Streaming Services Are The Last Hope of Music Industry

Last week Taylor Swift has been applauded as a crusader of music rights as she withdraw her album from Spotify:

“[People] can still listen to my music if they get it on iTunes. I’m always up for trying something. And I tried it and I didn’t like the way it felt. I think there should be an inherent value placed on art. I didn’t see that happening, perception-wise, when I put my music on Spotify. Everybody’s complaining about how music sales are shrinking, but nobody’s changing the way they’re doing things. They keep running towards streaming, which is, for the most part, what has been shrinking the numbers of paid album sales”

Taylor Swift´s comment is just a hypocrite sugarcoating of a smart business move and a great marketing stunt. She is still able make a platinum-selling album (the only one this year for that matter), so she concentrated on maximizing the physical sales. She would have left her albums in Spotify, if they had paid her more through premium service. She is smart businesswoman, so she definitely did the right thing for herself (proven by those platinum sales). It is not clear though, would she make even more money if she would have left her album in Spotify?

The last point of the quote is however just pure stupidity. Paid album sales have been shrinking way before no one had ever imagined music streaming. Streaming services kill downloads (both legal & illegal), because downloads are inferior format. Music streaming has been a truly a blessing for music industry. I might listen the new Taylor Swift album once on Spotify because all the publicity. She would get something out of that listening, but more than from me not listening that album or using BitTorrent. I would not buy or even illegally download that album in any case, because I am not that interested. Big stars benefit more from lurker listeners than smaller artists.

Essentially there is only one important thing to really understand about current music industry:

People will not be paying for physical music anymore. Period.

This is called progress and you cannot stop it. Taylor Swift is an outlier with her platinum sales. Increase of vinyl record sales is just a too well covered hipster activity. You have to be a total moron to think that vinyl sales could help even slightly the struggling music industry. The real question is: are people willing to pay for streaming services? They are the last resort to make any money from the actual songs. Currently it seems positive and with the launch YouTube Music Key, there is enough competition to keep it interesting for the near future.

It is naturally disheartening to read about that Iggy Pop cannot live with his music or how little Aloe Blacc gets royalties from writing one of the biggest songs of the year:

Avicii’s release “Wake Me Up!” that I co-wrote and sing, for example, was the most streamed song in Spotify history and the 13th most played song on Pandora since its release in 2013, with more than 168 million streams in the US. And yet, that yielded only $12,359 in Pandora domestic royalties— which were then split among three songwriters and our publishers. In return for co-writing a major hit song, I’ve earned less than $4,000 domestically from the largest digital music service.

But what is truly the alternative?

Iggy Pop makes his money from advertisements. He could not do those without being a musician first. Although he remains fit, I doubt it is from starving.

I appreciate Aloe Blacc tremendously. I have been supporting him by buying physical records made by him from the start of his career with indie group Emanon. Is Aloe Blacc better off now or when he was pressing and self-publishing his records? Although the revenue share from “Outside Looking In” was probably more favorable than the terms and conditions of Spotify, he is now more successful by every account. “Wake Me Up!” would not be as big song without Spotify and the exposure of that song has benefitted Aloe Blacc way more than the petty 4000$ from the streaming royalties. The sad fact just is that the individual hit song will not necessarily make you money anymore. That song is more of advertising. Is it right or wrong is a philosophical question, but does not change the shifted dynamics of music business.

I agree that 4000$ looks shameful for making one the biggest songs in the universe, but life is not fair. People do not want to pay for physical music anymore, expect for old luddites like me, who still get excitement from the special box sets. Actually I am more worried about the viability of Spotify´s business model. They are currently handling over 70% of their revenues to different rights holders according to Spotify CEO Daniel Ek:

Spotify has paid more than two billion dollars to labels, publishers and collecting societies for distribution to songwriters and recording artists…that’s two billion dollars’ worth of listening that would have happened with zero or little compensation to artists and songwriters through piracy or practically equivalent services if there was no Spotify.

They are not profitable yet, either.

“Wake Me Up!” has been estimated to generate almost million in Spotify royalties. Someone is getting paid (and there might be a master plan behind it). The history of music has not really been a financial success story of artists. Record labels, shady managers and other Svengalis have exploited the creative work of musicians. So either the artist are afraid, smart or just increasingly naïve by pointing the finger to Spotify instead of their employers, record labels with whom they have signed their contracts.

You can still make money out of music, especially if you are strong brand, innovative or just really good. Dave Grohl (from one-of-the best live bands in the world) sums it up nicely on Reddit discussion:

Me personally? I don’t f*cking care. That’s just me, because I’m playing two nights at Wembley next summer. I want people to hear our music, I don’t care if you pay $1 or f*cking $20 for it, just listen to the f*cking song. But I can understand how other people would object to that. You want people to f*cking listen to your music? Give them your music. And then go play a show. They like hearing your music? They’ll go see a show.

Amen to that.

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