The coming long-tail cull

When governments plan to introduce controversial new policies, they prepare the ground in advance (dropping hints in speeches, privately briefing journalists, etc.), so that by the time the new policy finally arrives, it does not feel quite so controversial. A similar process is currently playing out in the music business. The biggest major label executives are starting to seed a narrative into the marketplace about the potentially corrosive effect that the rapidly-growing long-tail of music and creators is having on consumers’ music-streaming experiences. Of course, it also happens to dent major label market share too, but the issue is not quite as clear cut as it might first appear.

There are three main industry constituents that are at risk from the fattening of the long tail:

  1. Major labels and their artists
  2. Consumers
  3. Long-tail creators

Let’s look at each of those in turn:

1 – Major labels

The first on the list is the most obvious, and also the easiest, to demonstrate. Over the course of the five years from 2016 to 2021, the majors grew recorded music revenue by 71%, which is impressive enough, except that artists direct (i.e., artists who distribute without record labels) grew revenues by 318% over the same period. Consequently, artists direct increased global market share from 2.3% to 5.3% while majors went from 68.8% to 65.5%. Meanwhile, the top 10 and top 100 tracks continue to represent an ever smaller share of all streaming. The very least that can be said is that majors and their artists have collectively grown more slowly than long-tail creators, and at the most, the case could be made that long-tail creators have eaten into major’s growth.

2 – Consumers

This one is far harder to make a definitive case either for or against. Consumers tend not to categorise music anywhere near as precisely as the music business. For example, only a third of consumers say they mainly listen to older music, despite industry stats showing that catalogue consumption dominates. Most consumers do not consider music to be ‘old’ as soon as the music business does. So, imagine how difficult it would be for consumers to delineate ‘what is long tail?’ They may say in surveys ‘music isn’t as good as it used to be’, but they could equally be referring to majors’ music as the long tail. So we are in the realms of measuring second-order effects (are consumers disengaging from streaming? Not yet, but they might) and of making logical assumptions. If consumers consistently hear poorer quality music, then it is reasonable to assume that their satisfaction would decline. However, DSP algorithms push music that matches users’ tastes, and there is so much high quality in the long tail that there is no particular reason to assume that more long-tail consumption should inherently equate to an increase in consumption of poorer-quality music. And do not forget, consumers have demonstrated plenty of tolerance for ‘average’ music in mood and activity playlists.

3 – Long-tail creators

It may sound oxymoronic to suggest that long-tail creators could be hurt by the rise of the long tail. But, as Will Page put it, the rise of the long tail means that “there are more mouths to feed”. The fractionalised nature of streaming royalties means that the more long-tail creators there are, the lower per-stream counts there are and, even more important, the harder it is to cut through. The irony is that it is easier to make the case that the long tail is eating itself than it is to establish causality between its rise and majors’ loss of share.

Divide and conquer

Of course, the missing constituency is the DSPs themselves, but they do not warrant a place here, because they are the ones with the power to scale up or down long-tail consumption via their algorithms. It serves DSPs to have listening fragment to a degree as it lessens the share and, therefore, the power of any individual label. But if DSPs ever thought they were pushing too far, then they would rein in the algorithms.

Where next?

So where does all this leave us? In the ‘do nothing’ scenario, listening continues to splinter, majors lose more share, long-tail creators find it harder to cut through and earn while consumers may (or may not) see any meaningful change to their listening experiences. In short, the head loses out, as does the long tail, while the market further consolidates around the ‘body’ of streaming catalogue (which, by the way, the majors are already key players in and could easily ramp up their focus – as WMG is already doing). 

The ‘do something’ options fall into two key groups:

  1. Gate / limit consumer access to catalogue
  2. Gate / limit creator access to royalties

There are many ways to achieve the first (preventing long-tail music getting onto DSP catalogues; lowering long-tail priority in algorithms; creating a separate tier of catalogue; deprioritising / blocking it from search and discovery, etc.). All of this risks looking very much like the establishment trying to prevent the next generation of creator and industry breaking through. That is without even considering the moral dilemmas of choosing who is ‘in’ and who is ‘out’.

Option two, however, could be more altruistic than it looks. For an enthusiast hobbyist with a few hundred streams, royalties are going to be little more than a novelty. But for a hard-working, self-releasing singer / songwriter with tens of thousands of streams, the hundreds of dollars are already important. Let’s consider that there was a pay-out threshold, where 1,000 annual streams are the point at which royalties are paid, with all the royalties associated with the sub-1,000 stream artists being distributed between all other artists. Suddenly, those slightly more established long-tail artists can earn more income. 

None of these options are without challenges and moral dilemmas. But the direction of travel appears to be towards something being ‘done’ about the long tail. If that really does end up having to happen, then let us at least try to ensure that the changes benefit long-tail artists too, not just the superstars.

8 thoughts on “The coming long-tail cull

  1. A random thought, but are there any artists in the world powerful enough that they could ‘gate’ their content on a DSP as a premium offering? So you could only get the artist on Spotify, for example, if you paid an extra $1 a month and that dollar going exclusively to the artist. Content wouldn’t be restricted elsewhere so it would require some consumer inertia and there are relevance/discovery risks for the artist, but some fans might choose to do this to ‘value’ the artist and prevent them having to sign-up to another service elsewhere. Like a ‘YouTube for discovery, Apple Music for quality home listening’ model. Could you do this with a Dylan? Adele? BTS? Could Amazon Prime sign an artist exclusively by offering to pay out premium royalties. Pink Floyd?
    Like I say, random thought.

  2. By ‘long-tail’ you mean what exactly?
    Is ‘long-tail’ the same as ‘Catalogue’, ie tracks on DSPs that have been there for X months/years?
    Or more correctly tracks that were recorded Y years ago, whether on DSPs for that period (for obvious reasons given the youthfulness of ‘streaming’ platforms) or not.
    So does ‘long-tail’ relate to the age of the track in this scenario.

    I’m confused by the seeming distinction between artists with major label-distributed tracks and long-tail creators. As if somehow major label artists aren’t long-tail creators, assuming long-tail = catalogue.

  3. I think the definition of long-tail here is the mass of largely unpromoted music that’s uploaded to DSPs but has super low engagement rates.

  4. Good post, I was making that argument to my institutional equity clients that the easy way for the majors to achieve their goal is to tell the DSP to only count market shares on streams above 1k. But that is a problem for the DSP as they pay 52% on average for recorded royalties but the majors get more than 52% and the indies less. So putting a 1k threshold would result in more payments in recorded royalties for the DSPs. They won’t accept this. So the 1k threshold solution is neat but has financial consequences which means it is unlikely to happen…

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