Streaming Is Saving the Music Industry

How streaming platforms have changed music


When Spotify launched in 2008, the music industry was like a beached whale waiting for something to lift it up and throw it back in the water. No one was sure that this new form of consumption would be the answer, especially when labels realized they’d only be getting a thousandth of a cent with each stream.

But Spotify promised things would change and that artists would be able to make a living again. Ten years later, and now it can be said that streaming is saving the music industry. It’s revolutionized the way we consume music and everyone — from the labels to the artists — are profiting off of Spotify’s promise.

Everyone’s Getting Paid

When profits from the music industry dropped to $6.3 billion in 2009 from $14.6 billion in 1999, there were some whispers that the industry was dead. While those worries were a bit overstated, the concerns were valid. Other than a few big name stars, neither the labels or the artists were making any money and no one was offering any kind of light at the end of the tunnel.

Then streaming started catching on. A few more services started popping up and consumers started buying into the notion that they could listen to 40 million songs for $10/month, less if you’re a student. That was less than the cost of one physical album. Fast forward to 2015 and Universal Music made 20% of its revenue from streaming, a figure in excess of $1 billion.

But things wouldn’t be much different if just the labels were getting paid. Thankfully, that’s not the case. Artists are making some bank, too. And not just big names like Rihanna, Beyonce, or Ed Sheeran. Even niche artists who are able to tap into an audience base who appreciates their music are getting paid off streams. And they’re doing it without a traditional record label.

Discovery Is Easier

Before streaming came along, artists would have to press hundreds and thousands of CD’s to build a buzz or submit their singles to radio stations if they hoped to get any play. That was cost prohibitive and just not very effective. Streaming kills all that. All today’s artists have to do is record music with basic software and hardware that can work in their home and *boom*, their music is ready to be uploaded to millions and billions of listeners.

SoundCloud has been the one of the most promising platforms for new artists to find and audience and kick-start their career. Drake was discovered on the now deserted MySpace. Justin Bieber found his success on YouTube. This just wouldn’t have been possible before streaming.

Pirating Is Down

According to the Digital Media Association, pirating of music is down over 50%. That’s huge for smaller artists who need every dollar they can get. Plus it only makes sense. Why would anyone need to pirate anything when you can access pretty much everything for a relatively low monthly subscription?

Artists Can Be Creative Again

When the industry was trending downwards, labels made it a point to stick to safe music that could top the charts. That meant any artist that wasn’t putting out Bruno Mars type melodies were relegated to the sidelines and many times cut from the roster all together.

Streaming has changed all that. Musicians can feel comfortable playing the type of music they love knowing they’ll get some streams. And while they might not be turning out top ten billboard hits, they can focus on their fan base without sacrificing creativity and still make a living. Artists like British singer Jones, who’s debut album failed to make the billboard 200 but whose songs have been streamed over 70 million times, is a perfect example. So are the rappers you may not have ever heard of but are able to do mid-sized venues based on the fanbase they’ve accumulated through streaming.

Playlists Adding to the Money Jar

Another benefit of streaming not often talked about are the playlists. Because of playlists, music can now be ordered and categorized in any number of ways. Listeners adding songs to playlists means it can get played any number of times over the lifespan of that user. Plus these platforms put together their own playlists that get streamed millions and millions of times over. If an artists song happens to fit on that particular mood of playlist, they can expect to get paid.

This is great news for both new acts and past icons. Legendary acts like Fleetwood Mac have over 11 million listeners each month. They don’t have to put out any new music at all to get a sizable cheque at the end of the month.

The Down Side

So there really isn’t much down side to streaming. The main complaint is still the payouts. The record labels shouldn’t be complaining too much. The big three combined made about $14.2 million each day. Let’s look at how that payout looks for the artists over each streaming platform.

  • Spotify — $0.00397/stream (51% market share)

  • Apple Music — $0.00783/stream (22.29% market share)

  • YouTube — $0.00074/stream (1.7% market share)

  • Tidal — $0.0124/stream (1.76% market share)

  • Amazon — $0.0074/stream (3.8% market share)

As you can see, the platforms with the highest market shares tend to pay the lowest amount per stream. And YouTube doesn’t want to give up a dime. Guess you can’t win them all. It should be said that Lyor Cohen, now head of YouTube Music, did say he plans to keep upping the payout amounts. Let’s not hold our breath, but the gesture is appreciated.

Another difficulty comes down to managing all the different platforms. Competition is great and we don’t want any single medium to dominate the market. But when certain platforms offer exclusive content, it only increases that platforms allure. For example, Apple loves releasing Drake’s albums exclusively on Apple Music for the first week or so. Tidal probably has the most exclusive content and have released Kanye and Beyonce albums exclusively on their platforms, along with other podcasts and interviews users can’t get anywhere else.

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