#NewRules: The Music Industry's Acceptance Of Digital & Streaming Music

posted Thursday August 15 ,2013 at 03:35PM CDT | 0 comments

#NewRules: The Music Industry's Acceptance Of Digital & Streaming Music

Today, just by having a phone you can help someone go platinum, and they might just make money off of it too.

The music industry, known for being arguably the fastest-changing wing in all of entertainment, is more digital today than ever before. According to the independent technology and marketing firm, Forrester Research, total revenue from U.S. music sales and licensing dropped to paltry $6.3 billion in 2009 after nearly topping out at $14.6 billion in 1999. Today there are fewer record labels than ever as once treasured record stores have all slowly become banks, auto part stores and massage parlors. But while fewer people are spending money on the physical media across the board—as CD sections in major retailers such as Target and Best Buy become smaller and smaller—loyal listeners remain just as passionate about music as ever with digital sales continuously soaring. While the great Napster debacle of the early 2000s showed an industry dragging its feet in the face of new technology, today the presence of the Internet and digital sales cannot be ignored. In fact, they’re being charted.

Perhaps it’s easy to take for granted all the conveniences of being a music fan in the post-Internet age. There was once a time when every album ever released by every label wasn’t available every waking hour of the day with the click of a mouse. But even in the early days of music on the Internet, where people would discuss music on message boards and post midi files, the two facts that remain the same today are that not only will music fans find each other no matter what the medium, but they’ll gladly share whatever they can.

File Sharing & The Early Days Of Digital Downloads

Once the industry realized that music on the Internet wasn’t going anywhere and further filesharing sites like Limewire and Kazaa were still springing up, the slow start of legal music downloads began. Apple launched the iTunes store in April, 2003, which saw sales grow each year, ultimately resulting in the music industry standard for sales scales, SoundScan starting to track tracking digital copies sold in 2005. That summer, Gwen Stefani’s “Hollaback Girl” became the first song to successfully sell one million downloads.

Soon, digital music became the name of the game. With few physical retailers left, I think the industry realized the availability of a worldwide marketplace for all music, free of viruses and potential litigation, might be an enticing thing for audiences still passionate about music. There was much rejoicing when Eminem’s 2010 album Recovery became the first full-length LP to sell a million downloads. Today, the impact of how digital sales benefit the music industry is visible at every turn. This past year’s Grammys, thanks to the immediate proximity viewers have to legally purchasable and downloadable music at any given time, saw an overnight 518% sales increase for folk-rockers Mumford & Sons after their performance. Fox’s “American Idol” and “Glee” have both generated some serious hand-over-fist cash by offering downloads of the musical performances heard immediately after they’re aired. Professional Wrestling giant WWE’s various music partnerships have allowed for a worldwide exposure for the music used in their broadcasts, including catalog titles like Living Colour’s “Cult of Personality”—the entrance music for WWE superstar CM Punk—having a second life 25 years after its release with an annual increase of over 100,000 buys since it started being regularly featured in 2011. The week of Michael Jackson’s death and the mass-media circus that followed it saw the late superstar sell over a million song downloads. At a time when anything in the permanently plugged-in pop culture conversation can lead to absolutely anybody saying, “I want to hear that song,” available legal downloads are an absolute necessity. Eighty percent of American households currently have Internet access, which means 80% of American households now double as record stores.

The Impact Of The R.I.A.A., Billboard & Nielsen SoundScan

Today, the music industry is entering a new exciting frontier with the acceptance and utilization of the streaming era. Going back to last year when top streaming video production company Maker Studios received a few million dollars from Google’s YouTube investment to create such popular content as Epic Rap Battles of History, the Internet was once again alive with the same energy that powered early MTV. Vevo and YouTube partnerships have also allowed artists and music-based content generations to make money-per-view, most recently seen when Psy’s worldwide smash “Gangnam Style” racked up 900 million views and landed the singer an estimated $870,000 off of YouTube alone. Reflecting the changing times, I think both the Recording Industry Association of America and Billboard magazine are acknowledging these feats as a measurable and admirable accomplishment. In May, the RIAA announced that songs reaching 500,000, 1,000,000 and 2,000,000 streams would be receiving gold, platinum and double-platinum plaques respectively. Billboard has now also been including YouTube views collected by Nielsen SoundScan into their data, resulting in newfound notable chart presences from songs such as Baauer’s “Harlem Shake.” The first few artists announced to receive these accolades include recent hits like Eminem’s “Love the Way You Lie” and J. Cole’s “Workout” as well as catalog titles like Kanye West’s “Stronger” and Whitney Houston’s “I Will Always Love You.” This also includes measuring listener interaction in different ways, equating 100 streams to one download. Yet, despite the very wording of a music industry being based on a means of generating income, these certifications reflect no amount of monetary investment on the part of the listeners whatsoever. This might work to the advantage of a rapper like Lil B who, post-MySpace, has primarily existed on YouTube and forfeited the hundreds-of-thousands of dollars he could be making monetizing his videos with corporate advertisements in favor of getting his music and message out to his fans uninterrupted.

So, the biggest question in face of these major changes is: why now? Is it because, not unlike the skyrocketing prices for licensing music and music publishing fees, the industry is trying to make as much money from everywhere that they can? Perhaps, but more likely, I think it’s because good business is good business. As Jay-Z’s become fond of saying, these are the “#NewRules,” which Jigga himself helped set through the release of his album, Magna Carta Holy Grail. In case you’ve missed the single biggest musical promotional campaign of the decade, Jay announced the forthcoming release of the album during an extended commercial in game four of the NBA Finals. A commercial for an album on television is something very early-2000s music industry, but then came word that the album was going to be released for free to everyone with a new Samsung mobile device who downloads the Jay-Z app. While, yes, the app had severe glitches and ultimately repeatedly crashed during the first hour that the album was supposed to be available on midnight July 4, this new media created one last “old media” moment as disgruntled fans huddled together nationwide around their radios and listened to Funkmaster Flex play the surprisingly un-leaked album for the first time.

Of course, only Jay-Z could have us party like it’s 1999 one minute and set course for the year 3,000 the next with how his actual deal to release the album through Samsung was established. The phone and electronics giant purchased one-million copies of Magna Carta Holy Grail at $5.00 each, allowing the album to go platinum weeks before anybody had actually heard it. Or so one would think...

The digital horizon for the music industry is a tricky beast, especially considering the implications of acknowledging and awarding those who’ve made significant achievements in getting their music heard. Magna Carta Holy Grail, effectively an entire album used as a promotional phone campaign, falls into the arena of questioning whether these million copies should count as sales or not. After all, not everybody purchasing a Samsung phone is doing so with the interest of getting a free Jay-Z album in mind. And I’d argue that just because the company is buying a million copies doesn’t mean a million files are going to wind up in app-using listeners’ ears. The industry raised the same red flag when Prince bundled his new albums with concert tickets, and later an issue of an overseas magazine. It used to be an album would only be eligible for gold or platinum status 30 days after hitting whichever magic number of units moved it achieved. Yet, because of digital sales (of which the number of actual returns is minuscule), waiting so long has proven to be an exercise of a by-gone medium. After much deliberation, today artists are eligible for gold and platinum certification the very day that they hit that magic digital number. I think this makes the Jay-Z/Samsung model fit much more akin to the Mom and Pop stores of yesteryear who would purchase X amount of copies of an album for their store and then hope to sell those copies to generate a profit.

Going forward, these #NewRules might really wind up meaning #NoRules. If a million copies of an album are sold, and nobody hears it or pays money directly for it, or even has it, did it really go platinum? Jay-Z selling a million digital units to a company is great for his bank account and his legacy as a businessman, but in the broad scheme of things, I think his platinum certification isn’t necessarily marking an achievement in music but rather in exploiting a loophole and charging through a gray area as if this new music legislation is just a part of his grander Hov performance art piece. In terms of these #NewRules bringing up the question of “what are we really celebrating?” there’s the fact that a stream is now essentially worth the same as any other stream. A decade ago at the height of the music industry, the market for people actually spending money on so-bad-they’re-entertaining albums was incredibly slim. For instance, at the industry’s absolute height, laughable lovable “American Idol” flunky William Hung only sold 200,000 copies of his debut album, Inspiration. And, while he did land at the top of Billboard magazine’s independent albums chart, he didn’t go much father than that. Compare that to now, where Tay Zonday’s “Chocolate Rain” is quickly closing in on 100,000,000 views. Are we as a nation ready to call Tay Zonday among our first 100 X Platinum superstars? I think this means the playing field for acclaim in the music industry has never been more level for independent artists. For the major artists willing to exploit the system, this means the playing field has never been more skewed in their favor. There’s an idealist voice out there somewhere echoing that these #NewRules may be the most artistically thoughtful gesture the industry has ever done in that they’re rewarding artists just for being heard. Or, it’s a gold and platinum distraction. There’s a good chance you’re reading these words on a phone right now, something wholly thought impossible a mere six years ago. Today, just by having a phone you can help someone go platinum. They might just make money off of it too.

Chaz Kangas is a freelance journalist covering music, film and pop culture's highbrow and low-brow. He's contributed to the New York Times, Village Voice, LA Weekly, Citypages and Complex among others. Originally from Minneapolis, MN but currently residing in Harlem, NY, he's also guest-lectured at Sarah Lawrence College and Fairfield University and is currently co-authoring R.A. the Rugged Man's autobiography. You can follow him on twitter @ChazRaps

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