The Influence of Streaming Services on the Music Industry

 

The music industry is a complexly intertwined bridge that connects artists with consumers. In 2009, the revenue of the music industry was consistently decreasing, eventually collapsing the market (Wolfson, 2018). In order to revive the music industry, its response to the deflating market was the introduction of streaming services. The transition to streaming services has positively influenced the music industry by providing a better listening experience to listeners and monetarily supporting artists, but the system is imperfect. 

 

Recently, streaming services such as Spotify have become more influential. Music industries worldwide had been struggling to maintain their revenue, and the US market eventually collapsed, which had been the world's largest music market: "...annual revenues fell from $14.6bn in 1999 to $6.3bn in 2009" (Wolfson, 2018). As the music market deflated, the tensions between record labels and artists escalated, until the appearance of music streaming services. The introduction to today's significant streaming services, such as Spotify, brought a new system to the music industry. Spotify offered a platform with more freedom, a place to share music even for obscure artists (Lal, 2018). Artists are now allowed to find "a way onto the streaming platform and [construct] a closer relationship to the company—an advantage when pitching music for its influential playlists—while bypassing the major labels altogether” (Sisario, 2018). Because of these advantages, artists start to engage in streaming services. In that process, artists establish their own independent labels, also known as indie labels.

 

Even though many artists are transitioning toward streaming services and indie labels, it does not mean that offers at the major labels are unappealing. The transition to streaming is reshaping customers' method of listening to music, but it is undeniable that "major labels still have a financial advantage over just about every indie label" (McDonald, 2019). The financial advantage enables these record labels to perform on a larger scale and include influential promotions and better networking. Although the record labels may better support the artists compared to streaming services, only a few artists received this significantly restricted support. Due to these restrictions, it is hard for artists to survive in competitive record labels, with limitations in opportunity for negotiations. Streaming services noticed this prominent flaw and suggested an alternative at an appropriate timing, which made the transition more appealing. 

 

The transition to streaming services has positively impacted both the listeners and the artists. People are starting to expect better music experience, and this includes not only the quality of music but also the method of listening to music. In response to these needs, new streaming services are experimenting with different approaches to satisfy their customers, and Youtube Music is a notable example of an outcome from this trend. With its excellent design, and accurate recommendation system, accessibility, and an undemanding interface, Youtube Music has been a successful appeal as a new music platform to its customers (Singleton, 2018). The listening experience is now not only dependent on the quality of music but beyond, an environment where people can better interact with music. Such as an aesthetically-pleasing design as well as sophisticated user experience. After listening to music, the software analyzes the listeners' tastes in music, introducing new music to people with lower chances of failure.

 

But the artists benefit even more from this transition than the audience. In the past, record labels were the only path to success, but now, streaming services such as Spotify are offering better deals to the artists (Sisario, 2018). For example, "If an album cost $12, it is likely the artist would get around $1.20 from the label, making each track on a CD of ten songs being worth $0.12" (Buse, 2018). Spotify, on the other hand, offers $0.0038 per stream, which means that people have to play the track 32 times to equal the profit from the physical recording, and "most songs from albums I would have liked enough to purchase in physical form have most definitely received over 31 streams" (Buse, 2018). With better value, artists are making the shift to streaming services. The benefit of streaming services is not only the money but also the availability of opportunities for artists. With the expanding online music community, artists have accepted this trend as an "inspiration-enhancing workspace where they can communicate, collaborate, and promote their work” (Madden, 2004). The environment that streaming services offer is generally more independent. With the introduction to streaming services, more artists can participate in the music market, hence allowing them to connect with other musicians and audiences. Streaming services allow music to be more accessible to not only listeners but also for artists. 

 

Although streaming services are benefiting the music industry as a whole, it does not mean that it is flawless. The stated vision of Spotify, for instance, “is to harness Spotify’s ability to drive discovery to connect artists with fans on a scale that has never before existed with the goal of enabling 1 million artists to live off of their work" (Schofield, 2019). But their actions do not back up their claim. Although the streaming service itself has developed quickly, "the system through which artists are paid for the music being listened to hasn't evolved in tandem—meaning that, as dissenters note, many artists are still paid little, after services and labels take their respective cuts" (Mejía, 2019). The objective of these streaming services was to provide a platform where artists can live by solely publishing music: however, Spotify's "pro-rata model” is not supporting the ones who are actually in need. The rights-holders of the recordings take about 55 to 60 percent of the revenue earned from streaming, but "the rights holders of the song itself (the composition) [...] see about 10 to 15% of that pie" (Mejía, 2019). The rest is taken away from the artists' contracted record label.

 

Streaming services are indeed providing new opportunities to musicians, but inequality exists even within these systems, and artists are not benefitting as much as the streaming services had promised. For the artists to truly make a profit from the streaming services, the payment system must change. As the imperfections of the streaming services become more evident, people start to question the validity of the system itself: "Do we listen differently when we have unlimited options? Does the rise of the streaming service eliminate the very need for a library of one's own?" (Ganz, 2015). There are no clear answers to these questions, but at least it signifies that people desire change. The streaming services are driving the music industry in the right direction, supporting artists with more opportunities, but new transitions are plausible in the future. 

 

The transition into streaming services has indeed brought a positive influence and advancement in the music industry. It is a new environment where listeners and artists can both benefit. It already seems like so long ago, when people digitally downloaded music, while the artists solely relied on record labels for a living. But streaming services are not perfect, and there are definitely ways to improve. Streaming services are not the final phase of the music industry, but rather, a stepping stone to a more enjoyable music environment.

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Written by Eric Lee