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? I thought it might
Speaker 1: be a good idea to do an episode or two
Speaker 1: about the music industry, because how the industry works as
Speaker 1: a business is really tightly tied to technology. In fact,
Speaker 1: music itself is tightly tied to technology. It is the
Speaker 1: product of technology in most cases. I mean, you can
Speaker 1: you can sing, and I guess that's a good argument
Speaker 1: to make a that that's a kind of music that
Speaker 1: doesn't involve technology, but most music does. And the evolution
Speaker 1: of tech has really affected music in numerous ways, for um,
Speaker 1: the ability to record it, to new ways to create
Speaker 1: different kinds of musical sounds, and all sorts of ways
Speaker 1: to experiment with recording and music production and distribution. Even that,
Speaker 1: you know, we we have to take all that into account.
Speaker 1: It's not just the tech, it's not just the business.
Speaker 1: They are tightly integrated. So from the tech used to
Speaker 1: record music to the tech used to play it back
Speaker 1: to the radio broadcasts to streaming over the internet, we
Speaker 1: can really see how technology has shaped both art and business. Uh. This,
Speaker 1: by the way, this whole idea of me doing these episodes,
Speaker 1: which has taken me a long time to work on
Speaker 1: because there's just so much to cover. It was really
Speaker 1: prompted by the recent news that fans of certain artists
Speaker 1: on the death Row Music label we're upset to discover
Speaker 1: that some of their favorite albums and songs we're just
Speaker 1: disappearing from the various popular music streaming services out there.
Speaker 1: And this coincides with Snoop Dogg's announcement that he wants
Speaker 1: to turn death Row Records, which he purchased not that
Speaker 1: long ago, into the first major music label in the
Speaker 1: metaverse and make it an n f T music label.
Speaker 1: UM pretty extreme, but let's dial back the clock a
Speaker 1: little bit. Before the early nineteen hundreds, musicians really only
Speaker 1: had the option to making a living off their music
Speaker 1: a couple of different ways. They could play live venues
Speaker 1: and take a share of the box office, or they
Speaker 1: could find themselves a wealthy or generous patron, whether that
Speaker 1: was a specific person or maybe a government or whatever. Um.
Speaker 1: Or they could compose music and they could then put
Speaker 1: it onto sheet music and print sheet music and sell
Speaker 1: that make money that way, But the emergence of recorded media,
Speaker 1: which predated radio broadcasting, that would change everything. In nineteen
Speaker 1: o four, the Victor Talking Machine company, which made phonographs,
Speaker 1: also got into the business of producing music, because if
Speaker 1: you don't have anything to play on your talking machine,
Speaker 1: why would anyone buy one? Now? In the early days,
Speaker 1: recording equipment was exceedingly scarce. Essentially, the companies that possessed
Speaker 1: recording equipment were the same ones that were producing the
Speaker 1: playback equipment. They were in the business of doing both,
Speaker 1: and that meant from the very beginning you had gatekeepers
Speaker 1: in the recorded music industry. There were no such things
Speaker 1: as independent labels in the earliest days, just the larger
Speaker 1: phonograph and grammophone companies, and so right from the start
Speaker 1: we had a precedent in which a few powerful companies
Speaker 1: determined what music would get recorded. So at that point
Speaker 1: musicians had an opportun tunity to make money off recordings.
Speaker 1: They could also count on these companies to market music
Speaker 1: to a wider audience, so they'd reach people that otherwise
Speaker 1: they never would have been able to. People would be
Speaker 1: able to listen and enjoy their music and pay for
Speaker 1: it more importantly that otherwise these musicians would never have
Speaker 1: encountered and the company would only make money if people
Speaker 1: were buying the recordings. So we quickly established this relationship
Speaker 1: in which the musicians created the music and the recording
Speaker 1: company did pretty much everything else, from committing music to
Speaker 1: a physical recording to marketing the music, to sales and
Speaker 1: distribution of that music. Now, according to a Wall, a
Speaker 1: w a L is a company with an acronym that
Speaker 1: stands for artists without a label. Uh, the nineteen o
Speaker 1: four deal that Victor Talking Machine Company did would give
Speaker 1: an artist four thousand dollars for a single song and
Speaker 1: a cut of up to twenty to percent of each sale,
Speaker 1: which is incredibly generous. And I'm imagining that four thousand
Speaker 1: dollars has to have been adjusted for inflation, because otherwise
Speaker 1: we're talking about more than a hundred thirty thousand dollars
Speaker 1: for a single song, and there's just no way that
Speaker 1: that's true. Heck, I find the four thousand dollars thing
Speaker 1: hard to believe honestly, considering the time period. And again,
Speaker 1: it wouldn't be four thousand dollars in nineteen four dollars,
Speaker 1: but the equivalent of four thousand dollars today, but let's
Speaker 1: just assume that it's all accurate and that a wall
Speaker 1: adjusted for inflation. The Victor Talking Machine Company was one
Speaker 1: of three major companies in the industry in those early
Speaker 1: early days. The other two were the Columbia Phonograph Company,
Speaker 1: and then you had the Thomas A. Edison Company, And
Speaker 1: all three of these companies were making phonographs or phonograph
Speaker 1: like devices, and so they all had a vested interest
Speaker 1: in making sure that there was content to play on
Speaker 1: those devices. They also each one had to dominate the industry.
Speaker 1: They wanted to be the big player, so they would
Speaker 1: each attempt to get exclusive deals with specific musicians and orchestras.
Speaker 1: And early on you had competing formats in in the
Speaker 1: record industry. So early early on, you had wax cylinders,
Speaker 1: which not only didn't provide the best sound quality, but
Speaker 1: they would also wear down unrepeated playbacks because they had
Speaker 1: a wax coding and playing them would start to damage
Speaker 1: the coding, so you know, after like a few dozen plays,
Speaker 1: it would be really diminished quality. So even when the
Speaker 1: industry moved from wax cylinders to flat record discs, which
Speaker 1: were made from hard material like shellac. It would be
Speaker 1: quite some time before the industry would move to vinyl,
Speaker 1: but even when they went to disks, you know, the
Speaker 1: flat disc format you had competing record disc sizes and
Speaker 1: playback speeds of the playback speeds would range from sixty
Speaker 1: rotations per minute up to more than a hundred thirty
Speaker 1: rotations per minute, and the playback speed affected a lot
Speaker 1: of other stuff, from how much audio you could commit
Speaker 1: to a record to the actual playback quality of the music.
Speaker 1: So generally speaking, the faster the rpm, the higher the rpm.
Speaker 1: In other words, in the early days, the better the
Speaker 1: sound quality typically was. Right like, if you were playing
Speaker 1: back the record at a hundred thirty rpm, the quality
Speaker 1: was better than a record that would play back at
Speaker 1: sixty rpm. However, it also means that it takes much
Speaker 1: less time for a stylist to go through the groove
Speaker 1: of a record, uh, whether you're recording or playing it back,
Speaker 1: which means you could only fit a smaller amount of
Speaker 1: audio per side of a disc then you could if
Speaker 1: you were doing it more slowly. So there were trade offs,
Speaker 1: uh you know you and of course, if you played
Speaker 1: the disc at the wrong speed, like if you had
Speaker 1: to sixty RPM record, but you were playing it back
Speaker 1: at at rpm. Everything would be super fast twice more
Speaker 1: than twice as fast as what's supposed to be and
Speaker 1: sold be it wold sound like the chipmunks got into
Speaker 1: the coffee again. So the early days of the recording
Speaker 1: industry were really a bit messy. I'm sure you're all
Speaker 1: familiar with various format wars. I did an episode about
Speaker 1: format wars last week. You know, it's easy for consumers
Speaker 1: to hit limitations due to buying into a specific format
Speaker 1: over and others. So you know, you buy you know,
Speaker 1: if you were to buy the Victor Talking Machine phonograph,
Speaker 1: then you might not be able to play anything from
Speaker 1: any of the other companies. So the gramophones and phonographs
Speaker 1: and turntables were pretty expensive in the early days. Most folks,
Speaker 1: if they could even afford one, would have to make
Speaker 1: a choice regarding which format they would buy into. Now,
Speaker 1: eventually the industry would gravitate towards standardization, and you would
Speaker 1: have three speeds that were really treated as as the standards.
Speaker 1: You had seventy eight RBMT, r PM and thirty three
Speaker 1: and a third RBM with fort and thirty three ultimately
Speaker 1: dominating the Space seventy eight kind of faded away. Well,
Speaker 1: let's backtrack a bit to talk about what was going
Speaker 1: on on the business side. And then when these companies
Speaker 1: first started getting started, what followed was a pretty easily
Speaker 1: predictable predatory era in which these you know, agents representing
Speaker 1: these different companies like the Victor Talking Machine Company or
Speaker 1: Columbia or whatever, they would go and scour regions for
Speaker 1: talented musicians who otherwise we're unconnected. If you've watched the movie,
Speaker 1: Oh Brother, Where art Thou, they kind of play around
Speaker 1: with this idea. You know, you get that that statement
Speaker 1: about a feller who's paying some folks to sing into
Speaker 1: a can. Well, that kind of stuff was actually going
Speaker 1: on in the early twentieth century. You had these agents
Speaker 1: seeking out talent and paying them a nominal fee to
Speaker 1: record a song. And for the talent, the fee might
Speaker 1: be considerable, right, there might be a few hundred dollars
Speaker 1: into the talent. That might be an enormous amount of money,
Speaker 1: but it was like a one time payment, and then
Speaker 1: the music company would have the use of that recording
Speaker 1: for as long as they kept the recording, and they
Speaker 1: could make some serious money. And world's turn on such things. Then,
Speaker 1: in n nine, the US government passed a copyright Act
Speaker 1: which would guarantee that writers and publishers of music would
Speaker 1: get a cut of record deals. However, it left out performers.
Speaker 1: So you might wonder, well, why the heck is that.
Speaker 1: Why would the writer and the publisher get a a
Speaker 1: guaranteed cut but the person who performed it doesn't. Well,
Speaker 1: in the days of orchestral performances and chamber music and
Speaker 1: that kind of thing, the general philosophy was that the
Speaker 1: bulk of the creative expression didn't come from the performers. Like, yes,
Speaker 1: you can have someone who is very skilled play and
Speaker 1: they're gonna sound better than someone who doesn't know what
Speaker 1: they're doing. But if you had two different people who
Speaker 1: are really skilled, the general thought was it's going to
Speaker 1: be exactly the same, and that the real creative drive
Speaker 1: came not from the musicians but from the composer. The
Speaker 1: composer would describe in excruciating detail how the music was
Speaker 1: to be played in the sheet music, and the musicians,
Speaker 1: at least according to the philosophy of copyright law, we're
Speaker 1: just mirror vessels dedicated to bringing that music to life.
Speaker 1: But the composer was ultimately responsible for the actual work,
Speaker 1: the creative expression, and so the composer would get the
Speaker 1: credit and the compensation. The US government followed that same
Speaker 1: logic when they created this copyright law in nineteen o nine.
Speaker 1: The Act also covered the innovation of recorded sound, which
Speaker 1: was something that wasn't a concern before nineteen nine because
Speaker 1: it wasn't really possible. And this would have an enormous
Speaker 1: impact on the music business. If a musician has a
Speaker 1: writing credit on a song, that musician is eligible for
Speaker 1: songwriter royalties for the length of the copyright. By the way,
Speaker 1: length of copyright was something that continually got longer and
Speaker 1: longer when big companies like Disney would lobby to extend
Speaker 1: the period of copyright repeatedly. So while originally the period
Speaker 1: of copyright would last couple of decades, now it's like
Speaker 1: the lifetime of the artist, plus I forget, like seventy
Speaker 1: years something like that. But musicians who only had a
Speaker 1: musician credit, they're not a songwriter, they're just a musician,
Speaker 1: they would not qualify for those same royalties, which is
Speaker 1: kind of awkward. Um, and this is like this continues
Speaker 1: to be an issue today. This also meant that if
Speaker 1: you wrote a real banger and someone else recorded it
Speaker 1: like they covered it, then you would be do the
Speaker 1: royalties from any sales or performances of that version, at
Speaker 1: least songwriter royalties. And by performances, we're really talking about
Speaker 1: stuff like you know, radio play or use in TV
Speaker 1: or movies and things of that nature. So being a
Speaker 1: songwriter is a good way to make money over the
Speaker 1: long run, because as long as the stuff you write
Speaker 1: is popular, you're going to have a continued payout. For
Speaker 1: musicians who are not composers, that was a different story.
Speaker 1: They can't depend upon that same revenue stream for you know, indefinitely. Now,
Speaker 1: technically the Copyright Act should have curtailed some of the
Speaker 1: predatory behavior that I was talking about earlier, but there
Speaker 1: was an awful lot of exploitation of talent in those
Speaker 1: early days. The recording industry then hit some really tough
Speaker 1: times in the nineteen twenties and the nineteen thirties. The
Speaker 1: Great Depression hit consumers very hard, so it became pretty
Speaker 1: tough to sell you know, players and records because people
Speaker 1: just didn't have the disposable income to do that. And
Speaker 1: then we get to the evolution of radio and radio broadcasting.
Speaker 1: So the early days of radio, we're all about live
Speaker 1: performances over the air. It really wasn't a thing to
Speaker 1: play prerecorded music for the most part. This was partly
Speaker 1: because the recording technology was such that the quality of
Speaker 1: recordings were far inferior to live performances, so it was
Speaker 1: considered a pretty big step down to play a prerecorded
Speaker 1: piece over the radio. So the early radio business was
Speaker 1: just like the phonograph business, and that it was dominated
Speaker 1: by companies that made radios. The companies that were making
Speaker 1: radios were also the companies that owned radio stations. They were,
Speaker 1: you know, in the business of broadcasting, because just like
Speaker 1: the phonograph, a radio ain't no good to you unless
Speaker 1: he got something to tune into, right, It doesn't make
Speaker 1: any sense to buy a radio if there are no
Speaker 1: broadcasts in your area. So the same companies that were
Speaker 1: making radios were creating the broadcast stations, and some of
Speaker 1: those stations were also companies that made record players. So
Speaker 1: you had, you know, this this convergence of audio technology
Speaker 1: all coming in at the same time. I'll explain how
Speaker 1: that changed the music industry further when we come back
Speaker 1: after this quick break. All right, we left off talking
Speaker 1: about radio stations. Well, these stations would hire performers to
Speaker 1: come in and play music live over the radio. Radio
Speaker 1: sales eventually began to slow down, largely because the folks
Speaker 1: who had been interested in radio and who could also
Speaker 1: afford one, had bought one already. So there was a
Speaker 1: steep rise in radio sales that then plateau. The technology
Speaker 1: hit a really early saturation point, and that meant that
Speaker 1: there needed to be a different source of revenue. This
Speaker 1: is where radio broadcasts began to incorporate advertising. And the
Speaker 1: early days of radio there really wasn't advertising, but that
Speaker 1: changed pretty quickly. Um, and then advertising became the primary
Speaker 1: way that radio broadcast stations would generate revenue. Now, on
Speaker 1: the consumer side, listening to music on the radio was free.
Speaker 1: The radio sets themselves were prohibitively expensive for some folks. Um.
Speaker 1: And really, when I say listening was free, I mean
Speaker 1: it's free in the way that this podcast was free,
Speaker 1: and that you know, you also had ads supporting the stuff,
Speaker 1: but that was really the only cost of listening. Really,
Speaker 1: I'm sure sounds very familiar to everyone out there, right.
Speaker 1: And the radio also served as advertising for musicians and
Speaker 1: songwriters because, of course, now we also had the ability
Speaker 1: to record that music onto physical media UH and as
Speaker 1: recording technology improved, there was a new interest in record
Speaker 1: players and records, largely driven by teenagers. To be like
Speaker 1: in the fifties or so, the kids would hear a
Speaker 1: song on the radio, they would want to be able
Speaker 1: to listen to that song whenever they liked so they
Speaker 1: would rush out and by the record of that artist,
Speaker 1: and the radio would become a key component in the
Speaker 1: marketing of music. This would also shape music itself. In
Speaker 1: the very early days, the limitations of recording meant you
Speaker 1: could fit around four minutes of audio on a single
Speaker 1: physical cylinder or disk, which meant that you couldn't write
Speaker 1: music that would last longer than that, or you had
Speaker 1: to write music that could be divided up into four
Speaker 1: minute chunks, and then you might sell several discs for
Speaker 1: longer pieces. But it meant that people started to settle
Speaker 1: on a on a length for music of around four
Speaker 1: minutes per song or less, which is why to this
Speaker 1: day the way we listen to music, like a lot
Speaker 1: of our songs fall into that general range. It was
Speaker 1: a technical limitation of the time that created a cultural
Speaker 1: UH standard really for like a standard length of a song.
Speaker 1: There are obviously exceptions to this, right you have the Ramones,
Speaker 1: where a four minutes song would be an epic and
Speaker 1: then you have the late meat Loaf where a four
Speaker 1: minute song would be the beginning of his fourteen minute song.
Speaker 1: So there are exceptions, but generally speaking, like this is
Speaker 1: what when I talk about how technology shaped music, this
Speaker 1: is kind of what I'm talking about. The limitation of
Speaker 1: only being able to record a few minutes of audio
Speaker 1: per side is what shaped modern music and for songs
Speaker 1: to be the length that they are now. As recording
Speaker 1: techniques actually evolved, it became possible to record more content
Speaker 1: per side of a record, so the limitation of four
Speaker 1: minutes per side gradually faded away. This would end up
Speaker 1: giving birth to the album because while you could record
Speaker 1: a very long piece of music per side, and there
Speaker 1: were people who did it, especially for things like classical music, uh,
Speaker 1: you could also use this to create a collection of songs. However,
Speaker 1: while that was going on, radio was swinging things back
Speaker 1: to the early days of recording because you had the
Speaker 1: new musical entity of the radio single coming out around
Speaker 1: this time. Now, it was ninety nine when r C
Speaker 1: A Victor introduced the forty five rpm seven inch record. Now,
Speaker 1: these records, because of their size, the seven inch size
Speaker 1: and their RPM speed of forty five revolutions per minute,
Speaker 1: they could only hold a few minutes of music per side,
Speaker 1: just like the early records of the era. And then
Speaker 1: several things all kind of happened to make the forty
Speaker 1: five popular. One was that, you know, you had a
Speaker 1: lot of record players that could actually accommodate forty five. Uh,
Speaker 1: they were less expensive than the larger thirty three and
Speaker 1: the third albums. They also happened to come out just
Speaker 1: before the rock and roll music revolution happened, and all
Speaker 1: of that came together to completely reshape the music industry. Uh.
Speaker 1: And that's really where we started seeing the focus on
Speaker 1: singles to the point where you've got some folks who
Speaker 1: bemoaned that, where it was potentially something that limited the
Speaker 1: music industry. But it became a common practice to record
Speaker 1: a musician or bands really popular song as the A
Speaker 1: side of a forty five single, and then you use
Speaker 1: the other side, the B side, to include a lesser
Speaker 1: known piece from that band. So sometimes you might get
Speaker 1: a demo version of a song, which is kind of cool.
Speaker 1: Or you get a song that wasn't included on the
Speaker 1: full album that featured the A side single. That was
Speaker 1: really cool. It was like the only way you could
Speaker 1: get those songs. Typically the fort would have the same
Speaker 1: songs that we're getting widespread radio play on the A side,
Speaker 1: So again the radio acted as kind of the commercial
Speaker 1: for the music. The A side was the product, the
Speaker 1: B side was some bonus material. Now, as the recording
Speaker 1: industry evolved, certain companies consolidated, purchasing up smaller music labels.
Speaker 1: R C A. Victor was one of those, with our
Speaker 1: C A being famous for making radios and broadcast stations,
Speaker 1: Victor being famous for phonographs. Then the two merged together.
Speaker 1: Some other really big recording companies shut down. The Thomas
Speaker 1: Edison Company dissolved its recording division back in n UM.
Speaker 1: That was, you know, right at the Great Depression, so
Speaker 1: you know, it was kind of it was coinciding with
Speaker 1: a time where people just didn't have the money to
Speaker 1: purchase that kind of stuff. The burgeoning film industry also
Speaker 1: got into the music industry. There were some smaller independent
Speaker 1: labels that were establishing themselves around this time as well,
Speaker 1: so starting to get really interesting. By the nineteen sixties, however,
Speaker 1: the bigger labels were gobbling up all the smaller ones.
Speaker 1: Um because there's always a bigger fish. So CBS, which
Speaker 1: started off as a network of radio broadcast stations, acquired
Speaker 1: Columbia Records, which again was one of the big three
Speaker 1: early early on that also acquired the American Record Corporation.
Speaker 1: Warner Brothers ended up purchasing ABC Records and also had
Speaker 1: Warner Records. Then the company bought seven Arts and Reprise, Uh,
Speaker 1: then Atlantic, then Elektra Records labels. So yeah, you had
Speaker 1: these big companies getting bigger, massive corporate corporations that were
Speaker 1: shaping how the music biz worked, really fortifying themselves. Now,
Speaker 1: for decades, musicians were pretty much limited by either the
Speaker 1: huge conglomerates or they could work with a few smaller
Speaker 1: independent labels if they wanted to record their music. Recording
Speaker 1: required specialized equipment, mixing expertise, dedicated space. It required the
Speaker 1: ability to actually create a master recording and then to
Speaker 1: duplicate that master recording onto copies. So it just wasn't
Speaker 1: practical for most musicians to do all of this themselves.
Speaker 1: Remember this isn't the days of physical media like there
Speaker 1: was no digital approach here, You could not have a
Speaker 1: file representing a song, so you you really did need
Speaker 1: to lean on actual organizations to do this because they
Speaker 1: had the capital to get all this equipment and expertise together.
Speaker 1: Then you actually had the process of taking recording and
Speaker 1: mass producing copies of it for sale, again well beyond
Speaker 1: the reach for individual performers. Then you had the marketing
Speaker 1: and distribution side, like actually pro oding the material and
Speaker 1: getting the material out to points of sale, another big
Speaker 1: limiting factor. Most people would not be able to do
Speaker 1: that on their own. So the symbiotic relationship between musicians
Speaker 1: and record labels really solidified in this era. Uh and
Speaker 1: I do say symbiotic, but depending upon the musician you
Speaker 1: might hear it was more parasitic. The record labels had
Speaker 1: a lot of the power, and unless you reached a
Speaker 1: particularly high level of fame, you probably didn't have a
Speaker 1: lot of leverage to lend yourself a really lucrative deal. Um. Now,
Speaker 1: one way you could make money is to perform at
Speaker 1: live shows. Typically artists get a cut of the gate
Speaker 1: that is, the box officer ticket sales. They might also
Speaker 1: set up merchandise or merch tables. They typically get most
Speaker 1: of that as well, they have to pay out the
Speaker 1: people who are working the tables, but otherwise, um, that's
Speaker 1: that's cash in the pockets of the performers. This particular
Speaker 1: approach also requires a out of investment anyway, because you
Speaker 1: gotta get booked, right, you have to. You have to
Speaker 1: establish a relationship with the venue and get an agreement
Speaker 1: to perform in a certain date and arrive at the
Speaker 1: the the divide like how much of the ticket sales
Speaker 1: goes to the venue versus the band. And then once
Speaker 1: you start talking about bigger venues than you also are
Speaker 1: usually talking about a booking agent, someone who is just
Speaker 1: specifically focused on getting that stuff sewn up, because that
Speaker 1: at by itself is a full time gig. I don't
Speaker 1: know how many of you out there have jobs or
Speaker 1: activities that involve having to schedule stuff with other people,
Speaker 1: but you, if you have had to do it, you
Speaker 1: know that that is an enormous amount of time committed
Speaker 1: to getting that to work. Just imagine doing that for
Speaker 1: a big band that's traveling, say across the United States
Speaker 1: and establishing venues where they're going to perform, knowing that
Speaker 1: the really big ones typically get uh gobbled up pretty early,
Speaker 1: so you have to plan this out, you know, more
Speaker 1: than a year in advance in some cases. And of course,
Speaker 1: over the last two years, the live performance industry took
Speaker 1: a d an enormously heavy hit. Tons of venues were
Speaker 1: shut down during the pandemic for months at a time,
Speaker 1: so for about a year the revenue stream was essentially gone,
Speaker 1: and even after that it was you know, it was
Speaker 1: all dependent upon where you were. And since the vast
Speaker 1: majority of musicians make their living by playing live shows,
Speaker 1: things got really tough for musicians. Now. Of course, record
Speaker 1: contracts earned musicians money too, It's not like they're recording
Speaker 1: for free. The big way to earn money through records
Speaker 1: is through royalties. Now this gets pretty complicated, particularly since
Speaker 1: there are different kinds of royalties, Like you know, I
Speaker 1: mentioned their songwriter royalties for example, but there are lots
Speaker 1: of different types of royalty. Now, what a royalty is Essentially,
Speaker 1: it's a payment made to the rights owner of a
Speaker 1: particular work for the licensed use of that work. The
Speaker 1: licensed use can include all sorts of stuff. It can
Speaker 1: include radio airplay, it can include the use of music
Speaker 1: and television or movies. It can include recording, it can
Speaker 1: include streaming um with artists who have signed with labels,
Speaker 1: we're talking about a percentage of the fee that gets
Speaker 1: paid to the label in return for the use of
Speaker 1: that music. So, in other words, the way this works
Speaker 1: as whoever wants the music, whether it's a person walking
Speaker 1: into an old school record store or you know, the
Speaker 1: person who's trying to fill out the the soundtrack to
Speaker 1: the next Quentin Tarantino movie, they go to the record label,
Speaker 1: they pay for the use of that music, and then
Speaker 1: the record label takes a cut of this, and then
Speaker 1: a percentage of that amount that was paid to the
Speaker 1: record label then gets paid out to the rights holder
Speaker 1: or artist. But it doesn't really get as simple as that.
Speaker 1: Usually artists get what's called an advance. This is a
Speaker 1: sum of money that's paid to the artist upon some deliverable.
Speaker 1: For example, it could be when an artist signs a
Speaker 1: contract or completes an album recording. Then the artist gets
Speaker 1: a payout, but that payout is actually counted against future royalties,
Speaker 1: and royalties are a percentage of each individual sales. So
Speaker 1: before you start earning lots of royalties, you first have
Speaker 1: to recoup the money that the label spent on you.
Speaker 1: With the advance. This is way easier to understand if
Speaker 1: we actually use hypothetical example. So let's say that my
Speaker 1: band Johnny and the tech Heads gets a ten thous
Speaker 1: dollar advance on our new album, So that ten grand
Speaker 1: is ours to keep unless we've done something really silly
Speaker 1: like signed a contract that requires us to pay back
Speaker 1: in advance if we don't recoup the expense. No one
Speaker 1: should ever agree to do that. There's a reason why
Speaker 1: it's good to get a lawyer to look over contracts,
Speaker 1: but where you assigned them. But let's say our royalty
Speaker 1: payment is a nickel per unit sold, so five cents
Speaker 1: every time they sell a unit, and it doesn't matter
Speaker 1: to me what the unit is in this case. This
Speaker 1: is just a hypothetical example. Now, we don't actually earn
Speaker 1: any royalties until we've recouped the amount of money the
Speaker 1: labels spin on us in its advance. That means we're
Speaker 1: kind of paying off that ten thousand dollars one nickel
Speaker 1: at a time. That means we would have to hit
Speaker 1: two hundred thousand units sold before we started earning royalties,
Speaker 1: and we would start earning royalties starting with copy two
Speaker 1: hundred thousand and one. So Once the advance is recouped,
Speaker 1: the royalty checks can start coming in. Also, ten grand
Speaker 1: is a lot of money, but you're usually talking about
Speaker 1: splitting that with a bunch of different people. There's the band,
Speaker 1: You probably have a manager, Uh, there's a producer that
Speaker 1: usually you have to pay the producer's royalty out of
Speaker 1: your own royalties. And of course we're talking about payments
Speaker 1: that don't have tax with holdings. So that means that
Speaker 1: you really need to be holding onto that cash because
Speaker 1: you're gonna be spending some of that to pay taxes
Speaker 1: because nothing was withheld, so you're gonna owe it at
Speaker 1: the end of the year. Uh, That ten grand or
Speaker 1: whatever gets willed down pretty quickly. So that's one of
Speaker 1: the really big reasons that a lot of bands go
Speaker 1: on tours and do lots of live shows. The albums
Speaker 1: can get fans, Fans come to the shows, and that's
Speaker 1: where the musicians really typically earn a lot of cash,
Speaker 1: plus of course they can connect with their fan base.
Speaker 1: In most cases, the record label is going to keep
Speaker 1: around or more of the revenue from albums and songs sold,
Speaker 1: with the artists getting the rest in royalties. Again, once
Speaker 1: the advance is recouped In return, the record label handles
Speaker 1: all the distribution and marketing for the musicians, and that's
Speaker 1: the big trade off, all right. When we come back,
Speaker 1: we'll talk about how the music industry has changed even
Speaker 1: more in more recent years. So with the rise of
Speaker 1: the Internet, a lot of new ways to earn money
Speaker 1: have emerged for musicians. Musicians can make use of tools
Speaker 1: like band camp or Patreon. They can sell music directly
Speaker 1: to their fans or invite their fans to help support
Speaker 1: their work. Patreon can be done in a way where
Speaker 1: people are subscribing monthly to an artist, or Patreon can
Speaker 1: be done so that every time something new is released
Speaker 1: then the supporters can paid have access to that thing.
Speaker 1: So it creates a more direct pathway between artists and
Speaker 1: audience and bypasses a lot of the other stuff that
Speaker 1: you would typically have to go through. Uh. Musicians can
Speaker 1: also try to bankroll a recording by launching a crowdfunding campaign.
Speaker 1: There's something like Kickstarter or indie go Go. And the
Speaker 1: aliferation of digital recording equipment and software has really opened
Speaker 1: up the opportunity for musicians to take on a lot
Speaker 1: of traditional recording work themselves. Um So, in other words,
Speaker 1: the things that we're limiting factors back in the early days,
Speaker 1: the fact that only these big companies had access to
Speaker 1: recording equipment. That's no longer the case, right, you can
Speaker 1: go out and buy it's fairly decent recording equipment for
Speaker 1: not that much money. Not in the grand scheme of things.
Speaker 1: I mean, it still is going to cost you probably
Speaker 1: a few thousand dollars, which, don't get me wrong, that's
Speaker 1: a lot, but it's peanuts compared to what it was
Speaker 1: back in the old days, where there just wasn't that option.
Speaker 1: So you can do a lot of this stuff yourself,
Speaker 1: although it does still require expertise and skill in you know,
Speaker 1: executing it, and that goes from everything from the playing
Speaker 1: of the music to the recording process through the mixing process.
Speaker 1: All of that wires a lot of work. So it's
Speaker 1: not like it's uh, plug in blay, but it's a lot.
Speaker 1: It's a lot more within reach than it used to be.
Speaker 1: But the technology that really has dramatically disrupted the music
Speaker 1: industry over the last decade or so is definitely streaming.
Speaker 1: So let's talk about what streaming actually is. Essentially, it's
Speaker 1: accessing media in real time. Although we could pick some
Speaker 1: knits with that definition and the use of the phrase
Speaker 1: real time, but it gets across the meaning. So instead
Speaker 1: of downloading a song to a device, you use some
Speaker 1: sort of service. It could be an app, maybe a
Speaker 1: browser based service to listen to music streaming from a
Speaker 1: web server somewhere out there to your local device, and
Speaker 1: your device receives the music in the form of digital
Speaker 1: data sent pretty much like any other data that would
Speaker 1: be sent across a computer network. So it's kind of
Speaker 1: like radio, but it's on demand and it's not using
Speaker 1: traditional over the air radio broadcasts and instead it's using
Speaker 1: essentially zeros and ones coming from a server to your device. Now,
Speaker 1: there are a lot of places where we could start
Speaker 1: our story about streaming. For example, way back in when
Speaker 1: pretty much most of the population really didn't understand what
Speaker 1: the heck the Internet was, you had the Internet Underground
Speaker 1: Music Archive or i u m A. This was created
Speaker 1: by some students at the University of California, Santa Cruz.
Speaker 1: They launched an organization to give independent artists away to
Speaker 1: get their music two fans. So again, like if you
Speaker 1: didn't have a deal with a big record label that
Speaker 1: could distribute and and market your music. This was a
Speaker 1: way where you could bypass all that. This was one
Speaker 1: of those very early demonstrations of how the Internet can
Speaker 1: democratize content distribution and bypass the traditional model which has
Speaker 1: massive media companies, you know, being the gatekeepers. Which you
Speaker 1: might guess that massive media companies weren't super crazy about
Speaker 1: this idea, and you'd be right, because it turns out
Speaker 1: if if you know, if you end up accumulating a
Speaker 1: lot of power, you're not crazy about giving that up. Now.
Speaker 1: I find the I U M A story really impressive
Speaker 1: because this was before the MP three format had really
Speaker 1: taken off. Uh. You know, MB three is a type
Speaker 1: of of audio file where you're using compression to reduce
Speaker 1: the file size. Um not audio compression but file size compression.
Speaker 1: Two different things here, although there can be audio compression
Speaker 1: as part of it, because the way it B three
Speaker 1: works is that, at least philosophically, the way it works
Speaker 1: is that there's there are a lot of things in
Speaker 1: sound that humans cannot directly perceive. Are are a bill
Speaker 1: need to hear has limitations, and so the philosophy behind
Speaker 1: MP three is that you drop any sounds that humans
Speaker 1: would not be able to hear. Anyway, and then you
Speaker 1: can reduce the file size that way. I'm oversimplifying, but
Speaker 1: that's generally the thought process behind MP three. It's a
Speaker 1: psychoacoustic approach to figuring out what information is most necessary
Speaker 1: so that you keep that and you get rid of
Speaker 1: everything else anyway, Because the MP three had not really
Speaker 1: become a big deal yet. In the files were often
Speaker 1: in formats like wave or ai f F and those
Speaker 1: can be much, much, much bigger than MP three files.
Speaker 1: And you have to keep in mind that this was
Speaker 1: also back in the day when folks were using dial
Speaker 1: up internet. You know, it was pretty limited bandwidth. Heck,
Speaker 1: just getting an image to load could take the better
Speaker 1: part of a minute. So this was not streaming. This
Speaker 1: was not the days of streaming. This was all about
Speaker 1: downloading files. Nick could take a really long time to
Speaker 1: download a single file. But this was a stepping stone
Speaker 1: toward streaming. Another really big stepping stone was the development
Speaker 1: of Napster. In fact, a later service with the name
Speaker 1: of Napster would become a streaming music service, but the
Speaker 1: original incarnation of Napster was not streaming. It was a
Speaker 1: peer to peer file sharing network that specifically focused on
Speaker 1: sharing music files. Now by this time, by the time
Speaker 1: Napster came around, which was the late nineties, the MP
Speaker 1: three format was established, which was great because it allowed
Speaker 1: users to compress audio files down to a fraction of
Speaker 1: their raw size, and that made it much easier to
Speaker 1: transfer those files over networks. Also, we were starting to
Speaker 1: get better connections to the Internet. Not everyone had it.
Speaker 1: I had a dial up Internet connection for a really
Speaker 1: long time, but eventually we got there. Of course, if
Speaker 1: you really impressed music a lot, like if you use
Speaker 1: a very strong file compression, you could affect the sound
Speaker 1: quality to the point where it was noticeable. But you know,
Speaker 1: if you were careful, you could find the right balance
Speaker 1: between file size reduction and uh, not affecting the quality
Speaker 1: too much. Now, peer to peer systems are not inherently wrong,
Speaker 1: they're not inherently illegal, But it was impossible to deny
Speaker 1: that the majority of the file transfer traffic across Napster
Speaker 1: was with copyrighted music files, and that the people who
Speaker 1: were sharing them didn't have the right to do so.
Speaker 1: So folks might use a computer to rip music files
Speaker 1: from a CD. They put a c D and a
Speaker 1: CD ROM drive, use a program to pull the music
Speaker 1: off the c d rum drive, convert them into MP
Speaker 1: three file formats, and then store them in a Napster
Speaker 1: folder and then make them available for other people on
Speaker 1: the peer to peer network to download those files. Meanwhile,
Speaker 1: the people who were doing this, we're also looking for
Speaker 1: music that was available on other people's machines. Napster became
Speaker 1: a haven of music trading and theft. Now in some cases,
Speaker 1: folks were using it to find songs that you literally
Speaker 1: could not find in other places, Like you could not
Speaker 1: go out and buy this music because it wasn't available
Speaker 1: for purchase. So things like bootleg albums and live recordings
Speaker 1: that otherwise didn't exist commercially, those were getting a lot
Speaker 1: of trade there too. Now, just because something is not
Speaker 1: available commercially doesn't mean that you have the right to
Speaker 1: to seek out recordings of it. But still, like you
Speaker 1: could see why people would justify it, right. They literally say, like,
Speaker 1: there's no way for me to buy this, and I
Speaker 1: really wanted I wasn't able to experience it in person,
Speaker 1: So this is what I'm going to do. I can
Speaker 1: understand that philosophy. Heck, I've done it myself in the past. Um,
Speaker 1: it's very frustrating experience to be in. But a lot
Speaker 1: of folks, you know, they were using it just to
Speaker 1: get hold of a song, or an album, or even
Speaker 1: an entire music library without having to pay for it.
Speaker 1: I'm not saying everyone who used napster was stealing music
Speaker 1: left right and center, but enough people were to make
Speaker 1: it a real problem. This happened to coincide with a
Speaker 1: dip in music sales, and that sent the recording industry
Speaker 1: into a frothy rage. I was gonna say a tizzy,
Speaker 1: but it was way more than a tizzy. Now, was
Speaker 1: that causation or just correlation? I think there was a
Speaker 1: lot of correlation here. I don't think it was pure causation.
Speaker 1: But again, when you've got a multibillion dollar industry and
Speaker 1: they see a dip, they want very quickly to identify
Speaker 1: the cause of that dip and to eliminate it, because
Speaker 1: you know, corporations are all designed to make as much
Speaker 1: money as they possibly can. So in this case, you
Speaker 1: had a dip in music sales and a rise in
Speaker 1: the use of peer to peer networks, specifically Napster, and
Speaker 1: the conclusion was, Napster is killing the music industry, so
Speaker 1: we must nuke it from orbit, because it's the only
Speaker 1: way to be sure. So before long, Napster and a
Speaker 1: lot of its users were the targets of multiple lawsuits,
Speaker 1: some of which alleged that Napster had caused massive revenue losses. Now,
Speaker 1: I would say that that is an argument that is
Speaker 1: impossible to support in any quantifiable way. Uh. I mean
Speaker 1: you could you could say that, yes, it had to
Speaker 1: have some sort of impact. I mean, it's common sense
Speaker 1: that folks getting access to music for free is going
Speaker 1: to hurt music sales. But it's impossible to actually put
Speaker 1: a quantifiable number on that because you have no way
Speaker 1: of knowing how many of those folks would have actually
Speaker 1: bought an album or a single in the first place
Speaker 1: if there had been no Napster. You know, there's there's
Speaker 1: no way of saying. You can't say, oh, well, if
Speaker 1: they hadn't stolen this music, they would have bought a
Speaker 1: legit copy. You don't know that it's possible that they
Speaker 1: just would have gone without. But it was still plenty
Speaker 1: enough for the music industry to go nuclear on not
Speaker 1: just Napster, but all the folks who had been using
Speaker 1: UH services like Napster to download music illegally and it
Speaker 1: was a really really ugly time. Napster itself, in its
Speaker 1: original form anyway, shut down by two thousand one. The
Speaker 1: brightest stars burned out the quickest, I guess. So. In
Speaker 1: the early two thousand's we saw the first emergence of
Speaker 1: legitimate digital music stores, you know, ones where you could
Speaker 1: actually purchase a song and uh and money would go
Speaker 1: presumably to the record label behind that song. In the
Speaker 1: early early days, most of these were operated by the
Speaker 1: individual music labels. It would be a little bit later
Speaker 1: before we would get the iTunes store. Uh. The iTunes
Speaker 1: Store didn't actually launch until two thousand three, and there
Speaker 1: was no denying that this was, at least in part
Speaker 1: a response to the problems that the industry had seen
Speaker 1: with services like Napster. Apple was stepping in saying, you
Speaker 1: don't want people just stealing your music, but people do
Speaker 1: want access to digital copies of your music. How do
Speaker 1: you manage this? Tell you what, Let us manage it
Speaker 1: for you. And this was like a huge, huge step
Speaker 1: forward for Apple. It would end up being one of
Speaker 1: their most brilliant ideas they came up with when it
Speaker 1: comes to ways to make more money. Now. Initially, these
Speaker 1: music label stores they didn't offer any streaming capabilities either.
Speaker 1: Customers would go to the stores purchase specific songs or
Speaker 1: albums and then download those files to their computers or
Speaker 1: other devices. Of course, in the earliest days, we're mostly
Speaker 1: just talking about downloading to computers. Then you would have
Speaker 1: to actually use a physical cable to connect something like
Speaker 1: an MP three player, you know, like an iPod to
Speaker 1: your computer, and you would transfer or music over the
Speaker 1: cable that way primitive, right, you know, this was again
Speaker 1: before you had these devices that had WiFi capability or
Speaker 1: cellular capability built into them. Oh and by the way,
Speaker 1: to get off on a little bit of a tangent,
Speaker 1: this was also the time where you learned very quickly
Speaker 1: that Apple was great at creating a uh AN experience
Speaker 1: that worked within a specific ecosystem. So if you had
Speaker 1: a Mac computer and an iPod and you used iTunes,
Speaker 1: it was all pretty seamless. It was easy to do.
Speaker 1: It was easy to update your iPod. Like if you
Speaker 1: bought new music on iTunes and it went to your computer,
Speaker 1: you could update your iPod pretty easily by connecting it
Speaker 1: to your Mac. If, however, you owned a PC and
Speaker 1: you used iTunes for PC and you had an iPod,
Speaker 1: it was a nightmare. Speaking of someone from who you
Speaker 1: know had that experience, it was terrible. Um and and
Speaker 1: you learned very quickly that the ecosystem was going to
Speaker 1: be a big deal in the future or of tech.
Speaker 1: And that is another one, right the getting caught in
Speaker 1: a specific ecosystem where if you want to kind of
Speaker 1: explore beyond it, you end up getting punished for it. Anyway,
Speaker 1: as digital music stores were taking shape, you had a
Speaker 1: few different groups working on pieces of tech that collectively
Speaker 1: would allow for music streaming. Uh. And that is where
Speaker 1: we're going to leave off when we come back for
Speaker 1: our next episode. In this we will start picking up
Speaker 1: at the birth of musical streaming, how that got started,
Speaker 1: and then how that in turn had a big impact
Speaker 1: on the music industry and how people make money. We're
Speaker 1: going to explore issues like is there money in streaming.
Speaker 1: You've probably heard people complain that they're getting pennies on
Speaker 1: the dollar because of streaming, and that their revenue has
Speaker 1: taken a huge hit in the wake of streaming. So
Speaker 1: we're gonna look at that and see what's going on there.
Speaker 1: We're gonna take a look at the big streaming serve
Speaker 1: us is out there and how they are performing, and uh,
Speaker 1: maybe even start talking about what's next. I mean, we've
Speaker 1: have seen kind of a resurgence in interest in physical media.
Speaker 1: Is that going to be more of a thing or
Speaker 1: is it just a little, you know, a little interesting
Speaker 1: flash in the pan. Those are things we will talk
Speaker 1: about in our next episode. For now, we're gonna wrap
Speaker 1: this up. If you have suggestions for topics I should
Speaker 1: cover on future episodes of tech Stuff, please reach out
Speaker 1: to me. The best way to do that is on Twitter.
Speaker 1: The handle for the show is text Stuff hs W.
Speaker 1: I'll talk to you again really soon. Text Stuff is
Speaker 1: an I Heart Radio production. For more podcasts from my
Speaker 1: Heart Radio, visit the i Heart Radio app, Apple Podcasts,
Speaker 1: or wherever you listen to your favorite shows.