By Alfonso Pinzón @alfonsopinzonm
Writing a musical summary of the most tragic year humanity has suffered since the end of World War II seems, frankly, and with all due respect to my colleagues in this and other media outlets, rather banal. Millions of human beings around the world are suffering an immeasurable physical and economic tragedy that, in one way or another, will affect us all for years to come. In short, we're not in the mood for parties.
Among so many affected communities, the situation for entertainment workers is especially devastating. Many voices of anguish fear that it will soon be too late for those who were the first to close and the last to reopen. We're talking about entire careers cut short, artistic lives destroyed. Some are calling for a return to normalcy with biosafety measures that will make reopening possible. If only everything could go back to the way it was before… But is the long-awaited normality in the music industry a lost paradise? Why do most jobs in this industry not provide a living wage? Why do artists seem to matter less and less? Why is wealth concentrated in so few hands, and why do artists seem to be becoming less and less relevant? What role does the virus play and what awaits the music industry in the post-pandemic era?
There are three major invisible forces that determine the direction in which the industry is moving.. These forces exist, regardless of the pandemic. To understand them, we must first understand where we come from and what we are calling normal.
Post-digital hangover or what we call normality
All industries are born, grow, and die. Since Napster opened the digital Pandora's box two decades ago, the recording industry, through a series of bad decisions clinging to what it once was, has desperately tried to survive its complete destruction. First resisting the digital revolution through legal means, then reluctantly adopting it through failed digital downloads, and now clinging to the economically weak. streaming. But the damage is already done. The death of physical media has unleashed three major forces, so far irreversible, that prevent the industry from overcoming the devastation: the shrinking of the pie, the formation of monopolies & oligopolies, and the commoditization of music. The 21st-century music industry is a broken system, a ship adrift, built on the ashes of the physical format, still unable to navigate the post-digital undertow. Its flaws are structural, and not limited to the pandemic. The system benefits only a few, while making life precarious for everyone else. and turns art into a commodity, as is any extractive raw material.
Reducing the size of the pie
The size of the pie, that is, the total revenue from recorded music, has shrunk to a third of what it was 20 years ago, not even accounting for inflation. This smaller pie is now divided among the entire value chain, starting with the artists, who are increasingly precarious. Not only are the parties on private jets, the lavish extravagance, and the legendary excesses gone, but so too are the well-paid sound engineers and producers, and the productions with serious budgets., funding for the development of artistic talent and promotional tours as part of a comprehensive marketing plan, among many other necessary components in a once dynamic and solvent industry.The fact is, there's no money in recorded music anymore, it's that simple! There is no solid source of income to compensate for the loss of two-thirds of the income and the streaming It's one swallow that doesn't make a summer.
This lack of resources also leads to a profound fracture in the traditional symbiosis that in the classic model of music business There has always been a difference between recorded music and live music, monetized through the cycle of new releases and promotional tours. The two businesses now operate separately. On the live music side, while it's true that the market is growing, this growth is driven solely by massive festivals, which reinforces the other two major forces: the formation of monopolies/oligopolies and the commoditization of music.
The formation of monopolies & oligopolies
He streaming It represents 80% of the entire recorded music revenue pie. There are only three relevant players in this arena: Spotify, Pandora, and Apple Music. Spotify, the global number one, holds 361% of the entire market. In Latin America, its dominance reaches as high as 851% in some markets, such as Mexico. What was once an oligopoly controlled by major record labels is now on its way to becoming a monopoly with a single digital player. And as with any monopoly, tyranny and abuse are the norm. Any artist who doesn't like being paid $$0.00437 per stream, while the CEO of Spotify personally amasses $5.2 billion, well, there's the door.
On the live music front, The growth of large festivals means the concentration of income in the hands of a few.. In some countries like the United States, monopolies have formed, as is the case with Live Nation, which owns 80% of the American market, or in Mexico with Ocesa, the queen and mistress of the market, with Live Nation (again) as its main shareholder. At best, oligopolies are formed, which tend towards absolute market control through cartelization.
This means that only large business owners and state agents have the financial muscle to play in the concert arena. Any entrepreneurial initiative is stifled. Cartelization involves predatory, deceitful, and exclusionary practices that clip the wings of the free market. Tyranny and abuse are once again the law. All small promoters become irrelevant, and entire regions are excluded (although many festivals take place in peripheral regions, these must be able to attract and accommodate large crowds, which immediately excludes the vast majority). The rise of festivals represents a dramatic reduction in the traditional tour, concentrating music tourism and its resulting revenue in very few geographical locations.
The commoditization of music
The commoditization of music is a direct consequence of the changes in consumption habits brought about by new technologies. But first, let's define what a commoditization is. commodity, In simple economic terms, they are like any other good in the market. commodities raw materials such as oil or most agricultural products, such as oranges. In the case of music, commoditization occurs when the artistic brand is diluted, and consumption happens in an almost undifferentiated way. What is Spotify, if not another algorithmic commerce platform within the Big Data economy? Like all the others (Amazon, Netflix, etc.), its goal is to measure all our digital behaviors and preferences., to then calibrate the type of personalized content with which we receive feedback to produce greater addiction. This has a positive side: discovery. We might end up listening to local artists from exotic backgrounds whom we would never have known otherwise. On the other hand, a somewhat darker side, artificial intelligence-based algorithms are feeding us, 24/7, often in a biased way, a database containing 3 million artists. After a while, we're navigating an ocean of information only an inch deep. At the end of the day, nobody matters. At least not enough.
Paradoxically, the consumer feels like they're in control. The center of gravity has shifted from the artist to the consumer. In this sense, the digital revolution is Renaissance-like. The consumer (the human being) is now at the center of the universe, not the artist (formerly God). The consumer wants it personalized and wants it now. It's the death of the rockstar. What value does an artist have among the 60 on a festival lineup? Probably not much. Once again, only a handful of big-name artists manage to monetize their performances; the rest play for peanuts, or even pay to play. Music has become a commoditized industry: a very few matter, for a while, while the majority are irrelevant.
The virus as a digital accelerator and the post-pandemic era
COVID-19 is a digital accelerator that drives these three major forces that annihilate free competition, create precarious working conditions for those in the music industry, and stifle any independent entrepreneurial initiative. As with every war and every pandemic throughout history, there are a few winners and many losers. The former have the ability to navigate and weather the storm, consolidating their power day by day. They, and they alone, will reap the harvest once the fog lifts over the ravaged land.
Public and private initiatives involving not only music but the entire universe of art and culture fail every day., even though some have enormous budgets. To reverse these trends and reinvent cultural industries in a sustainable and equitable way, including of course the music industry, we must begin by understanding the forces that dominate them. Ignore them at your own risk.
(Alfonso Pinzón is a musician, promoter, manager, and agent with 30 years of experience in the music industry. He currently works as a strategic consultant in New York City.).
