Music and Money: How Music Streaming Services Revolutionized the Record Music Industry

Music and Money: How Music Streaming Services Revolutionized the Record Music Industry

Music streaming services have transformed the recorded music industry and how people discover and consume music. Over 75 percent of the overall profit of the recorded music industry came from streaming services. Across the world, more than 229 million people are subscribers to different music streaming platforms. This number is projected to increase to 350 million in 2022.

Since music streaming has become a popular option for the younger generations, an increased number of streaming platforms are emerging, making the competition in the industry fiercer. Companies have to offer unique content, pricing, and artist features to gather more subscribers. Some of these successful streaming platforms in the market right now are Spotify, Apple Music, and Tencent.

The Battle Against Online Music Piracy

During the past 15 years, the recorded music industry has undergone a radical transformation. Before that, however, it was the most successful of the three music industries, the two being the music licensing industry and the live music industry. Back in 1999, recorded music was at its height with the number of records sold tripling the one billion mark of 1974.

All of this success was threatened when a student from Northeastern University by the name of Shawn Fanning launched Napster. This music-focused online sharing service allows users to share and download music without buying it legally. Several major players in the music industry filed suit forcing Napster to take down its site.

However, Napster was only the beginning as more and more online piracy services started popping out everywhere. Though the traditional music enterprise was successful in every legal battle ensuring closure of illegal services, new ones emerge simply replacing the old services. By 2013, the sales of physical records were at its all-time low since the 70s.

The emergence of the internet only shook the music industry structure. The pre-internet way of distributing records no longer worked. With rampant online piracy, the music industry was in dire need of a solution to bring back revenues from record sales. However, the big players were not too keen at all in creating models for legal online distribution.

The Rise of Music Streaming Services

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iTunes by Apple was the first successful online retailer that allows users to legally purchase music with ease in less than a dollar per track. Furthermore, iTunes has a feature that allows you to de-bundle an album so that you only purchase the tracks you like. Nonetheless, this radical innovation introduced by Apple did not put a stop altogether from online piracy.

It was when Spotify was launched that finally the rampant online piracy was somehow minimized, if not completely stopped. After several negotiations and concessions, many major right holders in the music industry finally agreed to give this streaming platform a try. Though Spotify was founded in 2006, it was only 12 years later that it launched in the US.

Spotify is the first access-based music streaming service that has proven to be a success. Though skepticism and criticisms coming from artists still are common until now, it is no denying that this streaming service saved the music industry. No matter how people theorize how unfair or not the model and method of distributing profits, Spotify has generated millions of dollars for record companies and artists alike.

Currently, there are several music streaming services consumers could choose from. There are also streaming services which are context-based, apart from being access-oriented. Instead of just listening to music, a subscriber can actually do things with the music they access. The best example is SoundCloud. You can upload your own materials and compositions, even a snippet of your professional violin lesson.

Embracing Change

Change comes with both good and bad. The popularity of streaming services that appeal to the younger segment of the population has both positive and negative implications.

On its positive aspect, streaming platforms make music available to everyone anywhere, whether they be online or offline. Oftentimes, the audio quality of music is better on streaming services than on CDs and vinyl records. Other than that, music streaming apps do not take up much room on one’s hard drive.

Users also have a much better chance of discovering new artists and genres through streaming services. And perhaps the biggest advantage of all is that subscription to music streaming services is more cost-efficient than buying an album of just a single artist.

Nevertheless, there are quite a handful of downsides with music streaming. For one, music subscribers do not own any of the music they listened to. Secondly, streaming platforms collect user information which could potentially lead to a privacy breach.

Other cons of streamed music include zero access to digital reproduction, several hidden subscription fees, and perhaps the biggest of them all, many artists lost potential earnings because of music streaming. Accordingly, artists only earn about $3.9 in every 1,000 streams.

Whatever the advantages or disadvantages of music streaming services may be, one thing is certain: by embracing digital technology, the record music industry was saved.

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