Streaming services are a big reason
that the Global Music Industry has to thank for record highs in valuation – in 2018
the industry was estimated to be worth $19.1 billion which is the largest total
since 2007. While there is constant
gripe in the news cycle about streaming services paying out minuscule royalties
to artists, streaming services as a whole have spurred revenue growth not seen
since right before the Great Recession. Prior to the Napster and Youtube era of
music consumption in the early 2000s, albums used to cost upwards of $20, so as
the average price of albums plummeted in early 2000s with the rise of streaming
and downloading, the music industry needed to pivot to figure out how to bring
in revenue.
The 2000s consumer consumption
signaled that people wanted to listen to whatever they wanted, when they
wanted, and they didn’t want to leave the house to get it. Rather than attempt
to go backwards in time, the industry responded by meeting where the consumer
where they were with a model that benefited both parties: music streaming
services. The rise of Spotify, Apple Music, and Tidal helped consumers get all
the music that they wanted, while generating revenue and increasing concert
sales. Music streaming services main goal is to get you to listen to as much
music as possible, and then feel moved enough to go see that artist in concert.
Present day, the majority of revenue for artists come from touring – artists put
out music, knowing it won’t generate them money from sales, but from it getting
you to go see them on tour, which is where the money is.
This leads to the present day issue
surrounding the algorithms that influence what people listen to and what kinds
of music is rewarded. The streaming algorithms of Youtube, Apple Music, Spotify
and others prefer higher quantities of content on a more regular basis to
constantly feed users with new and fresh content – this is the reason why Drake
and Migos will put 25 songs on an album as opposed to a refined album with not as
many filler songs. The lack of boundaries for listening to music and creating
playlists encourages more content from artists; Drake puts out 25 songs on an
album knowing that each person will only revisit 5-10 of those songs regularly
on their respective playlists, and the more songs Drake puts out the better
chances he has of a listener liking one of those songs enough to keep on a
playlist. While these algorithms satisfy the immediate want for new music from
artists, their true purpose is to get you into a seat at a venue where the
record label can generate the most revenue from you as a listener.
Algorithms are decreasing the quality of music
to fulfill the financial need for new material to be played on tour so the
label can recoup their investment. All the major record labels own significant
shares in Spotify, the leading music streaming service; the platform is a
marketing vessel to gain fans and convert them to paying customers at shows. Spotify
still operates at a loss right now and pays songwriters small paychecks for
their work, but there is no rush to change the pay structure because this model
has produced highest revenue streams for the industry in a decade. The algorithms
and payout structure incentivize artists to release more music and announce
more tour dates – give fans more content to persuade them to buy merch, vinyl
or a concert ticket, because simply streaming an artists music on Spotify or
Youtube is not enough to sustain their careers.
Finally, there are some interesting
ideas to help bridge the gap between streaming and touring to help aid those
artists that can’t tour as intensely as other artists. Music streaming services
could integrate a Patreon, Twitch, or Bandcamp payment model into their
platforms. Patreon is a subscription website that lets creators receive direct
monthly payments from consumers in exchange for varying levels of exclusive
content. For example, small artists will have lower tier subscription that
gives subscribers early access to new singles and higher tiers will have your
name included in the Thank You section on their album’s packaging. Twitch is a streaming
website owned by Amazon that, with a Prime membership, allows you to directly
send your favorite streamer $5/month free of charge to the viewer as inclusion
of the Prime membership. Bandcamp is a music marketplace where listeners can
download music for free and choose how much they want to pay for the music.
Streaming services can include an option to directly allocate $0.50/month of
your subscription cost to a specific artist to help further support them, or
include options to pay additional fees to get access to exclusive content from
specific artists.
Questions:
- When an artist releases a new album, how do you consume the album (shuffle it, play it all the way through, just the singles, etc)?
- Does the interface and platform of your choosing ever influence what you listen to through its recommendations, playlists, or charts?
- What would it take for you to pay additional money to a streaming service to support a specific artist?
Sources:
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