Are Music Streaming Services a Blessing or a Curse for Artists?
Last month, 25 yr. old Taylor Swift demonstrated unequivocal proof that she’s one of the biggest shakers in the global music industry. Hours after posting an open letter to Apple and explaining why she won’t let her ‘1989’ album be available in their music streaming service, the tech leviathan with a market cap of $730B made sure that the possibility of them “never ever ever getting back together” was unlikely and gave in to Swift’s demands.
For good or ill, Swift has been the poster girl for artists crying foul over music streaming services. Aside from her initial row with Apple Music, Swift is also a vocal critic of Spotify. Swift’s main contention is that music should not be free for consumers. In her Wall Street Journal op-ed, Swift states that, “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.”
Other artists complain about the low payout from streaming services. Zoe Keating, an independent musician from Northern California, revealed that even after 1.5 million plays on Pandora for six months, she received a measly $1,652.74 for her songs. With Spotify, 131,000 streams last year earned her a pittance -- $547.71. The numbers shouldn’t be a surprise: Spotify Artists, a website that explains the service to artists, shared that artists earn (on average) less than one cent per play -- between $0.006 and $0.0084.
With only these numbers in mind, the future of the music industry looks dire for artists. These days, there are three main modes of acquiring music legitimately. Music streaming, which has a per-access model, has two iterations – a free mode that contains ads, and a premium variant that a user pays for. Digital downloads (like iTunes) is a one-time online purchase. And then there’s physical music (mainly CDs).
Navigating The Inevitable
As influential as Swift is, it looks like music streaming is nonetheless where the future lies. Rob Wells, Global Digital Business head at Universal Music Group – the world’s biggest record-label company – said that he is “100%, absolutely convinced” that subscription and access models will be the de facto way that most people will end up consuming music in the future.
CNET reported that in the first half of 2014, music streaming took up an impressive 27% of music sales in the US. It closely follows sales from physical music at 28%, while digital downloads brought home the lion’s share at 41% of the total revenue. Both music downloads and physical sales, however, are declining.
Conversely, with its affordable subscription models, music streaming is gaining ground with consumers. For only $10 per month (approximately P450, or 1 newly released CD), users have unlimited access to millions of songs. Artists like Swift are saying that this low price ‘devalues the art’. Users, however, are at the other end of the argument. This is likely their limit – anything higher, and the possibility of resorting to music piracy skyrockets.
While asking for fair compensation is the right of any artist, there are others in the music industry who are nonetheless thankful for music streaming services. Music journalist Vickye Fisher argues that while streaming may have its faults, it’s still better than the alternative. “I’m not a fan of pirating music. I went a couple of years without illegally downloading a single song or album, but it came to the point where due to my residency in the UK I came up against territory issues with some new releases. Only in that case did I opt for the less industry-friendly model, and I can’t help but feel if those albums were on Spotify then at least those artists would have been paid for my listens as I was reviewing. As it is, I now have those files forever and can play them whenever I want, and the artists that slaved over them for two years will never see a penny. All because they weren’t on Spotify,” she clarified.
It is obvious that the new economies of music streaming are still evolving. The good news here is that there seems to be more people who want to pay (a little) for music rather than pirating it. With more people subscribing, there will be a bigger share for everyone. It just takes time. Just like CDs when it was first introduced in the market, it will take a few years before the music streaming economy scales up and payout becomes ‘acceptable’ even for big name artists like Swift.
In the meantime, there are other advantages inherent in streaming technology that artists can maximize. Album and song sales typically just supplement an artist’s livelihood. The real money comes from tours and merchandise (so much so that there may be instances where albums are released to hype or even validate a tour). Due to the nature of the technology, streaming has unprecedented access to user data – information that artists can capitalize on.
Music streaming services can tell artists where they’ll probably have packed venues. By culling invaluable geo data, an artist can know the top cities that listen to him the most – even where he doesn’t get as much radio airtime.
Through partnerships with streaming services, artists can also enhance engagement with their fans. Contests that hype the release of a new song, or even one-on-one skype chats with top listeners are now possible with the user data gathered by the streaming service.
These benefits, along with the unmatched potential of providing access to millions of people unfettered from geopolitical boundaries or accessibility limitations, make music streaming services a boon to starting musicians. The outlook is that people will be familiar with new music through streaming services, then go out to buy a CD or make an online purchase to keep a copy of the music that they like.
But for established stars, there’s another avenue that they can pursue to improve what they’re getting from music streaming services: their own contracts with their label company.
Various news agencies have reported that as much as 70% of Spotify’s revenues go to the artists. The bulk of these payments, however, go to the record labels, not the artists themselves. This is an arrangement that may have been tolerable pre-streaming technology: the labels would do the promotions, distribution, even physically copying the CDs. But now, things are different. Promotion and distribution are largely done online, and there aren’t even broken units that would be returned to the label company that would impact margins. As one of Swift’s songs attest, everything has changed.
UK’s The Independent quoted Paul Pacifico, Director of the Featured Artist Coalition (FAC). He said, “The problem seems to be the enforcement of legacy contracts that were signed before streaming even existed and that don’t operate within the streaming environment. The FAC position is that we are calling on the labels to engage with artists to reassess and modernize contracts and make them fit for the digital age. We would like to see an industry united behind legal streaming services.”
Until the contracts between artists and record labels are overhauled to reflect the new realities of the music streaming industry, music consumers can only hope that there won’t be too much bad blood between the artists we love and the distribution service we prefer.