Streaming music network like Spotify and Apple Music are not good for the music industry despite what we hear day to day from the press and music industry at large. Sure there has been growth in revenues since the days of Napster when the industry was in a complete mess, but the industry is nowhere near out of the water yet and needs to rethink its strategy if it is to support the very artists that make the industry possible.
So why are streaming music networks not good when so many people say they are?
The majority of people who champion streaming are not your average artist, they are not even the top 10 per cent of artists. The advocators of the commentary we hear day to day are music industry press, mainstream press, the streaming networks themselves, aggregators and Digital Service Providers (DSPs) and of course users, who get an amazing experience of all the music in the world for 9.99.
Distributors such as Distrokid, Tunecore, and the like all make money because of the sheer quantity of music they manage. Okay, they offer other services in most cases too, but uploading music to reporting back on its popularity is not the most difficult thing to do in the world, is it? The streaming networks themselves give this data in the first place. What many of them do do well is collect royalties for artists.
The streaming networks themselves are having a hard time too. There's not one of them making money. Their losses keep piling up and there seems little light at the end of the tunnel. Apple (Music), of course, doesn't care as much as the others as even Tim Cook pretty much stated he saw music as a loss leader. Spotify loses money and shares have dropped some 50% since they floated.
The problem is; so many people gain from promoting these services as a “critical distribution channel” for musicians that even the musicians believe it – well the less savvy ones that think plays equal fame and a career. Yet over 90% of revenue being paid out from DSP's is going to less than 10% of music. And the majority of this is going to back catalog music owned by labels, not new music artists.
In a recent talk from Apple at the BPI in London, they stated that 50% of the music played on their platform was indeed older back-catalog music.
Of course, there are always champions of a service and stand out artists that do extremely well. Drake for example, and Ed Sheeran. There's also a number of under-the-radar artists making “background music” who have figured out that streaming listeners leave music playing while they do other things.
But does this mean we have fulfilled the dreams of music fans or simply forgotten them to concentrate on music listeners or as we like to call them, radio listeners?
It seems that everyday music listeners are being serviced but the core music fan, the fans that love music and support their artists, are being neglected, and that is where the money and the industry is letting down fans, artists and themselves. These fans want to spend more on their music.
So what does work?
If you ask a band what works they talk about touring revenue, merch sales and super fans. They also talk about physical album sales. They also talk about how few dollars they got paid from Spotify and how it doesn't even pay for the pizza they ate the day they recorded it.
Fans will buy what artists sell. Careers aren't built because of Spotify. Spotify facilitates the spread of music just like radio but it should be used as a means to make playback easy for fans, not as the core sales channel for it.