The Evolution of Music: From File-Sharing, to Streaming, and Beyond

Yesterday (Napster & Blogs)

I remember finding Napster as a kid and realizing that I didn’t need to go anywhere else to find music. People would make packages of their favorite hip-hop songs, which I would download to discover amazing new music. It wasn’t because some centralized entity was feeding it to me; it was based on recommendations around what I was searching for, and the community circulating the music they loved.

Shortly after Napster came along, blogs got big. I built my career from getting promoted on blogs. There was a very limited window of time where blogs took over the distribution of how people found new music. Bloggers had tens of thousands of followers because those followers thought that they had great taste.

During this time, tastemakers curated what was best for the community. The best music rose to the top because everything was free and people would just share the best quality.

There were a lot of downsides to that model. As an artist who wants to get compensated for my work, I’m obviously in favor of a model that pays the creators (and I would never promote stealing).

But there’s also something we can learn about the organic way that music spreads. Access to publicly-curated music disappeared from the world when centralized distributors took over.

Today (Streaming)

Enter streaming services.

First of all, it’s important to point out that Apple Music, Spotify, and other streaming platforms have been amazing tools for artists to actually earn money. They took a big first step towards solving the issue with file sharing platforms like Napster: people don’t necessarily want to steal music, and artists want to get paid. Anybody who claims that streaming services don’t pay out fairly just doesn’t understand the nature of the record deals that artists sign.

Artists are often pressured into bad deals because they need some financial security in their artistic pursuits. In exchange for small “advances,” artists give up massive amounts of “equity” in their careers. Much of this upfront money is recoupable against future royalties, live income, merchandise, and other cash flows associated with an artist’s growth, but distribution is never a guarantee.

As a result, most of the talent in the world will never succeed unless they give up a huge portion of their income to those people who control the distribution channels.

The issue, then, lies in the layers of gatekeepers that hold the keys to distribution. What is actually reaching fans’ ears?

Some interesting data from a leading streaming service:

Instead of fans or artists curating music in a way that could access a huge amount of people — which blogs fulfilled in the past — you have editorial playlists. These playlists have provided a way for some new artists to get discovered that didn’t exist in the pre-internet age, which is great. But ultimately, it’s still subjective and determined by a minority — as opposed to the best music revealing itself through fan curation.

Streaming services have brought some distribution to independent artists, but there are still a lot of inefficiencies that prevent it from happening in a free-flowing and truly natural, organic way. And that’s how music is meant to be consumed in the first place.

Tomorrow (Decentralization)

The positive aspect of the Napster/blog era was that fans were closer than ever to artists. There was no entity in the middle controlling the access, and the best music revealed itself through the volume and velocity of circulation.

The positive of the streaming era is that consumers have a way to pay for music, and artists have a way to get paid (though the speed and transparency of these payments is a work in progress; every year, I have to chase down royalties from a hit song I released a few years ago).

Unhinged decentralization leads to everybody stealing, and centralization leads to subjective taste-making where fans don’t get the best music and artists don’t have a fair shot at connecting with them.

We need a platform that encourages — and improves upon — the best of all worlds: Artists sharing their music, fans deciding what the best music is, and artists getting compensated.

Decentralized streaming will benefit consumers and creators.

Artists need to be incentivized to share, fans have to be incentivized to promote their favorite music, and artists have to be fairly and quickly compensated. Decentralization helps with all three — we just need the right platform.

There are several solutions in the works right now, which is great to see. I’m particularly excited about Audius because they are working backward from first principles. Other streaming tokens only existed as a means of reward, and at which point distributed ledger technology might not even be necessary. Audius is focusing on the way that value accrues to an entire ecosystem of participants, which is necessary for the mass-adoption required to make a difference.

Conclusion

Things aren’t right the way they are. Streaming services are losing tens of millions of dollars in a single quarter. It’s then just a question of time, and who’s going to build a solution to change the model.

In today’s model, there are so many middlemen. Not even just on the digital music side, but throughout. A lot of that is completely trimmable fat, and I think we’ll see that change over time.

We need platforms that directly connect fans and artists, that enables artists who are more independent to actually reach those broad audiences the same way pop stars can.