The Streaming Service conundrum has been around for quite some time now and has caused quite a stir in its lifespan. What happens to the artists? The reason so many people are asking this question is because it has been noted that the margins for some artists aren’t as large with streams as they are with downloads.
Now in order to be relevant, one only has to look at the way that people are consuming their content nowadays. Streaming services are a part of an ever expanding market that has allowed consumers, like you and I, to go through millions of tracks at the reasonable price of about $10 a month (on average).
With more and more people getting comfortable with services like Spotify, Google Play, Apple Music, Tidal and the like, the revenue for record labels seems to be increasing. It is evident that streaming services will be around for quite some time and that the music industry has embraced the technological paradigm shift that the world is experiencing.
The music industry has benefited from the increase in revenue as streaming has contributed a large chunk of its recent earnings. With Spotify, the second largest streaming service, offering artists 38 cents for 100 streams, it’s not that hard to see where all this money comes from.
If we take a closer look, we’ll notice that some songs have reached over 30 million streams and these are from relatively unknown artists. At Spotify’s rate of 38 cents per 100 streams, an artist like this can look to receive up to $114 000. This doesn’t seem like much in comparison to the ’30 million streams’ boasted previously but with the new “Album-equivalency test” this only equates to about 20 000 in album sales.
There are services that offer artists more while other services offer less, for a single stream. Napster is said to be the most generous of the lot, with the rate of $1.67 for 100 streams. Tidal comes in at second with $1.10 given for every 100 streams. YouTube, the largest streaming site in the world, offers only 6 cents for every 100 streams which is significantly lower than its counterparts.
A lot of people in the industry are not happy with the fact that YouTube pays so little in royalties and these very same people also have problems with the other services offering free services even if they do bring in revenue through advertising. If they understood us consumers better, they would then realize that those services are only for marketing purposes.
YouTube itself is not a traditional nor exclusive music streaming service and with that in mind you can understand why people do not listen to all their music on YouTube. The free services not only advertises the artists but exposes people to the service as a whole and also encourages subscription due to the limitations in usage with the free services.
Now the problem that most artists have with streaming services is their seemingly low payouts but the streaming services claim to pay up to 70% of their revenue on royalties so the question, now, is where is the money going? Well we don’t have to look very far because the people with the money are telling us that they have it. Record Companies. They have boasted a steady increase in revenue for the past few years now and it honestly makes no sense as to why this has to come at the expense of the artist.
If you think about it, with the decline in physical copies and increase in digital copies and streaming services, the operating costs for an average record company should decrease. This would mean that record companies would take a smaller cut from the money that artists bring in for them since the costs are now a fraction of what they once were.
This is not the case, however, as quite a few artists have found out. Frank Ocean made headlines recently as he released his last album under Def Jam in an exclusive release, only to drop the global hit ‘Blond’ on another service and deny the label any of the revenue. This caused Universal to rethink their take on exclusive releases but has it also caused them to reconsider their share in the profits?
We’ve heard other stories break out about how big named artists like Taylor Swift and Adele have boycotted the likes of Spotify for their refusal to increase their royalty fees but a lot of these streaming services are operating at a loss. It is still a relatively new market so it’s going to take some time to accumulate enough users for the current model to be lucrative for all those involved to comfortably reap the benefits.
In truth, the music streaming service has taken over how we consume our content and this means that there are only a select number of artists that can afford to not have their music on certain services and even fewer that can afford to keep their music off all streaming services entirely. The people that are most affected by all these problems are the middle-class artists.
The ones that aren’t big enough nor small enough to see the benefits of streaming. The ones that are in record deals with labels that refuse to compromise on their archaic profit sharing schemes. The artists that need to stay relevant and stable at the same time. The missing middle.
Streaming services have also given rise to the amount of internet based success stories. More and more artists have found their songs land up on the right playlist which has led to global success. This coupled with the data that they get from certain streaming services allows them to establish exactly who is consuming their content, where they are and how great the concertation of them are in certain areas.
This means they can now target certain areas for performances and also use a specific set of tracks to cater to that areas preferences. Imagine going from making music in your mother’s basement to selling out venues in only a matter of weeks. This is the power that a lot of Streaming Services have at the moment. The power to create superstars and with this, they have become the new gatekeepers of the music industry.
Streaming services have given more and more independent artists the opportunity to showcase their talent and catapult their careers further and faster than the average record company would take to produce the same results. A good example of this type of artist is Chance the Rapper.
The SoundCloud Alumni has become a global icon and part of the idea that anyone can make it with the right amount of talent and marketing. We no longer live in a world of “it’s about who you know” and we have migrated to the world of “who knows you”.
The next time your favorite artist drops their long awaited album exclusively on a different streaming service to the one you are using at the moment and you would like to switch then I would suggest using the MusConv tool. It allows you to move all your tracks and playlists with the option of saving your playlists as CSV files. If you change your mind as much as I do then you’re definitely going to need this tool.