Why streaming is the best thing that happened to the music industry (and Taylor Swift is wrong)


Wednesday 29 July 2015 by Frederick Siler

Let me start off by saying that I love Taylor Swift as much as the next sane person. She’s super nice, pretty funny and writes really catchy songs. While sometimes it seems like she’s the perfect human that we should all aspire to be, I think she’s picked the wrong fight by taking on music streaming.

Swift recently hit the headlines after forcing Apple to change the way it paid artists while offering free three-month trials of its new streaming service, Apple Music. But the fact that her music is available on the platform at all is a bit of a surprise. Swift pulled her entire back catalog from Spotify toward the end of 2014, slamming the service in the process.

“I’m not willing to contribute my life’s work to an experiment that I don’t feel fairly compensates the writers, producers, artists, and creators of this music. And I just don’t agree with perpetuating the perception that music has no value and should be free.”

Swift’s comments are in line with the opinions of other artists who claim that the compensation for their art is too low on streaming platforms like Spotify. These aggrieved musicians specifically target the company’s free, ad-supported service, claiming that offering their work for free devalues their art – despite the fact that all artists are compensated for listens on free and paid subscription models.

I understand why artists feel this way. But I disagree. Spotify has definitely changed the landscape of the music industry – but so has the internet as a whole. The music industry panicked when iTunes first launched more than a decade ago, amid fears that album sales would fall as consumers opted for single-track downloads. Sure, people don’t typically buy full albums anymore, but the music industry is thriving in the digital age – and I don’t think streaming is going to kill it.

I love music (a fact proven by the 92 hours I spent listening to Spotify last year). Since I was a kid, I’ve always listened to music – and I’ve shifted the medium I’ve used to obtain it. So without further ado, I’d like to take you through my music listening history – and show you how I’ve contributed to the music industry over the past 21 years.

The physical era

At about age 10 I was given my first portable cassette player. I only owned two cassettes that actually had music on them and I replayed them constantly. I would switch the tapes out in between songs and fast-forward to my favorites. There were only about 20 songs in total, but they were all I needed to be entertained at that age. I may have contributed about $30 to the music industry. Sure, I was young and didn’t need many songs, but these were still one-time purchases that could last a lifetime if needed.

Getting my first CD player was a big deal. Even more exciting, one of my friends had a computer that could burn CDs. This opened up a whole new door to music for me. I didn’t have to buy any more music, I just had to find a friend who bought a particular CD and then burn a copy. During this time I probably only contributed another $50 to the music industry with the five CDs I actually purchased. Even though I only bought a handful of CDs, I amassed an extensive library of burned discs from friends, leading to a loss of potential revenue for the music industry.

The “morally gray area” era

At risk of wrecking my chances of working for the FBI, I confess that I illegally downloaded music. At the time I didn’t really see an issue with using sites like LimeWire (which claimed to be a legal service). I convinced myself that music was just supposed to be free. I received my first MP3 player for Christmas and I was really excited to start shifting my library from CDs to my new digital device. In the two years I used my MP3 player, I downloaded many gigabytes of songs – and artists were compensated zero for those downloads.

When I got my first iPod I shifted back to paying for music for the first time since my cassette-buying days. With any Apple product, there’s a different sense of joy when using it compared to an almost identical product. Apple made it feel cool to legally download songs one by one. Once I received my first iPod Nano I started handpicking songs to buy and create carefully crafted playlists. During the next year I was spending up to $15 per month on iTunes.

While I still wasn’t buying all the music I would like to, I was able to get the songs I really wanted. This restricted my listening: I would only pay for songs that I really valued, which left little room for discovering new music. This is where iTunes and a pay-per-song model is limited. Few people want to spend a dollar on a song they may listen to once and hate.

The streaming era

Enter Spotify.

When my college roommate described Spotify to me I definitely didn’t think it could be legal. I did some research and I decided to try it out. After the first day I was hooked. Having such a huge catalogue to pick from at any time was exciting. I was able to discover pretty much any band at anytime.

Now at almost any house party you’ll see a computer hooked up to the speakers with Spotify open for people to DJ. Before the company became popular, one person had to bring a huge box of CDs or records for people to choose from, and even then they usually didn’t have the song you wanted (Proud Mary by Tina Turner is my go-to party song). Now with Spotify, anybody can play any song they want and feel cool for that moment when everyone cheers on the song they picked.

Shortly after signing up to Spotify I upgraded to the $10 a month premium account for the ability to download my playlists and listen on the go. For the first year of my subscription I paid $120 for access to the music industry. This is a huge amount more than I had previously been spending – and now I get much more for my money. In addition to rediscovering old music, Spotify opened the door to new bands and genres of music I never would have listened to otherwise. This has encouraged me to go concerts to see independent artists that I never would have discovered before I had Spotify. Being able to listen to a whole album without paying for it has changed my listening habits, leading to me actually spending more money on music than I did before.

You may ask how much of that $120 makes it to the artist. And it’s a tricky one. Spotify uses a formula accounting for a number of factors, mainly its own revenue. Still, about 70% of its revenue is paid out to rights holders. In Spotify’s first five years it paid $1 billion in royalties and in 2014 alone it paid another $1 billion. Even if only a small amount makes it to the artists, that’s $2 billion more than those artists would have received if the listeners were pirating their music.

According to Spotify, Taylor Swift could have been making upwards of $400,000 per month in streaming royalties on her new album. For Swift this doesn’t matter because she knows her hardcore fan base will opt to own her music – her latest album 1989 has sold more than five million copies in the US alone. She can afford to “shake off” potential earnings from Spotify because her audience will follow her wherever her music goes.

However, the small artists she claims to be speaking for can’t and shouldn’t have “bad blood” with streaming services. These all-you-can-eat platforms open the door to new fans and remove the barrier for many consumers so they can discover new indie artists.

But alas, even if Taylor somehow reads this blog post, I don’t think she and Spotify are ever getting back together. Like ever.

Frederick no longer works at The Frameworks.

Categories

  • Music
  • Spotify
  • Taylor Swift