The writers, musicians, and engineers who make the recordings, the people who design and build the equipment we listen to music on, the distributors, and the consumers who buy the music, are all in this together: "This" being the basic human desire to listen to music that soothes us, excites us, makes us think and makes us feel.
It's not news that the music industry is a shell of its former self – if we only define the music industry as the record labels. Even though the major labels would have you believe otherwise, the music industry is really doing quite well – it’s just different and not as dependent on the labels as it once was.
But are things really all that different? Has music gotten too expensive? Or, has the feeling among some that music should be free destroyed the market for music?
In 2019, global revenue from recorded music was $18.9 billion dollars, with streaming making up 37% of that revenue. Streaming also saw a 34% growth from 2018 to 2019, so the portion of income from streaming is only going to grow.
The chart below shows RIAA revenue data for the years 1974 to 2019 in billions of dollars. Keep in mind, from 1994 to 2001 or so, everyone was replacing perfectly good vinyl with CD, so those years show an artificial bump in revenue the major labels assumed would never go away. Another interesting thing to look at is 2014, which is about when the streaming changeover really took hold. However, by 2019 things appear to have bounced back nicely and are even slightly ahead of where we might expect revenues to be based on the historical curve. That’s all good news for the future.
As a human necessity it has tremendous emotional value but how does its dollar value stack up with other necessities?
Let's Start With Gasoline
From 1950 to 1959, the average price of a gallon of gas in the U.S. was approximately $0.21/gallon. For comparison, adjusted for inflation, a gallon of gas in 1954 would cost $1.86 today (plus a guy in a nifty uniform would come out and wash your windshield and check your oil).
In 1974 a gallon of gas was $0.36 ($1.74 in today's dollars)
In 1979 a gallon of gas was $0.99 ($3.25 in today's dollars)
In 2000 a gallon of gas was $1.65 ($2.28 in today's dollars)
The last time I filled up it cost me $2.10 ($3.49 in today's dollars or $0.40 in 1974!!). It’s safe to say gasoline doesn’t really cost much more than it did forty years ago.
Keep in mind the US was in the midst of a horrible recession with a tremendous inflation rate in 1974.
In 1974 a dozen eggs would run you about $0.78 ($4.09 in 2020 dollars)
In 1984 another dozen eggs would run you about $1.01 ($2.51 in 2020 dollars)
If you were still buying eggs in 2004, they were costing you about $1.75 a dozen ($2.40 today)
We bought a dozen eggs last week and paid $1.61 (or $1.18 in 1974 dollars)
Now Let's Talk About Water
In 1974 water was free. Or to be picky, about $0.002 per gallon from your faucet. Being the most abundant thing on Earth, water in 1984 and 1994 was pretty much the same price as it was in 1974. Today I can buy a 1-liter bottle of a water named after a South Pacific island for $2.19.
If we do the math, that $2.19 liter of water figures out to cost the thirsty consumer about $0.57 per gallon. Not free, but not all that expensive either.
Here’s the Point: The Cost of Music
5 RPM single in 1964 = $0.49 ($3.77 in today's dollars)
45 RPM single in 1974 = $0.69 ($3.33 in today's dollars)
45 RPM single in 1984 = $1.29 ($2.96 in today's dollars)
CD single in 1994 = $1.99 ($3.20 in today's dollars)
MP3 single in 2014 = $.99 or more than 3 times less than in 1964
Vinyl album prices:
Average retail price of a vinyl album in 1974: $4.99 ($26.18 in today’s dollars)
Average retail price of a CD in 1990: $19.98 (or $39.54 today or $52.97 in 1974!)
Average retail price of a FLAC high-resolution download with liner notes: $24.98 (or $4.76 in 1974 dollars)
Granted, with a download you don’t get the physical product, but if that’s what you really want you have the option to go buy the physical product for about the same price – it’s a great time to be a music fan!
As far as live music goes, in college I had second row seats to Van Halen at Asbury Park Convention Hall and the ticket cost me $9.50 (I have the stub), which I thought was outrageous for a band only on its second U.S. tour. That $9.50 would run me $33.85 today, which I probably wouldn't complain about for the David Lee Roth version, but still might have to think twice about for the Sammy Hagar version.
Last year I wanted to see Elton John. A pair of tickets high up on the other side of the arena would have set me back $340.00 each. We’ve seen Elton John like eight times and although he is very good, I don’t think he’s $680 good. We bought a bottle of wine and stayed home and listened to his early good stuff and saved $660 without factoring in parking and a couple of $12 beers. Although I don’t remember what I paid to see him the first time I saw him (which I think was around 1980), by comparison those two tickets would have cost me (a broke college student with few prospects and crappy car) $2134.71. Live music is where the inflation is!
I recently had a discussion with a musician of some renown who told me something a fan had recently said to him: "I support you, I buy your albums, I don't steal them," as if the fan is performing some heroic, valiant act by purchasing things he is consuming and enjoying. Pirated music has always been with us, but the difference today is it seems maybe it’s a little easier to rationalize being a pirate now. Regardless of opinion, if musicians and songwriters don’t get paid for their work, they won’t be able to afford to write and perform the songs we rely on to get through the journey.
It may seem like only a few pop stars are making any reasonable money from their music, but that’s really no different than it’s ever been. For everyone Elton John there has always been between 500 and 75,000 equally talented piano players we’ve never heard of. There have always been a few acts at the top of the pyramid and thousands of other acts with small or niche audiences who are able to survive. Of course, there are probably fewer slots open for mega-stars as there once was, but who’s fault is that exactly? Certainly not the fans’ fault.
Changes in technology have caused a lot of disruption in the music industry, but things are not as dire as we all thought they were five years ago. Once the streaming services start to turn a profit, things will straighten out for the artists. The top-tier services are new and are barely making getting by so we still have a few years to go before things become equitable again. Starting up a streaming service costs a ton of money, money that we the consumer pay in order for the streaming service – and therefore the artists we stream – to become financially viable.
So, contrary to conventional wisdom, music has not lost significant monetary value. In fact, it’s kind of kept pace with other essentials. It’s just that we’re in a time of tremendous change – change that is really been a boon for the average music fan.