808s & Fast Breaks: The NBA and the music industry are both sinking
The NBA and the music industry are in the same boat, and they’re both sinking.
The NBA and commissioner Adam Silver find themselves treading water as they face life-or-death decisions. Last week the NBA and the National Basketball Players Association made one of those life-or-death decisions, announcing the league will have the shortest offseason in professional sports history and play 72 games in an attempt to stay afloat until the 2021-22 season.
The music industry is also at the back of its boat, submerged in water. The industry has been sinking for a while now, but the coronavirus pandemic has it gasping for what may be its last breaths. The main players of the industry — artists, digital streaming platforms and labels — are currently underwater, fighting for a nonexistent life jacket.
The underwater fight is as sad as it sounds. Last week, in response to a petition calling to pay artists a penny per stream, DSP powerhouse Spotify responded to criticism with an offer to pay artists even less.
Yes, you read that right. Spotify announced a plan that would offer artists algorithmic promotional boosts on songs in exchange for paying the artist a lesser royalty rate on said song. In other words, the company offered exposure in exchange for no pay, not to be mistaken for the equally exploitative practice of experience in exchange for no pay. As villainous as Spotify may sound, remember it’s fighting for air, too.
Spotify is the perfect example to contextualize the currently struggling music industry. A company with over 320 million users and 144 million paid subscribers can’t afford to pay artists even half a penny per stream. Since its launch in 2008, Spotify has never posted a net profit, nor has it had consecutive profitable quarters. This is mainly because whenever Spotify’s revenue increases, the Big Three of music — Sony, Universal and Warner — demand that their royalty percentage increases as well.
For example, in 2019, Spotify’s year-over-year revenue increased by 26% only for royalty rates to increase by 30%. Since Spotify doesn’t have any musical artists of its own, the company’s existence relies on the Big Three to supply content.
Now, this may make the Big Three sound like the villains, and to an extent they are, but they’re victims of circumstance just as much as the artists and DSPs.
To make a long column less long, I’ll use one word to explain how labels went from Infinity War Thanos to the half-dead Endgame Thanos: Napster.
Napster killed the concept of physical sales and made data more transparent for artists and empowered listeners. The high profit margins of CDs were gone, artists learned their true value and fans felt entitled to either free music or music at a fraction of what they paid in the past. The industry went from pulling in $25 billion in revenue in 1999 to $14.2 billion in 2014. Then, right when the industry seemed destined for air in 2020, as revenue grew for a fifth straight year in 2019 and eclipsed $20 billion for the first time since 2005, a pandemic happened, tours stopped and streaming revenue went from a fraction to the main source of income for artists. Instead of 2020 solidifying a new era of digital success in the music industry, the year has shown that the industry is as far from financial stability as ever.
The pandemic and a $200 million tweet from Daryl Morey are the only reasons the NBA finds itself in the same boat as the music industry. Before the 2019-20 season, the NBA’s revenue increased every non-lockout season for 20 years to a point where the league’s annual revenue from the 2018-19 season was almost four times as much as from the 2001-02 season. A league as innovative as the NBA doesn’t deserve to be in the same boat as the music industry, but here we are.
The NBA’s revenue dropped 10% last season, approximately $1.5 billion, and next season is projected to be up to four times as bad. Silver reportedly told players, “this could be the single greatest challenge of all our lives.” While that does sound overly dramatic, take into account that fan attendance accounts for approximately 40% of the league’s revenue, and the NBA travels more than any professional league in the United States. Explained simply, basketball is a sport that has to take in some percentage of fans to avoid financial drowning.
These simple facts combined with a pandemic and a historically short offseason make the NBA seem close to joining the music industry underwater, but I don’t think so.
Between artists demanding their worth, streaming platforms existing at the allowance of labels and said labels bullying all those involved to pursue the heights of yesteryears, the music industry seems destined to drown from each branch pulling the other down. Each party knows they can’t survive without assistance from the others, yet each side wants to reap more than the other. The reason the music industry may never be the same post-pandemic while the NBA will likely return to growth in a year is because those involved in the success of the NBA are willing to sacrifice.
The NBPA would be well within its rights to fight the NBA on a shortened offseason, just as team owners could understandably request pay cuts and TV stations could justifiably push for an 82-game season. But then, everyone would lose. Instead, each party is accepting a balanced amount of sacrifice in order to stay afloat and one day return to smooth sailing. Meanwhile, the music industry can’t even find a way to split a penny.
Taj Mayfield is a junior writing about the connections between music and sports. His column, “808s & Fast Breaks,” ran every other Monday.