The History of Streaming Music
49:40 Share

Banking with Capital One helps you keep more money in your wallet with no fees or minimums on checking accounts and no overdraft fees. Just ask the Capital One bank guy. It's pretty much all he talks about.

If you're one of over 2 million adults in the U.S. suffering from plaque psoriasis, the itchy, scaly patches of this chronic skin condition may make you want to put your life on hold.

Welcome to Stuff You Should Know, a production of iHeartRadio. ♪♪♪

Hey, and welcome to the podcast. I'm Josh, and there's Chuck, and it's just us streaming along merrily on our way. Right? This is off to a terrible, terrible start. Life is but a dream, right? Yeah, but aren't they talking about a stream? Merrily, merrily, merrily. Ringer and the Rosie's Pocketful of Posies. No. No, that's not it. That's about like the Black Death or something. Yeah, let's just move on.

Okay. So we're talking today about streaming music. That's why I made that joke. I should make scare quotes for joke. We're talking about streaming music, the history of it. And I love this, Chuck. This is a great idea of yours. Was this your idea? A listener suggested idea? No, this is just me. I was maybe waxing philosophic about LimeWire with somebody and then I was like, oh, it'd be kind of a fun episode.

Well, you were right. And one of the things I love about this is this is history, like world changing history that we lived through and not like as kids. This happened very much in like our adult lives, you know? Oh, yeah, for sure. Just a seismic shift in history.

how music was released and consumed and the finances around it. And yeah, I thought it was super fascinating. There was a point in history not so long ago where people were spending a lot of money comparatively on buying CDs and physical media until they just said, you know what? I'm not going to buy music anymore. I want it. I want it for free. Like screw all those musicians and trying to make a living.

Yeah, pretty much. And it's not. So the musicians were caught in the middle. It was the labels that were the greedy fat cats that pushed it too far because it didn't matter whether it was the clunkiest album or the best that Richard Marks had to offer. Both ends of the spectrum. You were paying $19.99 for that thing, whether you liked it or not. Was that how much they were? Yes, absolutely. I don't remember being that much.

Yeah, they definitely were. I think they got down toward the end in maybe the $12.99, $15 range. That's what I remember. They were very much $19.99 for a while. It was like $20 a CD. That was a birthday present right there, one CD. You know who initially fought the big fight and refused to release a record unless it was, I can't remember how much it was, but it was quite a bit less? Who? Tom Petty, baby.

Man, what a cool dude. Yeah, R.I.P. So, like you said, people just kind of got tired of overpaying. But at the same time, this was a time where frequently albums were released where no one, even the band probably, thought that more than one or two songs were worth buying. The rest were just crud. What?

You didn't get burned time and time again buying an album and being like, God, I only like the two songs I heard on the radio. Everything else on this album is terrible. No, I was a little different. I wasn't a singles guy. I never bought singles. I was always an album guy. Right. And so I would buy albums that were good and not albums that had one good song.

But that's what I'm saying. You didn't know how good or bad the other songs were until you got the album because you only had heard the one good song on the radio. So you would hope, hope, hope that the rest of the album was as good as the song on the radio, and it never was. There was like an avalanche of difference between the quality of how good the radio song was and how bad all the other songs on the album would be. That was my experience, at least. Well, I didn't fall as prey to it, I think, because...

And I'm not like some snob or anything, but most of the albums that I would actually invest in buying because, you know, I had a limited amount of money were like good, really great bands. OK, whatever. Let's move on. I think we've one of our famous stumbling blocks. I'll stick with my guns. You stick with yours. Well, I just didn't have the kind of dough to be like, oh, I like that song. I'll get that album. I like had to really know it was awesome.

I didn't either. And that's why I hated it so much that I'm still upset about it today. Maybe I was better at it. Yes, you were. I think that's ultimately the point you're driving at. I'm glad you just came out and said it.

So, everything changed from the big heyday leading up to the 1990s into the 2000s when a teenager from Massachusetts, a hacker named Sean Fanning, got together with a finance partner named Sean Parker, who would later go on to be the, very famously, the first president of Facebook, got together and started

said, hey, we got this new thing. It's a file sharing software. It's a peer to peer thing. So you can get music for free, basically, by trading it with your friends. And initially it was just, I believe, Sean Fanning was like, I just want to trade music with my friends who live on the other side of the country. Then they realized they could get investors, make it into a real business. And that was Napster.

Yeah, and one of the other things that was required for this to work were CD ripping program software that came out around the same time where you could put in a factory-made label-produced CD and rip all the music from it and turn it into MP3s. As you did that, time and time again, your MP3 collection would build up. And when you installed Napster, it would find all those MP3s, and then you could trade them with other people like you were saying. And it was such a hit, Chuck. Yeah.

that within two years, we'll talk about Napster shutting down. It only lived for two years originally. By the end of two years, it had something like 57 million users in two years. Yeah, I saw 80 million.

That's I believe it, that it was sensational. And the idea that it was a teenager that not only introduced this to the world, but completely changed the way that music is made is just it's satisfying, but also just mind boggling because things have been done a certain way for so long. And the labels were so in control. The idea of this guy coming along, it's like the original Disruption.

Yeah. At the peak of Napster, there were 27 billion transfers per month, song transfers. That's so nuts. It's just incredible. And this is another great stat that Livia found. At one point, supposedly 61% of all traffic on college servers were people sharing MP3s. Totally buy that, too.

So, like we said, musicians mostly got caught in the middle of this. It was the labels that were really taking the hit.

And some musicians were like, this is great. This is a great way to spread music and awareness. Chuck D was a very famous proponent of it early on. But there were also the exact opposite. Some artists were like, to heck with that. I think there's a famous quote from Dr. Dre. And he ended up joining Metallica, A&M Records, the RIAA, and started filing suits against Napster.

And some of them, including the RIAA and Dr. Dre, started suing Napster users, that is their fans, for pirating their music, like suing them directly, personally, individually. Yeah, they went after them under the RICO Act, the Racketeering Act. Metallica was specifically seeking $10 million, $10 million.

And what they didn't realize was this was, you know, this was an online thing. So you could get another software program. Like if, you know, what they ended up doing was they ended up getting a list of more than 300,000, like 330 something thousand individuals who had shared Metallica's music.

and got Napster to ban them. And what they didn't realize was that all they had to do, those users, was get another piece of software to allow them to get into Napster under another name. And so it was a pretty quick workaround.

Yeah, and so Metallica got such a bad name for this. This is such bad PR for them. And I can't remember the name of their bassist, their original bassist, or maybe their second bassist. He left in protest saying, like, this is wrong. Neustadt. Neustadt.

Was it Newstead? Okay. They were, there's still today people are like Metallica sued their fans. They did not. They found the names of their fans and had Napster ban them and there was a screen you would get that said at the request of Metallica you are not allowed to access Napster any longer. But they didn't sue any individual fans. The RIA, I

R.I.A.A. did and so did Dr. Dre. And I read about one 12-year-old girl, Brianna Gahara, who had to pay $2,000 because the R.I.A.A. sued her. And she had to pay two grand, a 12-year-old girl. That's what it was like. That's how upset the labels were at this point. Well, she probably didn't think about that when she was getting $2,000 worth of free music.

Well, essentially, it's what they're doing. But she still ended up paying like $2 a song, which is really that's outrageous today in 2024. Yeah, double. Yeah, at least. So one thing this did was just, you know, brought it to the news. And a lot of people that weren't sort of on the on the.

front edge of that technology, we're like, oh, wait a minute, there's a site where you can just go get music traded? So it actually, it was sort of like the Barbra Streisand effect. It ended up creating more users. Napster tried to hang in there. There was an attempted acquisition at one point for 90-something million bucks that a judge shut down for

some reason that's not worth getting into, but they tried to become like a legitimate player. They paid royalties eventually, about $26 million of royalties. They tried different models. They tried subscriptions. Nothing really worked, I think, because by that time there were other, like I mentioned, LimeWire. That was the one I used. I never used Napster. Kazaa, FrostWire, these other ones, competitors came along.

And so Napster, while like completely changing the game because they were the first ones, didn't end up being some big, huge, they couldn't get some big acquisition for it. No, they just, like you said, changed the game. But one of the things that also was changed from Napster in its brief two years and then its follow-up successors like Kazaa is,

is the idea that people aren't going to pay $15 or $20 or even $12 for a CD anymore. It's not how we want to do it. That's ridiculous. We're not doing it. I would rather take my chances at getting sued by the RIAA and get music for free than pay for an album that I'm only going to like one song on. That's what I said. And it was just, everything was completely upended. And Apple came along in 2003 and brought...

massive stability to this huge sea change. But it didn't go back to the way it was. They said, we have a model here that can actually accommodate both in this new kind of environment of how music is created and delivered now. Yeah, I want to jump back a second. I wonder if

Because I think it's a real shame that, you know, maybe $15 is too much for a CD considering how cheap they were to produce. But I think it's a real shame people were like, I want to pay $0 for music now. Like, I think it should be free. And screw everybody that makes a living doing this. I wonder if initially if the record labels had immediately just gone down to like $6.99 for a CD, if that would have changed the game.

I don't know. Maybe. I think one of the things that did change attitudes like that was a general public awareness that was spread that

That the artists were being harmed by this. Yeah, you're totally right. Making music did deserve, you did deserve to be compensated for the music you made. Like it shouldn't be free. That took years. So it's kind of like the, it was like the pendulum of development, you know, but with music instead. All right. So I agree. You mentioned Apple and specifically iTunes is what came out in 2003 and the iPod and they started selling songs for 99 cents.

One thing we didn't mention was that if you had a PC and you were on LimeWire or Napster, there was a decent chance you might get a virus. They were pretty rife with viruses. Pretty skanky. You could avoid that danger and you could pay 99 cents. You could get that single song if you're you, if you're Josh, and you don't want to take a chance on buying a full album.

You could just get that single Richard Marks song. It don't mean nothing, and you would be super excited.

Well, that was the thing. Richard Marks is a bad example because I think his two major albums both had multiple hits on them. All right. I'm just going to say it. Well, let's go with Utah Saints. They're a perfect example from roughly this era. They were a – I don't even know where they were from. Maybe British electronic group? I think I remember that song. Yes. Because that was the name of the song, right? Something Good. It sampled Kate Bush –

And they would say like, Utah Saints. Yeah, yeah. Yes, that song. So you bought that album? The rest of the album, you would just be like, God. Well, that's your problem. You don't buy a Utah Saints LP. I was big time into electronic music at the time. And people weren't coming out with albums like every week that were electronic. It was still very guitar heavy. So you had to work with what you got. And you frequently get burned. Sorry, Utah Saints, if you're out there listening.

So overall, statistically from and this is a pretty staggering stat from 2001 to 2010, when this first started over that next decade, physical music sales dropped 60 percent all over the world, about 14 billion dollars in revenue loss. Digital sales rose about four billion, but that left a 10 billion dollar annual discrepancy in what the music business was bringing in.

Yeah. If that doesn't get it across, I don't know what does. Yeah. So, yeah, because at that point, it's basically just Richard Marks keeping the music labels afloat. The fact that they had any money was essentially 100% attributable to him. Well, you know what they say, it don't mean nothing until you sign it on the dotted line. That's right. That's what he's talking about, my man. Should we take a break? Yes. Go, go, go, go, go, go.

This election season, the stakes are higher than ever. I think the choice is clear in this election. Join me, Charlemagne Tha God, for We The People, an audio town hall with Vice President Kamala Harris and you, live from Detroit, Michigan, exclusively on iHeartRadio. They'll tackle the tough questions, depressing issues, and the future of our nation. We may not see eye to eye on every issue, but America, we are not going back.

Don't miss this powerful conversation with Vice President Kamala Harris. Tomorrow at 5 p.m. Eastern, 2 p.m. Pacific on the free iHeartRadio app's Hip Hop Beat Station. ♪♪

Okay, so while Napster was like, hey, we're into file sharing, some other ones were as well, at the same time, roughly, an alternative model was developing, and that was just streaming, right? So rather than downloading an actual MP3 that you would keep on your hard drive, you could burn on the CD, do whatever, this was like, there were music servers. This is crazy, just bear with me for a second. Mm-hmm.

That would actually, you would stream the music over the internet through like a player on your computer. You usually had to download the player itself. This is before they called them apps. And you could sometimes select songs. And then other times it was more just like an FM radio station where they would almost play it, play whatever random songs that you had no control over. Right. Well, you did have control in that you could skip songs and stuff. You just couldn't pick the songs. Right.

Sometimes, though, you could only skip a finite number of songs before it's like, nope, you have to listen to this Cardi one. Yeah, but that was the big problem with Launch Media. They probably could have gotten away with it if they didn't give you the ability to skip songs because it was a little more like radio. But because they had that fast-forward button, the RIAA got involved again and was like, we don't like that. Because one thing I don't think we mentioned is radio –

It was a way for people to listen to songs and music and get turned on to new stuff. It was a live transmission. Yeah. But what radio also was, was a free advertisement for those bands. So, you know, every time a song gets played on the radio, that's an ad to little Josh Clark. Like, hey, sucker, go out and buy this album if you like this.

These Utah Saints are great. This disrupted everything. The fact that you could skip songs. That's why the RIAA got upset because, you know, they're like, well, this is a lot like radio, but you can't skip songs on the radio. We want people to hear these songs because they're little ads.

Right, exactly. So that was a big problem. The streaming services were as big a problem, maybe not as big, but pretty close to the same amount of problem as file sharing services were too. They weren't like any kind of solution as far as the music industry was concerned. Yeah, and those were, you know, like Launch Media, who eventually became Yahoo Music. Those, again, that were just playing, there was like a...

I don't know if it was a real person programming, but it was as if a DJ was playing music. The first legit on-demand streaming service was Rhapsody in 2001, which started out as part of Listen.com, was bought by a company called Real Networks, and then eventually, in sort of an odd twist, it bought Napster, and in 2016, Rhapsody was rebranded as Napster.

Yeah. Do you remember RealPlayer? That was one of those, that software you had to download to stream music. Oh, yeah. I remember that. I went and looked at old RealPlayer skins and it's just like, oh, my God, the nostalgia. Those things were so ugly. I mean, they're super, they look super 2005. Yeah.

Uh, just seeing that little limewire lime actually gave me some feels because I was doing, by the way, I was doing the same thing. I'm not saying like when I said it's a real shame that people, uh, just said, I want my music free. Like I was doing it too at the time.

Oh, okay. Well, I'm glad you said that. I was part of that real shame. I was like, oh, great, LimeWire. I can trade music. But pretty quickly, I kept buying CDs for a while, the bands I loved, and pretty quickly I was like, wait a minute, there's something about this that doesn't feel right. Hey, one other thing that's occurred to me, Chuck, is –

I'm sure somebody's like, well, yeah, CDs might be like $15 a piece, but don't forget Columbia House where you get like 10 of them for a penny. I never did that. You didn't. Did I ever tell you my Columbia House story? You did, but I think people need to hear it if they haven't heard it. Okay. You told me last week at a Cubs game. Was it just that recent? Uh-huh. Man, I got to work on my memory. I need some Prevagen. So...

Like you would send off, for those of you who don't know, you would send – like literally you'd tape a penny to a postcard and send it into Columbia House and you could check like what albums you wanted them to send you. And like magic, they would send you those 10 albums for a penny. But then you were automatically signed up for their subscription service.

And they would send you albums that you didn't want at like two times the price. Yeah. So it really wasn't a good deal unless you could get out of it with just those first 10 albums. And I did exactly that because when they sent me the first handful of records that I didn't want, I sent them back with a letter saying,

explaining that I was 12 years old when I entered into this contract. There's nowhere in the United States that it's legal for a 12-year-old to enter into a contract, so please stop sending me albums. And they did. I love it. Very precocious kid. Thanks. I like that story. I was a little bastard. Yeah.

You mean like the rapper? No, it's Old Dirty Bastard. Oh, right. I was thinking Lil Wayne and Old Dirty Bastard got together. Right, Lil Bastard. That's my new rap name. Not Teppid T? Mm-mm. All right, so Pandora, Pandora, not Pantora, Pandora came along in 2005.

It began as Savage Beast Technologies. And they were founded on this idea of the algorithm to recommend songs to where it would curate like, this is Chuck Station. And the way they did this was through something called the Music Genome Project, which I remember just thinking it was the coolest idea and thing ever back then. Yeah.

And it was a cool thing. It was basically that they would analyze 450 unique attributes of every song that exists from, you know, as simple as like what genre is it to like how nasally somebody's voice was. Wow. Then they would evaluate it on a scale of one to five with half increments. And the end result would be the song's, you know, quote unquote DNA. Yeah.

Initially, they had a musicologist that did this by ear in the hand, and it took like 15 to 30 minutes a song. Eventually, AI took over. But it was that was the big attraction for Pandora was like this super cool project where they're categorizing music so specifically that it will start to learn what you like and curate. You can curate your own radio station.

That's nuts. I never heard of that Music Genome Project before. Oh, really? It was sort of all the rage at the time. Pretty groundbreaking. I mean, I'm taking it this is in the early 2000s? I mean, it was when Pandora started. That was sort of the basis of how they worked. Wow. So yeah, 2005. Okay. So Pandora also started to try a subscription model. Were they the first? Yeah.

They may have been. Well, I think Napster tried it, but it didn't work. Okay. So Pandora was the first, I guess, that was successful at it. It was, I think, $3 a month for streaming music with no advertising, which sounds like a deal, but there were only like 10 songs on the internet at the time. And they tried like 10-hour free trials, kind of like those AOL sample discs. Yeah. Yeah.

But they only had like a 1% conversion rate. Yeah. And one of the reasons why I think that doesn't get mentioned very often is that we're talking, this is like the mid-aughts, 2005. People were not at all comfortable with giving their credit card information out over the internet. Yeah. And that's the only way you could buy back then. Yeah. When it just seemed like the most top secret thing you could even have as a part of your life. Right. Yeah.

Yeah. So I really truly think that that was one of the reasons why this got a slow start. People were just not comfortable with paying for things using their credit card over the internet. And that's, I mean, how else are you going to bill somebody? Are you going to send them a physical bill for your online streaming service? You get a letter from a 12-year-old after that.

Yeah, exactly. Imagine Pandora getting checks mailed to them every month. That'd be hilarious. But I mean, I guess that's what you'd have to do to get business going. Yeah, I think you're totally right. Those early days of e-commerce, I think a lot of us had some trepidation about entering those digits online, you know? Yeah. And it might be, is it confirmation bias? I was like that, so I just assume other people were as well, but

Most of the people I knew were not comfortable giving out their credit card info at that time. No, I think you're right on the money. No bias whatsoever. You're just right.

Cool. So Congress got involved, actually, in the United States, at least, and they came up with the Copyright Royalty and Distribution Reform Act of 2004. That's how disruptive Napster was. In four years, Congress had passed an act essentially trying to help smooth this over. I'm sure it was largely in the favor of the labels, but it set up the U.S. Copyright Royalty Board where –

These software companies and streamers would come and take claims or be taken to this board by music labels to figure out who owed who what. Right.

Yeah, which was a big, you know, threw a big wrench in the plans of a lot of these companies that were just emerging. I think the ones that were sort of smaller gave up pretty quickly because it was such a legal quagmire. Like Yahoo Music wasn't even, you know, a smallish one. They shut themselves down. Yeah, for sure. So, again, Apple kind of rides to the rescue there.

And in 2007, they introduced the iPhone. Because I don't know if we said it or not, before the iPhone came along, if you wanted to listen to downloaded music anywhere away from your PC, you had to buy an iPod. Or one of its also ran competitors like Zune or something like that. But you had to have like a physical device to listen to. When the iPhone came out, it was like throw all that crud away.

Now you can not only listen to your MP3s that you're buying off of the iTunes store, you can listen to streaming music. You can do everything you can on the internet you can do on your iPhone. So it provided a super stable, safe platform, not at all skanky. You weren't going to get viruses or anything like that from downloading apps from the app store. And Pandora actually saw the writing on the wall very early. And they had an app like I think the next year

that was available for the iPhone. That was a Pandora streaming app. And I think the first year within nine months that the app store came out, the Pandora app was on almost a quarter of all iPhones in the world. Yeah. This also brought back funny memories of, this is kind of like when we were getting going with the TV show-ish. Really? That was 2013. Yeah.

Well, I'm just talking about, no, no, no, I'm not saying the launch of the iPhone. I'm saying the apps being like the end-all be-all. Like I remember very specifically in some of those TV meetings,

some of the guys on staff, like all they could talk about was apps and look at this new app and it does this and it does this cool thing and it does this cool weird thing. Right. And it was just app, apps, apps. And it's just funny to look back how that is at least changed for me. I mean, maybe people still use all kinds of funky apps, but almost every app I have is, is,

utilitarian and serves some kind of like function for doing something. Right. But if you wanted to razzle dazzle a C-suite executive who is like 15 years older than you at the time, all you had to do is even let them know you were thinking in terms of apps and they would just automatically promote you. I totally remember that time. It was pretty funny. We've survived a lot of weird times, haven't we? Hey, we have, including the great stuff you should know, Fire of 08. Yeah. Right at the beginning. The death of Richard Marks.

Oh, he didn't die, did he? No. Okay. That was a terrible joke. I'm sorry, Richard Marks. Sorry, Utah Saints. Sorry, Richard Marks. Right. So we have to talk about Spotify. Should we do that or take a break first? Let's talk about Spotify. All right. Spotify comes along. They change the game.

Pandora was still trying to be, you know, kind of like radio in a way. Spotify was like, no, we're really going to be on demand. And this is kind of what everyone's been waiting for. It was a company out of Stockholm, Sweden, very famous for, Sweden is for encouraging and supporting their tech industries. That's why there's so many coming out of there. But they launched in 2006. And then I think waited, I

Had to wait until 2011 to launch in the U.S. because they had to, you know, they were, I guess, smart enough early on to pre-negotiate with record labels and kind of get all that settled so they weren't just dragged into court right away.

Right. So early in their early years, even when they were just available in Europe, in Western Europe, they had 10 million users and 1.6 of them were already paying users. Right. So before this thing even hit the U.S., it was valued at a billion dollars. Spotify was. And when it hit the U.S., it just it just reached this incredibly massive level. Right.

One of the things that Spotify did, I think today they're at like 615 million active users, something crazy like that. But one of the ways that they managed to kind of come in and be like, hey, peace, everybody, was that they really paid royalties to the artists and the labels or whoever owned the copyright of that song.

They paid like 70% of their revenues went to pay royalties. And so they have been losing money every year since at least 2011, probably back when they debuted in 2006. And I think 2023, no, the first two quarters of 2024. Yes.

they made record profits. And because they lost money every year up until then, a record profit for them could have been $1. But they finally turned profitable, essentially. And they're saying, like, now we're going to be profitable.

from here on out. One of the criticisms they took is that they became profitable by going through massive rounds of layoffs and jacking up the price of their subscriptions. But the point to know about Spotify is they created a new standard by saying, we're going to actually pay real royalties to the people who own this music. Oh, for sure. So I think we take that break now. Okay. We'll be right back. Oh, there you go. There you go. There you go.

This election season, the stakes are higher than ever. I think the choice is clear in this election. Join me, Charlemagne Tha God, for We The People, an audio town hall with Vice President Kamala Harris and you, live from Detroit, Michigan, exclusively on iHeartRadio. They'll tackle the tough questions, depressing issues, and the future of our nation. We may not see eye to eye on every issue, but America, we are not going back.

Don't miss this powerful conversation with Vice President Kamala Harris. Tomorrow at 5 p.m. Eastern, 2 p.m. Pacific on the free iHeartRadio app's Hip Hop Beat Station. ♪♪

All right, so 2015, several new players came on the scene. Tidal, you might have heard a lot about at the time. All Capitals, T-I-D-A-L. This was an artist-owned alternative, kind of like United Artists and Movies back in the day, like musicians actually got together under the guidance of Jay-Z,

to buy a company initially. It was a Norway-based company called Aspiro that were developing, it stood for Wireless Music Player, but The WIMP. And it was higher bit rates, supposedly better quality, and also like real human editors making music recommendations. So Jay-Z gets on board. He's like, man, we can't call it WIMP.

in the United States. It's not tough at all, so they changed it to Tidal. Right. I read an interesting article. Also, big ups to Livia for helping us with this one, but she found an article from loudandquiet.com written by Stuart Stubbs called Five Years On, The Very Silly Launch of Tidal. And if you like

just kind of laughing a little bit at the misfortune of super egotistical wealthy people. You're going to like that article a lot. He just slams like this launch. And I haven't seen it because I can't bear to watch it based on his description of how awkward it is. But apparently it was one of the most awkward star-studded events ever held. Yeah, I've seen it. It was awkward. It was just, I don't know, man. Sometimes companies just screw it all up, you know?

Right. I think one of the big screw ups was to basically tell the audience not to clap for anything, which I'm sure was a decision because you don't want it to seem like these stars showed up so that they could be applauded for everything they said. Yeah. But instead, it made it super awkward and quiet from what...

From what Stuart Stubbs says. It is very weird for Madonna to walk out on stage and be met with silence. It was slightly surreal. Yeah. So, Tidal's deal was another company, obviously, because they were artists that wanted to pay through pretty well. And musicians got a 75% royalty on each song. It wasn't too long after that they were being sued for underpayment.

And it ended up not being a financial success as a company. Right. It's a bit of a mess, it seemed like. But it got bailed out by Jack Dorsey, the co-founder of Twitter. He was leading a company called Block Inc. And in 2021, he used Block Inc. funds to buy an 86% share in title for $300 million. Yeah.

And essentially, the shareholders in Block sued. They sued Jack Dorsey for this because they're like, you did this as a favor to Jay-Z. You can't do that to us. This is a terrible deal. And they actually had the lawsuit dismissed.

Yeah, I think, I mean, if you want to compare, I believe that Jay-Z, what did they pay? Like 50-something million? Everybody chipped in 56 million, yes. Okay, so then flipped it for 300 to his friend. But really, it was probably worth half of the original price by this time because it was not a success at all. And even still today, I saw it has about 5 million users, it says, but that that's even disputed by...

by people outside the company. And like I said, that judge dismissed the case against Jack Dorsey. And he said that there's nothing legally wrong in approving it, even though it was, quote, a terrible business decision. Yeah. Man, that's pretty funny. I would be so mad. Oh, yeah. I wonder if you snuck up behind Jay-Z and looked at his phone, what he's playing with. The real player.

He's OG. That would be great. I did look up that logo, by the way, and it was a wave of nostalgia. All right. Another one that came out in 2015. You might have seen Neil Young screaming at people on your television set right around then.

It was Pono. That was his... This was an actual device. It was a player, the Pono player. And it was a crowdfunded campaign that raised about $10 million. And the whole pitch here was, from Neil Young especially, was MP3s are garbage, and that compression stinks like...

And this is all the nice way. Like Neil Young was much more critical and probably cussed a lot more. But he's like, the quality here is better. And this is the way music should be listening. It's a travesty how we're listening to music these days. And that company, I mean, I guess Neil Young failed to realize it. By and large, most people don't care about the quality to that level. Yeah, a lot of people just can't detect it. It's not even that they don't care. It's that once you get to a certain bit rate measured in kilobytes per second, that's how much

how many bits are being transferred per second. So obviously the more bits transferred, the more of the song that's captured, the better the sound quality. Somewhere outside of 256 kilobytes a second, when you start going over that, people generally can't tell the difference, especially if you're just using like earbuds or something like that, you know, or just playing it through the speaker of your iPhone, especially. Yeah. Oh God. Do people do that? Very obnoxious people do. Yes. Yeah.

A CD, just for comparison, is a little over 1,400 kilobits per second. And you said 256 is where people can't tell much of a difference. That's like...

That's like people with a good ear. They say if you're around 90 to 100 and you're not the most discerning listener and you're not playing through something great, then you probably won't be able to tell the difference. Right. But again, if you're Neil Young, yes, you're really upset about this. Of course. He really missed the mark by assuming that everybody felt this way about it. Yeah. I mean, you can get just great quality of music from a fairly compressed rate. Yeah. Yeah.

I agree. 2015 also, and this kind of surprised me. It felt like it had been around longer, but that's when Apple Music, not iTunes, but the Apple Music streaming finally was launched, surprisingly late to the game, supposedly because Steve Jobs didn't like the idea. So Apple and Amazon...

who had been selling MP3s just like Apple had, they launched about a year later. So they're both giants that were kind of late to the streaming game. Yeah. Apparently Steve Jobs thought that it was basically piracy to make people rent music rather than own it and that people didn't want to rent music. They wanted to own it. So therefore subscription streaming services were basically just taking advantage of their users. And he kind of said,

If you pay $100 a year to listen to your favorite song, over 10 years, you paid $1,000 to listen to that song, and you don't even own it, rather than just buying it once for a dollar or something like that. And he makes a good point, but he's also leaving out all the other music that you've listened to over that 10-year period. Yeah, that's a weird way to put it. Yeah, it's a little disingenuous, but he was very much opposed to it, and Apple was not about to get into the streaming game while he was alive. Yeah.

He's like, if you're wealthy like me, you'll pay for a different streaming subscription for every song you want to hear. Exactly. Just to make it fair. And that's madness. Pandora, we should mention, was bought by Sirius XM in 2019. And we should, you know, talk a little bit about how the finances work today because it was, you know, there was a bit of a – things have regulated just a bit. You know, things really went in the tank.

I think that the 2014 was the lowest point in dollars for the music industry. They've come back now. In 2022, revenues hit $26.2 billion, which is about a 25% drop compared to when CDs died. Wow.

But that's a 70% increase from where they were in 2014. Yeah. I mean, that is a low point for sure. Yeah. So they've sort of course corrected enough to where I think they're like, hey, it'll never be the heyday of CDs again. Right. But not every, like people are actually paying for music now with these subscriptions. Yeah.

Yeah, and it does turn out that Steve Jobs was absolutely wrong. People are generally totally cool with renting their music through subscription services. I think 84% of music revenue comes from paid subscriptions. Yeah. I mean, that's significant. And one 2009 study found that piracy had dropped

because of the affordability of legal ways of consuming media, not because of enforcement, not the threat of being sued by Metallica, but just the fact that it was easier. And by this time, people got used to putting their credit card info on the internet. The threat of Lars Ulrich coming into your room and speaking to you for 20 minutes. Yeah. That's enough right there. For sure.

As far as what they pay, I mean, Spotify is the biggest dog in the market. They have about 30% of the streaming market. And like you said, more than 600 million active users. But these royalties, Tidal pays the most at 1.3 cents. Apple's 0.7, YouTube Music 0.7. Spotify pays 0.4 cents per stream. Same as Amazon and then Pandora's down to 0.1.

You're obviously making a lot more money off of Spotify because they're the biggest player. So it's less per stream. But as an artist, if you're a hit on Spotify, then there's a lot of money to be made. Right. Yeah, I think Spotify paid over $9 billion in royalties in 2023. Yeah.

three times more than they paid six years earlier. And there've been studies about how much money is actually made by the artists. There's 66,000 artists that make 10 grand or more a year on the platform through music sharing. 11,000 of them make more than $100,000 a year. And then 1,200 of them make a million plus.

And of course, most of the 1,200 are names that you've heard of that are already making tons of money anyway. But, you know, toward the lower end of that scale, there are indie artists that never in their life would have made a million dollars in a record label deal. Yeah.

that are now making, producing, sharing their own music, running their own social media, and they're making a million dollars a year or more from their music. That's one of the ways that this completely changed the game, not just in taking money away from the music labels, but also in making it easier for independent artists to just exist without the music labels. Yeah.

Yeah, for sure. I got a couple of things for you here on that line. Our beloved pavement that we both love. Sure. Harness Your Hopes was a B-side kind of throwaway song, not throwaway, but a B-side from 1996. It never made it onto their album. It went viral on TikTok last year. You know about all this, right? No.

So the song goes viral on TikTok for some reason. And like huge pavement for a song from 1996, got 148 million streams on Spotify. Wow. Which if the math is right, close to $600,000 just from Spotify from a, you know, a B-side from 1996. That's awesome. That's amazing. So that kind of stuff can happen, which is great.

And then I looked up, I was curious who the most streamed song ever on Spotify is. My guess would have been a Taylor Swift song. Believe it or not, Taylor Swift has the, her highest charting Spotify as far as number of streams go is the 42nd highest. What? Is it just that she has so many songs that that counts for her streams? I guess. Yeah.

Because she has tens of billions of streams. No, that's for a song, like one specific song. Oh, I see. You're saying in dollar amounts, in royalties. No, no, no, in streams. Like her most streamed song is Cruel Summer, and that is number 42 on the list. First of all, that's Bananarama. And secondly, I think my point still stands. Yeah.

She just has so many songs and variations of her songs that when you put it all together, she has like 38 billion streams a year on Spotify. Yeah, yeah. That's for her whole catalog, which is incredible. So who's number one that she's way down at 42? The Weeknd. Which one? His song, Blinding Lights. Wow. Is the most downloaded song on Spotify ever.

Uh, and I did, I think it was, I can't remember. I think it was like four or 5 billion streams and I did some math and I may not be right, but if I did my math, right, it looks like that that dude has made more than a hundred million dollars on that song off of Spotify. That's just off of Spotify, right? Yeah. That's not including like YouTube music, Amazon music sales of the actual MP3, your album.

How many ways can I say only Spotify? In hindsight, even that doesn't quite make sense. I'm not like, oh, that makes sense. It's funny how the Internet can do that. I would have guessed Gangnam Style, but that's a little dated, I guess.

I just like if that math is right, that's that's incredible. Yeah, for sure. But that's the kind of money you can make up. That's how Drake made like three hundred million dollars off of Spotify in a year recently. So, yeah. And if you're again, indie indie bands are now at the table there. They can do this all themselves. They they can just split it among themselves as bandmates. And, you know, if you just hit it just right.

Yeah.

Record executives haven't gone anywhere. There's still plenty of them around. And so when you do have a contract with the label, they'll very frequently be like, hey, this song has to have an amazing hook that's no more than 10 seconds long because we want to get it viral on TikTok. Go make a viral video on TikTok, essentially, is what they're saying. And so that's shaping how artists are making music. And a lot of them are not happy about that.

Yeah, it's also reshaped, you know, the sort of album era is kind of dead. I mean, there's still plenty of albums and still plenty of artists doing that. But it's almost like Livia points out, it almost is like going back to the days of the 45s in the 1950s, where it was, you know, these singles are being released.

And that's interesting. I know that, you know, one thing we should mention is that there is they're trying to get it pushed through now the Living Wage for Musicians Act through the house where they're basically saying, hey, minimum royalties should be a penny per stream. Like, I know you make a lot more on Spotify because it's the biggest player, but they're paying point four cents. And like if everyone paid a cent, that would be a huge difference.

Yeah. And if you're like, I totally agree with that, you can go to actionnetwork.org and look for Living Wage for Musicians Act. This morning, they only needed 432 more signatures to reach their goal. So apparently it automatically becomes law at 12,000 signatures, if I'm not mistaken. Nice work. I'm glad you put that out there. I am mistaken, by the way. But yeah, there was one other thing I wanted to point out, too, the way that it's evolved.

Because there's not a huge gamble in making music like there was when you have a whole production going on and a label and you're actually physically producing the albums, there's way more availability and potential for artists to explore music

genre bending, genre fusing, all sorts of gambly, risky new types of music that they would never be able to try if they had like a major album or a major label contract and that label was not willing to take those risks. So that's another way that it shaped it positively. Yeah. I mean, you and me could get together and put out a song and get it out there and streaming. Like we could do that.

Okay. What should we do? Should we call ourselves Pendulum of Development? And we're going to play, both of us are going to play the mandolin, but neither of us know how to play the mandolin as the hook. Well, who's our slide whistle player? Jerry? Okay. Sure. Are we going to cut her in on this?

Well, no, I mean, but she can still be the slide whistle player. Oh, okay, great. You got anything else? I got nothing else. This is a fun little trip down memory lane. Yeah, it was. Agreed. Good choice. And that's it, everybody, for streaming music, which means, of course, it's time for listener mail. Yeah, I'm going to say this is we're sort of correcting our omission of...

our Minecraft episode when we couldn't think of the kid's name. Oh, good. It was a kid in the audience and we couldn't remember his name, so we got a letter from Bowden's mom. Oh, wow. Hey, guys. My son Bowden was the kid who asked about Minecraft at the Medford show. He was the one with the glasses who also made the joke about being a retired factory worker. That was so great.

That'll make sense if you've seen the show. He didn't ask about mobs, and in fairness, there were probably 10 other kids after him who also asked about Minecraft. I don't think that's true. So I'm not sure if he's the one you're thinking of. He is. Well, he was, Sarah. But she says, regardless, I'm pretty sure he considers this to be his greatest contribution to humanity to date. Man, that kid is so cool.

Sincerely, thanks from a very grateful parent. That is from Sarah. So big thanks, Bowdoin. Yeah. And I'm glad we could get your name out there. Yeah. Thanks a lot, Bowdoin. That was a great idea. And we appreciate your mom writing in. That was Sarah? Yes. Awesome. Well, if you want to be like Bowdoin and Sarah, come to one of our shows and suggest an episode. You can also just make it easier on yourself and send it via email. Wrap it up, spank it on the Minecraft, and send it off to stuffpodcast at iheartradio.com.

Stuff You Should Know is a production of iHeartRadio. For more podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows.

This election season, the stakes are higher than ever. I think the choice is clear in this election. Join me, Charlemagne Tha God, for We The People, an audio town hall with Vice President Kamala Harris and you, live from Detroit, Michigan, exclusively on iHeartRadio. They'll tackle the tough questions, depressing issues, and the future of our nation. We may not see eye to eye on every issue, but America, we are not going back.

Don't miss this powerful conversation with Vice President Kamala Harris. Tomorrow at 5 p.m. Eastern, 2 p.m. Pacific on the free iHeartRadio app's Hip Hop Beat Station. Hey, friends. I'm Jessica Capshaw. And this is Kamala Luddington. And we have a new podcast. Call it what it is.

You may know us from Graceland Memorial, but did you know that we are actually besties in real life? And as all besties do, we navigate the highs and lows of life together. Big or small, we're there. And now here we are opening up the friendship circle to you. Listen to Call It What It Is on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

You can hear a sneak peek of the audiobook on my podcast, Revisionist History.

Listen on the iHeartRadio app, Apple Podcasts, or wherever you listen to podcasts.