As has been the focus of several of my previous blogs, the recorded industry business model has shifted considerably, with a focus on subscription as opposed to sales.
One issue that is beginning to become more prominent within industry debate around streaming services is revenue transparency. Whilst the debate surrounding fair pay for artists has been a prominent one for the last few years within streaming (Hogan, 2015), the calls for transparency have increased significantly recently as streaming has been heralded as the dominant recorded music format (Edwards, 2017). This is due to the low revenue generated each time a song is streamed, which in Spotify’s model is £0.00429 per stream (Cutlack, 2017). In addition, several entities are paid per stream, including the artist, label, streaming service and other rights owners, which often results in confusion over where the revenue actually goes, hence the call for transparency.
However, I feel these debates are missing a particularly prudent point. The previous business model revolved around sales – each sale generates revenue (an mp3 download on iTunes costs roughly £0.79-£0.99) which goes to the label, artist, publisher etc. Once the sale has transpired, the use of the mp3 become largely irrelevant. The revenue has been collected and in theory everyone is paid their rightful cut.
Streaming represents a challenge to this notion. Rather than one sale, streaming needs repeated, sustained listening to be profitable (for the artists/labels etc.), which simply isn’t supported by streaming services to the extent the sales model was supported by music downloads. One of Spotify’s most prominent selling points is their Discovery software – suggested, personalised playlists based on a user’s taste profile (Pasick, 2015).
But this service – rather than encouraging sustained listening – seems to breed a more fickle musical culture, presenting 30 predominantly new songs from predominantly new (at least to the user) artists per week to each user. Whilst this may certainly correlate with what users desire – new, ‘good’ music an extremely oversaturated market – it doesn’t seem feasible for the production side of music. If artists and labels can’t create a strong enough revenue from streaming due to a lack of widespread, sustained listening, they may have to look elsewhere for recorded music or indeed any revenue.
- Cutlack, G. (2017). Spotify Pays 0.00429p Per Stream. [online] Gizmodo UK. Available at: http://www.gizmodo.co.uk/2017/01/spotify-pays-0-00429p-per-stream/ [Accessed 29 Mar. 2017].
- Edwards, A. (2017). The UK music industry tried to agree a ‘transparency code’ for streaming royalties. It collapsed – here’s why – Music Business Worldwide. [online] Music Business Worldwide. Available at: http://www.musicbusinessworldwide.com/the-uk-music-industry-tried-to-agree-a-transparency-code-for-streaming-royalties-it-collapsed-heres-why/ [Accessed 29 Mar. 2017].
- Hogan, M. (2015). Is Transparency The Music Industry’s Next Battle?. [online] NPR.org. Available at: http://www.npr.org/sections/therecord/2015/07/14/422707429/is-transparency-the-music-industrys-next-battle [Accessed 29 Mar. 2017].
- Pasick, A. (2015). The magic that makes Spotify’s Discover Weekly playlists so damn good. [online] Quartz. Available at: https://qz.com/571007/the-magic-that-makes-spotifys-discover-weekly-playlists-so-damn-good/ [Accessed 27 Mar. 2017].