Did you know that there was a time, not so long ago, when the only way to listen to music was live and in-person? No, I’m not talking about a live stream from your favorite band on Facebook or YouTube, but listening to the music at a venue congregated alongside a small or large group of similarly-minded folks who liked the same kind of music you did. In pre-historic times like the year 1984, the concert was the only way we consumed our favorite tunes and supported the musical artists of our choice.
With the advent of recording technology, we have gone from the live concert experience to the phonograph and jukebox, the eight-track, cassette-tape, and CDs, to recent years with the onslaught of the mp3 and all digital streaming abilities. In the wake of these massive technological strides forward, the music industry has consistently been in catch-up mode; always having difficulty keeping pace. In the same way that technological changes have shaped the way we consume our favorite music, it has also played a huge part in other aspects of the industry, transforming the first and original way in which we consumed our music: LIVE.
Through technological advancement, the concert-going experience and the revenue created from these live performances have also seen a massive control shift out of the hands of the artists and the investors who deserve it.
Finding fair and legal means to regulate the consumption of music by the masses to taking back control of a rising secondary ticketing market and governing the concert experience are major issues that have united the music industry. Together, record labels, venues, streaming services and artists fight to get ahead of the technological curve and retain earnings for people that make the music possible in the first place. Technology changes and it changes fast. It has been the central force that has thrown the music industry into decades of chaos, and it’s the very thing to set it back on its feet again.
ALL ABOARD THE DIGITAL TRAIN
In the annual Global Piracy Report, 2017 saw music theft grow 14.7%. It was the most prevalent in the United States. Technology and its maturity have played a major role in people’s ability to steal and download tunes that don’t belong to them, but this technology did not appear yesterday.
Think back to 1997. This was the year that two guys created a system by which you could swap songs with your friends at no cost. They called their technology, Napster. This was the beginning of illegal music downloading. Technology spread like wildfire through college campuses and within months had over 20 million users on the platform uploading and downloading songs from across the decades to the biggest radio hits that came out yesterday. Major artists came together to speak out against the platform and the Digital Media Copyright Act (DMCA) was signed into law by President Clinton in 1998 but did little good as Napster gave way to a swell of music piracy sites including Limewire and BitTorrent among many others.
While the music industry fought to control these illegal downloading sites, it was blindsided by a number of game-changing technological advancements over the next decade, including the introduction of streaming services (Spotify launched in 2001) and the introduction of digital music library through Apple’s iTunes. With Spotify and Apple Music leading the charge and giving the listener the ability to instantly devour an array of music genres and artists through a single subscription service, music streaming services (accounting for 50% of total recorded music revenues in 2017) has become the preference of most consumers looking to broaden their musical horizons or just get the song that their favorite artist released last week.
THE EVOLUTION OF MUSIC CONSUMPTION – THE TIMELINE
Thomas Edison invents a device to record and play music on. The Phonograph.
Emile Berliner invented the Gramophone, the invention to record on flat discs (The Record)
The first LP is invented and was also known as the album.
Cassette Tapes become the most popular form of music media and it’s the mobility factor made music portable.
The first CD (Compact Disc) ever made was ABBA’s ‘The Visitors’ album.
The first Mp3 player is released.
June 9th, 1999
NAPSTER is invented, developing the idea of free online music sharing and leading to a huge drop in music recording sales.
NAPSTER is shutdown through a court order.
APPLE introduces the iPod
Streaming services like SPOTIFY begin to pop up giving way to the modern-day streaming music service
iTunes and the advent of the digital music library managed from your computer come to market.
ACCESS BEFORE OWNERSHIP
With the introduction of streaming technology and services by Pandora, Rhapsody, Spotify and Apple Music, music consumers now had the ability to gain access to multiple artists all at once and for one low price per month. Though some consumers still preferred the music quality of the CD, it was only a matter of time before streaming music became the popular choice. Physical formats of music consumption like the CD were officially out and digital music was the dominant form.
Record companies could no longer work outside the system and fight the digital age as it cost the industry millions of dollars yearly, so over the next decade, they began to work alongside these digital streaming services building the systems and infrastructure that facilitate the authorizing of over 380 digital music services and more than 40 million tracks. In 2016, the music industry saw its first increase in revenue by 5.9% after 15 straight years of loss or about 40% of the industry’s revenue.
So the industry as a whole is on the up and up, but It is important to note here that very little of the money that record companies receive for the digital downloads make it to the actual artists themselves. In the current business model, the label takes about 70 percent of the purchase price and this leaves the artist with only pennies from each download.
RECORDING ARTISTS COMPENSATION ISSUES EXTEND BEYOND THE RECORD
‘Access’ is also the prevailing issue when it comes to the live performance sector of the music industry’s business model but in a very different way. Still, from both the sales of their recorded music and the ticket sales to their live performances, artists are not receiving the compensation due to the creative force behind what are now big-name brands created by and profited off of by the record companies alone.
But if it is the streaming service technology and the easy access to the music keeping artists from their due on the recorded music side of the industry, what are the major industry issues and technologies that are keeping them from gaining money deserved from their concerts and tours and other live performances?
SPOTLIGHT ON THE LIVE MUSIC TICKETING INDUSTRY
The secondary market is the issue that is plaguing the current live ticketing industry. More specifically, the bot technology that is created to buy up what is usually 60% of the tickets to any given live performance. These tickets, which are usually priced on the low side by the primary markets for organizers and artists to maximize attendance of their target audience are quickly bought by secondary market resellers (with this bot technology) and then sold for sometimes triple or quadruple the original ticket price to the fans based on the demand of the artist. So when tickets are bought and then resold at astronomical prices, only the companies and individuals (you call them scalpers) that comprise that secondary market sees the profit. Once again, the artist (and now the fans of the artists) are the ones that lose.
Both technology and legislation have been created to try to correct the fundamental issues at the heart of this industry, but both methods have fallen short of truly getting at the root of the problem.
BLOCKCHAIN TECHNOLOGY CAN SAVE THE TICKETING INDUSTRY
There is a bright spot on the horizon for artists (and fans) in regard to the issues plaguing the live concert ticketing industry and that bright spot is a new technology that has seen a recent rise in popularity across multiple business sectors called a blockchain.
By allowing digital information to be distributed but not copied, blockchain technology is the backbone of a new type of internet. Originally devised for the digital currency, Bitcoin, the creators quickly found potential uses for the technology across many sectors.
Yellowheart is a start-up company out of New York City that is building a brand new ticket-selling protocol, harnessed by blockchain technology and specifically geared to control end-to-end ticketing, solving an issue that artists and ticketing providers have battled for years while enabling fans to buy the best tickets at face value.
In a recent interview with Billboard magazine, Yellowheart CEO Josh Katz explained how this technology is the key to YellowHeart’s success.
“The plague of the scalping industry is something I’ve talked to artists and friends about for years, and with the unprecedented growth of this underground system, we knew it was time to find a real solution,” he explains. “While technology and secondary ticketing sites are to blame for the growth of scalpers, we believe that technology is also our solution. Blockchain offers us the unique ability to track the entire ticketing lifecycle, which means the tickets end up in the hands of the fans, and no one else.”
Billboard went on to report that YellowHeart is just the latest startup to target the secondary market. London-based live ticketing company Dice, which recently partnered with Primavera Sound, and San Francisco-based online ticket exchange Lyte are also working on technology to take on the secondary markets and get the creative artists behind these live events the revenue percentages that they deserve.
Whether it be the revenues allocated from the digital sales of their music or the cash streams created by the sales of their most recent tour, artists and creatives are getting the short end of the stick with the current systems and technology created by the live streaming industry and the record labels to correctly and fairly compensate each for the value that they add to their label or service.
The artist and the music deserve their due and, though it is with the use and through the creation of technology that the music industry’s inequalities for artists were created, it seems that it is technology-driven platforms like YellowHeart and its use of the blockchain open ledger that give artists and investors the most hope of seeing the systems change and their true value upheld.
Josh Katz is the Founder and CEO of YellowHeart. Founded in 2018, YellowHeart is the first socially responsible live event ticketing platform. The YellowHeart platform is autonomous, fully decentralized and runs on public a Blockchain – which enables artists and teams to identify, market and sell directly to their fans. Josh is also the Founder of El Media Group (EMG). Established in 2005, EMG is the premier subscription music provider for business, servicing over 5000 of the premier luxury brands in hospitality, food and beverage, airports, casinos, and retail. From 1996 – 2004 Josh worked within the music industry spending time at Arista Records, Jive Records and BMG Entertainment. Josh was responsible and assisted in the launch, development and marketing for many of the biggest stars in music today. Artists include Britney Spears, Buddy Guy, Gwen Stefani/ No Doubt and many more.