When governments plan to introduce controversial new policies, they prepare the ground in advance (dropping hints in speeches, briefing journalists privately, etc.), so that by the time the new policy finally arrives , it does not seem so controversial. A similar process is currently taking place in the music sector. Top executives from major record labels are beginning to drive a narrative into the market about the potentially corrosive effect the rapidly growing long tail of music and creators is having on consumers’ music streaming experiences. Of course, it also happens that the market share of the major record companies is also reduced, but the problem is not as clear as it seems at first glance.
There are three main constituents of the industry that are threatened by long tail feeder:
- Major labels and their artists
- Long tail creators
Let’s look at each of these in turn:
1 – The major labels
The first on the list is the most obvious, and also the easiest to demonstrate. In the five years from 2016 to 2021, the majors increased recorded music revenue by 71%, which is pretty impressive, except that direct artists (i.e. artists who distribute without record labels discs) increased their revenues by 318% over the same period. . As a result, direct artists increased their global market share from 2.3% to 5.3%, while majors increased from 68.8% to 65.5%. Meanwhile, the top 10 and top 100 titles continue to represent a shrinking share of all streaming. The least that can be said is that the majors and their artists have collectively grown more slowly than the long-tail creators, and at most one could argue that the long-tail creators have eaten away at the growth of the majors.
2 – Consumers
This one is much harder to make a definitive case for or against. Consumers tend not to categorize music as precisely as the music industry. For example, only a third of consumers say they primarily listen to older music, despite industry statistics showing that catalog consumption dominates. Most consumers don’t consider music “old” as soon as the music industry does. So imagine how difficult it would be for consumers to define “what is the long tail?” They may say in polls that “the music isn’t as good as it used to be”, but they may also refer to major label music as the long tail. We are therefore in the field of measurement second-order effects (are consumers disengaging from streaming? Not yet, but they might) and making logical assumptions. If consumers constantly hear lower quality music, it is reasonable to assume that their satisfaction will decrease. However, DSP algorithms push music that suits users’ tastes, and there’s so much high quality in the long tail that there’s no particular reason to assume that longer consumption should inherently equate to increased consumption of lower quality music. . And don’t forget that consumers have shown a high tolerance for “average” music in mood and activity playlists.
3 – Long tail creators
It might seem like an oxymoron to suggest that long tail creators might be hurt by the rise of the long tail. But, as Will Page said, the rise of the Long Tail means “there are more mouths to feed.” The split nature of streaming royalties means that the more long-tail creators there are, the lower the number of streams per stream and, more importantly, the harder it is to get through. The irony is that it is easier to argue that the long tail is eating itself than to establish a causal link between its rise and the loss of share of the majors.
divide and conquer
Of course, the missing constituency is the DSPs themselves, but they don’t deserve a place here, as they are the ones with the power to increase or decrease long-tail consumption via their algorithms. It serves DSPs to have a listening fragment to some extent, as this reduces the share and therefore the power of any individual label. But if the DSPs ever thought they were pushing too far, they would brake the algorithms.
What is the next step ?
So where does all of this lead us? In the “do nothing” scenario, viewing continues to split, majors lose more share, long-tail creators find it harder to cut and win while consumers may (or may not) see a shift significant in their listening experiences. In short, the head is losing, as is the long tail, as the market further consolidates around the “body” of the streaming catalog (of which, by the way, the majors are already key players and could easily focus more – as WMG already does).
The “do something” options fall into two key groups:
- Block/restrict consumer access to catalog
- Block/limit creators’ access to royalties
There are many ways to achieve the first one (prevent long tail music from entering DSP catalogs; reduce priority of long tail in algorithms; create separate catalog tier; deprioritize/block it from research and discovery, etc.). This all risks sounding a lot like the establishment trying to keep the next generation of creators and industries from breaking through. This is without even considering the moral dilemmas of choosing who is “in” and who is “out”.
The second option, however, might be more altruistic than it sounds. For a keen amateur with a few hundred streams, royalties will be little more than a novelty. But for a hard-working, self-employed singer-songwriter with tens of thousands of streams, the hundreds of dollars are already significant. Consider that there was a payout threshold, where 1,000 annual streams is the point at which royalties are paid, with any royalties associated with artists with streams less than 1,000 being split among all other artists. As a result, these more established long-tail artists can earn more income.
None of these options are free from challenges and moral dilemmas. But the direction of travel seems to be towards something that is “done” about the long tail. If this were really to happen, let’s at least try to make the changes benefit long-tail artists as well, not just the superstars.