The Music Industry Is Built on Artists, but Shuns Creators

On the surface, the gaming and music industries share many similarities: both have an enormous impact on popular culture, drive billions of dollars in consumer spending each year, and rank #1 and #2, respectively, when Gen Z consumers are asked how they prefer to spend their free time. 

Having spent the past 20 years in the music business, however, I see two vastly divergent approaches toward leveraging technology, building community, and engaging fans. Never has this competition been more stark than in the months following March 2020’s Covid lockdowns, which sent video game usage surging and music streams tumbling. While both industries are growing—a remarkable feat for the music business, which many left for dead amid the piracy wars of the 2000s—gaming is increasingly leaving all other forms of entertainment in the dust. In 2021, estimates of the gaming market range from nearly $180 billion for game sales alone to $336 billion inclusive of hardware and B2B/B2C software. By contrast, the recorded music business generated $21.6 billion in 2020, roughly one-eighth gaming’s sales. 

Turns out, the story of gaming and music is one of two very different industries. Gaming has, over the last 40 years, been relentless in its innovation with new technology, growth-minded in its view of copyright and IP management, and invested heavily in building worldwide communities of highly engaged fans, enabling many to become creators themselves. In contrast, the music business has practiced reductive and punitive copyright policies and failed at building immersive, community-based ecosystems on top of its substantial IP. In its current form, music is seen as disposable, easily replaceable not just with video games but podcasts, audiobooks, and news. 

The music industry must fundamentally reconsider what both copyright and major project releases look like today. By creating universal copyright “rails” to unlock user-generated content (UGC) at scale, the music industry can reclaim its reputation for innovation, convincingly compete with other forms of entertainment, and forge a new, fan-focused future. 

Natural selection in the attention economy

The “attention economy” is now a defining characteristic of our 21st century. Games have emerged as the dominant form of entertainment in what is increasingly a zero-sum competition for consumer time.

Games have progressed from rudimentary graphics to lifelike simulation; from relatively brief, arcade-focused titles to deep, ever-expanding worlds; and from single- or two-player localized environments to globe-spanning, hyperconnected real-time applications connecting millions. Playing an AAA game in 2021 is a radically different experience than it was in the 1980s.

If this point sounds obvious, someone forgot to tell the recorded music industry. Of course, streaming platforms like Spotify have made the act of finding something to listen to radically easier (platforms that weren’t built by the industry itself, I would note), and a single smartphone can now store more music than anyone ever thought possible during the days of cassette tapes and CDs. But the experience of consuming an artist’s major release in 2021 is not fundamentally different than it was 40 years ago. There remains a dearth of mechanisms to directly support artists while enjoying their music, and little compelling content engaging consumers around major releases. The dominant means of fan engagement and branding, such as music videos, have in fact regressed as an art form over the past several decades.

There remains a dearth of mechanisms to directly support artists while enjoying their music, and little compelling content engaging consumers around major releases. The dominant means of fan engagement and branding, such as music videos, have in fact regressed as an art form over the past several decades.

Where music has evolved due to the attention economy, it has primarily done so with an internal rather than external focus: producers, labels, and artists have focused on how to make their song compete with other songs, rather than consider how music will compete with other forms of entertainment. Meanwhile, streaming services know exactly who their competitors are: Roblox, Fortnite, and other video games. The music industry as a whole has lost the forest through the trees. 

Music’s lost empire

Given the statistics and trends presented above, one might justifiably assume that gaming is bigger than music because there just isn’t that much money in the latter. Examining the financial and cultural wealth generated by music’s top stars , however, hints at a much different reality. 

From a cultural perspective, musicians are the most powerful group of creators in any industry. Three of the top four most followed Twitter accounts and 23 of the top 50 Instagram accounts are musicians, while just six are athletes. When followings are added up across all major platforms, the trend remains the same: a disproportionate number of the most followed individuals across the world are musicians. Followings aside, meme culture—just “culture” to anyone under 25—is dominated by musicians, whether it’s Drake’s multiple viral successes, Cardi B’s “Okurr,” Lil Nas X’s next-level understanding of internet engagement, or Megan Thee Stallion’s ubiquitous catchphrase, which had enough staying power to be a dominant cultural term across two summers, an eternity in our ephemeral society. This is not to say gaming doesn’t generate memes and cultural impact—Fortnite dances, for instance, have gone viral more times than one can count—but music’s impact is hard to match, at least for the time being.

Financially, music’s top creators are among the wealthiest celebrities of any industry. Oddly, however, this wealth generation is rarely if ever driven in majority by their music itself. The list of the world’s wealthiest musicians is one where the same story repeats over and over again: a creator unlocks massive cultural importance through their music, only to capitalize on it in an entirely different industry altogether. Consider Rihanna, now worth $1.7 billion, with 82 percent of her wealth coming from Fenty Beauty; Dr. Dre, whose stake in Beats earned him upwards of $350 million in Apple stock; Kanye West, whose wealth is primarily driven by his Yeezy brand and other fashion ventures; or Diddy, whose partnership with Ciroc helped cement his inclusion on Forbes’ Highest Net Worth lists.

The list of the world’s wealthiest musicians is one where the same story repeats over and over again: a creator unlocks massive cultural importance through their music, only to capitalize on it in an entirely different industry altogether.

One of the primary reasons most musicians—not just the top .01 percent—need to make money outside of recorded music is because the economics of streaming make it incredibly difficult to make a living, much less generate wealth, off listening alone. This is why the music business must fundamentally reconsider the potential for interactivity, community building, and immersion. 

Open worlds vs. innovation through litigation

I believe the pivotal factor in gaming’s rise to economic and attention dominance lies in the industry’s progressive, open-minded view on copyright, user-generated content (UGC), and modding of its IP, whereas the music business takes a draconian and paranoid approach.

While the gaming industry has embraced livestreaming with open arms, the music business has led numerous recent DMCA takedown crusades across Twitch and YouTube gaming channels, leaving even well-established creators without any hope of appeal or recourse.

There are arguably no better examples of gaming’s approach to IP protection than livestreaming and esports. Currently, more time is spent watching others play video games on YouTube and Twitch than total viewing hours of Netflix, ESPN, HBO, and Hulu combined. 

Esports and livestreaming have become so popular, in fact, that we often take it for granted that the entire practice revolves around what is, technically, an exhibition of copyrighted material to thousands or millions of viewers. Game developers don’t just allow gamers to stream walkthroughs and live sessions of their game for free, of course: they allow gamers to monetize these streams, netting millions in payouts for top players and huge advertising payouts for platforms including YouTube and Twitch. 

The widespread practice of modding—in which gamers modify existing commercial games to better suit their playing style or creative whims—offers another insightful view of gaming’s approach to copyright management. Modding, which involves an even more hands-on and directly monetizable form of copyright alteration and usage, has driven viral releases like Counter-Strike and dramatically extended the lifespan of dozens of major game titles. At one point, modding even accounted for the top three most-played games on Steam, the world’s largest digital distribution platform for PC games. Overwolf, a software platform that enables developers to support UGC and modded content in their games, demonstrates that the business of modding is substantial and growing. While not every game publisher embraces modding, the practice has had an undeniable impact on the ability for individual gamers to participate in the gaming ecosystem at scale, further driving overall industry growth. It is telling that Warner Music Group, one of the “big 3” labels in the U.S., features prominently among Overwolf’s investors—embracing a very different copyright standard for gaming versus its own industry. 

Gaming has similarly pioneered community building, creator monetization, and growth through its embrace of UGC, which is becoming an ever-increasing meta-trend across the industry. Three of the industry’s largest success stories of the past decade—Roblox, Minecraft, and Fortnite—are either games heavily invested in user generated content, or are themselves platforms for user-led game creation. Most significantly, both Roblox and Minecraft have less advanced graphics than most modern games: they owe their success less to powerful GPUs than the power of networked technology when combined with IP, interactivity, and community building. 

While the gaming industry has embraced livestreaming with open arms, the music business has led numerous recent DMCA takedown crusades across Twitch and YouTube gaming channels, leaving even well-established creators without any hope of appeal or recourse. Consider the perplexing situation many game streamers now find themselves in: they’re free to use the IP of the gaming industry as they see fit (and can monetize doing so), but cannot use most copyrighted music, even at low volume in the background of a stream. Two very different approaches to copyright, indeed. 

Tales of music industry copyright woes don’t end with livestreaming. Law professors trying to explain the fair use doctrine in lectures have gotten takedowns; so have YouTubers who dared to utter lyrics by Bon Jovi or educational guitar channels showing users how to play chords of famous songs. At times, this crackdown hasn’t just imperiled individual creators, but entire platforms: SoundCloud famously found itself in a precarious position with the industry in the mid-2010s, when the app’s plethora of UGC content led to widespread takedowns and account deletions, including that of my own account over an un-monetized remix.

I am not arguing for lax copyright enforcement that leaves creators and labels uncompensated for their hard work. Rather, I am calling for the industry to invest in building the technological backbone—the “copyright rails”—that will enable limitless remixing, modding, and reinterpretation of any commercial work while ensuring the original rights holders are compensated.

I am calling for the industry to invest in building the technological backbone—the ‘copyright rails’—that will enable limitless remixing, modding, and reinterpretation of any commercial work while ensuring the original rights holders are compensated.

No analysis of the music industry in 2021 would be complete without mention of TikTok, which is now the single most important channel for breaking new artists and records. At first glance, the success of TikTok—and major labels’ willingness to license the platform and play ball—would seem to contradict the argument that the industry needs to rethink copyrights. The first problem with this view, however, is that TikTok is quite different from modding or UGC game creation/augmentation: it merely allows the syncing of licensed music to short video clips, a much more limited offering than the monetizable ecosystem of mods and user-made content that proliferates in gaming. Second, while TikTok represents an incremental, rather than transformational, evolution in how the industry approaches copyrights and licensing, its success proves, not refutes, my central point: look how much there is to gain when the industry evolves and tries new technology. TikTok now single-handedly breaks number-one records, launches musicians to stardom overnight, and even resurrects 42-year-old songs and sends them back to the top of the charts—the same song, in fact, that I was once kicked off of SoundCloud for remixing. Progress is good.

The traditional music industry’s view of copyright, which stems from a deeply held belief that all streams are equal, regardless of the context in which they occur (e.g. a high-fidelity Spotify play vs. a gaming stream where a song is background noise), is flawed and reductive. I suspect it is costing the industry billions. Here are some ideas on how we can build a better future.

A more open future for music

The music industry’s copyright evolution can and should happen through three sequential and closely related mechanisms: 

• A rethinking of our collective copyright philosophy 
• The development of universal and scalable copyright tracking technology 
• Subsequent technological innovation allowing anyone to remix, reinterpret, modify, or create 

The past several decades have shown that the music business doesn’t fully understand how technology has upended the ways in which cultural trends emerge and its implications for copyright. Consider how musicians emerged in the 1980s: an artist would typically build a local following via shows and radio, attract the attention of label A&Rs, get signed to a deal, and then be pushed to the mass market via top-down marketing, including label-driven promo tours, radio interviews, and MTV. Today, the exact inverse is true: artists gain viral, fan-led followings on platforms like TikTok, then get signed and leverage their existing fanbase to monetize more effectively with label assistance. The 1980s saw talent emerge from the industry itself, from executives to the listeners; the 2020s are bottom-up, with fans driving boardroom decision-making. 

Rather than encouraging fan-led creation, the music industry often takes a ‘sue instead of innovate’ approach to independent creators and remixers. How many culture-shifting works haven’t been created because artists fear takedowns, account deletions, or lawsuits, or lack the tools to make them? 

While the industry has adapted their artist signing processes to suit this trend, the same cannot be said for fan-led UGC and content. Rather than encouraging fan-led creation, the industry often takes a “sue instead of innovate” approach to independent creators and remixers. How many culture-shifting works haven’t been created because artists fear takedowns, account deletions, or lawsuits, or lack the tools to make them? 

There is strong evidence that remix culture is vital to music’s appeal. In the past several years, two remixes of otherwise average-performing records—Seeb’s rework of Mike Posner’s “I Took A Pill In Ibiza” and Imanbek’s rehash of SAINt JHN’s “Roses”—have become certified global smashes, racking up 1.4 billion Spotify streams apiece, 22 times and 14 times the streams of their original versions, respectively. Similarly, the two most commercially impactful records of the past several years, Lil Nas X’s “Old Town Road,” which remains the record holder for most weeks at the number-one Billboard chart position (17) and Olivia Rodrigo’s “Driver’s License,” which catapulted the singer into unparalleled gen Z influencer power, were both surprise hits. “Old Town Road,” in fact, emerged as a viral trend (via TikTok) so quickly that radio DJs, who typically get their records from labels, were ripping the song’s MP3 off YouTube and sending it to each other just to meet listener demand. 

While neither single started as a remix, my point is simple: Nobody knows what is going to be a hit. Yes, some industry veterans may have a better ear than the average consumer, but hits are unpredictable and unique events, a trend that has become increasingly true in our hyperconnected culture. If nobody knows where the next smash will emerge from, taking a top-down approach to copyright enforcement against UGC—where the industry believes “We know better; this won’t work”—is shortsighted. We should be encouraging and empowering creators, modders, and remixers everywhere, not stifling them. 

The next step in empowering a limitless culture of remixing, reinterpretation, and UGC at scale is building the technological copyright infrastructure which will allow it to both function and compensate rights holders. Fintech’s boom over the past several years offers powerful insight on the growth that a legacy industry can experience when universal rails are built that allow the construction of complex user-facing applications on top of them. Just as Plaid’s APIs allow scores of wildly successful financial applications to seamlessly integrate and interact, music needs a technologically driven copyright layer to enable UGC at scale. 

Imagine the possibilities afforded in a world where a universal copyright layer exists. Any song could be disassembled to its constituent parts—often called “stems” in music production—and stamped with a unique signature identifying the original rights holders, splits, monetization accounts, and contact information. From there, digitally signed stems could be imported in Digital Audio Workstations (the software applications such as Ableton Live that music producers create in) and be mashed up, remixed, sampled, and rearranged without limits, all while being identifiable with digital signatures and inaudible watermarks. Once a creator is ready to release a work containing digitally signed stem(s), streaming platforms could programmatically identify underlying rights holders in the work and allow for seamless, automated, and instant monetization at scale—a far cry from the industry’s current sampling and licensing processes, which are manual, onerous, and restrictive. Emerging blockchain technologies may well be the technological backbone for flexible copyright management at scale: without industry buy-in, however, we will likely see incremental rather than dramatic progress. 

Of course, any grand vision for our industry shouldn’t just impact skilled creators who are proficient in Ableton Live: these copyright rails would further allow powerful consumer-facing applications to launch with built-in monetization capabilities for rights holders from day one. 

Several intriguing startups offer us a glimpse into what this future might look like. Producers and creators are now empowered with millions of premium, on-demand samples, like those that now dominate pop music via Splice; the music collaboration platform also supports its creators financially, having paid them upwards of $30 million as of 2020. More recent startups are pioneering the deconstruction of songs into stems with multiple variants, which can then be recombined into novel original works and cryptographically signed unique NFTs (Async.art); others are creating the world’s most extensive library of pre-cleared music samples from commercially released works, radically simplifying the time-tested process of “crate digging” for music producers and DJs (Tracklib). Even tech behemoths are beginning to innovate in this space: Apple, which acquired Shazam in 2018, recently launched an Apple Music exclusive tool, powered by Shazam’s technology, which can identify individual songs and samples in DJ mixes, allowing mixes to be monetized and streamed legally on the platform—an industry first. Some startups are thinking even bigger, building forward-looking copyright infrastructure quite similar to what I describe here (like Pex, for example). Their challenge will likely be industry buy-in, as they attempt to overcome deeply entrenched attitudes toward UGC and creation at scale.

But while these companies are innovative, they currently primarily serve experienced creators. The true “unlock” for the music business will come when universal copyright rails allow average users to easily mod, remix, and play with their favorite songs in musically coherent ways via consumer-facing applications. The inability to do so is not a technological limitation, but a lack of imagination, willingness, and underlying copyright infrastructure. 

Startups such as Audible Reality, which offer flexible “audio filters” to change the playback experience of music, offer an early look at what such a world might look like. Imagine a future in which anyone, anywhere, can create a unique way to hear a song already loved by millions, then distribute and sell that audio filter at scale. Such a world sounds remarkably similar to gaming’s present mod culture, and is one the music industry needs to aim for, quickly. 

The music business needs to empower technology startups to do for audio what TikTok did for video, putting the power of limitless creation at scale at the fingertips of all.

Universal copyright rails would likely unlock the creativity of millions, along with billions of dollars in revenue for the industry and a thriving startup ecosystem. The music business needs to empower technology startups to do for audio what TikTok did for video, putting the power of limitless creation at scale at the fingertips of all. If and when music realizes the power of unbundling the song by modularizing its constituent parts through copyright innovation, I think the industry will see engagement and growth that make the current streaming boom look like a side hustle. 

This vision will sound far-fetched and possibly ridiculous to some in music. I’d ask them to pause and consider one thought: how do you think the concept of game livestreaming and esports sounded 20 years ago? Nobody can predict the future. Gaming has shown us the need to throw open the doors to innovation and see what emerges.

On building experiences and virtual worlds

While copyright innovation is a critical step toward music capturing a larger share of attention going forward, we can’t stop there. A similarly grand vision is needed when rethinking what a music release means. 

Music is a notoriously “fat head” business, in which the very top earners eat the entire long tail of attention and economic distribution, a phenomenon that only seems to be increasing each year as streaming grows and physical record sales level off or decline. For context, over 90 percent of streams go to the top 1 percent of artists: based on my personal experience at a streaming service and as an artist, I suspect that this top 1 percent is itself similarly stratified, with the creators at the very top taking home the vast majority of total streams. 

This uneven distribution of revenue means that the music industry, much like film, is a hits-based business: one blockbuster pays for a hundred flops or smaller projects. Taking this one step further: if the industry is failing to fully capitalize on the releases of its marquee artists due to marketing myopia, that has huge downstream implications for smaller artists, whose very existence (at least in the label ecosystem) quite literally depends on the success of superstars. The more revenue labels can drive from top earners, the more risks they can (ideally) take in signing new, emerging, or unique artists, which benefits the long tail. 

The consumer experience, aside from the convenience of streaming, has changed very little, as well. A recent ultra-top-tier album release offers a good case study in how little investment is made into an immersive experience for consumers: when I went to listen to the album on Spotify, the “first of its kind’’ listening experience consisted of a handful of short videos with the artist talking about the album, a bit of custom UI design, and not a whole lot else. The gaming industry is building immersive virtual worlds, connecting millions around the world simultaneously, and empowering anyone, anywhere, to become a creator. Are a few vertical videos of an artist on a soundstage the best we can muster for a AAA album release?

Despite the industry’s current reticence to develop compelling extra-musical content for branding and revenue growth, this has not always been the case. In the 1980s and ’90s, music leaned heavily on new technology—cable television—to radically expand its footprint in popular culture and its bottom line with music videos. Michael Jackson’s “Thriller” video, the art form’s canonical piece of content, offers a prime example of the growth and impact possible for the industry when compelling IP is paired with bold investment in new technologies and storytelling. The video, which became a bonafide cultural phenomenon still recognizable today, didn’t merely cement Jackson as the top entertainer on earth: it resurrected its eponymous album from declining sales, making Thriller the best-selling album of all time globally, with over 70 million units sold. 

In the decades since, however, music videos have mostly receded to the periphery of pop culture (with a few notable exceptions, such as Drake’s Hotline Bling), following the same fate as many legacy media formats in our time of interactive hyperconnectivity. The music business needs to rethink what the “music video” of the next decade should look like. I strongly doubt it is a handful of short videos on a streaming app.

Imagine an interactive album release, driven by a purpose-built mobile app, which allows fans to experience an immersive, exclusive auditory and visual world that evolves and grows over time: behind-the-scenes footage of the album’s creation, live virtual performances from the artist, interactive community features to engage with other fans, and the ability to interact with—and modify or remix—the album yourself as a fan, then distribute this work on social media to further drive the flywheel of attention. While this level of experience will likely be reserved for top-selling artists at first, I believe it’s an area that will one day see a thriving startup community open these types of capabilities up to artists of all sizes.

This sort of experience already has some precedent: Travis Scott, Ariana Grande, and Lil Nas X have all performed virtually during the Covid pandemic, with astronomical results: tellingly, however, these experiences have been in the aforementioned virtual worlds of Fortnite and Roblox, not in ones built and operated by the music industry. Scott’s Fortnite concert drew over 12 million live viewers, cemented his role as a larger-than-life cultural icon, and drove immeasurable social buzz and brand equity. Compare such engagement to the 2021 MTV VMAs—a show that featured dozens of artists, not just one—which drew only 1.49 million total viewers, an all-time low. The takeaway is clear: legacy fan experiences simply don’t cut it anymore. Gaming has quite literally changed the game for all other forms of media, and the music business would be wise to adapt.

From a business perspective, building interactive fan experiences would solve one of music’s most pervasive problems: the lack of a direct channel of monetization between artists and fans. Currently, artists and labels are forced to monetize their fan bases on the terms dictated by other platforms—streaming apps mostly, although social media, retailers, and live events also play a role—exposing them to the whims of a middleman, platform fees, and an inability to own the brand-to-consumer relationship (think email and credit card info) that is critical to long-term brand building and revenue generation. 

Currently, artists and labels are forced to monetize their fan bases on the terms dictated by other platforms—streaming apps mostly, although social media, retailers, and live events also play a role—exposing them to the whims of a middleman, platform fees, and an inability to own the brand-to-consumer relationship that is critical to long-term brand building and revenue generation. 

To be clear, I do not think such interactive experiences could or should replace streaming apps—it’s not only impractical but would likely be illegal—but I do think the industry needs to radically expand the scope of its focus, lift the marketing myopia that is pervasive in taking artists to market, and reap the economic benefits of such a vision. I hope that such a transformation of the industry would allow labels and other copyright holders to take more risks, sign a larger swath of creators, and expand the pie for all. 

Designing music’s future

The meteoric rise of gaming over the past four decades offers a blueprint for how to capture engagement in our modern attention economy, where time is scarce and options are more abundant than ever. The industry’s relentless pursuit of community, interactivity, and creativity—enabled by technology being pushed to its limits—is the secret sauce of the media format now eating all other forms of entertainment. 

Like any legacy media business, the music industry can learn much from how gaming has ascended from niche hobby to global powerhouse to grow its own share of voice and bottom line. Unlike other legacy formats, however, music has an inherent and powerful advantage: its creators are the arbiters of pop culture, driving our collective reality forward with their creations, memes, and syntax. The combination of music’s cultural influence with a more progressive view of what music can be in the 21st century would likely be a truly powerful force for the industry, artists, and fans around the world. It’s one I sincerely hope we get to see.

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  Dave Edwards is the Head of Revenue at Audiomack. He has worked in the music industry for the past 20 years, first on the major label side, then producing electronic and pop music, and now at a music tech startup.

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