Music Business

The Music Industry’s Problem With Perceived Value

Fotolia_1831658_XSWhy does the listening public think music is worthless? Although music streaming has become hugely popular, this popularity has yet to translate into significant revenue, largely because potential subscribers don't feel that having tens of millions of songs at their fingertips is worth ten bucks a month.

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Guest Post by Hugh McIntyre on Forbes

For about ten years now, the recorded music industry has been in a pretty steady decline in terms of how much money is coming in. Ever since the public wrapped their heads around the idea of digital downloads—both in terms of piracy, and then iTunes, which certainly helped but didn’t stop the problem—revenues have dipped almost every year. A look at the number of records sold and the profits earned twenty years ago would make a newer executive cry.

With streaming becoming the way that people are accessing music, money is becoming even tighter in some places. Even though people are consuming more music these days than ever (we’ve surpassed one trillion streams so far this year already), they aren’t paying huge sums for it. As streaming continues to grow in popularity, there are going to be a lot of problems that the industry will have to tackle if it is to survive, but there is one that doesn’t get a lot of attention: the problem of perceived worth.


1Over the past ten to fifteen years, the listening public has picked up the idea that music is all but worthless, though personally very important. Between illegally downloading songs from Napster and Limewire and then having millions of tracks at their disposal for free (with an occasional ad thrown in there), it isn’t hard to understand how people began perceiving music as something cheap. Since it is both readily available and they don’t consider it to be worth a lot of money, many are simply unwilling to pay for it in any form.

Of course, this perception is entirely incorrect, but anybody who took Marketing 101 will tell you that it doesn’t matter. People will pay what they perceive something to be worth, and reason often has nothing to do with their decision making process. This is why millions of Americans will pay $5 for a coffee everyday at Starbucks, but they won’t hand over $10 for access to tens of millions of tracks, even if it helps the musicians and singers they have such strong connections with. All music has value, but it’s been lost on many over the years.

The industry needs to focus on convincing people that music is highly valuable, and that if they want to listen to it, they should pay for it. It will be tough to backtrack now that millions access their tunes for free (via platforms like YouTube, Soundcloud, and free tiers on Spotify and Pandora), but moving forward, making the case that not just the music, but the access to it, is worth something could be a good move.

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10 Comments

  1. I agree with you, but I’m trying to understand your perspective here:
    “Since it is both readily available AND they don’t consider it to be worth a lot of money, many are simply unwilling to pay for it in any form.”
    I would argue that the reason people don’t consider music to be worth a lot of money is BECAUSE we’ve allowed it to be so readily available and effectively at no cost as we haven’t stopped illegal downloading. In other words I see one as causal of the other, but you seem to discern between the two as if they’re mutually exclusive. Is that accurate, or am I misunderstanding your position?

  2. There are a couple assumptions being made that are off base. Any of these services can claim they have x ammount of songs are in their catalog, but most people don’t want all of those songs. They are looking for artists of a particular sound at that moment.
    The music industry is behind on a lot of levels. If it’s nearly impossible to make significant money from recorded music, common sense should question where else income can be made. People want to experience music and they also want to support artists they like. To me it seem obvious to focus on live experiences and merchandising. For example, I can’t tell you how many shows I’ve gone to that were big DJs and they had only 1 shirt for sale. Had the artist had a cool print or maybe another option I would have probably bought it.
    Also there’s plenty of bands I like that will play only 8 shows on their tour. Now I know from experience, it’s tough to hold a job and still push the band thing, but these are bands with significantly larger audiences than any band I was in. Not trying to argue with you, I just read how the music industry is dying yet I see plenty of opportunities to still make money. Maybe not on the 90s scale, but definitely legit pay.

  3. If people are unwilling to pay for music consumption, artists can’t afford to pay for music production, and you end up with a fast-food version of music where all the production and songwriting begins to sound the same. This drops the perceived value of music even further.
    We need legitimate intellectual property rights enforcement as step one on the path back to a sustainable working industry.
    Then we need better oversight and regulation of the digital distributors who have taken a page out of the “robber barons” handbook and have built a business model on the foundation that they do not have to pay fair wage to the creators of the product they sell. If there were not six figure+ salaries available for the executives of these companies that claim they can’t afford to pay content creators a living wage, those executives would move on to other jobs.

  4. Jeff is right. It’s just basic capitalist theory. If something is easily available, and cheap, it loses its value. How did we let this happen? How did record companies let this happen?

  5. Great article. I would argue that this all started with radio. My thought process: people have been given unlimited free access to music for year and years. Obviously this takes the choice out of the experience, but if someone wants to hear something other than that copy of backstreet boys they have two options. Buy new music or listen to the radio. Now we’ve introduced the new dynamic, spotify (or any streaming service). Tell me why ANYONE would pay for this though when we’ve been conditioned since birth to not think anything about sitting 30 seconds or so through a commercial.
    So my proposition. An immediate and cruel plunge into the real world. A world where music is looked at as an actual industry. An extreme and unrealistic version of this would be stopping radio without a paid prescription. As for streaming services. Cut that crap out…unless they are going to pay for the rights up front ON TOP OF paying the small percentage of royalties. And NO FREE STREAMING. These people making tons of money are not the same ones sitting in a studio at 3 am pulling their hair out over that perfect guitar solo. The reason we’re in this position is because we’ve allowed it. If we’re going to continue treating music like its not a product people are going to continue bumping the tunes. Feeling even more that it was created for them.

  6. You’re all wrong, here’s why: http://payusnomind.info/the-decline-of-music-sales-whats-really-to-blame/
    People bought the packaging of music, not so much the music itself. The music could be had for free way before file sharing. We can’t say people don’t value music because they don’t value digital downloads. It’s like saying someone hates Pizza because they don’t buy Pepperoni Pizza. Concert attendance has skyrocketed with fans paying way more for tickets than they ever have. That’s not a sign of a decline in the public’s perception of the value of music.

  7. Brother, you do know that streaming platforms already pay for rights on top of paying a per stream rate right? indie artists and unsigned artists haven’t been able to take part in that because their catalogs don’t have the value of a major record company. On the strength of the rights they own record companies not only get an advance on streams in addition to streaming revenue but they also get equity in the companies. The artists signed to the record companies get paid per stream.
    Any rights holder can negotiate what they’re paid by Spotify or any other streaming platform. The issue is one artist isn’t going to make or break a streaming platform so it’s easy for them to tell a single artist, no matter how big, to kick rocks. Record companies own the rights to major catalogs from a long list of mega star artists that are going to account for the vast majority of streams. What streaming platforms are paying artists is what the market dictates they can. If you’re at an auction and you bid $0.25 and nobody bids higher you’re not going to keep outbidding yourself until you reach what you feel like the thing you’re buying is worth.
    Subscriptions would actually be counterproductive. Music spreads by people hearing it, then sharing it with friends. Social media has taken that to the next level. People don’t even leave Twitter and Facebook to listen to music, it plays within their timeline. This is why Soundcloud and Youtube that don’t require users be on their site and/or logged in generate billions of more streams than Spotify which redirects users to their site and asks them to login. Spotify generates way more streams than Rdio and other services that require users to subscribe. Subscriptions would mean less people listening which would mean less sales.
    As artists we’re not paid a percentage of the subscription fee. We’re paid per stream. With a subscription a streaming platform gets paid no matter how much or little a user listens so what’s the incentive for the platform to get users to listen to more music?

  8. People do not think music is worthless. They value it very, very much.
    Many of them simply have no conscience about stealing.
    Wouldn’t everyone rather get what they value for free?

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