The Impact of the Shift to Streaming Music

Written by Jim S.

An eagle-eyed follower first brought this New York Times article – In Shift to Streaming, Music Business Has Lost Billions – to my attention. Feel free to read it but here’s the “executive summary” plus some other thoughts:

As pictured above, in 2010, streaming brought the record industry 7% of revenue. Five years later, it was bringing in 34% of all revenue. (According to the Recording Industry Association of America (RIAA), the streaming category includes:

  • Revenues from subscription services (such as paid versions of Spotify, TIDAL, and Apple Music, among others)
  • Streaming radio service revenues that are distributed by SoundExchange (like Pandora, SiriusXM, and other Internet radio), and,
  • Other non-subscription on-demand streaming services (such as YouTube, Vevo, and ad-supported Spotify).

Revenue from music sales in the United States has hovered around $7 billion since 2010. Revenue has been flat for several years and streaming is just not as profitable (for anyone) as CD sales.

In 2006, record labels still reaped $9.4 billion from CD sales in the United States, more than the total sales revenue of the business today. Last year, CD sales stood at just $1.5 billion, a drop of 84 percent in a decade.  (Italics mine).

And even though revenue is flat and profits are down, I’m not feeling too bad for the people who connect us to artists. They are doing fine. Not mentioned (of course) in the article is how well all of this is working for the artists themselves who, historically, get the short end of the stick. (Which always amazes me because if no artists, then no revenue for record companies).

A page on Spotify Artists says this: “Unfortunately, the majority of music consumption today generates little to no money for artists.” (Yeah, because you don’t pay them enough you cheap motherfuckers!). They then go on to break down how artists get compensated. It’s worth a visit if this topic at all interests you.

Turns out an artist’s royalty payments depend on the following variables, among others:

• In which country people are streaming an artist’s music
• Spotify’s # of paid users as a % of total users; higher % paid, higher “per stream” rate
• Relative premium pricing and currency value in different countries
• An artist’s royalty rate. Recently, these variables have led to an average “per stream” payout to rights holders of between $0.006 and $0.0084. That’s less then one penny USD per play. (Italics, again, mine).

And so this explains why, despite the fact she would still earn a shitload of money, Taylor Swift pulled her songs from Spotify. I am not a particularly big fan of her music. But I will here give credit where credit is due. It appears she’s doing it on principle as much as anything else.

Bottom line – the people you want to feel badly for here are not the record companies.

 

9 thoughts on “The Impact of the Shift to Streaming Music”

  1. Yes, yes, yes, yes, yes. Completely agree.

    Also: What I think things like Spotify are ruining is ‘the album’ as a format of music listening.
    Dark Side of the Moon or Sgt Pepper used the album format and ONLY work when listened to in that format, and they’re considered some of the pinnacles of 20th century artistic popular music. Just hearing The Great Gig in the Sky on it’s own means absolutely nothing to me. It only works as a part of Dark Side of the Moon! Would you call yourself a Scorsese fan if the only thing you’ve ever seen is one scene from Taxi Driver?

    Having every song at your fingertips is worthless and wasn’t the artist’s intention. You’re damn right when you say Spotify are ‘cheap motherf*ckers’…

    Sorry for rambling 😉 This post really hit the nail on the head 😀

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    1. I would agree in every particular save one. Not so sure it’s Spotify and the like ruining the listening experience. If we, the consumers, refused to make song-by-song purchases, then that channel would dry up.

      But alas, technologies and times change. And so despite the resurgence of vinyl, the days when we bought albums AS album to enjoy the experience (including artwork) are gone and they ain’t coming back.

      I like to purchase individual songs. But I can tell you that if there’s an album that cries out to be heard in sequence, then I’ll find that out and buy the CD. But the real problem, at least on that front, is there just aren’t enough albums being made that are good all the way through.

      As to the record companies’ greed, well, it was ever thus.

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  2. Yeah. Actually, you’re right that it’s really the consumers fault. I don’t actually hate the people at Spotify and their tactics. It’s just the very IDEA of that kind of music consumption that nags me, and more so that it’s becoming popular.

    Completely agree, though, that albums just aren’t being made like that anymore. All that matters is the single off the album nowadays, I guess.
    But hey-ho, I shouldn’t moan about other people’s preferences. I can still enjoy buying the ol’ classics 😀

    And you’re right: record companies have always been monsters. I read a fantastic book, though, about some of the great record labels and their beginnings called ‘Cowboys and Indies’. The story of Island Records is a fascinating one 😉

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    1. I’m reminded about a Hemingway story. When asked if it bothered him that Hollywood was changing his stories, he replied that no, they were right there on the shelf just as he wrote them. So for me, the classics are still there just as they were recorded (and I suppose, some of them are being recorded today).

      So unless a particular album is a singles-fest, I am definitely listening to it all the way through. BTW, doesn’t even have to be a concept album. I was reading a Springsteen interview where he said (can’t remember the album) he had placed a song ‘just so’ on side two to mirror the listener’s experience. Come to think of it, might have been ‘The Rising.’ And maybe that IS a concept album. 😀

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  3. Yes! “the people you want to feel badly for here are not the record companies”…
    They’re only sore the party’s over.
    Used to be a case that you’d hear a tune or three on the radio, go out and take a punt on the album. It was a risk that sometimes paid off and you’d find a great album, occiasionally you’d wonder how the hell you’d been duped but mostly lead to a overall contentment and a growing storage question.The label would make a killing either way as there was no other way.
    Now you can stream albums before buying and I’ve said myself a fair few quid by avoiding what turned out to be bombs. It should lead to a greater quality-control but it doesn’t. But if there’s something that I stream more than once it usually ends up in a physical presence on my shelf (just took delivery of one yesterday).
    The now dominance of streaming and the internet means that (granted you have to dig a bit deeper) more acts can break out and reach an audience by bypassing the major labels and more often than not I try and buy direct from the artist.
    The big labels simply aren’t keeping up and I fail to see the demise of such controlling, big-business influence on music as a bad thing.

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    1. Agreed. If I hear a good album on streaming or satellite, I buy it. Period. I want the artist to have hard cold, cash in his/her pocket for that. Unfortunately, some artists are losing sight of the fact that allowing their songs on YouTube, Vimeo and the like is a good sales tool.

      Case in point: I did a series on The Beatles just a few months back. I had to go back and revamp the posts as they’ve pulled most of the songs. Now, admittedly they are copyrighted. But they cannot be downloaded. And now how the hell is some kid gonna hear these songs? I had to pull ‘Norwegian Wood’ for example. That kid may never hear it, shrug, and move on. I’d say to The Beatles put ’em back up. Let people listen to them. Sure you’re taking a chance people will listen and not just buy. But I think you’re way better off in the long run.

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      1. I saw the Beatles songs were pulled from your posts. It was kind of creepy to see a harsh notice about using an unauthorized recording. Agree. How are people going to hear about this music if not allowed to post the music so people can listen? Also, I thought the Michael Jackson estate owned the rights to the Beatles music, which is why I thought it was pulled.

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  4. Good point about MJ’s estate. Jerks. They should take the long view. Well, the good news is that due to some copyright law, Paul may be able to get his and John’s songs back in 2018. I hope he does just on face value. And if he does, I hope he puts them all back up for the reasons we’ve discussed.

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