The music industry sees itself as ahead of the curve. In one regard however, its members may be wishing they were lagging behind the pack as the industry has been one of the first to be transformed by the advent of digital technology. In any free market the price of a commodity is pushed by the invisible hand to equal the marginal cost of producing a new unit. Unfortunately thanks to new digital technology, for music, this price has become virtually zero.
With it so difficult to make money directly in this environment, the industry has responded by showing ads alongside music. For this to work there needs to be volume, best achieved by grouping together as many artists in one place as possible. This necessitates the formation of monopolies on methods of dispersing music, hence the dominance of Spotify and YouTube in their respective spheres.
This places a huge amount of bargaining power in the hands of companies; prompting a number of prominent musicians to speak out against the amount Spotify pays per listen, with the amount being around an average of about half a penny per listen, meaning artists have to receive around 2.5 million plays, only to earn what they would working for a year on the minimum wage.
This is not the type of environment likely to continue to motivate large numbers of people to try their luck at music – potentially depriving us of future greats. Diversity is likely to lose out, with only the wealthy able to stick at it long enough. With extreme free market competition on one hand, and an industry dominated by monopolies on the other, it seems there are no good options left for the music industry.
This is about more than just whether the next Smiths will be unable to get the ball rolling – these kinds of technological influences are spreading to other areas of life. If the geniuses of the music industry can think of a way out of this conundrum, then we should all take note. If not, it does not bode well for creativity in the future.