Culture’s Most Valuable, Least Valued Asset

There’s a stubborn and fascinating paradox at the heart of the music business. It is often intuitively felt, but rarely articulated plainly.

Music is one of the most culturally powerful forces on earth. It anchors memories, shapes identities, moves crowds, ignites movements, defines decades, and travels further and faster than almost any other creative expression. It also underpins nearly every other entertainment and social experience we care about.

And yet… commercially and systemically, it is profoundly undervalued.

Photo by Ella Linder

We live in a world where more minutes of music are consumed every day than any other entertainment good, yet this generates dramatically less revenue than film, gaming, sports, or even podcasting when measured on an attention-weighted basis.

How did the very colour that is essential to human living become valued so little?

Music as a Secondary Entertainment Good

One uncomfortable truth explains a large part of the problem: music is overwhelmingly consumed as a secondary activity- something I offhand mentioned in an earlier post.

We rarely sit and explicitly listen to music as a primary action. We listen while doing something else- working, cooking, shopping, travelling, exercising… even when consuming other forms of media (have you ever watched a silent film or advert? Or played a silent game?). Music is a critical emotional amplifier- and is used with devastating effect in both conscious and unconscious ways.

These other activities draw stupendous value from the addition of music, but the commercial value created overwhelmingly goes elsewhere. Music enhances, elevates and enriches… but rarely extracts proportional value for itself.

This “supporting role” dynamic has shaped most modern use-cases. Music is the emotional fabric of culture, but has not become the economic centre of it.

… undervalued in business.

This undervaluation shows up everywhere- notably illustrated by public performance licensing (this has come up for me in 2 recent conversations).

In the US, still the world’s largest music market, the penetration of public performance licensing in shops, cafés, bars, and similar small businesses is astonishingly low- particularly for such a well developed market, and in comparison to Europe. Many of these local operations operate for years using music as ambience and brand-building atmosphere to generate commercial uplift… but without paying for the right to do so.

Not because they’re malicious, but because music, as a concept, feels free. Something ambient. Something that “just exists in the room”. “I pay for [the music with] a Spotify subscription… why do I need to pay again?”

My eye caught a similarly veined Facebook campaign recently in the UK. A small music venue was bitterly bemoaning the PRS license fees for the right to host live music performances. They’re argument was the fees were extortionate and that they would make a stand by not paying as it was “crippling their business”. I understand the challenges of the macro economic climate, but this framing conveniently skates over the very fact that selling access to music is what their business does! It is a vital, and supplied, input!

This narrative appears time and again, for example in micro sync licensing. Music is essential for the experience, yet seen as optional for the budget. Maybe cinemas also argue that film licensing is too expensive? Or gyms that treadmills are too costly? I can’t say- but I do see that with music the argument is consistently pervasive.

… undervalued by consumers.

Despite the emotionally indispensable nature of music, the market (particularly in the streaming era, and since pirating) has trained consumers that access to all music EVER RECORDED should cost less per month than a daily coffee- that music should be accessible anywhere, instantly, and without friction.

In one sense this 'access' is an achievement, only possible through the facilitation of the internet, digital and mobile- and is what has driven wider usage of music than ever before. The streaming revolution delivered enormous benefits, including increased headline revenue growth, but the pricing dynamic produced by this decades long evolution has also reframed music in the minds of consumers. Music has become a utility- like water, electricity, or internet access. A never-ending, instantly-accessible resource bundled neatly into a small monthly fee.

This isn’t necessarily a problem in and of itself- utilities are essential, yes. But utilities are also commodities. The core problem is that commodities compete on price, not intrinsic value. This framing has caused a collapse in the psychology of ‘value’- illustrated by the decrease in pricing power (DSPs only leaning into price raises recently) and the associated decline in average revenue per user, ARPU (arguments another time on whether this is a helpful metric or not!).

Consumers see music the same way they see tap water or electricity- vital, but expected to be cheap.

Culturally Critical, Commercially Undervalued

If we accept that music is indispensable yet commercially under-punching, the natural question becomes this- why has the market consistently depressed the value of something so fundamental?

1. Music Leaks Everywhere (Non-Excludability)

Music is more universal than other entertainment goods- say film, gaming or books. This is both a blessing and a curse as each of those (tends to) have structured and discrete access. Music is often inherently non-excludable in practical environments- it is tricky to universally “police” the sounds of a café in quite the same way TV broadcast rights or theatrical windows are. You can walk past a shop and hear music for free. A bar can plug in a Bluetooth speaker and function perfectly well. A small venue can host a local band oftentimes the rights society will ever know.

This is as much an argument for stronger policing and licensing as it is for controlling access. When something can be accessed for free, its value is often perceived to be free.

2. Emotional Goods Are Hard to Price

Humans routinely undervalue emotional goods while overvaluing functional ones. We’ll pay more for broadband or a new phone upgrade than for the art that affects our mood (or shopping preferences).

Music is a fundamental ‘contextualiser’ and ‘amplifier’, but these can be abstract in their value. They are hard to define, and measure. Art doesn’t need to have utility, but that makes anchoring a price incredibly difficult (particularly when it is seen more and more as a commodity- which creates a race to the bottom on price).

3. Fragmented Rights Infrastructure Depresses Value Capture

This is the other side of the coin to point 1- music is not only difficult to track, but is uniquely hampered by an extraordinarily complex rights ecosystem: multiple rights types, multiple licensors, territorial fragmentation, partial data visibility, and billions of usage events being pushed through pre-digital infrastructure.

Value that is hard to collect often goes uncollected. Invisible value doesn’t command leverage.

5. A Market Optimised for Scale, Not Pricing Power

The last decade of streaming growth hardwired a logic of scale over scarcity. More users, more content, more streams, more consumption, but at a flat (or declining) ARPU that is the natural conclusion for a generation trained to see music as a utility. Generative AI is only going to exacerbate this problem (as Deezer are telling us they're already seeing).

Simply put, 'more' does not mean more value.

Interestingly I do think there could be a future move to ‘Free to Play’ music- as has happened in gaming. That would likely generate more questions than it answers, so one for another time!

6. Cultural Assumptions Have Hardened

Perhaps the most important factor that compounds all of the above is psychological. Since Napster, a cultural assumption has slowly calcified- that music indeed should be inexpensive, abundant, and instantly available.

This cultural reset is one of the most powerful forces in the entertainment economy. And it continues to anchor price expectations, licensing debates, and consumer attitudes- even as usage, reliance, and value creation continues to grow.

The Paradox

Music has never been more widely used, nor more culturally impactful. Yet the economic systems and consumer psychology around it have slowly eroded the value that music is able to capture- even if it is directly helping create that very value.

This isn’t necessarily a complete Doomsday scenario, but it does need to be called out- 1) so we can consciously, and collectively, fight against it and 2) so we’re ready to participate in the subsequent 'value added' wealth. It is not a zero-sum game, yet it is often treated as one.

I hope there is a turning of the tide to come. The institutional money pouring into the industry in some senses can smell it (... if they are not trying to commoditise it).

We need to fight to recompense the value that music brings to our lives- or we will be left with hordes of ‘valueless’ slop- homogenous, and created in the cheapest way possible. That is not a future I want!