How Spotify Has Changed The Music Industry Forever
In 1999 the music industry hit a peak in revenue generated that hasn’t been surpassed to this day. $14.6 billion was made in the US and according to the RIAA (Recording Industry Association of America), 87.9% of that money was made through CD sales. In comparison with that in 2020 the music industry generated $12.2 billion with streaming services accounting for 83% of revenue generated with CD’s accounting for a measly 3.97%. How did this massive change come about and what does it mean for musicians and consumers?
During the CD era in the 1990s and early 2000s, recording artists were typically signed onto a record label to produce an album. A contract would be made between the artist and the label, and the artist would receive a fixed percentage profits of the sale of the CD (usually around 13%). This did mean that becoming a recognized artist in the industry was not very accessible, however it also meant that musicians received a reasonable cut of the profits. It was also quite expensive for people to buy CD’s with the average price of one being around $13.
Spotify was founded in Sweden in 2006 and was officially launched as a streaming service in 2008. It promised to revolutionize music consumption. It allowed users to listen to the music of their favorite artists without owning the physical album for a monthly subscription fee of $10 (Coffey, 2016). Spotify initially only launched in Europe and exploded in popularity when it released in the US in 2010. The platform now has over 345 million active monthly users and millions of artists on it. It’s clear the platforms growth is exponential and it’s currently dominating the streaming market generating 20% of all revenue music revenue in 2020.
It’s obvious that Spotify greatly benefits the music consumer, giving them access to millions of songs for only €10 a month, but is it better for the artists? The short answer is; no it’s not. Only 870 artists on Spotify currently earn more than a million a year. An average musician during the CD era would only have to sell about 100,000 albums to make that much. In comparison 207,000 songs were streamed in 2020 alone yet so few artists earn more than a million dollars. Given the percentage profits received from even a popular song, it is almost impossible for an artist to make a living off streaming services alone
As well as this given that streaming services account for the vast majority of music revenue it is clear that music streaming has a monopoly on the industry. Fans will almost force an artist into having their songs on Spotify, as evidenced by Taylor Swifts decision to return all her songs to Spotify in 2017 after removing them all from the service in 2014 due to concerns over releasing her music for “free”.
Due to this monopoly many artists’ only source of income is through ticket sales. In fact most musicians go on tours to provide their income for the year (Zendel, 2020). Even this source of income has been taken from musicians in 2020 due to the pandemic and the closure of all venues. This highlights the necessity for Spotify and all streaming services to pay artists more as live concerts isn’t a feasible option anymore.
The one benefit Spotify has, is that it has increased the accessibility of the music industry. Allowing relatively unknown artists to become popular and successful. We have seen this happen with artists like Billie Eilish and Lorde becoming popular purely through Spotify (Hawkins, 2021).
Spotify, and other streaming services like it, have definitely improved life for the consumer. Anyone is now able to listen to any song on any device at any time for a small monthly fee. However it is clear that Spotify has been quite damaging to the livelihood of artists. There is some hope with services like Bandcamp a digital music store becoming more popular, however it’s unlikely it will see widespread success due to the increased price. Hopefully in the future something will change and artists will be paid more for the sale of their music, however for now it seems they will continue to be paid very little.
Bibliography
Coffey, A., 2016. The impact that music streaming services such as Spotify, Tidal and Apple, Dublin: Triniy College Dublin.
Hawkins, J., 2021. Stream weavers: the musicians’ dilemma in Spotify’s pay-toplay plan, Canberra: The Conversation.
Zendel, A., 2020. “There are no days off, just days without shows”:, s.l.: Taylor & Francis.