It's amazing that the music business is standing at all after two decades of unprecedented disruption. Like some sad series of sadistic science fair experiments, the industry has been deconstructed & reconstructed only to be deconstructed & reconstructed once more as warring parties have sought to remake the industry in their own image. Executives. Pirates. Hustlers. Artists. Tech bros. Fandoms. Everyone's jockeying for their own unique interests with little concern for the interests of anyone else. And the list of winners & losers is constantly changing.

Napster. The iPod. Digital downloads. Ringtones. Streaming. Satellite radio. Digital recording. The demise of the traditional recording studio. The rise of the summer festival. A pandemic-induced, industry-wide hiatus of all touring. Soundcloud. Rebecca Black. TikTok. Bandcamp. Patreon. The resurgence of vinyl. The death of the CD. A hologram of Tupac performing at Coachella. Non-fungible tokens.

The disruption has been historic. And yet, as chaotic as these decades have been, one thing has been true from the start: those creating the change have thrived & those reacting to the change have suffered. And this will likely remain true for some time.

The story of the industry's fraught 21st century can be read many ways, depending on your perspective. A Greek tragedy. A David vs Goliath story. A lawless western. A technological dystopia. And yet, no matter the framing, the songs remain & the story continues to unfold. Dramatic events still hover above the horizon as we continue to work through what it means to be physical in an increasingly digital world & as we determine what fairness means in a society that has plenty.

The rest of the story is ours to write, collectively. But if we're to craft a happily ever after for all characters involved, it's essential that we re-examine the previous chapters with all perspectives in mind. We must consider how we got here before we may consider where we're going.

At its peak in 2001, the recorded music business was a $23b industry. The five major labels were on a buying frenzy, scooping up every last independent label in a race for market share domination. Sales records were being smashed as boy bands, assembled from focus group feedback like Frankenstein's monster, debuted big budget music videos on mTV's kingmaker, Total Request Live, to rapturous applause-light response. Labels bought plays on corporate radio for genre-busting crossover acts like Limp Bizkit, marketed nationwide to the lowest-common-denominator across inescapably uniform playlists. And ticket prices were inflating like helium balloons as Ticketmaster built its monopoly venue-by-venue. If you were a business man in the music business, things were great. A handful of executives now had a stranglehold on every major aspect of the business & the dollars were pouring in by the truckload. But if you were a music fan, things were getting pretty bleak.

It's not as if hyper-commercialization was anything new. It's just that there was previously a way of surfacing disruptive artists every so often in order to keep things from getting too stale. When the rock bands of the late '70s became too self-indulgent, the Ramones & the NY punk scene came along with a new energy that made them seem practically archaic. When the late '80s metal bands became too fashion-focused, Nirvana & the Seattle grunge scene hit & reset our preferences. And at the turn of the century it was time for another reset. It was time for someone to swoop in & save us from abominations like Creed & the Backstreet Boys & Nelly. But corporate consolidation had dried up all of the avenues through which our saviors might have made themselves known.

Traditionally, industry men like then-Universal Music CEO Doug Morris would scour accounting records for regional hits on the rationale that any regional hit would be a national hit, provided the exposure. And this was generally a safe bet. But by the end of the '90s, there was no longer such a thing as a regional hit. All of the radio stations were playing the same songs. All of the major venues were booking the same national acts. It had become a zero sum game.

So the industry, by necessity as much as design, had pivoted from relying on the taste of regional audiences toward relying on the paid insight of marketing consultants & focus groups & on the contributions of special effects teams & stylists. This allowed them to craft new stars out of dead presidents & exposure. Sometimes that meant spending millions on an act to only sell a few hundred CDs. But other times, they'd hit the jackpot & sell millions of copies in a single week. It was post-organic. And the wins made up for the losses & then some. But as lucrative as it was, it couldn't last. We know from history that there was an appetite for disruption & that the manufactured hysteria of TRL had a shelf life. But if a new sound was going to find its way to music fans' ears, it was going to have to carve an entirely new path through the corporate noise.

Disruption

In mid 1999, a jam band from Boston called Dispatch was schlepping it up & down the east coast in an old Ford Econoline, trying to build up a regional fanbase. Without support from labels or radio, they were forced to do it the old fashioned way, crashing on floors & couches as they tried to get a foothold in the New England college music scene. And they were having some success, drawing hundreds of fans to their Boston shows, but the record labels were entirely disinterested. Whereas mTV & corporate radio peddled slick productions finely tuned for mass consumption, Dispatch's songs sounded like they were written in a dorm room by Dave Matthews fans, largely because they were. It was rough around the edges, but it was something college kids could call their own.

In a sense, it was a rebellion against the hyper-commercialized music they'd all grown up on. And the sing-a-long quality of the songs created at their shows a sense of community that college kids, many on their own for the first time in a new city, were searching for. There was something undeniably populist about what they were doing. And while the industry wouldn't give them the time of day, the music fans of Boston were starting to take notice.

Further north, in Rome, NY, the music industry was preparing to cash in on the 30th anniversary of the Woodstock music festival. They had high hopes of recreating the iconic 1969 event, but it wouldn't all go as planned. They'd put together a line-up of commercially successful but otherwise unrelated acts ranging from Jewel to the Insane Clown Posse, hoping to cast a wide net to sell $150 tickets. And they hoped to further cash in with travel packages from regional towns costing an extra $100, bottled water for $4 (double what Coachella was charging that year), & the opportunity to ride a skateboard or bike on a flat, paved surface for $15. But they were wholly unprepared for the logistical complications of hosting 220,000 kids at an air force base for 3 days.

The July weather was inhospitable, the staff wasn't trained, & the infrastructure was inadequate. Security guards quit by the hundreds, allowing anyone to come & go freely. And a heavy rainstorm on day two coated the makeshift city in mud, making it impossible to identify open sewage that began to flow through the festival site. Light debauchery turned into outright lawlessness, & by the end there were 2 deaths, at least 8 rapes, hundreds of drug overdoses, & thousands of sexual assaults. By Sunday night, the music had become a sideshow. The Red Hot Chili Peppers played on as the event devolved into fires, rioting, & looting, & festivalgoers took their frustrations out on the festival infrastructure & venders' booths.

During the chaos, an attendee briefly took control of the P.A. system. “Woodstock is now under martial law. Anyone here who has a good time will be shot. Anybody with a Woodstock MasterCard will be spared.”

Several hundred state troopers in riot gear finally put an end to the concert early Monday morning, but not before the concert grounds had been torn to pieces. “It was a way of getting back at them,” one concertgoer told Spin Magazine, referring to the price gouging. But it wasn't the end of the rebellion. It was only the beginning.

Later that year, Dispatch was invited to play a Halloween gig at Pomona College in Claremont, California & 1,000 people showed up. More shockingly, they knew all the words to the songs. The band had never toured the west coast. They weren't getting any radio play. They didn't have distribution that would put their CDs in those record stores. But somehow, people were discovering their music. The record labels had spent years developing an iron grip on who was played on the radio, who was covered in Rolling Stone, & who would play events like Woodstock. But as Dr. Ian Malcolm would say, life finds a way. And that way was a file sharing application called Napster.

Napster was released in June of 1999, just weeks before the Woodstock Festival disaster. And that fall, those same students would return to college & begin using Napster to share mp3s over their schools’ high speed internet connections. The music industry would characterize the behavior as continued looting, but many file-sharers would call it payback for concert price gouging, for the destruction of regional radio, & for the overall hyper-commercialization of the times. Music fans were crashing the gates, just as they had done at Woodstock over the summer, only this time there were no police forces to reign them in.

The flood gates had been opened, & music began whizzing across phone lines. This was the start of the digital revolution.

Shawn Fanning, the founder of Napster, appears on the cover of Time Magazine in 2000.

Everything was being shared. Current top 40 hits. Classic songs. Underground artists. Kids were making mix CDs of their favorite hits & listening to that, ad-free, instead of the radio. They were discovering AC/DC, Pink Floyd & Queen for the first time, forcing mallcore fashion shops like Hot Topic to stock classic rock merchandise. And they were also discovering new music that existed outside of channels tightly gatekept by the major labels. Dispatch, Dashboard Confessional, Jack Johnson, Guster. A genre sprang up of rough-edged, earnest, unsophisticated acoustic music that sounded like it was created by the college kids who were trading all of these mp3s. The music industry didn't get it. There were djimbes involved, for Christ's sake. Djimbes don't make for sexy music videos. But these artists were catching fire on the internet, & it was signaling big changes to come.

Dispatch would later play its farewell show in Boston in 2004, the culmination of a career shaped by file-sharing. The outdoor concert drew 110,000 fans, exactly half the attendance of Woodstock '99. Like the record industry before, the city of Boston underestimated the band, sending only 15 cops to control the crowd. When the masses showed up, they called for more back-up, wary of the type of chaos that large crowds can bring. But this crowd was not disgruntled. And the show went off without a hitch.

File-sharing

It didn't take long for the industry to perceive file-sharing as the threat to their profits & they responded by attempting to both shut down the Napster platform & also stake their own claim to the internet. Universal & Sony teamed up to launch Pressplay, built on Microsoft technology, & Warner, BMG, & EMI collaborated on MusicNet, built on Real Networks technology. Both services offered limited catalogs, limited & highly restricted song rentals, & very little interoperability. Pressplay, for instance, allowed users to burn one compact disc per month for portability, but limited those discs to only one song per artist. These arbitrary limitations communicated a growing hostility toward music fans, & the confusion regarding which artists were signed to which labels & therefore would be available on which service destined these platforms to fail, wasting tens of millions of dollars in development. They would successfully shut down Napster in late 2002, but their inability to launch a viable replacement just left the door open to new modes of piracy that would be even more difficult to stop.

Napster's vulnerability to litigation was that it was built around a centralized network of servers that users would connect to. These servers could all be turned off, severing the connections & taking the platform offline. But decentralized peer-to-peer apps like KaZaA, Morpheus, & Limewire directly connected users to one another, meaning there were no servers to shut down. You could prevent the company from distributing the software to new users, but to shut down the network, you'd have to remove the software from every single user's computer. Bit torrent-powered services, too, would prove difficult to combat due to the legal separation between the software itself & the tracker websites, which indexed available content. The software couldn't be legally prevented from distribution because it didn't itself point anyone to any copyrighted material. And while a tracker website could be taken down, it might immediately pop back up on a new server in a new country, available globally but only subject to local copyright laws. Many trackers had contingency plans in place, expecting their sites to be taken down repeatedly. And with enough persistence, a bit torrent tracker site like the Pirate Bay can exist in perpetuity.

The industry therefore felt that its only recourse was to sue music fans in order to scare them away from file sharing apps. Metallica drummer Lars Ulrich volunteered to be the face of this effort, announcing at a press conference that he was ratting out thousands of Napster users who were sharing Metallica songs after their single I Disappear leaked onto the service prior to its official release. This is widely regarded as the day Lars, who had recently taken an interest in flipping paintings for tens of millions of dollars, assumed the role of King Asshat of Heavy Metal. But this antagonistic behavior wasn't new for Metallica. For years the band had quietly been sending cease & desist letters to online servers that facilitated the exchange of live Metallica recordings. This was despite the fact that they, like Dispatch, had not found their fame through mTV or radio, but through relentless touring & buzz created by the heavy metal tape trading circuit. If any band should see the value of file sharing, it should've been Metallica. Dispatch was essentially following in their footsteps. But the business of music had blinded Lars to his own hypocrisy.

The music industry's lawsuits, most of which were settled for a few thousand dollars each, turned out to be an ineffective deterrent & a public relations disaster. The lawsuits cost far more to litigate than they won in settlements & damages, & the industry decided to stop the practice altogether in 2008. But in many ways, the battle over piracy was only obscuring an even bigger problem, which was the end of the bundled music era.

The rise of Apple

Apple CEO Steve Jobs poses with the device that destroyed the CD, the iPod, in 2004.

A little-known fact is that CDs still sold well during the Napster era. At-home CD burners were still prohibitively expensive for most music fans, so the MP3s that were downloaded were mostly listened on the computer where the downloading took place. In order to listen to music in their Discmans or in their car, music fans still had to buy CDs. But when the iPod came out in 2001, that changed. All of the sudden, mp3s had portability, the key feature of the CD. And not only that, better portability, with hundreds of songs fitting in a pocket-sized device.

The music business had been abusive to artists & to fans for decades, but Apple was now beating them at their own game. Apple had triggered the decline of the CD & stood by while the industry began to implode. Then, using the iPod's market share as leverage, they talked the industry into backing their iTunes digital music store in 2003.

On paper, the iTunes store looked like a godsend. The software's integration with the market-leading iPod would provide a compelling alternative to piracy, & the iTunes store itself would provide a new marketing channel for the labels. Print media & radio were both experiencing audience decline & mTV was pivoting away from music & toward reality content, so having this direct line to music fans could be the silver bullet to all of their problems. It's just that no one realized how few songs consumers would buy when they were no longer forced to purchase a bundle of 12 songs at a time.

The music business had developed a growing reputation throughout the '90s for bundling one marketable single with ten or twelve mediocre tracks & charging fans $15 for the whole package. If you wanted to own Meredith Brooks' provocative radio smash Bitch you'd also have to purchase eleven songs that are "considerably calmer and aimed at adult alternative stations." If you'd like the Primitive Radio Gods' Standing Outside a Broken Phonebooth with Money in My Hand, you'd be let down to learn that "there is precious little on the album to hold the interest of anyone drawn in by the lead single." If you wanted Chumbawumba's pub anthem Tubthumping, you'd learn that "there isn't anything quite as good on the remainder of [the] album." The labels were offering one good song, but were charging fans for all twelve tracks. The investment was going into the single, including elaborate music videos & pay-for-play radio campaigns, & fans were being burned by the full product. The value of the CD, in other words, was inflated by as much as 90%.

Everyone had been living high on the hog during the CD era. The labels were swimming in cash. Songwriters only had to fight for inclusion... the songwriter with the worst song on the album made just as much as the songwriter who wrote the hit. And artists, even if their album flopped, could count on a princely advance thanks to the enormous profitability of their successful peers. But when music fans are given the option to download the single & leave the rest, the whole system crumbles like a house of cards.

Worsening the decline was that music fans who pirated music turned out not to be interested in legal downloads. While the industry had solved the problem of a single online store for all digital downloads, the restrictive Digital Rights Management prevented them from being a compelling alternative to illegally downloaded MP3s. So the music fans adopting iTunes downloads were primarily CD buyers--the industry's primary revenue source--adopting the cheaper & more convenient technology. The impact was so drastic that the Billboard music charts changed their sales metric to "album equivalent units," which would equate 10 single downloads to an album sale.

Fig 1. While digital download revenue grew by $4b between 2001 & 2013, physical sales decreased by $15b. Source: IFPI Global Music Report.

Over time, digital downloads would grow to become a $4b category, but the decline in CD sales revenue over that same time period was $15b. The industry, thanks to the iPod & the iTunes music store, was experiencing an ever worsening revenue crisis while Apple's stock price grew 50x from $.50 to $25 per share. The major labels were clearly no longer the apex predator in the music business; this had become Apple's smooth-talking CEO, Steve Jobs. And the moves that Apple would make in the coming years would shine a light on exactly how ill-prepared the industry was to navigate this new digital world.

Then Universal-CEO Doug Morris would later open up about this disruption to Wired Magazine. "That's a misconception writers make all the time," he said, "that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?... We didn't know who to hire. I wouldn't be able to recognize a good technology person--anyone with a good bullshit story would have gotten past me."

The industry was evolving, whether the industry liked it or not. But the new distribution model was only the tip of a digital iceberg.

Democratization & the digital revolution

In 1998, influential independent Atlanta rock station WNNX/99X started spinning Freak of the Week, a track independently released by local artists the Marvelous 3. This ignited a bidding war from labels, eventually won by Elektra, which wouldn't be significant except that it was recorded at singer Butch Walker's home on a second-hand Pro Tools digital recording rig with just a handful of microphones & preamps. That this track was virtually indistinguishable from other songs on the radio--many recorded at top-dollar recording studios--signaled an upending of the recording ecosystem.

Today, it's not uncommon for a home recording to become a hit. Billie Eilish's smash 2019 record was tracked in her brother's bedroom, & Lil Nas X's TikTok sensation Old Town Road was recorded in his bedroom closet. But prior to the late '90s, releasing a home recording was an aesthetic choice made by artists like Bruce Springsteen who were trying to defy the pop mainstream by releasing something gritty & personal. Freak of the Week represented the convergence of independent artistry & radio-quality production.

Throughout the 2000s, the quality of home recording equipment continued to rise & the prices continued to drop, but the flood of new music had nowhere to go. Artists like Dispatch & Jack Johnson & Dashboard Confessional had found fame through the internet when there was very little competition. But that window would close as quickly as it opened with mainstream users & mainstream taste flooding the file-sharing platforms. An entirely new media ecosystem would necessarily materialize to provide structure around the flood of new content.

First it was Fluxblog, then others. Stereogum, Said the Gramophone, Gorilla Vs. Bear, Aquarium Drunkard. Music fans with no incentive except to share their taste & build community became the new tastemakers. It no longer took a big budget music video to get noticed, only a glowing review on an influential blog. Writers would sift through their inbox for "the next big thing," & then blog that band onto everyone's radar the following day. Slowly, Pitchfork & AbsolutePunk began gaining readers. And this new media ecosphere would shape the sound of popular music for the next decade. Acts like Modest Mouse & Death Cab For Cutie, who were previously lucky to get college radio rotation, would elbow their way into a Top 40 that looked nothing like a Top 40 of 10 years prior. Iron & Wine, Band of Horses, & the Black Keys would provide a soundtrack to national tv ads. And third wave emo bands like Taking Back Sunday would headline arenas.

Music fans had once been entirely cut out of this process, replaced by executives who simply told them what they should like. But through the wonders of the internet they had forced their way back in & were remaking the commercial music landscape in their own image.

Meanwhile, the major labels were bleeding revenue & were laying off employees by the hundreds just to stay afloat. Without the funds or manpower to develop new acts, they sought out ready-made success stories. This meant signing Disney stars like Hannah Montana & Ariana Grande or Hollywood tabloid favorites like Paris Hilton & Lindsay Lohan. But it also meant a newfound reliance on engagement metrics. All of the sudden, a band's MySpace & PureVolume play counts became the only criteria that mattered. This was the era of blog buzz. And this seeded a new pipeline from blogs to indie labels to the majors.

In may ways, this was the democratized industry the internet had promised. Self-publishing had bulldozed the old media gates & erected entirely new ones, guarded by fierce comment sections that record labels dared not cross. Regional scenes like Omaha, Nebraska were again getting national attention. Early file-sharing favorites like Dashboard Confessional were getting mainstream exposure on blockbuster movie soundtracks & buzzy PureVolume favorites like Panic! at the Disco were getting record deals without having played a single show. New indie labels were upstreaming their most popular artists to major labels, creating the cashflow to sign more acts & offer homes to the flood of new artists enabled by digital recording. And the advertising industry had stepped in to offer licensing paydays to indie artists for the use of their songs.

The only problem was that revenue kept falling as consumers continued to abandon the CD format.

The major labels negotiated ever more frugal deals, demanding cuts of touring revenue, merchandise sales, & licensing deals, which previously went directly to artists. And independent artists abandoned the idea of selling music altogether, relying on grueling tour schedules to make end's meat. Gone were the studio sessions that lasted months on end. Gone were the million dollar marketing budgets. And yet artists had more tools at their disposal than ever before.

Benny Sings used his recording budget to build a small home studio to self-record his third album, At Home. OK Go created a viral smash with their thrifty DIY treadmill video for Here It Goes Again. And They Might Be Giants, having shrewdly retained their digital distribution rights, launched their own online store for downloads. By this point, questions were being raised about whether or not the record labels served any purpose at all in the digital era.

Rolling Stone declares that the future belongs to Radiohead in 2008.

Radiohead was the first major band to sidestep the labels completely, abandoning EMI to self-release In Rainbows in 2007. "I like the people at our record company," singer Thom Yorke told Time magazine, "but the time is at hand when you have to ask why anyone needs one. And, yes, it probably would give us some perverse pleasure to say 'fuck you' to this decaying business model." Released through their own website, inrainbows.com, the pay-what-you-want pre-release earned the band more than they'd earned the entire album cycle for their previous release, Hail to the Thief, & the profits from the full release (which included the top-selling vinyl release of 2008 & a deluxe box set) dwarfed what they had expected to make had they allowed a label to release the album.

Of course, Radiohead was successful because they had years of major label marketing power behind their brand. But something about the pay-what-you-want model clearly resonated with fans. It was the first good faith-gesture that fans had seen in a long time, & the effort to monetize the mob, rather than to monetize individual fans, seemed to showcase an understanding of changing consumption habits. Even if you give away thousands of mp3s for free, after all, there's still a chance that some of those listeners might fall in love with the album & eventually buy the $80 deluxe box set. This break from the antagonist relationship between the industry & its fans seemed like it might represent the dawn of a new direct-to-fan era for the industry. Services like YouTube, Kickstarter, Patreon, & Bandcamp would eventually come along to help facilitate these relationships, begging the question that if you can crowdfund an album yourself, record it yourself, distribute it yourself, record a video on your iPhone, upload it to YouTube, & promote it through the blogosphere, what do you even need a label for? How do you justify the creative & financial interference?

The various necessary aspects of a new digital-native music industry had all been proven out individually, & it seemed only a matter of time before someone assembled all of those pieces into one unified strategy. But just as the bootstrapping, direct-to-fan mentality began to take hold, a music streaming start-up emerged out of Sweden with an entirely different vision for the industry.