Streaming Music Is Finally King, and That's Good for (Almost) Everyone

Making a case, finally, for Spotify’s dominance

By Kirk Miller

 
Drake
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09 January 2017

If you’ve had any guilt about streaming music vs. buying albums, you can stop right now.

For a few years now, the narrative has been that Spotify and its ilk are bad for the music industry and, more importantly, the musicians themselves. It’s why you’ll hear Thom Yorke bitch about fractions of pennies per stream and how artists aren’t seeing any money.

But those fractions are starting to to add up.

A new report by Nielsen Music notes that in 2016, streaming passed digital music sales for the first time; the format grew 76% in the U.S. last year, and a total of 431 billion songs were streamed. And overall music consumption grew 3% last year, pretty much from that streaming surge, which is great news for an industry that’s been shedding money for over a decade. While Quartz makes the case that global music revenue is only growing by “puny single digits”  and ponders the loss of the dependable $10-$15 CD or digital album sale as a money source, we think differently.

First: artists never survived on album sales. It’s why every band or singer is bitter about their first contract: the money they “earned” was going to the fat cats at the label anyway. So streaming isn’t really harming A-level artists as much as they claim. Or, at least, it's harming them no more than the record contracts of yore (a case could be made for streaming harming smaller acts ... we’ll get to that).

Second, as noted by the Music Industry Blog, we’ve finally reached the 100 million subscriber mark for streaming services, aka the not-so-arbitrary figure that has been bandied about as the tipping point at which the industry (and its artists) could start seeing tangible financial results from streaming. That number will keep growing: every six months for the last year and a half, the streaming industry has added 16.5 million new paid listeners.

More good signs? The tech is improving: Tidal is now offering hi-res audio, meaning new tiers of payments are possible. And Pandora, iHeartRadio and Amazon all just added paid streaming services, creating more revenue outlets and better pricing structures as companies seek to differentiate their wares (Amazon Echo’s $3.99 streaming service, for example).

Hell, even non-streaming news is good. Take vinyl’s resurgence: A Tribe Called Quest just sold 10,000 copies of their new album in a week. But that's another story.

Plus, the likes of Spotify, Tidal and Apple Music only scratch the surface of what we could really do with streaming music. The website Musical.ly, voice-activated tech like Alexa and music/video/ebook bundles like French service Cstream are also potential new revenue sources, according to 7digital’s Pete Downton: “The trajectory of the industry is such that it’s actually much easier to make a business case for a music service in 2017 than at any point since I entered the industry.” And while these streaming companies aren’t profitable — yet — Billboard notes that Netflix never turned a profit before its IPO, which means that $200 million Spotify lost a year ago isn’t necessarily a huge concern.

Which isn't to claim this industry is without its problems. The most worrying trend? Music's middle class is quickly dying away.

Of those 431 billion song streams, the vast majority are going to artists like Drake and Beyoncé. So while pennies are adding up, only a few A-level stars are reaping the benefits. And while live music may be an ongoing profit source, concerts are getting too expensive. The shifting economics of the music industry means the middle class is disappearing; we're no longer in the '90s, when every decent alt-rock and indie band could land a real budget and a nice major label deal. Nowadays, it's a metrics game. Since a single video or song gone viral can catapult a middling talent to stardom (and make a label buckets of money with very little investment), the incentive to nurture young talent is low. Now more than ever, musicians have to think like businessmen and women and less like, you know, artists.

In a way, the music biz has gone the way of the contemporary movie biz, where only blockbusters (massive investment, massive audience) and indie films (small investment, committed niche audience) can survive. It used to look more like our current Golden Age of Television: investment in content is at an all-time high, giving eccentric personalities and ideas are the time and space they need to flourish.

But artists and labels also have less to complain about than they're letting on. Consider: It’s cheaper than ever to create and distribute music (last week, Spotify added 1,400+ new albums ... which was a slow week for them). And overhead for everyone is way down — when I spoke with a long-time major-label vet and current indie-record label owner last year, he mused on the expanding but less-sexy role of labels in the 21st century. “The labels are no longer banks and vaults to store copyrights,” he said. “They’re a service function. For the artist, touring and merchandise are the most important aspects. Recorded music is just the fuel that keeps thing fresh.”

So go ahead: get that monthly Spotify or Apple Music subscription. But then go see a concert and buy a T-shirt.

Only then can you truly say you’re doing your part to save the music industry.

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