Streaming and the future of the Music Industry
The CD and album are dead. Music streaming killed them. According to Rollingstone.com the music industry raked in an eye-popping $13 billion in CD sales in 2000. By 2014, that number had plummeted to $1.85 billion. The Recording Industry Association of America reports that ad-supported music streaming services earned $295 million last year– 34% more than the year before. Meanwhile, subscription-based services brought in in $799 million in revenues – 25% more than the year before. In fact, music streaming now accounts for 27% of profits for major record labels. By contrast, album sales and individual song purchases have been steadily declining for years, falling 9% and 12% respectively in 2014.
But was does all of this mean for the consumer? And what are the potential effects of music’s decade-long tech revolution? Read on for more.
Playlist curators are the new gatekeepers.
Music streaming sites like Spotify and Tidal rely on consumer curated playlists. On both of the sites, the public is called to buck the traditional DJ-controlled radio stations for personally created playlists. Popular curators, and more recently professional DJs, have come to expect that their playlists will be bookmarked, shared, and downloaded more often than those of the general public.
As a result, some unscrupulous record companies and promoters have begun to pay popular streamers to feature their artists’ songs. Campaigns can start as modestly as $2,000 for six weeks of play, and skyrocket to $10,000 a feature for more popular users. Record labels with deep pockets pay for their rising stars and power players, while indie artists without the funds to compete must rely on organic fan acquisition.
Spotify has since prohibited the practice. But experts expect that this under the table payola practice will continue as it had in radio, for many years.
How about some data driven dubstep?
It has never been easier to collect data about the ways consumers are interacting with the various sites on the internet internet. Unlike Pandora, which sets a relatively standard payment offering to artists for their music, Spotify pays artists according the frequency of their song spins.
Critics of the pay for play system worry that the practice may dampen down creativity as artists compete to produce consumer-friendly, popular content.
Artists will control their music much more closely.
When Taylor Swift decided to pull her music from Spotify and suspend her iTunes album release, music streaming tycoons listened.
Within days, Swift received a personal call from Apple VP Eddie Cue, who assured her that iTunes would change its royalty agreement to include payments on music played during Apple Music’s 90-day free trial period for non-subscribers.
Swift has since released her 2014 album 1989 for streaming exclusively on Apple Music. Similarly, Prince and rapper Lil Wayne have released music for streaming exclusively to Tidal.
In the future, it may be possible for superstars with their own funds and investors to bypass record-label-middlemen, and instead release their music directly for streaming.
The album format may be on its way out.
Back in the 90s, buying a CD likely meant that a consumer would listen to the album from the beginning to end at least once. Artists, therefore, often made albums that would follow distinct narratives. Their songs were organized to flow seamlessly from one tune to the next.
With single purchases driving revenue these days, and music streaming even killing single sales, it may be safe to predict that the format of the album will change drastically in the years to come as artists focus on creating hits over album story arcs.
There may not be as much money in music as there was in yesteryear.
In the late 90s and early 2000s, record sales were a driving force in the music industry, with artists like N’Sync, Backstreet Boy, Britney Spears, and the Dave Matthews Band selling tens of millions of records per release. These days, artists must rely on world tours and appearances to supplement their income. In the future, they may not be able to look to album sales as a driver of revenue.