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The tap water music industry needs to become a bottled one

Cover image for The tap water music industry needs to become a bottled one

Photo: Johnny Z

Photo of Kriss Thakrar
by Kriss Thakrar

Music and water are often compared to each other in the streaming age. There are many ways to express this analogy, but the bottom line is that music is becoming commoditised. To clarify, commoditisation is the erosion of a product from one that is highly differentiated and highly priced (with high margins) into one that isn’t. This is where recorded music is heading.

Consumers used to have to make a choice between a limited number of options, and those options were priced appropriately. The result was a large enough margin for the artists, songwriters and their teams to make enough money to incentivise them to pursue their craft.

However, in the current landscape dominated by music streaming, consumers no longer choose to spend money on artists. Instead, they spend it on platforms that are largely undifferentiated by their product selection. Consumers effectively have an unlimited supply of music to choose from. The problem is they are not spending enough on the music they do choose to provide enough income and margin for those creating it. 

This is a tap water music industry in how it provides a service in the same way that water works as a utility. This is a problem for a market built on differentiation. In the same way that there is very little incentive for anyone to enter the tap water market, why would anyone want to become an artist in the tap water music industry?

Why make music? 

This is a serious question that is not being asked enough. The majority of the best-selling artists both in the recorded music and live music space have gotten started in a pre-commodified music industry. For most of those getting started today, it is becoming increasingly difficult to carve out a career - the efforts that would have provided reward and stability in the past are not paying off.

For most creators and consumers, music is made as a product but consumed as a service. However, music works either as a product or a service, not both - and it is working much better as a service for consumers than it is as a product for creators.

For creators, the numbers do not add up, and yet, the supply keeps coming. Ultimately, if the incentives are not there, then the industry cannot provide sustainability and longevity for artists, only a stream of content for consumers.

Where are the incentives? 

If you are competing against 120,000 new tracks a day as an emerging artist, making music is not enough. Primarily, you are incentivised to make music that caters to the platform’s need to acquire users, which means conforming to the algorithms that define playlists and viral trends. The result is the trend of shorter songs and as many songwriters as it takes to design a track that thrives in the system. 

If that works, maybe there is hope in developing consistent income. However, in an era of fragmentation, it is getting harder to generate the mass audience need to earn meaningful streaming income. Perhaps that is why the Arctic Monkeys, a rock band formed in 2002, are the youngest headliners on this year’s bill of the UK’s biggest festival. 

The reality is that the incentives the music industry provides artists today are not delivering enough demand for today's artists, and especially not enough that makes it worth usurping the previous generation of superstars.

Is there a crisis on the horizon?

This is not a crisis, but it could be. Streaming has helped the industry grow after its collapse in the last crisis. However, it is somewhat paradoxical that an industry on the decline managed to produce the stars and headliners of today, and yet an industry that has globally grown for a decade is struggling to deliver anything that it deems worthy of replacing them. 

Where this risks becoming a crisis is if the demand for a new generation of artists drops to the point that recorded music loses cultural relevance. The era of music as a service could very well be approaching this point. Developments such as generative AI threaten to flood supply to a point that there is no consumer demand to pay for music beyond its floor value. 

When there is too much of any product without sufficient enough differentiation, why would anyone pay more than they need to for something so ubiquitous? Where there is a limitless supply of any product entering a system, consumers get bored and confused by the endless amount of variety. If music is produced like tap water then it will be treated with the same apathy and thoughtlessness, from both an emotional and commercial perspective, unless something changes.

A bottled water industry

The answer to the looming problems of the tap water music industry is to turn it into a bottled water industry. What bottled water has done is turned the ubiquity of water into something worth choosing to pay for. The music industry needs to find a way to get consumers to make this choice.

Whilst chemically, it’s all H2O in a container, by emphasising the source, the narrative, the pH etc, and creating eye-catching branding, bottled water has created a market worth hundreds of billions of dollars in value. Bottled water is all about the expression and commercialisation of the brand identity. Does music have a pH equivalent? What about an equivalent to a source in a mountain or a volcano?

When a high-end hotel welcomes its guests, it offers them Voss or Fiji or Evian - and they are happy to pay the price for it. Yet, consumers spend the same amount to listen to albums made by generational geniuses as they do for the sound of rain.

If there is no extra value for music that comes with a premium context (i.e., artists versus AI-generated music), why should any artist strive to offer more? No premium water bottled brand would accept the price of tap water for its products and yet the music industry is happy to. 

Music as a service is not sustainable for the music industry, not because it fails to provide value to the consumer but because it fails to provide incentives for artists. Music must be turned into a product again if it is to continue its growth and provide incentives for artists to be more than suppliers of content.

However, this is not about building a product around the content (i.e. the music) or maximising the growth of physical products like vinyl and cassettes. Artist brands need to be built to sell music instead of using music to build brands (particularly when music is used to build the platform’s brand more than the artist’s). Identity is the product, and without being wrapped in that packaging, the future music is only going to be tap water.

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