According to music revenues in 2015, people have really been getting their stream on. For the first time ever, digital music revenues surpassed that of physical music revenues, largely in part to the ever-growing popularity of streaming music through platforms like Spotify, YouTube, Pandora, Apple Music and, to much lesser extent, Tidal. With subscription values from streaming services up a hefty 66 percent, industry wide music revenues increased for the first time in 20 years. Despite the controversy over streaming from some industry heavyweights, it’s clear that streaming is the future of music and here to stay.
So, what’s all the hubbub about streaming? Well, what else gets people riled up more than money. Artists like Taylor Swift, who famously withheld her music from all streaming platforms outside of an exclusive partnership with Apple Music, and Katy Perry are lobbying for musicians to be paid more fairly for their work that is streamed. The frequently mocked, Jay Z-fronted platform Tidal was built around the concept – letting artists own stock in the platform and charging subscription prices above competitors like Spotify in order to more fairly compensate artists for their music. But here’s the thing – streaming has actually decreased music piracy. What was once a practical and relatively easy way for consumers to get their hands on music for free that offered no profit for artists is actually being eclipsed by a method that does produce revenue.
Not only does streaming give artists some money in the bank, but the process of streaming music has also become significantly more important when it comes to how songs and albums chart on Billboard. New rules from Billboard and the Recording Industry Association of America govern that a select amount of streams actually constitute as a single or album sale. Under these new rules, 1,500 streams of songs on a given album equal one album sold. Additionally, 150 streams of a song on an on-demand platform like Spotify and YouTube equals one track sold. So, if you listen to your favorite song 150 times on a streaming platform, you’ve technically purchased it.
This has been a game-changer for how we view the success of certain songs and albums. With streaming accounting for 20-30 percent of the chart points on the Billboard Hot 100, songs like Baauer’s “Harlem Shake” that don’t sell well but are streamed millions of times can actually become number one hits. Likewise, Kanye West’s recent decision to make his album “The Life of Pablo” available on other streaming platforms outside of Tidal allowed the album to debut atop the Billboard 200 album charts based primarily on streaming figures. The album was streamed 99 million times in a week, accounting for 70 percent of its sales (equivalent to 66,000 copies sold). Meanwhile, the album sold a mere 28,000 copies in pure digital and physical album sales. Yeezy’s seen much bigger sales numbers, but it just goes to show how many people are consuming music through streaming as opposed to other methods.
If an artist wants to top the charts and get a number one song or album, these days streaming plays a pivotal role in that feat. And yet, the issue of compensation remains. Streaming services typically pay a paltry $0.006-$0.0084 each time a song is streamed, which is where all the fuss is coming from. Sure, a Taylor Swift or Katy Perry isn’t going to go broke from these figures – not only are they already multimillionaires, but they’re the type of artists that can amass hundreds of millions of streams for their work. It’s the lesser-known, struggling musicians that are getting screwed over by this payment model, which essentially dictates that a song is worth less than a penny.
There’s a huge gap between the number of people who are streaming (especially for free on YouTube and Pandora) and the revenue the platforms generate. Streaming may have put the nail in the coffin for the music industry’s worst nightmare – piracy – but it’s a method of consuming music that has become so easy (and legal) that it so far isn’t really paying off for the industry, at least in the traditional sense. Moving forward, the music industry will have to get innovative in order to capitalize on all the revenue streaming could produce, but currently evades them. At the same time, if that leads to less access to music or higher prices, savvy consumers will result to old habits (pirating) or tech wizards will find an easier way to get sweet music in our ears. The question is, who will come out on top?