In 2015, streaming music singularly became the largest revenue stream for record companies, earning a whopping $2.4 billion in revenues. For the first time, downloads were overtaken by streaming music. This shows how streaming has evolved over the past decade. People are now more content at paying subscription fees to access libraries of music from their favourite artists. Probably as an indication from 2015’s earnings, it is quite obvious that streaming companies like Spotify are quickly solidifying their hold in the music industry. Streaming seems to have led to a reduction in pirated content. However, it is not all rosy in the streaming industry as there have been cases of exploitation by artists when it comes to settling their dues. Here are some pros and cons of music streaming sites and how they support record companies;
- The death of piracy?
According to a behavioral study published in the Journal of Consumer Behaviour, many people are shifting from pirated music content to streaming music. This is due to two main reasons; people feel guilty while pirating their favourite artists’ music as they usually want to contribute something towards their music and that they are also faced with low quality music when pirating the content. Based on this, piracy is definitely on its deathbed with more people shifting to subscription based sites where they don’t feel any kind of guilt download their artist’s albums.
- Alternate earning streams
Music streaming provides artists with alternate earning streams. Buying and selling albums is not as efficient as allowing someone to pay a monthly fee and get to choose all kinds of music that they want to listen to. Artists who are not signed by major labels but already have their own fan base can also be able to make money through these streaming sites.
- Meager earnings compared to mass users
Services such as YouTube which have ad-fuelled streaming music provide meagre earnings as compared to vinyl sales of the albums. For example in 2015, vinyl albums sold to 17 million people generated $416 million whereas these ad streams earned $385 million based off hundreds of billions of streams worldwide. This shows just how small the earnings can be from these streaming sites.
- Complaints from artists
Several artists have complained about some streaming services and the models which they use in calculating their revenues. Some have felt short changed by the earnings that they get and have resorted to taking down their content on some streaming services. However, streaming sites have always maintained that they get into agreements with label companies on the earning models that they prefer and submit the same to the record companies.
Record companies definitely earn a huge amount of money from streaming sites considering that they are the ones who release their music to be used by the sites. What streaming sites have done is to provide an alternate route to how people can access music which beneficial to both artists and their fans.