In 1781, Mozart wanted to advance his music career. So, he moved from Salzburg to Vienna, the cultural capital of Austria.
At this time, Mozart could not record music, which made it scarce. If you wanted to hear him play, you had to listen in person. Fans had personal relationships with their favorite musicians. Wealthy aristocrats financed Mozart’s travels and watch him perform.
This changed when Thomas Edison invented the phonograph. For the first time, music was infinitely replicable and could last forever. Since fans didn’t have to listen to music live, they could support their favorite musicians in new ways.
Power and attention centralized. Artists lacked the skills and capital required to distribute their music. They had to live in NY, LA, or Nashville, where they did favors for industry insiders and paid their dues. Small groups of “expert” executives called the shots.
Labels had all the power. Their business models depended on mass market reach and distribution, so they financed music for people with “average” taste.
With strong connections to radio stations, record stores, and television networks, artists could not garner attention without the labels. The big got bigger, but it was hard for small artists to break in. This system worked well for decades until the rise of illegal streaming, and later, iTunes, where fans could buy digital singles instead of full albums. Consumer spend on recorded music plummeted, falling 71% from 1999 to 2014.
On the internet, there’s no scarcity. The laws of supply and demand no longer work when there’s infinite supply and replication is easy.
The music industry needed a new revenue stream.
My favorite example is Soulja Boy’s Crank Dat. He used to make Top 40 playlists and upload them to torrent sites. Then, he slipped his own track in there and people thought it was a hit. Perception became reality when I started dancing to it at Bar Mitzvahs.
The answer: concerts.
Today, 87% of revenue now comes from touring versus recorded music and live music is the bedrock of artists’ income streams. Because of the internet, artists outside the Top 100 are more successful than they’ve ever been.
Because of YouTube and streaming services, modern artists are using new strategies to reach their fans. We’ve shifted to a song-based economy, where playlists trump albums and the old rules don’t apply.
- Release music more often.
- Focus more on singles, and less on albums.
- Record videos to connect with fans.
Fans are discovering songs in new ways:
- Viral videos and memes
Power has shifted from gatekeepers to the wisdom of the crowd.
On social media, artists are re-inventing what it means to be a celebrity and finding new ways to connect with fans.
They’re brilliant community builders — they’re real, accessible, and engage fans directly.
Audio and video are coming together on YouTube, minting global superstars.
Gangnam Style was so popular that tourism to South Korea increased more than 15% the year after it was released. Justin Bieber got his start on YouTube with “Cry Me a River.” He just broke the all-time record for simultaneous tracks on the Billboard 100. And artists like Taylor Swift and Jon Bellion bring fans along the journey of making a song with “Making Of” videos on YouTube, looking right into the camera and connecting with fans in new ways.
The music business is inverting. Music used to be the bottom of the funnel, but now, it’s the top of the funnel.
With brand deals, startups, and merchandise sales, artists are building a portfolio of revenue streams. People don’t just buy music — they buy the brand.
Today, we’ve returned to the days of Mozart, but this time it’s global. Artists are building passionate communities. Fans have direct relationships with their favorite artists.
They communicate like friends, not businesses. We’re with them when they make music, they share their secrets with us, they’re always with us on social media, and they come to our hometown to play music for us.
They’re our best friends.