/Music

There's something about conversations on MTV that has irritated me for years: everybody talks about the culture and almost nobody talks about the invoice. People bring up Madonna in a wedding dress at the 1984 VMAs, Cobain in a green cardigan at Unplugged, Carson Daly at the window over Times Square, and they do it in the tone of someone describing an artistic movement that was born on its own because kids needed guitars. It wasn't born. It was assembled, by people who came from radio, who understood formats and demographics, and who knew how much a cable operator will pay to avoid customers phoning in to complain. I'm going to try to explain this for anyone who really wants to understand the business, and I'll say upfront that I won't be kind to nostalgia. Nostalgia is a terrible analytical instrument. It's good for selling t-shirts. Let's start at the start. On 1 August 1981, one minute past midnight, the channel launched with "Video Killed the Radio Star" by The Buggles. A bad joke or a stroke of genius, depending on who's telling it. The company that put it on air was Warner-Amex Satellite Entertainment, a partnership between Warner Communications and American Express, which should tell you something if you're paying attention: the money behind it didn't belong to a record label or an artist. It was cable money and credit card money. The idea is usually credited mainly to Bob Pittman, and it consisted of transplanting the logic of a rock radio station to television: continuous programming, a familiar voice linking everything together, tight rotation of the same tracks until the audience knew them by heart. Pittman had worked in real radio and knew that what holds an audience isn't variety, it's predictable repetition that feels like variety. Years later he ended up at AOL and then at a giant of American radio, and I think there's a straight line there that nobody draws. I'm not going to write that piece, so we'll leave it. What matters is the first effect, the simplest and most brutal: the content was free. The record labels were already making promotional videos, mostly for markets like the British and Australian ones, where television played them, and they handed them to MTV without charging a cent. It makes sense, because to them it was advertising. A clip in prime time sold records, and selling records was their business. So you have a television channel whose raw material is supplied for nothing by the people who produce it, and which then sells the time between songs to advertisers. If you want an elegant name for that, call it an enviable cost structure. I call it borrowing other people's work and keeping the margin. That's the top layer, the one anyone can see with five minutes of thought. The next layer is the one that interests me more. MTV's customer was never the viewer. The customer was the cable operator, and the proof is the "I Want My MTV" campaign of 1982. If memory serves, the channel started out reaching only a few million homes, and neither New York nor Los Angeles had it on cable, which was an embarrassing problem for a brand that wanted to be both fashionable and an industry force. The solution was to put rock stars in front of the camera telling kids to call their local cable operator and demand the channel. It was lobbying with guitars. Faced with an avalanche of calls from teenagers, the operators gave in, because an annoyed subscriber is a subscriber who cancels. And here comes the mechanism that explains almost everything that followed: the operator pays MTV a fee per subscriber, every month, in every home where the channel is included in the package, whether or not anyone in that home watches it. Not much, in the range of tens of cents per home. But multiplied by tens of millions of households, it's an annuity. Recurring, predictable revenue that doesn't depend on anyone having enjoyed the latest Duran Duran video. I'm exaggerating a bit, I admit. Ratings mattered, and mattered a lot: for selling advertising, for negotiating renewals, for keeping the channel looking alive. But the revenue floor was that one, and a floor like that changes the behaviour of whoever stands on top of it. A company whose main income comes from being in the package worries, above all, about being hard to remove from the package. MTV made itself indispensable to an entire age group, and that was the real product. Back to the labels. It's worth looking at what they got in return for their generosity. In a short time MTV became the filter through which the music that was going to sell millions had to pass, and that is power. There's a story that circulates about Michael Jackson's "Billie Jean": the channel, whose playlist at the time was very white and centred on guitar rock, resisted airing Black artists, and the then head of CBS Records, Walter Yetnikoff, allegedly threatened to pull the whole company's video catalogue. The video aired in 1983. That's the version that circulates; some people at MTV tell a less dramatic one, and I have no way of arbitrating. Either way, the episode shows something the folklore tends to hide: the relationship was one of force, on both sides, and the culture that came out of it, with its heroes and its exclusions, was the result of commercial negotiations before it was a movement of any kind. And there was a second-order effect that I find fascinating and rarely discussed. Because the video became a condition for getting into rotation, video budgets shot up. "Thriller" reportedly cost somewhere around half a million dollars, which was a scandal then and is the price of an insurance commercial today. The labels accepted the costs because the return in sales justified them, but a good part of that cost was treated as a recoupable advance against the artist's earnings. In other words, the music that fed the channel for free was largely paid for by the musician, who only saw money after covering the video. A perfect irony. Meanwhile Warner-Amex was losing patience. MTV apparently only turned a profit around 1983 or 1984, and the rest of the cable operation was a money pit. American Express left, and between 1985 and 1986 Viacom bought the whole group of channels, MTV, Nickelodeon and VH1, for something like 685 million dollars. At the time it seemed like a lot. In retrospect it was a bargain with few precedents, and I think the reason isn't the one people usually give. It's usually said that Viacom understood youth culture. I think Viacom understood collective bargaining. Owning several channels, each with a well-defined demographic, kids on Nickelodeon, teenagers on MTV, young and later older adults on VH1, lets you do something very powerful: go to the cable operator and say you want to renew everything together, and that if they want to drop one channel, they lose the favourable rate on the others. Tacitly, that's what it is. From what I've read, for years it was Nickelodeon, not MTV, that supplied the biggest slice of profits for much of the parent company, and nobody was singing or shaking their hair. It's a portfolio business, with segments sold to advertisers who want to buy an entire age group at once, plus negotiating leverage. The creative side exists, of course, but creativity was the starter motor, not the fuel. Then came the expansion abroad. MTV Europe launched on 1 August 1987 with Dire Straits, which has its own charm, because the song talks in a fairly caustic way about MTV itself. Then came Asia, Latin America, and the local versions, many of them under licence or in joint ventures. For readers in the Portuguese-speaking world, the most interesting case is the Brazilian one: MTV Brasil operated for more than twenty years as a licence held by Abril, with its own programming and its own faces, and only in 2013 did Viacom take the brand back directly. The lesson is clear. The brand travels, the programming adapts, and the owner collects royalties and prestige with most of the risk on the local partner's side. If that sounds like hamburger franchising with better hair, it isn't far off. Now, if all of this was so good, why did MTV stop playing music? It's the question I get asked most, and honestly the standard answer, "because MTV sold out" or "because it lost its soul", strikes me as lazy. In 1992 "The Real World" premieres, made by Mary-Ellis Bunim and Jonathan Murray: seven strangers in a New York apartment, cameras rolling. It was cheap. I won't invent a percentage, but a scripted episode with writers, actors and sets cost a multiple of what was spent here, and the format allowed something the music video never did: MTV owned what went on air. The clip belonged to the artist and the label, and MTV rented the attention. A show of your own is intellectual property that repeats, that can be sold to other markets, that turns into a library. And in terms of attention, a three-minute video that the viewer swaps for another channel at the first chorus is far worse advertising inventory than a half-hour programme where people get hooked by the storyline. More time watching, more ads to sell. Over the years the principle stretched. "TRL" from 1998, "Jersey Shore" in 2009, "16 and Pregnant" and "Teen Mom". By the figures I've seen, "Jersey Shore" reached close to nine million viewers for a season premiere, an obscene number for a channel that had lived for years off a teenage niche. The people cast earned, by reports, pocket change relative to what the format generated. But nobody at the company cried over that. That said, I'll go back and correct myself a little. If I'm saying the culture was irrelevant, I'm being unfair. Without the culture the leverage wouldn't have existed. "I Want My MTV" worked because kids really wanted it, and the package could only be renegotiated in Viacom's favour because dropping MTV caused real revolt in homes. The culture was the product that sustained the bargaining power, and you can't manufacture that by decree. It's just that power is an asset that wears away when the place people enter through changes. And it changed. Napster in 1999, iTunes in 2003, YouTube in 2005, bought by Google in 2006 for about 1.65 billion dollars. In 2009 Vevo arrives, a platform created by the labels themselves to distribute the videos they had previously handed over to MTV. The question that matters follows: why hand them for free to a channel that only reaches homes that pay for the package, when I can put them on a site where anyone can watch them, with no middleman? MTV had lived by being the only door. When doors multiplied, the business of guarding the door evaporated, and music, which had been free to them, became free to everyone and therefore worthless as an exclusive. To me that's the centre of the matter, more than taste, more than "kids changed". A doorman's business dies when there are no longer doors to guard. I'm blunt about this because the pattern is so recognisable to anyone who depends on a platform they don't control. A site owner can lose a large chunk of search traffic after an algorithm update without having touched a thing. It's just the door owner changing the lock. Today's content creator is in MTV's 1981 position without the leverage: dependent on a distribution channel they don't control, producing for a platform that pays when it feels like it. The difference is that MTV managed to invert the relationship with the operators. Most of us, in general, don't. What followed was the slow erosion of the revenue floor. The number of US households with paid television peaked at around a hundred million, around 2010 or 2011, and has only gone down since. Every cancelled subscription takes with it the monthly fee of every channel in the package, MTV's included, and nobody can make that up with advertising because advertisers follow audiences, which also migrated. In 2019 CBS and Viacom merged again, in a move that struck me as consolidation of declining assets more than strategic vision, and in 2022 everything became Paramount Global. In 2025 came Skydance. MTV, the brand, survives as a licence and a label, and the music channels that made it famous have been closing in various markets, as far as I know. It's worth checking what's still on air in each country before treating the subject as closed, because these decisions change fast. So, for someone who wants to understand the business behind MTV culture, what would I take from this? A few things, and I doubt they're the ones you'd expect. First, the customer is rarely who it seems to be: MTV sold viewers to advertisers and channels to operators, and the viewers were, at bottom, the raw material that gave value to both. Second, free content is an elegant trap. It gives you a fantastic cost structure while scarcity is yours, and leaves you with nothing the day the supplier discovers it can sell direct. Third, owned intellectual property only seems boring until the day it's the only thing you have left, which is why the turn to reality shows looks to me more rational than tragic, even if culturally it leaves me cold. And fourth, we keep thinking cultural brands die of bad taste, when they almost always die of lack of leverage. Some things stay unresolved. I can't say, for example, whether there was a version of MTV that survived the streaming era, or whether the model itself was doomed from the moment Vevo appeared. Sometimes I think yes, that all it needed was to buy early whatever would become YouTube, and straight afterwards I think that's the cheap wisdom of someone looking backwards. There are those who argue MTV should have become an events and festivals producer, and maybe, but I don't know whether that pays the bill for what it was. I keep going back and forth on that one.