How streaming services like Spotify saved the music industry
his year is billed as the year of judgment for music streaming. But here’s the good news – your resolutions don’t have to include canceling your subscription. Streaming saved the music industry and created a much improved landscape for recording artists.
As always, the truth is complex, and it would take a book to cover it all. The basics are as follows: before streaming, and despite iTunes’ best efforts, the digitization of music had led to wholesale theft. World industry was contracting. He was therefore risk averse, which made it more difficult for any new artist to attract investment and break through.
Anecdotally – if you’ll pardon my foray into lived experience – it was a dark time. People were being laid off or jumping ship for music publishing or technology. Even more depressing, there was no money to sign new, original and awesome music. Morons of all kinds would come up to me at parties saying “the music should be free” and that the artists made all their money touring anyway. Frustratingly, morons were paid to do their own work, and booking agents’ first question to artists looking for tours remained “when is your album coming out?”
Then Spotify appeared, and things got better very quickly.
Change is difficult. The previous generation of artists struggled to come to terms with CDs once selling for £14 being replaced by streams worth around half a US cent on average. Many of them used their platforms to denounce Spotify. As a market leader, Spotify takes responsibility, but must also be credited: they are the ones who have provided a new business model for the music industry.
New emerging artists cannot rely on the giant fanbases developed over the well-nurtured years before MP3, and in partnership with the corporate giants. For these new artists, and therefore for the future, the choice was effectively between no money and streaming money. Artists who have embraced streaming and figured out how to make it work for them have thrived. For some of these artists, thousands of streams from the same individual fan can represent a bigger revenue stream than they ever would have seen under the old model.
Primarily due to streaming, global revenue has grown year over year for the past seven years. This means a lot more investment in artists and a buoyant market in general. Large and exciting artist campaigns are fueling the frenzied demand for vinyl, on which profit margins are much higher. Streaming services are much easier to associate with than their physical counterparts ever were when they were on top.
As always, the big labels have to take a lot of the blame for the problems that exist. When Spotify appeared, they showed less interest in high pay-per-streams than they did in giant “direct-to-profit” catalog advances, which had the advantage of not being payable to artists. . It’s also important to keep in mind that Spotify finds itself caught between a trillion-dollar hardware company in Apple, the world’s largest retailer in Amazon, Google’s YouTube, and the US Copyright Royalty Board, which sets the songwriter payments it has to make in the biggest music market. It’s great news for fans and artists that he hasn’t just been crushed.
And changing the payment system is not as simple as some would like. It remains to be seen whether the “fair compensation” models being pushed for streaming payments would actually benefit developing artists. The blunt truth is that many of these artists wouldn’t have done any better under the old model, and might in fact have done much worse. Again, fortunately, if the demand is there, so is the money. And with smart speakers in homes and phones in our pockets, music consumption is exploding, both for new releases and old catalogs.
Not all genres seem to thrive in the world of streaming, but so do when radio and brick-and-mortar stores run the game. streaming, but there is always more limited space on a radio playlist and in a high street store. Fortunately, streaming doesn’t seem to hurt well-organized independent record stores either.
The streaming era has provided artists with an unprecedented level of control and independence – not always seen as a good thing, from a label perspective. The services compete to provide the most useful analytics and data and to show artists what is really driving the streams. This helps them know where to invest time and funds in their campaigns. As Max Lousada, Director of WMG, recently said, “Artists now have all that choice.”
In 2022, the spotlight will shift away from payments made by streaming services and towards the different payment models between labels and artists. Change, as always, may well come.
But that doesn’t have to concern you, the listener. Either way, the more music you stream, the better it is for everyone involved. Unless of course I can interest you in vinyls?