Psychokiller: the Tech Revolution in the Music Industry

tl;dr: the past 25 years of the music industry are a great case study about how tech disrupts businesses. David Byrne of the Talking Heads is a great guide

For those of us who remember Napster and its various derivatives (LimeWire, BearShare, etc.) we know that music was one of the first “mainstream” industries suffering from obvious, Internet-led disruption.

That’s why a study of the history of the music business can be illuminating. Plus, everyone comes in contact with music, so we are not talking about the B2B market for jet engine reselling (I met a guy on a plane once who does this).

As I shared in How music can help us understand blockchain I’m listening to David Byrne’s book, How Music Works.

Byrne is best known as the lead singer for the Talking Heads. You may not know the group, but you might know Psychokiller and Burning Down the House.

The first part of the book was much more about the creative process associated with music. I’ve only recently begun to take piano lessons and am respectable about regular practice.

But, I’m a long way from being a maestro. His explanations of the components of music were helpful for me.

But the second part of the book, I was totally in my wheelhouse and Byrne’s perspective of the industry over the past 50 years, which he knows as well as anyone, is fantastic. Plus, he is extremely transparent about the economics of the business, using his own numbers. So, you get a real sense for how artists-even the top ones- are not making a lot of money in the business.

And this is despite some serious, structural changes to the business over that time.

The Democratization of Music Production Tech
One of the big changes he discusses, which is the result of the microprocessor’s invention, is how the technology associated with a recording studio has been compressed down into his laptop.

You’ve probably seen the pictures of “all the devices that a phone has replaced”

Well, the same thing has happened in the music industry.

It used to cost thousands of dollars (or more) to get an entire band into a studio and lay down tracks.

Now, each member of the band, irregardless of geographic location can asynchronously create their part of the music.

The reduction in cost is orders of magnitude.

This means, of course, that you don’t need a record deal to create a record. Recording studios used to be protected by the gatekeeper music companies.

Now, recording studios have been decentralized.

The Democratization of Music Distribution
First, Napster and the others. Then file sharing like BitTorrent. Today, YouTube. Anyone can get a piece of music out there for basically no cost. That was previously impossible.

Of course, we’ve all seen the rise of iTunes and the online music business in the last 10-15 years. So, in some respects, the distribution has somewhat re-centralized from the music industry and big record stores to Apple, Spotify, etc.

Still, we also know that an act like Radiohead or Imogen Heap can distribute directly to fans without intermediaries. And the power of artists was on display during last year’s Taylor Swift vs. Spotify fight.

These are all new phenomena.

Interestingly enough, the percentage that today’s middlemen take (30%) is the same as the middlemen of yesteryear. Even though one is digital, one is analog.

How Context Impacts Music
One particularly interesting point that Byrne made was how context can have an impact the creation of music.

For example, Johann Sebastian Bach composed much of his music with the church organs of central Germany in mind.

That’s where they were meant to be played, not in large concert halls and not via noise cancelling headphones. [if you want more on Bach, see A Passionate Life, which is a great documentary.]

Mozart composed with the salons of the court in mind.

Grunge bands think about the bars where they play and so on. So, the physical context matters.

But there’s another type of context that matters, the technological context.

For example, the reason why most songs are 3-4 minutes long is because that’s how much recording a 45 record can handle. The songs evolved to the format.

The invention of the CD also created parameters.

Apparently, the reason why a CD can hold 74 minutes of music is because the CEO of Sony at the time had a belief that the perfect piece of music was Beethoven’s 9th symphony.

It required 73 minutes. He insisted that if a CD were to be successful, that was the standard.

All of Beethoven’s 9th had to fit on it.

So the arrival of tech does a few things.

It changes the mechanics of how a “product” is produced and distributed.

And, by its constraints, it can change the very definition of a “product” itself…for better or worse. After all, CDs are more portable than records are.

The Democratization of Value
There were so many great observations in Byrne’s book about how tech changes an industry that I wanted to keep taking notes the entire time. Since I was driving for much of it, that was difficult, but in Chapter 3, he tells a story about the early days of the recording industry.

In it, a poor African-American man in the rural south in the middle of the last century, is invited to record his songs. While recording, he says, “Mr. President, I have a message for you.” Into that recording, he offers a message of hope and an ask…that people like him not be forgotten.

The remarkable part of the story is that it was the first time where a man like that could even dream that his voice would be heard by the President of the US because the tech enables voice to travel over distance and time.

It was “a means by which invisible people can be given a voice.”

We’ve seen that on hyper-charge with social media and the mobile device revolution.

Blockchains are just the next wave of tech that democratizes access (to value and financial products) and give “invisible people” a rudder over their financial lives.

What happened to music can happen to finance…and many other industries.

History doesn’t repeat, but it does rhyme, eh?