The Music Industry. Patrik Wikström

Introduction: Music in the Cloud

      One Sunday in early March 2008, the industrial rock megastar Trent Reznor, a.k.a. Nine Inch Nails, released his sixth studio project, Ghosts I–IV. The project consisted in total of 36 instrumental songs recorded during ten weeks in the autumn of 2007. Things were different this time though, primarily because even though Nine Inch Nails was a global brand and Trent Reznor had millions of devoted fans all over the world, he was at the time without a contract with a major record label after the relationship with Interscope Records had ended. Reznor reflected on the termination of the contract a decade later: ‘We weren’t selling enough records to warrant the giant advances that we’d been promised; these were contracts that didn’t see the cliff coming’ (Marchese 2017). The termination of the contract with Interscope was the beginning of a period when Reznor was able to experiment freely with how to engage and communicate with his fans. Reznor announced on the Nine Inch Nails website that ‘As of right now Nine Inch Nails is a totally free agent, free of any recording contract with any label.’ ‘I have been under recording contracts for 18 years and have watched the business radically mutate from one thing to something inherently very different and it gives me great pleasure to be able to finally have a direct relationship with the audience as I see fit and appropriate.’

For Ghosts I–IV, Reznor decided that the appropriate distribution channel would be the official Nine Inch Nails website ‘nin.com’. He also chose to release the songs under a licence that allowed fans to remix and redistribute the work in a multitude of different formats. On 13 March, Reznor launched the second phase of the project. First, multitrack versions of a number of songs from Ghosts were added to the remix section of ‘nin.com’ where fans could upload their own remixes, listen to and review the remixes from other fans, vote for their favourites, and so on. Second, Reznor launched an Internet-based ‘Film Festival’ on YouTube where he invited fans to create and upload their visual interpretations of the songs. The fans’ reception of the Ghosts project cannot be labelled as anything but exceptional. By the end of 2008 fans had uploaded more than 2,000 videos to the Film Festival, and an unknown but large number of user-generated remixes had been posted to ‘remix.nin.com’. Besides remixing and uploading the tracks from Ghosts I–IV, fans were also able to download nine of the original songs for free from the website. They were also offered four other product packages, ranging from a ‘$5 Download’ which included all 36 songs in various formats to a ‘$300 Ultra Deluxe Limited Edition Package’ which included downloads, CDs, DVDs and glossy booklets, all signed by Reznor himself. According to Reznor, during the first week after the launch 781,917 transactions generated $1,619,420 in sales revenue. In addition, the ‘$5 Download’ version was released on Amazon MP3 Downloads and remained as one of their top-selling albums, at least during March and April 2008.¹ It is notable that this result was achieved while the album, in its entirety, obviously was also available via various illegal file-sharing networks and services.

Trent Reznor continued experimenting during the years that followed, both with his own projects and with others, but in September 2012, Reznor announced that his band How to Destroy Angels had signed with the Sony Music label, Columbia Records, to release a number of their upcoming albums (Reznor 2012). Reznor concluded in a Facebook post that ‘complete independent releasing has its great points but also comes with shortcomings’. When Nine Inch Nails’ eighth album ‘Hesitation Marks’ was released by Columbia Records in 2013, it marked the formal conclusion of Trent Reznor’s experiments with independent distribution and promotion.

      Reznor reflects on his time as a DIY musician: ‘It took the wind out of my sails as far as thinking of direct-to-customer as a sustainable business for a musician. In a way, that experience gave me a pre-emptive look at music today. You’re not making money from albums; instead they’re a vessel for making people aware of you. That’s what led me to thinking that a singular subscription service clearly is the only way this problem is going to be solved. If we can convert as many music fans as possible to the value of that, in a post-ownership world, it would be the best way to go’ (Marchese 2017).

      Reznor’s bruising experience of the disruption of the music economy during the first two decades of this millennium is a striking parable of the journey that the industry has taken since Shawn Fanning² released peer-to-peer file-sharing to the masses in 1999 and changed the music industry forever. The insights gained during this turbulent process have been both costly and painful, but it was during this period and through experiments such as Ghosts I–IV that the contemporary music economy was forged.

      While Ghosts I–IV was not as financially viable as Reznor would have liked; it was a creative and fundamental break with the twentieth-century music industry model where vertically integrated multinational music companies controlled how, when and where their albums are released, promoted and distributed. The core of the Ghosts I–IV project was not the set of tracks recorded in Reznor’s recording studio in the outskirts of Beverly Hills. Rather, it was Reznor’s relationship with his fans and in the thousands of remixes, videos, comments and blog posts uploaded to nin.com, YouTube, ninremixes.com and a host of other more or less shady places in the Cloud.

‘The Cloud’ has been used as a metaphor to denote the Internet since the late 1960s and early 1970s, when Vinton Cerf, Robert Kahn, Robert Metcalfe, Leonard Kleinrock, Larry Roberts and many others invented the technologies behind the network of networks. A cloud was considered to be a useful and vague enough symbol that could be used to summarize all the resources, cables and gadgets connecting the computers at the nodes of the network (Figure 0.1). These days, ‘The Cloud’ is still used as a metaphor for the Internet, but it also conveys other meanings. For more than twenty years, the computer company Sun Microsystems (acquired in 2010 by Oracle) pushed the slogan ‘The Network is the Computer’. Sun suggested back in those days that the resources in the Cloud would soon become so powerful that the computers at the network nodes would no longer have to be sophisticated and expensive but could be made extremely simple and cheap. Eventually, technology did not choose exactly that path, but today, the Network (or the Cloud) is indeed the Computer and a considerable proportion of the resources we use on a daily basis for computation and data storage are provided by large ‘server farms’ or ‘data centres’ owned and operated by the world’s dominating technology firms (see, e.g., Carr 2008).

      Figure 0.1 The Cloud as an Internet metaphor

In this book, I apply the concept of the Cloud to the field of music in an attempt to capture how the music industry has been affected by this technological development. I examine how the industry during the first two tumultuous decades of the twenty-first century completely shifted its centre of gravity from the physical to the virtual – from the Disc to the Cloud. At the turn of the millennium, an average young party-goer in a large and mature music market