I know that this may be shocking to some, but I prefer Apple Music over Spotify. Many of us today have used or are using music streaming platforms to listen to music and, despite my controversial taste, we have thousands upon thousands of songs of different genres at our fingertips for a low monthly price. But have you ever wondered how music streaming platforms changed the industry? Because there is definitely a lot to discuss when it comes to the music industry and the streaming platforms we use.
The music industry is a business that has been repeatedly disrupted by digital technology and has been continuously adjusting for the past 25 years. Before the Internet and MP3s, the music industry relied on physical CD album sales for a majority of its revenue. However, around the Internet boom of the late 90s and early 2000s, the industry lacked a business model that was compatible with the increasing digital sphere.
Initially, the MP3 made music downloadable and exchangeable on the Internet. Album sales took a big hit as a large number of consumers began participating in piracy by burning and sharing their CDs online with others. This completely left the music industry in shock and in a slump as they had to find a way to navigate the digital world.
Additionally, the formation of sites for free music sharing, like Napster, was not helping the rapidly decreasing sales of CDs. During Napster’s prime, over 20 million users would share free MP3 files with each other and about 14,000 songs were downloaded every minute.
Can you tell me the last time that you purchased a physical album and not downloaded it?
While the Recording Industry Association of America (RIAA) was adamant to file a lawsuit for copyright infringement (which they won against Napster), the music industry was not as quick to adapt to a digital model of its own. It was not until 2003 when Apple convinced major labels in the music industry to join the iTunes store catalog for music to be purchased and downloaded.
Nonetheless, this did not mean that music industry revenues began to rise exponentially again. After all, the music industry initially sold physical CD albums at around $15.99 or more for each copy. But when iTunes began to take off, the majority of their sales shifted to singles that were only $0.99. That is a dramatic change. With iTunes, Apple essentially unbundled the album and shifted consumers’ attention to individual songs. Can you tell me the last time that you purchased a physical album rather than downloading it?
You would think that after all the change and disruption that the music industry went through, the launch of streaming platforms was the music businesses’ saving grace. Well, the answer could be yes, no, or both. It is honestly up to you to decide for yourself.
Music streaming services continue to grow. It’s clear that the streaming business model served as a great turning point for the music industry. In February 2020, it was reported that Spotify alone has 124 million paid subscribers and that Apple Music has over 60 million subscribers. While streaming platforms have shut out digital downloads, the most important thing that it has done for the music industry is cut back on piracy since people can now receive an endless amount of music for a low monthly subscription fee.
It is clear that the music industry is in a better place after years of decline and that streaming services are making up for the loss in physical album sales. These business models allow revenue to come from different sources. This includes ad-supported streaming and monthly subscription fees. The benefit for music labels putting their artists’ music on these platforms is the more listeners they have, the more potential consumers they receive. Streaming platforms allow artists without a label the opportunity to showcase their music, allowing room for more diverse artists to get their work out there. This takes out the middleman. Ultimately, more music is being listened to and that is good for the music industry as a whole.
But while the music industry has largely been revitalized, it does not mean that there are not issues and concerns. Artists have always struggled for ownership, payment, rights, and royalties to their own music as most of it owned by the label. Streaming platforms have struggled to maintain a business model that makes the artist, songwriters, producers, and labels happy as well.
On Spotify, it takes about 336,169 streams to earn a minimum monthly wage in the U.S., which is averaged to be around $1,160 to $1,472 a month. On Tidal, it takes 117,760 streams; and on Apple Music, it takes 200,272 streams. This probably was not what you were expecting. There is an ongoing debate on whether or not this amount of payment is fair. Streaming platforms keep a vast majority of the revenue, but they also provide the artist with attention and potential consumers. Since streaming and digital music sales do not generate a large profit, artists mainly rely on merchandise and live events to make a majority of their revenue.
I am most interested to see if this music streaming will last and, if it does not, what will be next for the music industry? Will the music industry continue to let tech giants set the terms of how they sell their music? Will subscription prices increase? Will the artist receive a higher form of payment for streams? There are a lot of unanswered questions and I am looking forward to the answers.
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