Popping the Question: Can the major labels use streaming to regain control of the music industry?

The music industry has been through a huge transformation in the past 15 years, but the three surviving major labels, Universal, Sony and Warner, are still responsible for nearly all of the biggest artists. Of the top 10 best-selling albums of 2014 in the UK, four were released by Warner, four by Sony and two by Universal. The internet has provided a platform for more artists to find an audience, with or without major label backing, which means sales are spread between a larger variety of releases. But independent artists lack the marketing spend, expertise and influence required to achieve a huge hit album. At the top end of the market, the majors dominate as much as ever.

Although they’re still releasing the most successful albums, the major labels are justified in being concerned about their future. The diversification of the market means they will have to downsize, accept that the profits they used to make are impossible in this new era, and focus on serving the audience of music lovers who will always exist (unless American Pie turns out to be a prophecy). As a pop fan, most of the music I listen to (and work with) comes from major labels, so I have no anti-capitalist desire to see them destroyed. Instead, I’d love to see the labels adjust to the changes in their industry with dignity and respect for music fans.

The past 15 years have represented the transition from a predominantly physical to digital music market. Now we’re moving into the second phase of the digital era, where streaming is expected to become the dominant method of music consumption. There are many reasons to doubt that this expectation is entirely valid, but it seems the music industry has decided it’s going to happen, whether the public really wants it or not. I think the reason the industry, and major labels in particular, is embracing streaming is because they see it as a chance to learn from the mistakes they made in the early days of digital downloading.

Major labels deciding to learn from their mistakes sounds like a positive development, and if they focus on finding ways to better serve music fans, it will be. But instead I’ve noticed a few worrying developments which suggest that what they’re doing differently this time is putting measures in place early in this new era, to try to regain the control and dominance they enjoyed in the past. This includes sneaky tactics that the public aren’t aware of, but because streaming is new territory, there seem to be no regulations in place to compel the labels to make their interests evident, and nothing to stop them acting in ways that feel like they shouldn’t be legal.

The discovery that inspired this post relates to a very hot topic at the moment: playlists. Although it’s not the only big streaming platform, and could soon have a strong challenger in Beats Music, I will focus on the current market leader Spotify for now. One of the primary methods of music discovery on Spotify is playlists. If you log into the desktop or mobile app, the first thing you see is playlists.

The playlists featured on that first screen, the “browse” section, are owned and curated by Spotify themselves. Spotify have a team, like the playlist team at a radio station, who decide which songs to add to these official Spotify playlists. Major labels regularly meet with Spotify to pitch their new releases for inclusion. I haven’t seen any Spotify employee’s diary, of course, but much like the meetings radio playlist execs have with the big radio pluggers (who work either within major labels, or mainly for major label acts), it’s hard to imagine the same opportunity is open to independent acts or their representatives.

Exploring the Spotify app, I found that the first ten songs on the first featured playlist, Teen Dance Party, were all major label releases except one, from large dance label Ultra. The playlists featuring catalogue (i.e. old) music are only slightly more diverse, for example Drinking Songs includes seven major label releases in its first ten songs. In their playlists for genres such as indie and dance music you’ll find more independent artists, but since the major labels were already less dominant in these genres, this can hardly be considered an impressive showing. Spotify are apparently following the philosophy of Sharpay when it comes to choosing how they use their new-found influence over the music industry.

It’s a shame, but not surprising, to see that the tradition of major labels having more access to supposedly objective platforms for exposure is continuing. It seems that the democracy of the internet has its limits – power players continue to club together and make deals to stifle their competition, and users aren’t aware or bothered enough to use the power the internet gives them to stop it. That’s a bigger social issue, but in the case of the music industry, it means new power players like Spotify are being used by old power players, such as the major labels, to extend their control and influence into the new digital world.

The prevalence of major label acts on Spotify’s official playlists suggests the streaming giant is willing to give the majors the leg up they need. But even if Spotify didn’t actively support major labels, the labels have other ways of using the platform to their advantage. The smart Scandinavians of Universal and Sony sussed out a few years ago that ownership of Spotify playlists would become crucial, and they deserve a big thank you from their international colleagues for starting up the Digster (Universal) and Filtr (Sony) playlist brands. The Scandi-geeks’ smart move was not just setting up these playlists, but avoiding branding them with the name of their employer, and including big tracks from other labels to keep them fresh and relevant. However, their own releases naturally get priority placement.

When I first realised what the labels had done, I was impressed – it’s inspiring to see people coming up with innovative new marketing techniques and finding ways to adapt to a changed industry. It was only when I started looking into the opportunities open to artists to get more exposure on Spotify that I realised that unless you’re with a major label, it’s hardly worth trying. At a recent conference, I asked a label’s commercial director, who had been involved with their playlist brand, for the tricks of the trade. I asked if the curators would take submissions via the Spotify messaging functionality, but the only way he could think of for an act not signed to that label to get on their playlist was if they were signed to another major. The labels might agree to an exchange – we’ll feature your new song on our playlist, if you feature ours on yours.

Spotify doesn’t list the most subscribed playlists, so we can’t quantify exactly how much control the majors have on the platform. But don’t assume it’s only the playlists set up by the labels which are controlled or strongly influenced by them. The labels are using their wealth to give the smart/lucky owners of popular playlists a nice payday. We already know that Warner has bought the company Topsify, which owns and runs a huge number of playlists, and playlists.net, which they claim will remain an “independent platform” but currently gives a lot of promotion to Topsify playlists. I have also heard of major labels buying individual playlists with large followings, or paying the creators to add songs by their artists. I recently found out that in Scandinavia, where streaming already dominates music consumption, 60% of plays are from playlists personally owned by the user, but that still leaves 40% of their listening time to be unwittingly influenced by major label marketing tactics.

The major labels’ control over popular playlists is worrying for many reasons. The more playlist subscribers a song reaches, the more money it earns for the label. If a user doesn’t know the playlist is owned by the label, they’ll assume it’s an objective list of recommendations, so the label profits from a hidden bias. Their tactics could also skew the Official Charts against independent acts, since streaming data is now factored in. As if there weren’t enough reasons that introducing streaming to the UK charts was a stupid idea (see my 2014 post on this for my full rant), now we have another one. Every time a song is listened to on a playlist it counts towards the charts. Streams may only make a small difference to the charts now, but that will increase as streaming becomes more popular, and so will the major labels’ influence over the charts. How could independent acts possibly compete?

It’s one thing when the dynamics of radio plugging are recreated on streaming platforms, the new industry robotically replicating the old. But this is the equivalent of a major label buying popular radio stations, magazines or TV channels to ensure their new releases get plenty of exposure. Not just buying clearly branded advertising space, but actually buying media platforms in order to control them. And doing so without clearly informing consumers when they’re promoting their own wares. Wouldn’t there be outrage if that happened?

The music industry has never been a fair game, so perhaps it’s silly to even bother questioning this sneaky behaviour. Maybe we’re now so used to big companies pulling tricks like this that we’ve given up and we’re just letting them get on with it. The current theory in sociology is that teenagers no longer have a concept of “selling out.” Maybe we’re all willing to trade our integrity a little more easily these days, when it feels less and less avoidable anyway. But I find it sad that a new playing field has been made uneven before most people have even started playing.

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