Record-business profits peaked 20 years ago, just before Napster and other file-sharing sites turned their world upside down. There have been occasional surges, but the future of the Compact Disc looks bleak, and while income from downloaded files is still climbing, the shift of profitability from à la carte music sales to unlimited streaming on demand seems inevitable. The realignment is already underway—the vast majority of today's music listeners, young and old, haven't bought a CD, file, or LP in years. It pains me to admit it, but after hearing, at the 2014 Midem music exhibition, a presentation by Marc Geiger, of William Morris Endeavors, I was convinced that music-streaming companies are poised to reboot the industry. If Geiger's predictions are accurate, the music business will be more profitable than ever, and swell to $100 billion in 20 years or less (see www.youtube.com/watch?v=bcNsAR_FM5M&feature=share).
Long before that, the market for physical media—music, movies, books, publications—will have shrunk to a size you could drown in a bathtub. Yes, oldsters and a smattering of hipsters will keep the faith, because we like to hold stuff in our hands. But long before that, everyone else will have jumped ship. It's already happening—a lot of kids use YouTube as their primary source of music. Pandora has 75 million "active" listeners, though only a small portion of them are paying customers. And at only $10/month, those folks are still spending a lot more on music than does the average person.
Those metrics are hard to swallow. I buy four or five new CDs/LPs a month, and lots more used albums. That may be a little more than the average audiophile spends on music, but most of my non-audiophile pals haven't bought music in a very long time. Ask your friends and relatives about their buying habits, then see if they use music-streaming services, podcasts, YouTube, or Internet radio.
And it's not just "civilians" who are moving on. A recording-engineer friend recently confessed that he's now a Spotify subscriber and, to reduce clutter, is selling off his entire collection of LPs and CDs. When he swore he'd never buy another album, I at first thought he was just trying to get a rise out of me. He was dead serious. He's tired of the game—he just wants to enjoy music without it being the central focus of his life. He's checked out.
I won't follow his example. I love having a large collection of LPs, CDs, SACDs, and DVD-Audio discs, and the memories that arise every time I play one of them. They've been a constant in my life, some for more than 50 years, and I can't imagine why I'd ever cut them loose. I have free subscriptions to Spotify and Pandora, but they don't do a lot for me. I find new music by hanging out in record stores and listening to podcasts, such as WNYC's New Sounds and NPR's All Songs Considered.
When I find music I like, I buy it. Sometimes, I make a bad call. Boo-hoo—that's the way it goes. Not every expensive restaurant meal satisfies, and sometimes you're going to see a movie or show that sucks. I'm willing to keep buying music, because I want to help support musicians when I can. Maybe, just maybe, if more folks did that, more bands would squeeze out albums faster than at today's pace of one every three or four years.
Yet I have to admit that Geiger's presentation alerted me to the very real possibility of a paradigm shift. He thinks that, in the long run, Google or Apple will crush Spotify, Pandora, and Beats Music in the streaming game. A couple of giants calling the shots in the music world is a scary thought, but Geiger projects one, two, even three billion users worldwide in 10 years. Even with "only" a half-billion streaming customers paying $10/month, that's $60 billion a year from streamed music.
Ten years is not so far away. Yes, some portion of the subscriber base will opt for free services supported by advertising, but even so—when the streaming services have hundreds of millions of users, the ad income will be substantial. It's still very early in the streaming game—the big changes and corporate moves are still at least a few years away.
Stereophile readers tend to have large music collections, but there's no reason we can't take advantage of what the streaming services will offer. It's hard to resist the temptations of 10 or 20 million tracks at your beck and call. Geiger didn't mention high-resolution streaming, but I'd expect that premium-price subscription rates will provide additional income—it's bound to happen. In France, Qobuz.com already offers 16-bit/44.1kHz FLAC streaming, and bona-fide hi-rez streams can't be too far away. Would you pay $30–$40/month for access to a vast library of hi-rez recordings? To download a few hi-rez albums, that price might be really compelling.
In the near future, there may come a day when some of your favorite music won't be offered on physical formats or as downloads: If you want to hear what's new, you'll have to subscribe. That's not so different from how it works with some TV shows today: If you want to see House of Cards or Orange Is the New Black when they are new, you have to pony up for a Netflix subscription.
And the future of vinyl? Before I give up my LPs, Marc Geiger will to have to pry them from my cold, dead fingers. But I don't think it will come to that. From the vantage point of mid-2014, it's looking as if the LP will be the last surviving physical format. It's the one you can't get for "free." Of course, Geiger's forecasts may turn out to be wildly off the mark. The worst-case scenario is that we'd be back to the status quo. I could live with that.—Steve Guttenberg
