This year many were doubting if any artist would release a platinum album, but that all changed with Taylor Swift’s “1989,” which is on pace to be the biggest album release since 2002. Aside from Swift’s success, the lack of well-selling albums illustrates a shift in the music industry away from albums and vinyls [what century are you living in?] as consumers are moving to streaming and pirating to satisfy their music fix. However, this past week Swift grabbed more headlines by pulling her music from the popular streaming service Spotify, which has more than 40 million users, and by saying she sees the service as nothing more than a “grand experiment” that does not “fairly compensate” the artists. It’s clear her album name is not the only thing stuck in the past.
While Swift may not be ready to face the future of the industry, consumers have already made their choice and shifted towards streaming services. The ability to find new artists at the click of a mouse, purchase songs individually, and the general convenience of streaming services meant that the decline of albums began long ago, even if some musicians are clinging onto the past. The decision to not enter into agreements with streaming services typically comes from the small royalties that musicians receive. Artists only earn half a cent for each play of their music on Spotify, but over 70% of the service’s revenue goes to artists.
Swift may be able to afford not participating in commercial partnerships with streaming services, but for most artists refusal to stream would be too costly. Streaming services actually lower barriers to entry for artists because it is free to upload music to most services and the website will promote the music for them. Furthermore, it matches consumers with similar tastes to the artist and can allow artists to free ride on the success of artists with similar styles. Streaming easily promotes artists and increases long run profits by driving ticket sales- the real money maker for an artist. Swift’s decision may have gotten plenty of attention, but expect few artists to make a similar decision because streaming is here to stay, to the benefit of consumers and producers alike.
8 Comments
It makes sense when you say that streaming services lowers barrier to entry for artists. Though this may be an exact reason Taylor Swift’s team may be interested in keeping her music off streaming services. Swift is already wildly popular, as shown through her album and concert ticket sales, and it is in her best interest, as well as the interests of other already popular musicians to keep their music off these streaming sights in order to decrease easily accessibility to new artists for consumers. Keeping market share is important and if Taylor can get teenage girls to go out and buy her album to listen to it exclusively rather than listen as a playlist with other new, similar, artists mixed in, it is probably in her best interest to do so.
I think it will be important to see how other music artists react to Swift’s decision; will they follow suit, or will they continue to allow their music to be accessed through streaming services like Spotify? The music industry is vast, so Spotify can shake off this rather minuscule hurdle without facing a decrease in the demand for the service because other songs will be played in place of Taylor Swift’s music. I agree with Jacob with regards to having low expectations of other artists removing their music from streaming services. Sales of CDs have been on the decline for close to a decade as streaming services and digital music files have replaced CDs as the most common way to listen to music. Therefore, it makes sense for artists to keep their music on Spotify (and other streaming providers) in order to reach more potential consumers.
Lastly, this may create unintended consequences for Taylor Swift. Instead of buying her album in a store, fans may resort to using alternative methods to listen to her music (e.g. illegal downloads, radio, etc.), which would lead to a decrease in profits for Swift. I believe Swift will eventually retract her decision, telling Spotify, “You belong with me.”
I agree Swift will eventually return to Spotify or a similar service. For the time being she can rely on her fame to encourage fans to buy her songs from itunes, but down the road itunes and other services may change their selling platform because of rapidly falling sales. One point I didn’t mention in the post- Swift and her publisher would have made $6 million from spotify on “Shake it Off” alone, so certainly spotify isn’t shorting her any money. In the mean time Spotify can just “shake it off” since most artists are cooperating with the streaming service.
I do agree that TSwift may end up eventually returning to Spotify. Though you wonder if it is beneficial for an artist to initially, with the release of a new album, keep their music off streaming services. This would allow for a higher volume of sales of their physical cds and online albums in the first few weeks. It is almost a way to price discriminate between the diehard fans who want the music right away, who will go out and buy the cd if it is not readily available in other ways, and those who may not buy and will wait to stream the music later. I guess only time will tell if Swift will renege her initial claim or if she is really adamantly against streaming telling Spotify, “We are never ever ever getting back together”.
While I have no puns to add (quality work team), I had the same reservations regarding alternative listening methods. Has she kept her music from YouTube as well? The radio? Seems to me like she just added incentive for Illegal downloading from sites like Dirpy.com. Further, if nobody wants to pay two month’s worth of Spotify subscription for one album that’s probably only half full of music people will like, how is anyone going to hear the one song on the album that will fare better than all the rest? I haven’t heard any of her new songs. Not in residential areas, not at parties. She could be missing an entire sample of potential listeners just by limiting her exposure. People don’t download music to their phones these days, they use Spotify. So, even if someone were to download the music, they’d have to put it on their audio devices before sharing it with anyone, and is essentially a barrier to her own entry.
If you pay the dollar iTunes price for music and you want to get a library of 10,000 songs, you will pay 10k and be limited to those songs. I pay 5 dollars a month for spotify and have access to over 24 million songs (that number is quickly increasing). I could live 60 more years and pay a total of $3,600 to have unlimited access to music. It is ridiculous that iTunes and other music distributors have not lowered the price of their music. This business model is sure to fail and has been failing for decades. Maybe it worked when there was literally less recorded music in the world. People only had a few thousand bands they could listen to. Now there are millions of bands…people are not going to pay to listen to all of them. This seems like Taylor Swift is upset that producer surplus is being lessened and consumer surplus is being added to.
I agree with Alexander, I think this is a pretty naive view for Taylor Swift to take. I used iTunes for years, and, looking back, spent too much money on too few songs. I haven’t bought a song on iTunes in nearly 3 years now. Even without Spotify, it has become increasingly easy to find and download music online for free, and there are plenty of websites where you can put together free playlists (i.e. SoundCloud, YouTube). I now have a hard time even considering buying a song for $0.99 or, in some cases $1.25 on iTunes when I can listen to more songs for less elsewhere.
Three points:
Music is a huge market, and therefore varied. What may make sense for one artist need not apply to all. Furthermore, while there may be illegal downloads, the fact remains that the album is platinum, so lots of people have pulled out their plastic for a physical product.
There is indeed price discrimination across time, selling entire albums today ($12.99 on iTunes), moving to down individual tracks over time ($1.29 on iTunes) as only a few of the songs gain traction [pun left implicit].
Now there is the possibility that it is actually an album, with songs that tie into each other. So then you have bundling: you may only like a couple of the tracks as stand-alone songs, but you’re willing to spend rather more than for the two favority tracks to buy the whole package.
As an aside, I’ve about 6,000 tracks on my computer, so seldom turn to streaming services. I don’t have a gold-plated data plan so streaming on my cell is out of the question: spotify may be cheap on a monthly basis, but spotify plus a huge data package is very costly. I don’t want to pay another $40-$60 per month [add spotify and it’s $65×12 = $780]. I can buy a lot of CDs for that.
I do buy music a few times a year, typically for a specific performance of music that I will be singing with the Glee Club or Rockbridge Choral Society. Streaming services are not a substitute.
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