media update’s Emma Beavon walks you through some of the main ways streaming has made its mark on the music industry. 

New technology has made way for the emergence of music streaming. This means that people can access music without requiring you to download files from the Internet. The new found accessibility, convenience and personalisation listeners found was an instant hit, and now it has even gotten to the point where people are willing to pay for this service. 

Music streaming has had a huge impact on listeners and has revolutionised the way people consume music. But how has streaming impacted the music industry and the artists we have all grown so fond of?

Here are five ways streaming has changed the music industry and its artists: 

1. It’s no longer focussed on new releases

Back in ‘the good ol’ days’, artists would release a new song and it would climb the charts rather than enter at number one. It would then sink down the charts after a few days. This would lead to chart battles between artists.

The introduction of streaming services has encouraged ‘bingeing’ on individual artists . This means that there have been big jumps in revenue for record labels whose artists are streamed regularly.

2. It’s harder for artists to make the amount of money they used to 

In a 2014 article by the Wall Street Journal, Taylor Swift highlighted the financial implications of streaming for mega-selling artists. She also argued that music shouldn’t be free as it devalues the industry:
“Rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is. I hope they don’t underestimate themselves or undervalue their art.”
The payment model of streaming services can be quite complicated. Artists do get paid by streaming platforms, but it’s not as straightforward as payment was in the past. 

There are lots of factors that determine how much artists are paid per stream. For example, how much they are paid is dependent on:
  • the listener’s country and location
  • if the listener is on a free or subscription account
  • the specific artist’s royalty rate
  • the relative pricing and currency in different regions
Ditto music estimates that artists receive:
  • R0,06 per stream on Amazon music
  • R0,06 per stream on Spotify
  • R0,09 per stream on Deezer
  • R0,11 per stream on Apple Music
While this may not sound like much, let's put it into context. In 2018, Drake was named the most streamed artist on both Spotify and Apple Music. On Spotify, his music gained 8.2 billion streams in just one year. That amounts to around R524 800 000? ($35 812 991,76) earned just from Spotify. 

Most streaming platforms have tried to make some kind of move to make artists happier with their financial awards. In 2018, Spotify allowed artists to restrict the availability of their music to its paid service.

3. It has made the music industry grow

In April 2019, Spotify became the first music streaming service to reach 100 million paid subscribers worldwide. Due to the fact that around 70% of a streaming platform’s revenue goes to rights holders such as record labels, publishers and distributors, streaming services have generated a lot of money for the music industry. 

For example, Drake achieved more than 5.1 billion streams in 2017 on Spotify alone. This helped his record label, Universal Music Group, achieve profitability and offset the fall in sales of digital downloads and CDs by earning the company around $1.1-billion in streaming revenues in the first nine months. 

4. It’s no longer about free and easy access

If anything is available for free and it is easily accessible, its perceived value drops. This is why streaming services are encouraging listeners to sign up to their subscription deals. The next step was to get artists to sign exclusivity deals with specific streaming platforms. 

These platforms introduced exclusivity as an attempt to persuade potential customers to sign up to their services rather than their rival’s. But this attempt is not popular with the public, as they don’t want to take out multiple subscriptions to different providers, who offer pretty much the same things. 

Universal Music Group has stopped offering exclusive deals to streaming platforms because of the public’s objection to exclusivity. As they are the largest record company in the world, it is expected that exclusivity deals won’t last long. 

5. It introduced subscription deals to music

Music fans were thought to be difficult to entice. But it seems that after the launch of Netflix, Amazon Prime and other subscription-based video streaming services, music fans assumed subscriptions for streaming music would be next. 

Now that the number of paid subscriptions to music streaming services is in the high millions, with that number expected to grow even more in the coming years, the music industry and investors couldn’t be happier! 

Added to that,  greater volumes of subscribers comes with lower prices and more bargain deals (fantastic!). 

But what does this mean for artists in the music industry?

That still remains to be seen as the world of streaming is still relatively new, which means that the future holds endless possibilities.

What are your thoughts about how streaming has changed the music industry? Let us know in the comments section below. 

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