New job for Obama as music industry continues to struggle: Don Pittis

Even while paid music streaming services convince most people to pay for their tunes, the industry is a shadow of its former self. Don Pittis wonders if President of Playlists Obama can turn the knowledge market around.

Streaming is putting money back into the music industry, but economists doubt it will be enough

Bruce Springsteen with U.S. President Barack Obama, who in a new job of President of Playlists may be able to solve the economic problem of why music doesn't pay. (Yuri Gripas/Reuters)

When his current job runs out, U.S. President Barack Obama has been offered a new presidency — this one at the Swedish music-streaming company Spotify.

When you read the requirements, the outgoing head of state is undeniably qualified for the job. But in the unlikely event he applies, getting the music industry back to its former strength seems as Herculean a task as the job he's leaving

Despite new signs this week of a partial recovery based on streaming, the value of the music industry has shrunk by half since the advent of electronic music sharing.

Maybe as an insider, Obama can help.

"I'm still waiting for my job at Spotify," the outgoing president quipped last week to former U.S. ambassador to Sweden Mark Brzezinski. 

And this week the company responded, posting a job titled President of Playlists.

Demanding qualifications

Anyone could apply, but the qualifications, including running a country, were demanding.

"Ever had Kendrick Lamar play at your birthday bash?" asks the ad. "We'd love to hear about it!"

And another specialized qualification: "Someone with good team spirit, excellent work ethic, a friendly and warm attitude and a Nobel Peace Prize."

Job candidates for President of Playlists must have had Kendrick Lamar play at their birthday party. (Yuri Gripas/Reuters)

Data out this week from BuzzAngle is expected to show that subscription music streaming, offered by services that also include Apple Music and the musician-owned Tidal, has exploded in Canada, up more than 300 per cent from 2015.

Golden age gone for good

Joel Blit, a specialist in the economics of innovation at the University of Waterloo, says the golden days for the music industry, back when we bought music in cardboard sleeves and plastic boxes, is gone for good.

While the streaming business seems strong, it hasn't been a licence to print money. Many companies that got into the business are struggling.

Blit, who has advised the Canadian Musical Reproduction Rights Agency and SOCAN, two groups who represent musicians and composers, says the economics of the music industry are out of balance.

For consumers, the new system is fabulous. No expensive stereo equipment. No shelves full of records or CDs. Just a phone. It's so convenient, music isn't worth stealing anymore.

It has created a lot of public benefit, but that benefit hasn't gone to the people who have been creating it.- Joel Blit, University of Waterloo

But he fears that things are even worse for artists now than they were in the days of iTunes, when fans bought 99-cent tracks and the musicians got 10 per cent.

"It has created a lot of public benefit, but that benefit hasn't gone to the people who have been creating it," says Blit. "If it gets too extreme, you get into a position where no one is going to create the [music] in the first place because there is nothing in it for them."

The low-return phenomenon does not just apply to music. In the internet era, it has swept the world.

Easy to share, hard to extract income

Crucially Blit says the same thing applies to technological innovation: easy to share, difficult to extract the income from, often involving prohibitively expensive court cases

Everywhere you look, people are producing things that other people want, and yet repeatedly the existing economic system fails to capture the value.

The strange thing about the arts, including music, is that the urge to create means that people seem to be willing to keep on creating even though they are not earning a living wage.
Spotify founder Daniel Ek has battled Apple Music for a large share of the music-streaming business, while others have failed. (Shannon Stapleton/Reuters)

Perhaps it's the Harry Potter effect, where the unknown welfare mom writes a blockbuster novel at her kitchen table that goes on to be rejected by 12 publishers before she eventually becomes a royalty billionaire.

In a system where the stars make all the money, people may be willing to cast aside current income for a small chance at stardom.

But since the same phenomenon applies to other parts of what might be described as the knowledge and information sector, there may be something else going on in the economics, according to Brian Cozzarin, who studies the management of technology at Waterloo.

Democratized knowledge 

"This has been a perennial problem since the time of Adam Smith in the 1700s, and it's that placing a value on knowledge is difficult," says Cozzarin.

Cozzarin says the internet has democratized knowledge.

"It's actually a very good thing because in the past you used knowledge as power, and power was money," he says. "And nowadays someone in India can access the same information on Wikipedia as I can, whereas even 20, 30 years ago they couldn't."

And even as the number of people using the information climbs into the billions, no one makes a profit from it. He says that repeatedly the economists fail to find the results of that spreading knowledge in statistics like GDP.

Clearly as we create more knowledge, as we create more music and innovation and use computers to share it, we are making the world a richer place. 

Maybe President of Playlists Barack Obama can help figure out a way to make economics take that into account.

Follow Don on Twitter @don_pittis

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About the Author

Don Pittis

Business columnist

Don Pittis was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.


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