Technological utopians have been predicting for years that the internet will weaken the dominance of superstar artists in the music industry and enrich the teeming masses of smaller, niche creators. But new research suggests that this ‘long tail’ theory is wrong: superstars are capturing the vast majority of music revenues and their share is increasing because of the rise of digital services like iTunes and Spotify.
What is interesting is that a relatively niche group of engaged music listeners have most interest in discovering as diverse a range of music as possible. Most mainstream consumers want leading by the hand to the very top slither of music catalogue. This is why radio has held its own for so long and why curated and programmed music services are so important for engaging the masses with digital.
It is right that the falling cost of distribution has made more music available to consumers than ever before: most digital music services have catalogues of more than 20m tracks. However most of those tracks go unheard. The ‘long tail’ is very thin and anemic compared to the ‘fad head’.
Using data compiled from record labels, distributors, artists, managers and music services, they found that the ‘superstar economy’ is even more extreme in digital services than it is in physical stores. This is partly down to the nature of digital devices, as a digital store or service has a home page that often has to squeeze onto a few square inches of smartphone screen while a high street store has dozens of square feet of window space.
What do you think about the long tail theory in the music industry? Will new ways of sharing and discovering music online could yet inject more life into the ‘long tail’ or will most consumers stick to the mainstream and is music going to remain a superstar economy?
Thanks for your post Emilia. I think this is an interesting question, and not that easy to answer right away. On the one hand it seems logical for the long tail theory to be applicable to the music industry, as the discovery of new (niche) music has never been easier. On the other hand, the nature of digital music as an information good makes the distribution of music extremely scalable, meaning the marginal costs are more or less zero. This scalability was very different during, let’s say, the Roman Empire period, where it would have taken a writer or singer a huge effort to reach an extra hundred thousand consumers.
Next to that, the superstar economy is getting enforced, as you stated, by the nature of digital devices. Furthermore, the digital content that is created strengthens the superstar trend. When we think about the literature industry, for example, think about the New York Times Bestseller Book List; this vastly enhances the superstar economy because of the popularity of the list and, ultimately, prevents other books from getting read. The music industry is similar, music streaming services like Spotify and Deezer enable the superstar economy. The publishing of top global playlists and selection of tracks by number of plays (Spotify) makes the music industry more and more homogeneous, when solely looking at number of plays. Now, let’s consider the Roman Empire period again, where listening to poets and singers had a far more local nature simply due to the lack of publishing tools. In that sense, it can be stated that during the Roman Empire Period, the fat head was more or less nonexistent. Today, the music industry has a very substantial fat head.
The superstar economy is a problem for the publishers who fail to reach the attention of popular lists and receive the advantage of ‘digital word of mouth’ created by endless facebook likes and the transparency of music plays in social networks. One of the main problems for these less popular is, obviously, the collection of royalties. As every music producer becomes more and more dependant on streaming providers like Spotify and Deezer, the streaming providers increasingly collect royalties otherwise collected by the artists. Similar to the fintech industry, people are trying to come up with ways to exclude third parties, and enable artists to fully own their work again. An example of a person like that is Lars Holdhus, who expresses his views of applying blockchain technology to the music industry on http://futuresalongtheblockchain.com/.
So, to conclude, I think the superstar economy is stronger than the long tail theory at the moment. However, there might be ways for lesser known artist to make the career of music production/publishing information goods more legitimate and compromise the power of third parties. It might take some years, but the application of blockchain technology will be a very interesting topic to follow.