Can Music Streaming Survive & What Does it Mean for the Industry?
Chances are these days that you’ll get many of your tunes through a site like Spotify, Tidal, Apple Music or Deezer. For the first time ever, streaming services are overtaking physical and download music formats. Streaming accounted for 51% of all US music revenue last year according to the Recording Industry Association of America and here in the UK, the BPI, the British music industry’s trade body, reported that money from streaming had surged by 60%.
The rise of streaming is undoubtedly a turning point for the record industry but what will the consequences be for record companies, recording artists and for music fans? Is this change how we listen to music to be welcomed or will it put the music industry under pressure?
The rise of music streaming came as no surprise to major record label BMG. Peter Stack, Executive Vice President of Global Catalogue Recordings, told Londnr: “You could argue that streaming is the service we have been waiting for ever since rock ‘n’ roll came along. It really is an unbeatable proposition: pretty much all the music there is, available 24/7 pretty much wherever you are. Put it like that and it’s no surprise it’s taken off.”
With physical production and distribution becoming increasingly less important, big labels have been forced to change to remain relevant. Recognising what Stack described as, “a fundamental change in the whole music business”, the owners of BMG sold their old business and started a new company in 2008, coincidentally in the very same week Spotify started. Smaller independent labels have benefitted, capitalising on the rise of streaming, and now represent 38% of the global recorded music market. Peter Stack believes that music streaming empowers artists: “When you can potentially upload the music yourself, there’s no reason to put up with the old ways of doing things.”
So freed from needing the investment of major record companies, is streaming allowing artists greater opportunity to get their music out there? Singer-songwriter Ben McGarvey, who records under the name Minute Taker, told us he believes there has been a shift of power back to the artists in recent years: “I love the fact that I’m not reliant on anyone when it comes to releasing my music. I can arrange every aspect myself with no compromises and that is very freeing.”
Although streaming does allow newer artists to get their music directly to an audience, it still isn’t a level playing field for new acts. Ben explained, “If you can get onto playlists then that can be really good exposure I imagine, but I’m yet to find myself on any. I think streaming is good for big artists but not for less known ones. ” Up-and-coming singer-songwriter Sam Way agreed: “Being put on a popular playlist could be a pivotal point in your career”. He has worked to build good relationships with different streaming platforms but recognises “there is no doubt still lots of favouritism and no doubt money involved too; backing the bigger artists to make sure their songs are pushed into the limelight.”
One of the most controversial aspects of streaming has been how little revenue recording artists can earn in comparison to traditional formats. Steve Harnell, editor of Classic Pop magazine, commented, “a huge chunk of a musician’s revenue stream through physical sales and paid-for downloads has been eroded”. Ben McGarvey has most of his Minute Taker back catalogue on streaming sites but admitted “the money I see is so miniscule it’s unlikely to generate any meaningful income for me any time soon.” From an artist’s perspective, the struggle to make any money in this streaming age is a concern. Consider that it takes over 1,000 individual streams to generate the same income as one album sale and it becomes understandable how musicians are turning increasingly to live performances and merchandise in order to continue making music. Worryingly, concerns about the financial stability of streaming stretch beyond the recording artists’ earnings. “The biggest question mark over the sustainability of streaming at the moment is the fact that none of the major streaming services themselves are making money”, BMG’s Peter Stack told us.
The market leader, Spotify, has 50 million paying subscribers prompting the obvious question: why aren’t they making money? An eye-watering 80% of Spotify’s cash flow goes on licensing its 30-million-song catalogue from the labels and the artists who own them – putting them between a rock (and roll) and a hard place. So what will the future bring? Will streaming continue to be the most popular way to buy music? BMG’s Peter Stack is optimistic. “Streaming has come so far so quickly that it is easy to forget it is still early days. We believe it still has substantial growth in it yet.” However with the per-stream payment so low, many artists are still considering their ongoing relationship with these platforms. Musician Sam Way takes a pragmatic approach: “it’s important as an artist, to know how your fans are listening, be attuned to that, and don’t be too precious about making your $$$ on these platforms – use them to get yourself heard”. Similarly, Minute Taker’s approach to the streaming services is still evolving. He told us “With my new mini-album Reconstruction I’m experimenting with not putting it on streaming sites, at least initially.”
Classic Pop magazine’s Steve Harnell sounds a note of caution over the rise of streaming services: “I can certainly see a point where record labels decide to withhold their products from streaming websites and apps. There’s no doubt streaming has blown in a huge hole in their traditional business model, so something’s got to give.”