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I am an ethnographer researcher, Venture Capital investor, and a fan of many movie, anime, and shows. I observe pop culture, online subculture, and changing behaviors around consumption. Whenever something triggers a thought, I just can't help but jot it down. This is where all those little ideas spill out.
Last week, at an event at the EFI, I saw a more advanced version of AI robot Fiona from “Silicon Valley”—Amecca. It was fascinating and quite demystifying.
FIRST is that, So far, the robots presented by AI generally exhibit traits such as being “polite, open-minded, friendly, and devoid of any vices,” while lacking a sense of warmth. When we compare them to AI, many of the human qualities that are often criticized—such as sluggishness, selfishness, impulsiveness, arrogance, and hesitation—may start to be appreciated more. These flaws, in contrast to the absolute positive descriptors like “polite,” “correct,” and “friendly,” seem to better capture the dynamic and diverse contours of humanity.
SECOND is that, the moderator conversed with Amecca for about 20 minutes, and it could respond to nearly any question; however, it struggled to handle silence. Any pause lasting more than a second would prompt it to start speaking immediately. I found this quite amusing; “dealing with silence” is indeed one of humanity’s most advanced skills. Reading the atmosphere in silence, sensing unspoken words, and understanding the meaning of “the moon is beautiful tonight” can be challenging, even for me.
This gave me further insight into why “domestic AI in China is so difficult to develop.” While “garbage in, garbage out” is certainly one reason, understanding the essence of East Asian culture, which values “leaving space,” presents a next-level challenge for AI trained on logical reasoning. However, on the flip side, if one day AI truly learns to navigate and even utilize silence, grasping the nuances of East Asian culture, it could signify that AI technology has reached a significant milestone.
In our discussion of the Spotify case study, we examined the rising trend of global music artists resisting the platform, alongside the prevailing sentiment that Spotify offers insufficient compensation to music creators. Currently, artists on Spotify earn between $0.003 and $0.005 per stream, which translates to needing 2 million streams to generate a mere $10,000. This data, at first glance, appears to substantiate the criticism directed at Spotify.
However, I question whether Spotify should be held primarily accountable for the increasing challenges musicians face in monetizing their work. Through preliminary research, I have arrived at a conclusion that diverges from the mainstream narrative. I contend that Spotify is not the primary culprit in this scenario; instead, the decline in artists’ income can be attributed to a multitude of factors that collectively contribute to this downward trend, which has already become an entrenched reality within the entertainment industry.
Accessibility and Devaluation of Music
One of the primary reasons musicians earn less today is that music is more accessible than ever before, and this accessibility has led to a devaluation of the product itself. The emergence and widespread availability of pirated music platforms, such as The Pirate Bay, fundamentally shifted how consumers accessed music. With piracy, music became virtually free for anyone with internet access, pressuring the entire industry to lower its prices. Even legitimate streaming services like Spotify offer millions of tracks at an affordable monthly subscription, making individual tracks or albums far less valuable. The consumer’s willingness to pay for music has decreased, pushing down overall industry earnings despite increased access.
Over-supply of musical works
The barrier to entry in the music industry has been lowered significantly due to advances in technology. Musicians can now create, produce, and distribute their music with relative ease, using tools like digital audio workstations (DAWs) and platforms such as SoundCloud and Bandcamp.
In 1970, the global music catalog was estimated to comprise approximately 2 million songs. Over the subsequent 30 years, the number of tracks increased by a factor of 2.5, resulting in around 5 million officially released songs by the year 2000. However, it was in the following 20 years that the catalog experienced explosive growth, with the total number of songs skyrocketing eightfold to reach an astonishing 40 million by 2020.
While this democratization of music creation is positive in some respects, it has led to market oversaturation. The saturation of music available in the digital age has led to a significant decline in the perceived value of individual tracks and artists. This phenomenon is exacerbated by the increased interchangeability of songs, as consumers can easily access a vast library of alternatives at their fingertips. This commodification has made it more challenging for musicians to command higher prices for their work.
Redistribution of the Industry’s Value Chain
The music industry has become more commercialized and monetized at every stage—from production to distribution to marketing. Previously, many stages, such as distribution through physical stores or marketing through word-of-mouth, were relatively inexpensive. Now, digital distribution platforms, marketing campaigns, and streaming services all take significant portions of revenue.
BTS exemplifies the economic dynamics of the modern music industry, particularly the disparity between artist income and total revenue. Despite the group’s global success, BTS members’ earnings represent only a fraction of their total generated revenue. HYBE, BTS’s management company, earned over $1.37 billion in 2022, with a significant portion from album sales and concert revenues. However, the group members, while well-compensated, earned around ₩21.0 billion KRW ($15.8 million USD) each for renewing their contracts in 2023. This figure underscores the significant role HYBE plays in BTS’s financial success, given its investment in the members’ extensive training, marketing, and production. For instance, BTS members like RM and J-Hope trained for approximately six years before their debut.
This example reflects how modern musicians receive a smaller share of industry profits as the value chain includes more stakeholders, such as streaming platforms and production companies, even though the industry continues to grow.
Competition with Other Forms of Entertainment
Music is no longer the dominant form of entertainment it once was. In the 1950s and 1960s, music held a larger share of the entertainment industry, with a high cultural impact. However, in today’s media landscape, music must compete with a variety of entertainment formats, including social media, streaming video, and short-form content like TikTok.
In 2000, the global entertainment industry was estimated to generate revenue of approximately $1.2 trillion, with the music industry specifically accounting for around $30 billion, representing a share of approximately 2.5%. However, by 2023, the global entertainment industry experienced significant growth, reaching a valuation of $2.8 trillion. In contrast, the music industry generated $28.6 billion, resulting in a decline in its share to roughly 1%. This stark decrease underscores the diminishing proportion of the music industry’s revenue within the broader entertainment landscape.
Short-form content provides a large amount of entertainment value for free, reducing the relative appeal and value of music. Consumers can spend hours on platforms like YouTube or TikTok, consuming free content that directly competes for the time and attention that might have been previously devoted to music.
Conclusion
In conclusion, the financial challenges faced by musicians today can be traced to several interconnected factors: the increased accessibility of music, the simplification of music production and distribution, the redistribution of value within the music industry’s supply chain, and the intensified competition from other entertainment sectors. In light of these factors, while Spotify’s market pricing may not be entirely equitable, it nonetheless aligns more closely with contemporary market demands and conditions than traditional music industry business models and pricing strategies.
To address these issues, we must delve deeper into how to establish a more equitable value distribution system. Given the growing prevalence of intermediaries and the rising proportion of revenue shared among them, it may be worthwhile to explore the potential of technologies such as blockchain to eliminate intermediaries, thereby enabling music creators to receive compensation in a more direct manner. Such innovations could pave the way for a more sustainable and fair economic framework for artists in the evolving music landscape.
International Federation of the Phonographic Industry (IFPI). (2023). Global music report. Retrieved October 17, 2024, from https://globalmusicreport.ifpi.org
During Edinburgh’s Doors Open Day, I visited a century-old theatre that doesn’t even have a restroom, and a three-story Adam Smith residence with a total area of less than 300 square meters. Surprisingly, both of these places have served as venues for the Edinburgh International Festival. It gave me a glimpse of how scarce venues are in this city.
I also started to understand why cultural industries here often lean towards the non-profit sector. First, there are indeed a significant number of people and organizations with substantial funds ready to donate (probably benefit from the taxation policy here). Second, even as a non-profit, government grants can be sufficient to sustain a small team.
Take the theatre I visited, for instance. Despite being too old for serious activities and constantly requiring maintenance, it still receives £1 million in government funding, which is enough to maintain the building and support four full-time staff. Occasionally, the theatre rents out its space for live shoots by companies like Netflix or Amazon, which helps it stay afloat, even if only at a survival level. It’s still somewhat productive.
Similarly, the restoration of Adam Smith’s Panmure House has been an ongoing project for over a decade, supported by more than ten different donors and organizations. This kind of non-profit fundraising is typical of the creative industries here, and as long as you keep telling your story and highlighting your importance, even the most inconspicuous project can potentially attract attention from wealthy individuals or foundations.
To put it bluntly, it’s almost like they’ve “achieved a certain level of communism” here. While private ownership exists, there’s a sense of distribution based on need. I realize that my difficulty in understanding NPOs might stem from my inability to fully grasp an economic logic that lies outside the capitalist framework.
