The Covid-19 pandemic has shattered the music industry. By taking away live music for what will likely be 18 months or more, Covid has ended the revenue stream that animated an entire music ecosystem. This is particularly true for independent artists with few other means of making a living in today’s industry. Musicians lost two-thirds of their typical income in 2020. Live music revenue fell 85 percent.
The Save Our Stages bill, passed in December as part of the second round of pandemic relief, has offered a lifeline. But even after it’s again safe to see a live gig, the underlying driver of the music industry’s deep inequity will persist.
For decades, corporate concentration and the rise of streaming music platforms has shifted power to tech giants, and to a conglomerate that, through the staggering failures of US monopoly regulation, has come to dominate terrestrial and satellite radio, concert promotion, ticketing, artist management, and venue ownership, essentially every revenue-generating slice of the industry.
Three major record labels produce two-thirds of all music consumed in America. They are the most powerful buyer of music and talent, and they use that power to prioritize a handful of mega-stars and pop hits. They pitch music into massive radio conglomerates and streaming platforms that control how music is consumed, and they collect an ever-growing share of industry revenue.
Concerts, a crucial space where independent venues and artists have largely sidestepped corporate gatekeepers, are increasingly threatened by Covid shutdowns and the prospect that Live Nation and other Wall Street–backed giants will either buy them out or put them out of business.
In an early pandemic survey, 90 percent of independent venue owners said they would likely close if the pandemic ended live music for more than six months and no federal support came. We’ve just entered year two.
The broad middle class of independent artists, record labels, venues, and other small businesses must now rely on—and increasingly pay—monopolists for access to bands and fans. For some, the pandemic made a difficult situation impossible.
Five years ago, a record industry executive named Darius Van Arman gave a pre–Grammy Awards speech on the state of the music business. The co-owner of Secretly Group, he led an independent label that had become a taste- and hit-maker, with an artist roster including Bon Iver, Dinosaur Jr., and The War on Drugs. Van Arman offered a simple litmus test for whether music is “independent,” a shapeshifting term applied to everything from punk bands playing basement gigs to the cash-flush “indie” subsidiaries of major labels. “You are independent if you are pro-competitive,” he said.
Major labels have helped greatly narrow what’s considered “popular music.” Major label artists released more than 90 percent of all top 10 songs over the last decade, and their dominance has drastically reduced the diversity in artists and sounds that appear and remain on the charts. According to data collected by Colin Morris, Michael E. W. Varnum, and other researchers and provided to WIRED, the number of new songs entering the Billboard Hot 100 peaked in 1966, with 740 new songs entering the chart. By 2001, that number had fallen to just 308 new songs, and today it remains around half of its 1960s peak.
The major’s continued, unchecked pop music dominance is partially the product of the time-tested “blockbuster strategy” of overinvesting in a handful of extremely profitable artists and albums. But the majors are now more flush with cash than ever, and they’ve used those resources to buy a staggering number of new acts, an average of two a day.
None of this would be possible without relying on the other twin tower of music industry power: Spotify, Apple, YouTube, and the other streaming platforms.
As streaming rose to prominence, so too did the outsize corporate power that has come to control nearly all music distribution and revenue. Spotify and Google’s YouTube account for three-quarters of all streams globally. Along with streaming services of tech monopolists Apple and Amazon, four companies have a near-total stranglehold on the market. “The level of control in those few large companies is very dangerous,” says Louis Posen, head of legendary punk label Hopeless Records. To him it’s no different than elsewhere in an increasingly monopolized economy, and no different than a century ago, when monopolies in railroads, oil, steel, and other essential goods controlled American commerce. “When just a few companies control the power, bad things happen.”
While streaming has helped most survive, it’s helped the major labels get even richer. In 2019, research group MBW figured the three major labels each made around $1 million an hour from streaming; only the biggest independent labels clear that much in a year. The top seven artists on Spotify each earn around half a million dollars per year from streaming on the service, while Spotify royalties pay the bottom 99 percent of artists an average of $25 annually.
Most of the soul, R&B, and hip hop artists Alexander works with are just in the process of building a following. They need exposure, something that opening for a more popular act can deliver. But in Alexander’s experience booking gigs in bigger cities, bigger acts almost always have management companies. When those management companies also own and control live music venues, there’s just no choice about the clubs his musicians perform in. Independent venues “are running into pressures,” he says; they sometimes struggle to host the kind of talent that sells out shows and keeps the lights on. “In Memphis, that’s a big deal,” Alexander says. “Most live venues are small businesses.”
Independent venue owners also worry that Live Nation will begin throwing its cash around. Last month, the company announced it’s sitting on $2.5 billion in cash reserves, and it received a $500 million injection from Saudi investors in April 2020—luxuries entirely unavailable to independent venues and promoters. Today, Live Nation’s stock price is at an all-time high, three times higher than it was in March 2020, even though it hasn’t hosted a single concert in a year.
Time and again, critics who opposed the myriad mergers that created the modern, top-heavy music industry told Congress, regulatory agencies, and the public that the deals gave too much power to a few companies, in violation of the antitrust laws.
Our twin antitrust agencies, the Justice Department and the Federal Trade Commission, reviewed every deal and investigated conduct over and over. Under both Republican and Democratic administrations, the agencies did nothing, and today the industry is more consolidated than ever.
After years of inaction, the country’s antitrust apparatus appears poised for a revival that could end consolidation and disperse power in the modern music industry. Late last year, the FTC sued Facebook under anti-monopoly laws for illegally acquiring rivals Instagram and WhatsApp as a way to kill competition between the apps. The case marked the first major monopoly case at the commission in years and demonstrated a willingness to unwind harmful mergers, which could certainly be applied to music industry giants.
Legislative action to strengthen antitrust laws also appears imminent. Last month, Senator Amy Klobuchar introduced a sweeping antitrust bill that would force some big companies to prove that a merger would be good for competition before the government would permit it. It would also make clear that the law applies to companies that abuse their power as buyers of goods, services, and creative output, significant for corporations that control the industry’s most important input: the music itself.
More significant antitrust reforms may come out of the House of Representatives. Last year’s House Judiciary Committee report, in response to a yearlong investigation of monopoly power in big tech, recommended transforming the law to drastically curtail corporate power. Along with proposed break-ups of big tech firms, the report recommended new rules to limit the power of dominant digital platforms to exploit the creators and businesses that depend on their infrastructure. It also called for making some mergers presumptively illegal—a presumption that would have almost certainly stopped last year’s Liberty Media–iHeartMedia megadeal.
Emboldening the antitrust cops to stop harmful mergers matters in the music business, as consolidation continues apace. In February, Sony spent $430 million to buy AWAL, one of the few big, independent distributors of digital music, showcasing the majors’ continuing push to control distribution beyond record stores. And Liberty Media just completed the creation of an in-house “blank check” acquisition company, flush with more than $500 million to target a company “in the media, digital media, music, entertainment, communications, telecommunications, and technology industries.”