Isabel Vera
Intro to Music Business
1:00 Wednesday
Music Streaming has changed the music industry forever. According to the Recording Industry Association of America, it accounts for 75 percent of overall music industry revenue. Consumers are no longer going out and buying records but streaming new albums, singles and other content from the comfort of their home. Streaming content includes paid subscriptions to services like Spotify, Apple Music, and Tidal but that doesn’t leave out digital radio. This streaming has brought in a total of 3.4 billion dollars in 2018 alone.
Consumers have begun to stream at the rate of 1 million new “Subscribers” per month which is a rate that is still in growth today.
As read about in theverge.com:
“The music streaming economy presents myriad new opportunities, but also its share of challenges too,” the RIAA writes. “According to Nielsen, more than 70,000 different albums were released by mid-year. Finding an audience amongst an extraordinary range of music choices, competing for the user’s attention against other entertainment options on the ubiquitous smartphone, and being prominent on dozens of different digital platforms is … critical for success.”
Today with all these new innovations we have the ability to become artists of our own both paving our own way and using these streaming services to our advantage.
Some argue that because of these streaming services anyone can put out music, oversaturating the market with artists who aren’t the best and it becomes a nuisance. Others argue that this could be good for the music industry and while there are people who are not so good putting out music there’s also a lot of undiscovered talent in which the music industry is in need of.
Although both points are valid it is import to take them with a grain of salt.
With previous points having been made its also time to consider the differences between owning music and streaming music. In the early 00s, Cd sales were on the decline. Hundreds of people were being laid off from there job as some would even call these times the great depression of the music industry. Big name artists were in the midsts of making hit after hits and yet the music industry was still at a decline. Revenue was declining and most record companies even had to cut out the middleman. This was the beginning of Limewire. Limewire was the beginning of the digital download revolution. Most college students couldn’t afford CD prices but still wanted to listen to new music and be updated with the times.
Mark Gorton the creator of Limewire created a mega-million dollar industry of illegally downloaded content of which eventually got shut down by the U.S district supreme court in may 2010 but the damage was already done, the music industry lost more than half of its worth and they were itching for something new. During this time music streaming apps and websites started popping up. Digital radio stations such as Pandora became very popular and people were now able to listen to all kinds of music at any time of the day from country to hip-hop to even classical music. With the Rise of digital streaming consumerism coming into play it was no surprise that other people started noticing and creating apps such as Spotify and Apple music.
Spotify and Apple Music play at the idea of the reigning two. This is relatable to the idea of either Über or Lyft. Of course, there are other music streaming platforms but these two platforms reign in the music industry and as the music industry label giants began to see a growing and business possibility in music stream services they began to bet against the music industry and CD sales and started buying parts of these services.
With information on how these label giants have adjusted to the ever-changing consumerism of music that brings a huge question. How are musicians being paid?
First off, copyright is a big factor in who gets paid what. Royalties are paid out to rights holders or the writers of the song. After the writers have been paid the distributor is paid as well. The composition of a song itself is the lyrics and the melody of the song while the sound recording is the literal audio recording of the song. Sound recording rights are owned by the recording artists and their record labels. There are 3 major uses for songs which are under the section of performance rights. Performance rights are when a song is played on AM/FM radio, internet radio, and satellite radio. Reproduction rights are the sale of physical goods (CD, Vinyl or digital).
Sync rights are when a song is used in a fil television and other media such as youtube etc. The fact of the matter is that these rights belong to the artist and their Label.
Some artists do not write their own songs in which then the profit would be distributed to each party both the artist and the label and the person who wrote the lyrics and the melody. In the situation where the artist wrote their own lyrics and melody then they would get a double payout. To make the situation more understandable the artist and the label is under the sound recording copyright and the writer and melody creator is under the composition copyright.
When an artist or label puts a song on iTunes or any digital store money from the bought record is paid out to both the compositional and sound recording copyright. The rates for these payouts depend on the label size, distributor size and contract negotiations made prior to the release of the record. The same goes for when the song is streamed, meaning, whatever the going rate for a streaming site is whether it be 60 cents for 1000 plays or 1 dollar for 10 plays (in a parallel universe) these profits are split between the copyright groups.
Cited by Rolling Stones Magazine:
“The music industry has now accepted streaming as its revenue-leader and is poised to adapt around that, with many analysts and experts expecting that the business will streamline itself — with rewrites of law, new royalties negotiations, mergers, acquisitions, and consolidations — into something leaner and, finally, more lucrative for musicians. Bad news: No one knows when that will be.”
All this is new and both consumers and labels are adjusting to the fast pace changing of the music industry. With that being said, music streaming is a lucrative business but a great investment because as many people can agree on this new innovation in the way people consume music isn’t phasing out anytime soon but is now being catered too. Many people have caught onto this change as buying musical equipment has never been so easy as well. The easy access to all things music gear from interfaces to DAW programs have also been affected because of this change in the way people consume music. The digital age of music has created a new push towards artists getting discovered and artists sharing their music with anyone anywhere in the world at the push of a button. Perhaps, being discovered by digital consumerism is the new “American Dream”.