Streaming spells economic woes for the music industry

Anti, Rihanna’s eighth studio album, was released last month and greeted by an incredible response from fans and critics alike. The album was made exclusively available on TIDAL, a music streaming service owned by Shawn “Jay Z” Carter, and has already been streamed more than 13 million times. 1 million free downloads of the album have been offered to fans on a first- come, first- serve basis as part of a promotional deal between Samsung, Rihanna, and TIDAL. The popularity of Anti on the streaming market puts a spotlight one of the most pressing issues in the music industry: streaming is breaking the bank and the business.

More and more people are opting to stream music at a low cost rather than purchase albums. The elephant in the room facing artists, record labels, and streaming services is where the money fuelling the music industry will come from now that consumers are spending less and less on music. One of the most popular streaming sites, Spotify, has over 75 million active users. Only 20 million of these pay the £9.99 a month subscription fee needed to upgrade to Spotify Premium, which enables users to listen offline. While users of TIDAL must pay £9.99 a month to access music, the company boasts only 580,000 subscribers. Paid for streaming services such as TIDAL barely hold a candle to free sites like Spotify and Youtube.

Low-cost streaming drains money out of the music business. Even the most popular streaming sites are feeling the pain of a reliance on advertising and a handful of subscribers for revenue. Spotify is growing in size, but the company suffered an operating loss of £199 million in 2014. Royalties given to record labels are paltry as a result. The record label Racing Junior has earned a laughable $3.00 from Spotify plays, even though their artists have been streamed over 55,100 times. As always in the music business, the musicians and songwriters receive the smallest cut of the cake. On average, the artist who created the music earns less than pennies: $0.001128 per play on Spotify. Data journalist David McCandless calculates that in order to make the US minimum wage, a solo artist would need to be popular enough to have 180,000 plays on TIDAL, 1,117,021 plays on Spotify, or over 4 million views on YouTube every month. For comparison, a singer would only need to sell around 5,478 downloads on Itunes or 457 CDs in record stores to earn just as much.

It is clear that only already popular and wealthy artists like Madonna and Nicki Minaj, who hold shares in TIDAL, can attract the amount of views needed to make money from streaming. Rihanna, who has a net worth of around $120 million, can afford to release her music at little cost to her fans. Even so, streaming faces a backlash even from big names such as Taylor Swift, who pulled her entire catalogue from Spotify in 2014. New and less mainstream artists simply cannot survive in the streaming market. As Radiohead’s Thom Yorke says, ‘make no mistake, new artists you discover on Spotify will not get paid’. The economic elephant in the music industry’s offices can no longer be ignored. David Byrne of Talking Heads cinches the streaming problem: ‘the whole model is unsustainable as a means of supporting creative work of any kind.’

Billie Mills-Pullan 

Image courtesy of Kevin Mazur for Roc Nation

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