Music labels matter more than ever


Industry rule number four thousand and eighty
Record company people are shady
A Tribe Called Quest — Check The Rhime

I’ve been a Spotify user since February 2012 (= only $400 in subscription costs so far, an outright steal). I listen to albums, not singles, make (some) playlists, share (a little) and, most of all, never discovered any new music through the service. Spotify is like Amazon to me: I find what I look for, but was never sold/recommended anything. Though I often think you don’t need new music when you have The Low End Theory, how am I discovering and loving tons of old and new artists? Labels.

Innovation in music distribution only helped the big get bigger

The iPod launched in 2001 with the following promise: “a thousand songs in your pocket”. Nowadays, it would be more something like “35 million songs in your pocket”. Sure, it’s not all music — many vinyls haven’t been/won’t be digitalized — but it’s good enough for 95% of listeners. The iPod was only one episode of the revolution of the music industry by technology, which went through different vinyl formats, tapes and the Walkman, then mp3, peer-to-peer file exchanges, streaming and mobile. Each of these technological advances increased the amount of content made available to listeners. They also made it theoretically easy to distribute music for a new comer.

Now what happens when so much content is made available? The long tail principle says content consumption moves to “more of less”: niche artists attract their small audiences, and users start listening to them, possibly moving away from commercial hits. The reality is a bit different: listeners do consume niche content but (1) they are only a portion of the market and (2) that same portion consumes commercial hits even more than the rest. Long tail phenomena actually strengthen the dominance of major, established artists.

The other economic principle at play is information cascades, made 100x faster and bigger with the increase of social interactions enabled by social networks and mobile messaging. An information cascade occurs when a person observes the actions of others and then — despite possible contradictions in his/her own private information signals — engages in the same acts. So when you already are a major artist, and you publish new content, your existing fan base makes it really easy for your new music to catch fire and flood the whole web. You don’t even need advertising. You don’t even need to rig Amazon or iTunes sales by buying copies of your own content to rank higher and induce signaling effects. All of this makes it complicated for new artists to break through and users to explore. “The hardest problem facing musicians is getting people to listen to their tunes at all, not getting paid”, as Bob Lefsetz puts it.

How to navigate the mess

Now when I say “labels” I don’t necessarily mean record companies. I mean people. Artists, producers, journalists, friends with taste. People who know their stuff. People who listen to the latest but also go back in time and explore low-key music from decades ago. Major music nerds, exploring fusion, for whom music genres are not relevant.

Many artists I listen to I discovered through very old school but truly effective media: I heard from Adele in a 2008 interview of The Neptunes (so happy she’s working on her next album with Pharrell) and from Tobias Jesso Jr in a piece on Zane Lowe. French radio station TSF made me discover Cole Porter’s Fifty Million Frenchmen, Flying Lotus’ BBC residency is made of gold and I religiously read each of Sagittarius’ album reviews. Now I always enjoy my friends’ recommendations when I know that they know what they’re talking about (especially him and them).

What all of this shows is human curation beating algorithms. In his recent piece on “Curation and Algorithms”, tech analyst Ben Thompson sees “the embrace of curation as a mark of maturation of the technology industry”. This is the opposite of “you bought this book so let me show you another book from the same author”. It’s more “I know you trust me so take my hand and let me show you something new.” Sometimes it’s even bigger than curation: it’s education.

A new definition of labels

Benedict Evans’ piece on search, discovery and marketing has one main conclusion that made me think of the music industry: “the internet makes advertising more important than ever”. Now advertising can be automated by algos but humans still beat machines at this game. This is why music labels have tremendous relevancy: they advertise new artists. They will help them shape their message and give them a platform to reach an audience.

This might be Tidal’s angle. This might be the unique competitive advantage Tidal is trying to build: a group of extremely talented people (I hope we can at least all agree on that) who now control a platform to connect with users and bring them what’s next. And it’s not even necessary to promote only exclusive content: let’s say a new artist has content on all platforms, but he is only promoted in Tidal, while buried in Spotify/iTunes. Users will discover in Tidal, and if the content is good it will begin to have success on other platforms. Tidal won’t catch the streaming value from all the success but will position itself as the place to be, the place where listeners are provided with valuable recommendations. Isn’t Apple already trying this with Beats 1? Curated or algo-generated playlists are far from enough. Lefsetz says Apple Music is toast but acknowledges that Beats 1 is “mildly interesting” (this is big from him).

A label can be a friend, Pharrell, a blog or Rick Rubin. It is a lighthouse that helps you navigate the mess and discover new horizons. The music industry is not done yet with paradigm shifts.

ps: per Fred Wilson’s tip, introducing Board Observers FM


Originally published at www.boardobservers.com on June 30, 2015.