From Download Dollars To Streaming Cents? How does streaming work for musicians

by Koka Tarini Siddhartha

We live in a time when the world is going through a series of extraordinary events and staggering changes. The tip of this year’s iceberg includes The Apprentice host, Donald Trump, being sworn in as the president of the United States, the Supreme Court of India recognizing every citizen’s fundamental right to privacy, the murder of journalist Gauri Lankesh for having exercised her right to free speech, and now, the social media movement #MeToo, in response to the sexual harassment allegations against Harvey Weinstein.

Amidst this chaos, the music industry has also been evolving at an unprecedented rate. Over the past few decades, we’ve witnessed a shift in the distribution and sale of music from vinyl to cassettes, to CDs, to downloads, and finally to streaming. This past year, in particular, has seen music streaming become more popular. Is the diminishing distribution of physical copies, and the switch from digital downloads to streaming a boon or a bane to musicians?

Reggaeton-ing into the charts

Prior to Despacito (the biggest song of this year, with over four billion streams), one of the few memorable reggaeton songs that managed to make it onto the charts was Daddy Yankee’s Gasolina in 2005. Reggaeton is a genre of music originating from the Puerto Rican island. Generally, most hits or even entries on prominent chart shows such as the Billboard Charts or the UK Top 40 tend to be sung in English.

How have Spanish songs, not just Despacito, but even other songs like Mi Gente, Reggaetón Lento, and Me Rehúso, entered the charts and become global smashes in 2017? The answer is simple: through music streaming apps. Spotify and Apple Music have played—and continue to play—a vital role in the success of a song. Digital downloads are stepping aside to make way for streaming.

…but how will musicians earn money if their songs are not downloaded?

Many musicians are apprehensive about their earnings via streaming, where they get a few cents every time their song is streamed, as opposed to getting a dollar (or the equivalent) when their song is downloaded. However, reports show that streaming a song matches the revenues that can be earned by downloading the same song (more here). Simply put, there is no real loss merely because a song isn’t downloaded.

Additionally, streaming apps have developed new ways to promote artists through playlists, radio shows (like Apple Music’s Beats 1), and even exclusivity agreements for the first two weeks of an album’s release. Streaming has not completely killed the physical sale or digital downloads of a song or album. It has further helped spread music to every corner of the world, and this could, in turn, translate into revenue for artists at live performances.

Are streaming services foolproof?

As with any product or service, streaming apps come with a variety of pros and cons. Here, we use Spotify as an example, which had over 140 million users as of June 2017. Spotify is currently the largest music streaming platform in the world (despite its absence in India). It has over thirty million songs in its catalogue, with artists ranging from platinum album sellers to indie artists.

There are numerous reasons for a musician to release his/her music on Spotify. It democratizes the world of music, and acts as a universal jukebox by creating playlists, and also by allowing its users to create and share their own playlists. A song by an artist as famous as Beyoncé could be on the same playlist as songs by newer artists such as James Cherry or Danny Ocean.

While revenue on Spotify is not generated through downloading music, the freemium service it offers allows users to either stream music for free (but be subject to ads and limited song skips per hour), or to subscribe for a certain monthly fee, with full functionality and no ads. Additionally, Spotify and Apple Music are now venturing into funding specific music videos and albums, which gives artists a boost to enter worldwide charts, and perhaps to even get signed with a record label.

However, these streaming apps are not without flaws. Spotify was recently entangled in a legal battle for only paying royalties to record labels and not music publishers (read this to understand the elements of a song). There are also artists like Taylor Swift and Thom Yorke from Radiohead who are not happy with the free three-month trial on Apple Music and the free streaming option on Spotify. In her spat with Spotify, Taylor Swift stated that “music is art which is rare and valuable, and thus should be paid for”.

On the creative front, streaming apps tend to affect songwriting and compositional aspects, as artists try to emulate popular tunes, which they think are more likely to appeal to listeners. Another drawback is the effect of the thirty-second play mark. More artists are reducing the lengths of the intros of their songs (frontloading) in order to reach the mark and earn their cents (more here).

How can this situation improve?

Spotify and Apple Music have already undergone some upgrades. For example, Apple Music is cutting back on album exclusives as record labels are not pleased with an album being released only on one platform, which is unfair to an artist’s fans. A change in the subscription model could also be beneficial, as lower rates could increase the number of subscribers, in turn reducing piracy.

On the legal side, there needs to be a re-evaluation of contracts, especially contracts between artists and their record labels. Contracts need to be renegotiated to specifically discuss royalty distribution through streaming services. How is the 70% royalty handed by Spotify distributed amongst the label, publisher, and artist? Why should labels get a percentage of an artist’s sales revenue for CD manufacturing expenses when they are not selling CDs any more?

Streaming apps can have a more positive effect on artists if they take both consumer behaviour and artists’ interests into consideration. While music streaming empowers artists to independently release their music, this does not mean record labels will die—rather, well-balanced and fair contracts could strengthen the relationship between labels and artists.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.