The music industry turned the corner in 2015 when streaming revenue gathered enough steam to reverse a 15-year decline in sales. Now firmly on the other side of that trough, things have changed. Music discovery has foreclosed on serendipity in favor of big data and artificial intelligence. Music itself has achieved ubiquity on global scale, but investors in the publicly-traded music industry companies are challenged by declining music quality and a landscaping approaching perfect competition. Diminished incentives for risk taking is the most corrosive dimension of the structural changes to the fabric of the industry - and the other consequence is a loss for music lovers who favor originality.
All generations point nostalgically to the artistic and social failure of popular music as compared to some past epoch or genre. Today we have data that describes music in ways not thought possible even ten years ago. That data narrates a downward trajectory, and it correlates with a structural change in the way the industry collects and distributes cash. With today’s emphasis on the cost of production rather than the value to the consumer, sketching (music creation) in popular music has moved from the written score to the studio to a computer algorithm. The two-sided market place created by companies like Spotify removes so much of the mystery from music’s creation and discovery alchemy that the industry’s promise of newness is betrayed beyond repair by the yoke of over-optimization. This new dynamic favors short-term commercial virality, measured in real time, delivered instantly around the world. For example, Spotify pays artists $0.00397 per stream, so its makes sense that quality would give way to quantity. Why risk crafting music when it’s easy to mass produce a music product on a computer.
Interpreting signals in the Million Song Dataset, researchers describe less variety in pitch transitions, consistent homogenization of the timbral palette, and a progression towards poorer volume dynamics in the evolution of popular music. There is plenty of nuance to be discovered in music: its unique way of expressing, for example, the pulses of political-social upheavals or themes that express resistance to mass obedience, and, of course, love. But that’s not what dominates popular music today because of the way the industry has been redesigned. Instead there seems to an absence of originality of prose or purpose (abundance of sameness). Consumers, too, play a role in not demanding more from the industry.
You can hear in the Beatles’ song, Yesterday, several aspects of what is missing in today’s popular music, in particular the idea that music can be expressive below its sonic surface. The song contains an unpredictable progression and a total absence of clichéd romantic language despite its love song quality. There is also a social dimension to be highlighted or discovered in the aesthetic of the song that explains why Yesterday is one of the most covered songs in the history of recorded music. Walter Everett shows how the song has two contrasting sections, differing in melody and rhythm, producing a sense of disjunction. This technical mastery makes it resistant to stylistic duplication. The melody is seven bars in length, rare in popular music, while the bridge, or "middle eight", is the more standard form of eight bars; often two four-bar phrases combined. Musicologist Alan Pollack points out the home key (F-major) has little time to establish itself before "heading towards the relative D-minor." According to Pollack, this diversion is a compositional device commonly used by Lennon and McCartney, which he says is, "deferred gratification." I don’t know much about the Beatles’ process, but when I hear the plaintiff wailing of the high-pitch violin collide with the deep texture of the cello, it invites questions about the nature of happy and sad and that true emotion (as opposed to false wants, immediate gratification) is the song’s purpose, a path to human connection.
Walter Everett compiled a list of over 300 cover tunes that the Beatles learned during their early Hamburg period. Based on his analysis, it appears that the early post-punks almost completely avoided covers, most likely because they were too hard to play. In 1982, U2’s Edge observed: “Much earlier on we tried to do cover versions of things, but to be honest we were so bad at working out stuff that we just had to give it up and write our own songs.” Since the Beatles’ rose to fame, and up until some recent period, it was the norm that a band should write its own material. Yet today an astonishing amount of popular music is written by two people: Lukasz Gottwald of the United States and Max Martin from Sweden, who are both responsible for dozens of songs in the top 100 charts.
Last year, Verizon announced a new partnership with Apple to offer subscribers of Verizon Unlimited six free months of Apple Music. The success of the promotion led to a new offer: customers can get an Apple Music subscription free if you have Verizon's Beyond Unlimited or Above Unlimited data plans. In other words, the world’s universe of music is free, possibly for life.
For investors evaluating the music industry, the combination of perfect competition and the perception among music consumers that music is something free means the product is in decline and the industry univestable. For music lovers, I suggest you turn off your phone and attend as many live music events in your local community as you can find. There you can enrich your life through serendipity and possibly find some dimension of human connection that is so absent from a whole universe of free music.
The ideas presented in this post do not constitute a recommendation to buy or sell any security.
Investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is not indicative of future price action.
You should be aware of the risks involved in stock investing, and you use the material contained herein at your own risk. Neither LBS.CO nor any of its contributors are responsible for any errors or omissions which may have occurred. The analysis, ratings, and/or recommendations made on this site do not provide, imply, or otherwise constitute a guarantee of performance.
LBS.CO posts may contain financial reports and economic analysis that embody a unique view of trends and opportunities. Accuracy and completeness cannot be guaranteed. Investors should be aware of the risks involved in stock investments and the possibility of financial loss. It should not be assumed that future results will be profitable or will equal past performance, real, indicated or implied.
The material on this website are provided for information purpose only. LBS.CO does not accept liability for your use of the website. The website is provided on an “as is” and “as available” basis, without any representations, warranties or conditions of any kind.