Streaming and the Future of Music
I think that music streaming using players like Spotify and YouTube have and will continue to transform the music industry. Based on Taylor Swift’s major move to remove her old albums from Spotify, record labels are clearly worried about the negative impact of record sales. This is also shown when Adele’s manager suggested that Spotify “may need to change its policy of insisting all albums be made available on both its free and premium tiers.” To my understanding, if you have Spotify premium, you can download music, listen without interruption, and get better quality recordings. I don’t think that those are big enough incentives for many people to pay for Spotify premium, however it appears that the company is doing very well in Europe, as Lauren Davidson’s article in the Telegraph showed that Spotify made more money than iTunes in the first quarter of 2014.
One point I found very interesting is why Spotify is seen as the villain and not YouTube, as Adele’s manager also mentioned: “On the one hand, labels are trumpeting YouTube as a marketing tool: 10 million views on YouTube and it’s a marketing stroke of genius. But on the other hand they’re looking at 10 million streams on Spotify and saying that’s x amount of lost sales.” Spotify may seem worse because you can instantly download using their site, whereas with YouTube you’d need to go to another online source that turns YouTube media into mp3s (the recording is usually awful). It seems rather odd that Spotify can allow users to download music for a monthly fee, instead of a by album or by song purchasing system like the one in iTunes. I understand from these articles that artist do get paid each time someone streams their song, pennies If I recall correctly, but that is obviously a lot less than getting a 10 dollar purchase of the album from iTunes. So artists can either take their chances with record sales, or hope that enough people stream or download their work on Spotify in larger numbers so it offsets the lower royalty payment, or their “cut”.
I think the main question that will determine to what extent services like Spotify change the music industry will come with analysis of cases like Taylor Swfit. Did she make more money with or without Spotify? The article by Nicholas Carlson on Business Insider spoke very strongly against the more traditional view of record sales and making money off of musicians, held by people like Taylor Swift’s record label CEO Scott Borchetta. He has the plain view that if people can download the album, why would they buy it in stores? Of course the article points out that people in general don’t buy CDs anymore, especially not the younger audiences of Taylor Swift. However, it appears that Swift is so extremely popular that she can choose where her music is available, and the people will follow. Looking at how much she made on Spotify over a period of time versus how much she makes when a record launches analysts might be able to find the raw numbers to answer the question. Yet, Swift is an exception to the rule, so what she does is up to her and she probably won’t lose a cent or any sleep over the decision, but for other less known artists, Spotify seems to open new and potentially lucrative doors.
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