
Speaker 1: were far more portable than vinyl, albums and and vinyl players.
Speaker 1: The exteriors of these cartridges were pretty durable, so you
Speaker 1: didn't have to worry about getting you know, like a
Speaker 1: scratch on your cartridge and then your music is gonna skip.
Speaker 1: But these eight tracks also had some big downsides too.
Speaker 1: One is that the eight track had a sort of
Speaker 1: never ending loop inside it, which was one way only,
Speaker 1: so you couldn't rewind to listen to an earlier song.
Speaker 1: You had to go around the horn, You had to
Speaker 1: go through the entire length of the tape to come
Speaker 1: back around to the song again. I think, In fact,
Speaker 1: I know several times in the past I've talked about
Speaker 1: turning over an eight track. That's not right. No, it's
Speaker 1: that there's a never ending loop inside the eight tracks.
Speaker 1: So eventually the loop comes back round again and you're
Speaker 1: able to listen to the music that's on that part
Speaker 1: of the loop. Um, but you can't rewind, you can't
Speaker 1: go backward. Um. You. Another big down downside two eight
Speaker 1: tracks was at the capacity of your average eight track
Speaker 1: tape was less than what you could fit on a
Speaker 1: full vinyl album, So the eight track would not be
Speaker 1: able to hold all the songs that you would find
Speaker 1: on the full vinyl album version of whatever you were buying.
Speaker 1: So if you went out and bought UH the vinyl
Speaker 1: and the eight track of the same artists album, the
Speaker 1: eight track would be missing a few tracks. Typically. Also,
Speaker 1: the magnetic tape and the eight track would degrade over time,
Speaker 1: so one common issue was that sound from one track
Speaker 1: would start to bleed into the next track, kind of
Speaker 1: like what happens when UH you are listening to a
Speaker 1: radio station and you start moving into another radio station's
Speaker 1: broadcast range and they start to mesh with each other.
Speaker 1: Very disconcerting. Also, the tape was pretty flimsy, so if
Speaker 1: it caught on stuff, it could easily break, and that
Speaker 1: was another big downside to them. They did have at
Speaker 1: home eight track players, which helped the medium quite a bit,
Speaker 1: so it wasn't just in cars. Cars are are where
Speaker 1: it got its start, but they were at home versions
Speaker 1: of eight track players too. Now, eight tracks had a
Speaker 1: bit of a heyday in the nineteen seventies. They kind
Speaker 1: of peaked at around nineteen seventy eight, but even at
Speaker 1: their peak they were still just a fraction of the
Speaker 1: market of vinyl, and then cassettes were catching up. When
Speaker 1: eight tracks first arrived on the scene. The cassette tape
Speaker 1: already had existed, like I mentioned, but was, for lack
Speaker 1: of a better word, total pants Uh. They were just
Speaker 1: awful with terrible sound quality. But that would change, and
Speaker 1: ultimately the smaller form factor of the cassette and the
Speaker 1: greater capacity that cassette tapes had, like they could hold
Speaker 1: more material, that would spell doom for the eight track
Speaker 1: in the long run. Anyway, even when eight tracks were
Speaker 1: at their peak, they were at about four billion dollars
Speaker 1: in revenue, and vinyl was still at around sixteen billion dollars.
Speaker 1: This is adjusting for inflation, by the way, so vinyl
Speaker 1: was about four times more successful in turn of revenue
Speaker 1: then eight tracks. Eight tracks would never overtake vinyl, but
Speaker 1: cassettes would, and the cassette was doing pretty well by
Speaker 1: the late seventies. They overtook vinyl in nineteen eighty three,
Speaker 1: and then cassettes hit their peak as late as nineteen
Speaker 1: nine and around twenty two billion dollars in revenue. Again
Speaker 1: we're talking about by revenue here, um, But the compact
Speaker 1: disc was a big thing and had overtaken cassettes way
Speaker 1: back in ninety two. This was also when we started
Speaker 1: to see a decline in music sales. This would also
Speaker 1: be around the time when Napster was really active, and
Speaker 1: so the industry pretty much pounced on piracy as being
Speaker 1: the reason why music sales took a downturn, and that's
Speaker 1: when we got all these massive and um overenthusiastic I
Speaker 1: think is a good word over enthusiastic lawsuits against napster
Speaker 1: itself and then specifically users of Napster really meant to
Speaker 1: terrify users so that they wouldn't pirate music, and it
Speaker 1: was insane. Some of the damages that they sought against
Speaker 1: various users of the platforms really painted the music industry
Speaker 1: in a bad light at the time. All Right, we're
Speaker 1: gonna take a quick break. When we come back, we
Speaker 1: will continue to talk about cassettes and then we'll get
Speaker 1: into some of the complicated issues when it comes to
Speaker 1: trying to figure out what these different forms of media,
Speaker 1: what kind of impact they had on consumers and the
Speaker 1: music industry in general. But first let's take this quick break. Okay,
Speaker 1: So cassettes could fit an entire album on them, unlike
Speaker 1: an eight track, So that was one bonus for cassettes.
Speaker 1: They could be rewound. There was another big bonus. They
Speaker 1: were more portable than eight tracks, and the magnetic tape
Speaker 1: tended to be a bit sturdier than what you found
Speaker 1: on eight tracks. The quality of a cassette tape could
Speaker 1: degrade over time, so you know, the more you played it,
Speaker 1: the less good it would sound. But generally speaking they
Speaker 1: were received as being a bit more durable than the
Speaker 1: eight track format, and the music industry treated cassettes a
Speaker 1: lot like the way they treated vinyl, and that you
Speaker 1: could buy full length albums, or you could buy cassette singles,
Speaker 1: which would contain a few songs but not a whole album.
Speaker 1: This gave customers some options. They could buy just the
Speaker 1: singles they liked, or they could get the whole album.
Speaker 1: I don't know how popular cassette singles were, Like, I
Speaker 1: have anecdotal things I could talk about, but that's worthless.
Speaker 1: Right In my own experience, I almost never bought a single.
Speaker 1: I almost always bought an album instead of a single.
Speaker 1: But I did have a couple and there were some
Speaker 1: downside succettes, a big one being that the amazing album
Speaker 1: art of the vinyl era was reduced to a tiny
Speaker 1: fraction of its normal size. That's one of the things
Speaker 1: that vinyl collectors often bemoan is that, uh, the when
Speaker 1: vinyl started to have a downturn, we started to see
Speaker 1: the end or the perceived end of an era of
Speaker 1: amazing cover art. But convenience made up for most of
Speaker 1: the downsides for most people. And now when the compact
Speaker 1: disc started to get popular. So the compact disc debuted
Speaker 1: all the way back in the early eighties, but took
Speaker 1: a while to get popular. Once that happened, things changed
Speaker 1: a bit. Uh. Yes, there are different CD formats out there,
Speaker 1: there are CD singles and things, but here in the States,
Speaker 1: the full sized compact disc was pretty much the standard
Speaker 1: and in some markets the only format available. I'm also
Speaker 1: not going to go into stuff like digital tape because
Speaker 1: going through all the other, at least in the US,
Speaker 1: the other minor media formats would just be overkill. Anyway,
Speaker 1: the music industry was really focused more on selling full
Speaker 1: albums at this point and not singles. That meant, if
Speaker 1: you wanted to get that hit song that you really liked,
Speaker 1: you had to buy the whole dang album if you
Speaker 1: were determined to get CD quality that is, and c
Speaker 1: d s are an optical format, meaning CD players use
Speaker 1: lasers and the lasers read little pits and lands that
Speaker 1: are on the surface of the c D lands. By
Speaker 1: the way, that's just a word. That means the span
Speaker 1: between pits and the pits and lands correspond with bits.
Speaker 1: That is, zeros and ones and songs are represented as
Speaker 1: digital data. So unlike vinyl eight tracks and four tracks
Speaker 1: and cassettes, those are all analog formats, right, those are
Speaker 1: not digital. C d s are digital. Now, I'm not
Speaker 1: going to go into the long debate between digital versus
Speaker 1: analog because I've talked about it in previous podcasts and
Speaker 1: they would push this episode into truly epic length. So
Speaker 1: we're gonna leave that debate behind. It's not really important
Speaker 1: for the purposes of our discussion anyway. So, by the
Speaker 1: average music customer was spending around sixty four dollars on
Speaker 1: music per year, so assuming you're buying CD s, that's
Speaker 1: somewhere between three to five CDs per year roughly. Now,
Speaker 1: all through this time, the music industry was making huge
Speaker 1: amounts of money. We're talking like around forty billion dollars
Speaker 1: in nine in the United States, and much of that
Speaker 1: was due to the packaging of music the bundling of music.
Speaker 1: Like I said, CDs pretty much forced people into buying
Speaker 1: whole albums even if they only wanted a single song.
Speaker 1: Even cassettes which did have those cassette singles were priced
Speaker 1: in such a way that I think a lot of
Speaker 1: folks just elected to buy the whole album rather than
Speaker 1: spend more on a per song basis, Like a cassette
Speaker 1: single would be less expensive than the full cassette. But
Speaker 1: if you were looking at it on a per song basis,
Speaker 1: like like you're looking at it like grocery shopping, like
Speaker 1: how much is this per ounce, then a full album
Speaker 1: was more economically uh sound, I guess. But in the
Speaker 1: late nineties, digital music al formats were poised to make
Speaker 1: a huge difference to create the opportunity for consumers to
Speaker 1: buy music in a different way, an unbundled way, because
Speaker 1: you could start buying songs individually rather than buy full albums. Now,
Speaker 1: before I get into that, I need to add that
Speaker 1: the year that recorded music peaked is another one of
Speaker 1: those things that I find conflicting information on a lot
Speaker 1: of sources suggest that it was ninety nine. That's what
Speaker 1: the Recording Industry Association of America says that recorded music,
Speaker 1: as in music, you would go out and purchase a
Speaker 1: copy of like a physical copy of peaked in nine
Speaker 1: But that's where the United States. If we actually look
Speaker 1: at the global market, the peak was even further back
Speaker 1: in nine six. That was with a global revenue of
Speaker 1: around sixty billion dollars. As for artists cuts of you
Speaker 1: know how much did artists get for these different kinds
Speaker 1: of media. Those changed over time too, So back in
Speaker 1: three for example, and artists would get about eight percent
Speaker 1: off the sale of an al boom costing eight dollars cents.
Speaker 1: This is from a book by Steve Knopper called Appetite
Speaker 1: for Self Destruction. Now is the same year that the
Speaker 1: compact disc debuted. It would only only early adopters really
Speaker 1: win after CDs that that at that point because they
Speaker 1: could only they were the only ones who could afforded
Speaker 1: CD players when they first came out were a couple
Speaker 1: of thousand dollars. So it wasn't the sort of thing
Speaker 1: that the average teenager could rush out and purchase, at
Speaker 1: least I certainly couldn't. And uh, once you get to
Speaker 1: the point where c d s were starting to become
Speaker 1: the standard, where cassettes were starting to fade away, and
Speaker 1: artists share off a sixteen dollar c D was just five.
Speaker 1: So remember the final album, they were getting an eight
Speaker 1: percent cut off of what was like an eight dollars
Speaker 1: cents sales price, and with the c D it's a
Speaker 1: five percent cut of sixteen dollars. So the CD cost more,
Speaker 1: but the artists got a smaller percentage of the sale. Now,
Speaker 1: gradually CD prices increased and artist shares also increased. They
Speaker 1: went up to ten. By the way, when it really
Speaker 1: comes to comparing how much artists earned and how much
Speaker 1: music was worth across different formats, it quickly becomes a jumbled,
Speaker 1: chaotic mess. It. I mean, it really does become impossible
Speaker 1: to talk about in any meaningful way. The fact is
Speaker 1: there's just not really any rhyme or reason to it
Speaker 1: when you really look across the years. Pitchfork has a
Speaker 1: really great article about this that came out in two
Speaker 1: thousand fifteen, so it is dated, but the article is
Speaker 1: titled how much is Music Really Worth? I recommend that article.
Speaker 1: That's a good read if you want to learn more
Speaker 1: about this, and it really lays out that the price
Speaker 1: of music has gone all over the place over the years,
Speaker 1: So Pitchfork adjusts all the prices to match two thousand,
Speaker 1: fifteen dollars because that's when the article came out, and
Speaker 1: you see really crazy amounts, like like a an eight
Speaker 1: track album of Jimmy Hendricks's Are You Experienced in nineteen
Speaker 1: sixty eight cost fifty three dollars ninety six cents for
Speaker 1: for that one album, keeping in mind that eight track
Speaker 1: albums can't hold as much as vinyl. Uh It also
Speaker 1: points out that it would cost forty two dollars forty
Speaker 1: three cents to buy a cassette tape of Simon and
Speaker 1: Garfunkel's Bridge Over Troubled Waters album in nineteen seventy and
Speaker 1: when you look at those prices, coughing up about twenty
Speaker 1: five bucks in two thousand two for a CD of
Speaker 1: The M and M Show seems quite the bargain. But wait,
Speaker 1: it gets more confusing because generally speaking, the price of
Speaker 1: an album like a single album, declined between nineteen seventy
Speaker 1: nine and nineteen eighty four. It went from around twenty
Speaker 1: two dollars eighty one cents per album in nineteen seventy
Speaker 1: nine to sixteen dollars eighty one cents per album in night.
Speaker 1: But then the price of albums began to climb again
Speaker 1: up to two thousand four, and by then it was
Speaker 1: up to eighteen dollars forty two cents. Remember, all of
Speaker 1: these prices have been adjusted for inflation, so it's not
Speaker 1: just that inflation made these go out. The actual cost
Speaker 1: was increasing. The cost would drop again to fourteen dollars
Speaker 1: cents by two thousand nine. So Pitchfork came up with
Speaker 1: these figures by averaging the per unit sales across all media.
Speaker 1: So that's a combination of all the available options for
Speaker 1: each album. Right, So in the seventies and eighties, you're
Speaker 1: talking about everything from you know, averaging together the vinyl,
Speaker 1: the eight track, the cassette, tape, um, all the different
Speaker 1: versions that you get of that album. That's where that
Speaker 1: kind of averages out to, whereas in the more recent
Speaker 1: days it would be things like c d s, maybe cassettes, digital,
Speaker 1: that kind of stuff. So what I'm getting at is
Speaker 1: there is no apples to apples that we can really
Speaker 1: talk about here. In fact, we can't even really do
Speaker 1: apples to oranges. It's more like we're talking I don't know,
Speaker 1: apples too. Can openers or something that. But let's let's
Speaker 1: get onto downloads and streaming and talk about how that
Speaker 1: disrupted the music industry. We started to see the unbundling
Speaker 1: trend with the rise of digital music stores, primarily iTunes,
Speaker 1: which started in the early two thousands. Two thousand three,
Speaker 1: I think is when the iTunes store launched. Now, at
Speaker 1: that stage, artists were getting about four off a full
Speaker 1: album that was purchased off iTunes, and typically and a
Speaker 1: full album off iTunes cost about nine dollars cents, that
Speaker 1: is according to David Byrne of The Talking Heads. But
Speaker 1: another format was also going to shake things up, and
Speaker 1: that was streaming. So let's talk about streaming. Streaming really
Speaker 1: is what it sounds like. You're streaming data from one
Speaker 1: source to a destination device. In this case, that data
Speaker 1: represents audio. One group created a streaming audio technology that
Speaker 1: they then incorporated into a music service called tune to
Speaker 1: dot com um that's t U n E t o
Speaker 1: dot com. That was an online radio service. They also
Speaker 1: worked with a more on demand streaming audio concept that
Speaker 1: they called Aladdin. In two thousand one, Listen dot Com
Speaker 1: purchased tune to dot Com. Listen dot Com meanwhile, also
Speaker 1: owned an online music directory. So pairing the Aladdin concept
Speaker 1: of this on demand streaming service with this large music database,
Speaker 1: Listen dot Com created a new service that they called Rhapsody.
Speaker 1: This would be the first streaming music service and it
Speaker 1: launched in late two thousand one, so it actually came
Speaker 1: out before the iTunes Music Store did. To Listen to Rhapsody,
Speaker 1: customers would have to fork over a monthly subscription fee.
Speaker 1: Over the following year, Rhapsody built out their library further
Speaker 1: by making deals with major music labels. The company Real
Speaker 1: Networks are e A l at Works would go on
Speaker 1: to acquire Listen dot Com. This stuff happens all the
Speaker 1: time in tech, particularly during this era, because there's always
Speaker 1: a bigger fish, and that happened just as the iTunes
Speaker 1: Music Store launched. And just to bring Napster back into this,
Speaker 1: in two thousand sixteen, Rhapsody, which was by this point
Speaker 1: an independent company. In a you know its own history
Speaker 1: is worth an entire episode, Rhapsody would rebrand as Napster.
Speaker 1: There was no real connection to the original peer to
Speaker 1: peer network that had caused the music industry so much
Speaker 1: headache back in the two thousand one time, but it
Speaker 1: did have the same name. They bought the rights to
Speaker 1: the name, so we could say that streaming really got
Speaker 1: started in late two thousand one early two thousand two.
Speaker 1: Also in two thousand two, last dot Fm would introduce
Speaker 1: a feature that would become important for later streaming services
Speaker 1: like Pandora. That feature would track user activity, meaning which
Speaker 1: songs the user was gravitating toward, and then use that
Speaker 1: information to make recommendations of music that the listener might
Speaker 1: not be aware of, but they could potentially really like
Speaker 1: based on their preferences, Like if you listen to a
Speaker 1: lot of band A, maybe you'd also like band B
Speaker 1: that sounds a bit like band A. Pandora would take
Speaker 1: this concept and push it much harder, growing out of
Speaker 1: something that was called the Music Genome Project. You've probably
Speaker 1: heard me talk about metadata in the past. Metadata is
Speaker 1: information that is about information. For example, for each episode
Speaker 1: of tech Stuff, I create metadata, and the metadata includes
Speaker 1: a brief description of the episode. It also includes keywords
Speaker 1: that relate to the subject matter, so if you're searching
Speaker 1: for a specific tech stuff topic, uh, it's more likely
Speaker 1: to pop up. Metadata helps computers contextualized content in some way,
Speaker 1: because computers aren't natively able to understand what content is.
Speaker 1: So with songs, the Music Genome Project would break down
Speaker 1: a lot of the basic components of the music in
Speaker 1: order to quote unquote understand what that music was. And
Speaker 1: actual human beings were doing this work, by the way.
Speaker 1: It wasn't like the computer was scanning a song and saying, oh,
Speaker 1: this song has you know, a very strong power lead guitar.
Speaker 1: So the Pandora employees would include tags of songs like
Speaker 1: female vocalist or up tempo beat or long guitar solo
Speaker 1: or whatever. You know. They'd use different ways to describe
Speaker 1: the music, and the Pandora service would later use those
Speaker 1: descriptions to create dynamic playlists of music for listeners based
Speaker 1: on a seed song or artist. So you might go
Speaker 1: in there and say, like, I want to create a
Speaker 1: Pandora radio station that uses They Might Be Giants as
Speaker 1: the seed band, and it might pull other artists like
Speaker 1: I don't know, bar Naked Ladies, which you know, you
Speaker 1: could argue whether or not that's similar to they Might
Speaker 1: Be Giants, But there's a lot of overlap in the
Speaker 1: listening habits there. That's kind of the idea. So the
Speaker 1: listener puts in the starting point the Music Genome project
Speaker 1: bit says, Okay, what are some of the characteristics of
Speaker 1: the song and or artist and what other similar artists
Speaker 1: and songs can I draw from in order to create
Speaker 1: a playlist. It was and is pretty darn cool. Well,
Speaker 1: we're gonna talk a bit more about Pandora in particular
Speaker 1: and the tribulations that it faced when it came to
Speaker 1: figuring out things like licensing fees after we come back
Speaker 1: from this break. So Pandora's features and similar ones that
Speaker 1: were designed to do, you know, pretty much the same
Speaker 1: thing created the backbone for lots of streaming services. Of course,
Speaker 1: not all streaming services are dynamics. Some follow more of
Speaker 1: a broadcast model. For example, I listened to the I
Speaker 1: Heart Radio broadway station a lot that's more like a
Speaker 1: streaming radio station, where they're doing the programming on their
Speaker 1: side ahead of time. It's not like it's just dynamically
Speaker 1: pulling the next song. If I listen to a Pandora station,
Speaker 1: like a Pandora Broadway station, I'm hearing music that is
Speaker 1: at least in part curated based upon whatever I used
Speaker 1: two seed that station. Now, when it comes to music streaming,
Speaker 1: the music industry would treat that kind of consumption similar
Speaker 1: in a way to radio broadcast, similar but not identical.
Speaker 1: In fact, in many cases, the industry would effectively penalize
Speaker 1: streaming platforms, and at multiple points companies like Pandora faced
Speaker 1: the possibility of having their entire business model threatened. Alright,
Speaker 1: So this this part the story gets even more messy
Speaker 1: than it already has been previously. I mentioned as CAP
Speaker 1: so as CAP and other performance rights organizations seek out
Speaker 1: licensing fees and royalties, right, and there are certain percentages
Speaker 1: that they seek out for radio broadcast where they will
Speaker 1: negotiate a percentage that they'll look to claim for songs
Speaker 1: that are broadcast on radio. In the early days of
Speaker 1: internet radio, there was a real imbalance between what terrestrial
Speaker 1: radio stations were expected to pay and what streaming services
Speaker 1: were expected to pay. In some cases, streaming services were
Speaker 1: expected to pay twice as much for streaming a song
Speaker 1: as the radio would be charged for broadcasting a song.
Speaker 1: And you also see like the difference in operation makes
Speaker 1: a huge effect here too, Right, because radio station broadcasts
Speaker 1: a song, they might have to do sort of a
Speaker 1: Nielsen review to figure out how many people are listening
Speaker 1: to that radio station, right, But streaming services can theoretically
Speaker 1: anyway track exactly how many people are listening to a
Speaker 1: specific song. And while a song might broadcast over the
Speaker 1: radio three or four times in a day, you know,
Speaker 1: how do you count. Do you count that as a
Speaker 1: single performance? Do you count that against the percentage of
Speaker 1: you know, how many people are listening to that radio station.
Speaker 1: With streaming services, there was no limit to how many
Speaker 1: times a song could be streamed in a day. It
Speaker 1: would all depend on how many people were wanting to
Speaker 1: listen to that song. But this got really complex, thanks
Speaker 1: large and largely because the ruling of a a U.
Speaker 1: S agency called the Copyright Royalty Board that formed in
Speaker 1: two thousand four as part of the Copyright Royalty and
Speaker 1: Distribution Reform Act here in the United States. The Board
Speaker 1: includes a panel of three judges who quote oversee the
Speaker 1: copyright laws statutory licenses, which permit qualified parties to use
Speaker 1: multiple copyrighted works without obtaining separate licenses from each copyright
Speaker 1: owner end quote. Because obviously, if you're running a broadcast service,
Speaker 1: it would be impossible to seek out a license for
Speaker 1: each copyright holder. And still, you know, have a service.
Speaker 1: Now in two thousand seven, the CRB created new regulations
Speaker 1: for online royal teas, which many platforms claimed would mean
Speaker 1: those platforms would have to pay out more in royalties
Speaker 1: than they were making an ad revenue, meaning the royalties
Speaker 1: were actually threatening the very business of internet radio. A
Speaker 1: lot of companies got upset with the CRB, including the
Speaker 1: one I worked for. Of course, back in those days,
Speaker 1: it was not known as I Heart Radio. It went
Speaker 1: by the name Clear Channel Communications. Now, the rates for
Speaker 1: streaming started out at point zero zero zero eight dollars
Speaker 1: per play, so not even a penny per play per
Speaker 1: listener back uh or per listener rate, I should say,
Speaker 1: back in two thousand and six, But it would increase
Speaker 1: all the way up to point zero zero one nine
Speaker 1: per play per listener rate in and that's where it
Speaker 1: would stay. Now. Despite the proclamations that this would bring
Speaker 1: an into streaming radio online, it didn't. But then it
Speaker 1: was also complicated to just keep track of which tracks
Speaker 1: were playing and how often they were playing on which
Speaker 1: platform they were playing, so it really got hard to
Speaker 1: determinative streaming platforms were actually paying out royalties properly or not.
Speaker 1: In fact, most people guests that they weren't that artists
Speaker 1: weren't getting what they were owed um, and that there
Speaker 1: were a couple of different reasons for this. Some of
Speaker 1: them were kind of honest ones and that it was
Speaker 1: genuinely hard to know whom you were supposed to pay,
Speaker 1: and others were maybe that some of these platforms were
Speaker 1: lying on the fact that it was so complicated and
Speaker 1: opaque that they could kind of get away with not
Speaker 1: paying Now. In two thousand eighteen, US Congress passed the
Speaker 1: Music Modernization Act in an effort to get a handle
Speaker 1: on this problem. This set up a nonprofit agency called
Speaker 1: the Mechanical License Collective or MLC. Starts to sound like
Speaker 1: a dystopian science fiction novel, anyway, the MLC is responsible
Speaker 1: for maintaining a database of the owners of mechanical licenses
Speaker 1: for copyrighted works. The MLC collects licensing fees from music
Speaker 1: streaming services, and the database makes it much easier for
Speaker 1: these streaming services to identify the owners of the licenses
Speaker 1: so that the streaming platform can make sure that the
Speaker 1: right person is credited and ends up getting what they
Speaker 1: are owed. Heading up to two thousand eighteen, this was
Speaker 1: really a big challenge again because there wasn't the centralized database,
Speaker 1: so the MLC was working to change that. The MLC
Speaker 1: is also responsible for paying out those fees to the
Speaker 1: proper license holders. There's actually a couple of steps in
Speaker 1: that as well. Streaming services can still negotiate directly with
Speaker 1: license holders, but otherwise they have to pay a compulsory
Speaker 1: fee to the MLC to do streaming of those songs.
Speaker 1: But what does this mean for the actual license holder,
Speaker 1: the artist or rather the composer typically, how much are
Speaker 1: they getting paid? Well, let's say you got yourself an
Speaker 1: album and that album is available on a service like Spotify,
Speaker 1: and first Spotify generates revenue through subscriptions and such and
Speaker 1: takes a big cut of that incoming revenue. So Spotify
Speaker 1: takes around thirty of all the revenue. The rest goes
Speaker 1: into a pool that gets divided up among all the
Speaker 1: other parties involved and getting music on Spotify. So that
Speaker 1: includes your record label, your music publisher, your distributor, and you.
Speaker 1: And depending upon how frequently folks were streaming your particular album,
Speaker 1: your pool might be much smaller than someone else's um
Speaker 1: because you're all sharing that amount, right, that's left over
Speaker 1: after Spotify takes it's like it's cut that's left for
Speaker 1: everybody to divvy up based upon how frequently there's you know,
Speaker 1: those songs were played on the platform. So what this
Speaker 1: means is that by the time everyone else has taken
Speaker 1: their cut, there's very little left to go to the artist. Plus,
Speaker 1: record labels have been a little opaque and how they
Speaker 1: pay out artists, so it makes it even more complicated.
Speaker 1: Business Insider reported that an artist might receive somewhere between
Speaker 1: point zero zero three three to point zero zero five
Speaker 1: four dollars per stream, so less than a cent per stream.
Speaker 1: In fact, it would mean that someone would have to
Speaker 1: listen to a song multiple times before, or several people
Speaker 1: would have to listen to the same song before an
Speaker 1: artist would even see a single penny. That penny would
Speaker 1: still get split with the publisher and other entities like
Speaker 1: as CAP. That money, by the way, also, like I said,
Speaker 1: does not go directly to the artists from Spotify. Instead,
Speaker 1: it goes to whichever distributor handles your music. The distributor
Speaker 1: receives the royalties from the streaming platform, then pays more
Speaker 1: likely your record label, and then your record label will
Speaker 1: eventually pay you on whatever schedules all of these different
Speaker 1: entities are working on, so payment can be a bit erratic.
Speaker 1: This is largely why the live events space is so
Speaker 1: important for musicians, because while you can make money streaming
Speaker 1: songs on platforms like Spotify, you need to be really popular.
Speaker 1: I mean, you need to have thousands and thousands of
Speaker 1: people listening to your songs in order for that to
Speaker 1: really become something where you can live off of it.
Speaker 1: So really streaming is you know, at least getting a
Speaker 1: decent revenue from streaming is really limited to extremely popular
Speaker 1: acts already. If you are a small independent act, you're
Speaker 1: probably not getting a significant amount of money from streaming. Uh,
Speaker 1: you might get more by selling your music directly through
Speaker 1: platforms like band camp, or maybe you're getting a regular
Speaker 1: support system through something like Patreon, or maybe you're just
Speaker 1: making money by playing live venues, selling merchandise. Maybe you're
Speaker 1: even pressing your own vinyl and selling it. That gets
Speaker 1: really expensive to It's if you've ever wondered if you've
Speaker 1: ever gone to a show and they've sold vinyl and
Speaker 1: it's from like twenty five bucks or something. If you've
Speaker 1: ever wondered why it's twenty five dollars to buy a
Speaker 1: vinyl album. It's because producing vinyl independently is really expensive.
Speaker 1: You have to pay a certain amount of money just
Speaker 1: to get the master reduced, and then on top of that,
Speaker 1: the actual pressing of vinyl costs a good amount of money.
Speaker 1: Typically it gets a little more economical if you're producing
Speaker 1: larger runs, but then you have to sell more in
Speaker 1: order for those larger runs to be worthwhile, right, Otherwise
Speaker 1: you've got a garage filled with vinyl that you can't move. So, yeah,
Speaker 1: it's a complicated thing. The recorded and streaming businesses of
Speaker 1: music really tough, like specifically tough on artists. Particularly if
Speaker 1: you're an artist who didn't write your music, then you're
Speaker 1: really not looking at a whole lot of money and royalties.
Speaker 1: The person who wrote your music might be looking at some,
Speaker 1: especially if the song goes really super popular and viral
Speaker 1: or something. But otherwise it's a very tough gig. And yeah,
Speaker 1: it's super complicated. Uh, it always has been. The music
Speaker 1: companies typically are the ones that end up making out
Speaker 1: like bandits here, You're you're talking about like now billion dollars,
Speaker 1: billions of dollars in revenue every year. But they are
Speaker 1: also the companies that are promoting artists and spending money
Speaker 1: to try and get people to be aware of the
Speaker 1: artists that are under their label. So there's a trade
Speaker 1: off there. Still, I suspect a lot of record executives
Speaker 1: out there probably make more money than um, then maybe
Speaker 1: they need to, like, maybe some of that money should
Speaker 1: be trickling down to the folks who are actually making
Speaker 1: the music as well as you know, the people responsible
Speaker 1: for making sure that the recording of that music is good,
Speaker 1: like all the technicians who are working there. I think
Speaker 1: that probably there needs to be a bit more redistribution
Speaker 1: of that, but they all. I I feel that way
Speaker 1: about pretty much every industry everywhere, that the people who
Speaker 1: are responsible for the work deserve more credit than what
Speaker 1: they typically get. Well, there you go. There are a
Speaker 1: couple of episodes about the music industry and how technology
Speaker 1: affects the way the business of music works. There's more
Speaker 1: to say here, By the way, For example, the rise
Speaker 1: of the MP three would end up changing the way
Speaker 1: music sounds quite a bit. That was largely because the
Speaker 1: way that MP three files compressed data often also incorporate
Speaker 1: compression of music, compression in the sense of reduced dynamics,
Speaker 1: so you have a reduction in the difference between the
Speaker 1: softest sounds and the loudest sounds. That means that you
Speaker 1: start to have more, you know, music that has more
Speaker 1: of a uniform loudness to it, and that lack of
Speaker 1: dynamic feature in the music is something that was driven
Speaker 1: by technology. Some people bemoan that because they say, well,
Speaker 1: now the music is less complex, less nuanced, and uh,
Speaker 1: and it can all start to sound very similar to
Speaker 1: each other, even when you're talking about different instrumentation and everything.
Speaker 1: The fact that you have this kind of standard loudness
Speaker 1: becomes an issue. So there are other elements that we
Speaker 1: could talk about as far as how technology has affected music.
Speaker 1: And of course there's also the whole story of electrification
Speaker 1: of music, everything from electric guitars to the rise of
Speaker 1: synthesizers and uh, you know, syn synthetic drum kits and
Speaker 1: that kind of thing. But that would just go down
Speaker 1: more rabbit holes. And plus I've covered some of that
Speaker 1: in the past. But if you do want me to
Speaker 1: talk more about music and tech and how the two
Speaker 1: are so closely related, let me know. You can still
Speaker 1: let me know on Twitter. As I record this, we're
Speaker 1: waiting to find out. If Twitter actually does completely, you know,
Speaker 1: agree to the sale to Elon Musk. That's something that's
Speaker 1: happening just as I'm recording this episode. Um, and if
Speaker 1: that does happen, I might, I might just I might
Speaker 1: just piece out of Twitter for a while. But even
Speaker 1: in that case, I will make sure that there will
Speaker 1: be another means of contact me if you do want
Speaker 1: to contact me on Twitter. The handle for the show
Speaker 1: is tech Stuff H s W and I'll talk to
Speaker 1: you again really soon. Y. Tech Stuff is an I
Speaker 1: Heart Radio production. For more podcasts from my Heart Radio,
Speaker 1: visit the i Heart Radio app, Apple Podcasts, or wherever
Speaker 1: you listen to your favorite shows.