You can’t give people all the music they want for $9.99 per month.

That doesn’t generate enough cash to keep all the stakeholders happy. Somebody must get squeezed.

This is reposted from Ted Gioia’s Substack channel. He confirms the future trend we have been predicting here, especially about the streaming content business model. The bottom line is that streaming content is more expensive than buying content if artists are able to cut out the middleman. Digital technology with blockchain can do that.

Get Ready to Pay More for Music

I keep seeing cheery news stories about growth in the music business. But the numbers are misleading.

Highly misleading.

The growth is happening in all the worst places. Money is shifting from creative artists to technocrats, lawyers, and pencil pushers of all sorts.

If you play a guitar your career prospects suck. But if you’re a fund manager who owns song publishing rights, you can earn huge paychecks.

If you write songs, you may struggle to pay the rent. But if you’re a lawyer who specializes in song copyright lawsuits, you’re living in high style.
If you make music, you keep asking why it’s so tough. But if you’re a technocrat who streams music, you’re sitting pretty.
Is the music business really growing, if all the excess cash flow goes to to lawyers, fund managers, Silicon Valley overlords, and high-powered techies?

That’s like saying you’re healthy because the parasite sucking your lifeblood gets larger every day.

If you actually make the music, the industry isn’t healthy. Even if you’re just a music lover, things are looking ugly.

And it’s about to get a whole lot worse.

I’ve been warning for five years that the new economic model in the music business is broken. You can’t give people all the music they want for $9.99 per month.

That doesn’t generate enough cash to keep all the stakeholders happy. Somebody must get squeezed.

If you don’t grasp how broken the streaming model is—not just for music but also in Hollywood and other creative fields too—you won’t even understand the daily media news.

The broken economic model explains why writers in Hollywood are striking right now.
The broken economic model explains why writers are so fearful of AI—even demanding that the new contract prohibits AI-generated screenplays—and why musicians should be just as worried.
The broken economic model explains why Netflix has raised subscription prices sharply—even while reducing the range of film and TV options on its platform
The broken economic model explains why so many hot new artists are coming out of TikTok and social media, not traditional record labels.
The broken economic model explains why songwriters are selling their catalogs to investment groups.
The broken economic model explains why old music is killing new music in the marketplace.
I’ve been saying this for so long that I sound like a broken record (remember those?).

And how have things worked out for Spotify during those five years?

Check out all the red ink on the chart below. The company has never shown a profit, and results have worsened since listing on the stock exchange.

And now you’re going to pay a price for this. . . .