Streaming Music Services – The Gift That Just Keeps Giving?

About three years ago I wrote a blog titled “Whither The Ad-supported Free Music Sites?”, in which I made mention of the streaming service Spotify that was struggling to establish itself in North America. I seriously questioned the viability of its business model at the time, but then I wasn’t privy to just how far the company would go to curry favour with the major labels. Now, with the majors a few hundred million dollars richer thanks to Spotify providing them fat advances in return for the right to access their material, the company today appears to be entrenched as a key player in the American digital music market (it is not yet available in Canada, although apparently there are work-arounds for intent Canucks who have a little bit of tech savvy).

I bring this up during Christmas week of all times because this is, after all, the season of giving and I’ve been wondering for a while now whether streaming music services are, on balance, a positive or negative for artists. There is a fair amount of controversy in the music industry around this and, as with many things involving money and multiple parties, the answer has much to do with who is getting what.

The enriched majors seem happy, with Spotify at least, as do members of the public and certain types of clients in industry who are using streaming-based music services in greater numbers than ever. But many content creators aren’t, and neither are a lot of labels that lack the muscle to wrestle favourable terms out of such services. The truth is, streamings are a miniscule source of revenue for almost all artists and labels. Take my company’s situation, for instance: Streamings currently make up over 99 percent of its digital track activity, yet they account for less than 30 percent of its online sales revenue.

Now, I’m the first to admit that I’m happy when money comes in from any source; but it’s clear that, all other things being equal, unless fees from streaming services increase considerably, revenue overall from digital music sources for independent labels and artists is going to continue declining if streamed music continues to grow at the expense of downloads. That’s a pretty sobering prospect, and one that hasn’t escaped the attention of a disparate group of musicians and others who have recently banded together to form a new organization known as the Content Creators Coalition, the purpose of which is to give an industry voice to artists and writers. They understand that to survive in this business harnessing the tools of the Internet, however smartly and aggressively, just isn’t enough; you also have to have a degree of control over the circumstances in which your music is disseminated by others, and along with it the level of compensation. Clearly, they don’t see existing forces within the marketplace, including the established rights organizations, as the whole answer.

The advent of digital technology is a blessing in many respects, but like any double-edged sword it cuts both ways. It’s imperative that content creators who aspire to make a living in this business gain a proper perspective on it. One veteran artist/writer with a lot of interesting things to say on this whole subject is David Byrne of the Talking Heads. Check out this Brit’s recent fascinating Guardian newspaper article The Internet Will Suck All Creative Content Out of the World and some of the 1200-plus responses it’s garnered. Though he’s definitely come down on one side of this issue, it’s a good read for anyone with a stake in the future of music.

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