Why Streaming Services Like Spotify and Apple Music May Improve Music Quality
Many people complain about what they see as a decline in music quality. I think this is more romanticizing the past than any real decline though. There has always been mediocre and bad music. There has always been music aimed at teens and tweens. There have always been novelty songs. Not every song of the past was Hey Jude or Stairway to Heaven. Those songs were simply the best of the best of their time.
Having said that, could streaming of music actually raise quality? Could it make the big label system less oppressive to artists? Maybe. Here's why?
Streaming Versus Buying
If four million people buy a song at $1.29 that song makes about $5 million. Those four million people will likely listen to that song over and over but the record labels only benefit from that one-time purchase. Labels will put out songs they feel can get high upfront sales. If a song has longevity and is getting some sales for years to come great. But if not, the labels have still made a lot of money in the short-term.
Streaming is different. Every time someone streams a song the label gets paid. Think about that. Every time someone listens to a song on a streaming service the label makes money. This is radically different from the current buy-once listen-often model the industry was built on. Now songs can generate continuous streams of revenue for years to come.
Team by Lorde
Music sales are in decline and streaming is on the upswing. Down the road, most record label revenue will come from streaming on services like Spotify, Apple Music, Google Play All Access, and Deezer. Spotify's services have both paying and free subscribers. Free subscribers are supported by advertising. Paying subscribers don't have to listen to ads and they have other perks. Spotify's average payout per stream is approximately $0.007. Look at how much a song would make with 100 million streams:
"100 million streams at $0.007 = $700,000 in revenue"
Let's compare the sales revenue and streaming revenue for a song. I'll use Team by Lorde. Team currently has US sales of 2.45 million. The song has 171 million worldwide streams on Spotify and 111 million on VEVO. These are the biggest streaming services. So, how do sales and streams compare?
171 million worldwide Spotify streams at 0.007 = $1,179,000
111 million worldwide VEVO streams at 0.007 = $777,000
2.45 million US only sales at $1.29 = $3,160,500
Team has probably made more than $6 million to 7 million worldwide in sales already while it may have made only about $3 million or so from all streaming providers. Now obviously as people buy less they'll stream more. For Team streaming numbers would have to double to match sales. According to the Guardian, there is an:
"industry debate about whether these services’ growth is making up for the decline of CDs, and seemingly now of download sales too."
And here's the reason for this concern. A song would need about 185 streams on Spotify just to match sales revenue from one iTunes mp3 purchase. For every one purchase Lorde's Team had in the United States, it had around 70 streams worldwide. The streams per download are probably half of that when considering worldwide sales. So, the song is very far off the approximately 185 streams it would need to match sales revenue. Longevity will be the key to success. A song that's getting streamed for years to come will make far more money than a song that has short-term interest only.
Think of it this way. If you buy a song at $1.29 and listen to it an average of 100 times per year for the next 5 years, all the label has made is what you originally paid. If you stream the same song an average of 100 times per year for 5 years, the label will make $3.50. It will be in the labels' financial interests to release songs people will want to listen to for years to come. How might all of this benefit artists?
Record labels are risk averse. That's in everything from pop and country to folk and classical. Many singers complain about having to record songs they don't want to record. Or they'll complain about interference in the process of creating their albums. Record labels often force singers to put out songs purely to cash in on current trends. It's all about short-term profits and they don't always treat their artists as long-term investments they should support and nurture. If the public loses interest in an artist, the labels just move onto the next big thing. The question is could streaming change that?
Maybe. An artist that has a 1 to 3 year career will largely be forgotten, so their music will get little in the way of streaming years after release. However, an artist who manages to have a 20+ year career will continue to get huge numbers of streams from both early fans and new fans they pick up over the years. Artist development may once again become a priority for record labels. If Lorde is still a successful artist 10 years from now, Team will definitely be getting lots of streams and it's streaming revenue will have likely significantly surpassed what it could have made in an environment depending on sales. If Lorde is largely forgotten a year or two from now, her songs will generate far less revenue.
A Music Reviewer Mercilessly Bashes Kesha's Record Label for Not Giving her Creative Freedom
Talented artists may be encouraged to use their talents rather than being forced to put out generic songs that will be popular in the short term but may not stand the test of time. I always use Kesha as an example of this because she's an extreme case. She's so oppressed by her label they won't let her release ballads or any song that shows vulnerability. She's a young singer-songwriter who has written and recorded pop, dance, rap, country, rock, blues, folk pop and acoustic songs. Yet all you ever hear from her on the radio is generic dance pop songs about partying. That's all her record label would ever let her release. Why? Because Kesha is one of the best in the music industry when it comes to writing catchy, ear-worm pop hooks (she wrote the hook on Timber as an example). Her label hasn't wanted her to expand her music beyond that. Her talent has been deliberately hidden and buried by a label that wanted short-term profit rather than quality music. Thankfully Kesha is refusing to play along and has been in a bitter fight with her label. She's filed a lawsuit to break her contract.
Stories about artists feeling oppressed are common and have been for years. Looking back at the example of Lorde's Team longevity will be important for record labels' bottom lines. It's easier to predict what songs will succeed in the short-term hence singers being forced to sing songs they don't like that fit current trends. However, long-term success will depend on quality and artists being able to maintain years long careers.
Now, you might think longevity was important in a sales environment as well. After all, look how valuable the back catalogs of The Beatles or Michael Jackson are. While that's true, the number of artists who have valuable back catalogs is a tiny percentage of all the recording artists over the last 50-60 years. They were usually several albums into their careers before their work became so valuable. The problem is labels haven't been focused on the long-term at all. They're thinking about how much money they can make in the next few years rather than what they can make 10 to 20 years from now from catalog sales. Streaming might change that because it has both short-term and long-term advantages.
The Coming Revolution
This is the first time since the birth of recorded music that we're seeing a major revolution in how people consume it. Music downloading was revolutionary to some extent but it was still based on the buy-once listen-often model. And digital downloads were devastating to the industry because it became so easy to steal music. Large numbers of industry employees were laid off and labels signed far fewer new artists as album and single sales plummeted.
With streaming, listeners lease access to almost unlimited amounts of music. Streaming is reducing piracy, which is a good thing for the industry. However, it may take longer for labels to make the kind of money per song or album that they could have made with purchases. This may force the industry to focus more on releasing music that will be played for years rather than songs and albums that maintain their popularity for a short time before people move onto the next big thing.
This is not to say that the One Directions and Justin Biebers of the world will go away. These acts are often more about merchandising than music, so labels will still have an incentive to sign them. However artists who have talent may be encouraged to use it and their creativity may not be suppressed in the name of short term profits.
However, maybe this is positive thinking on my part. Perhaps instead of improving the quality of music, labels will sign more singers like Rihanna who work with teams of songwriters and producers. For years, she released albums yearly and had singles out all the time, either solo or features. Since she seems to have little or no input into her music, she can easily spam the radio and charts with new music something artists who write their own music can't easily do. Spamming could makes lots of money for record labels without the need for songs or the disposable "artists" behind them to stand the test of time.
It's possible we may see both. More focus on quality music and supporting talented artists but also more focus on creating purely commercial spamming acts who can make a lot of money in a short career.