Running Head: MUSIC STREAMING SERVICES AND THE ALBUM 1

Community Problem Report: Music Streaming Services and the Album

The University of Texas at El Paso

RWS 1301

November 8, 2017

Jade Hernandez
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Abstract

Music streaming services give customers an efficient way of providing music at the hands

of the owner quickly. These new services which are paid-subscription have increasingly become

a more popularly used method of listening to music in our technological era. As music streaming

services began to become increasingly more used, other alternatives began to lose money. Music

streaming services began to release ad-supported versions and subscription services to the

public, and has been taken by storm to be used as a common way of discovering new music easily

within algorithms the app uses. Never before has music been so easily accessible and discoverable

for many people, and has become much cheaper to purchase. Though these new services provide

music much more music to customers, it may begin the issue of artists feeling underpaid. Many

consumers tend to overlook this statistic, but as the money is distributed, each artist finds out that

they are not being paid as they should for plays in their published song. As this problem began

to increase, artists start to pull their music from the applications to protest their frustration to the

company. To handle this problem, the music streaming service platform began to pay more of their

revenue to the record labels, as much as 70% of all profit. But many artists still believe they are

not being paid as much as they should. In a different context, beginning artists who want to become

more famous tend to also overlook the money, because for now they only want recognition. As

this controversial issue continues, music streaming service companies attempt to aid the individual

as best as they could.

Keywords: Music Streaming services, Artist, Money, Technology, music, customers, recognition
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Introduction

Music has been heard in many ways up to this point in our history. From first being heard

on Broadcast radios, Vinyl and cassettes, CDs, MP3, then radio once more, music has been shifted

many times to be suitable with the current era to distribute efficiently. Back before technology

took a stronghold onto music, it was generally heard through pricey vinyl records that were a

common medium in the 1950s, then progressively evolved to cassettes which were used to record

music from the broadcasted radio station via tape recorder (Zantal-Wiener,2017). As cassettes

slowly died out, the compact disc was born that began the MP3 revolution. CDs took the public

by storm, as they could burn the songs onto multiple CDs to avoid having to pay more money

(Zantal-Wiener,2017) . Eventually this grew as a bigger problem for pirating music online as the

internet grew. To combat this infringement, music streaming services came in to offer a selection

of music based on subscription, that would not exactly belong to the public physically, but rather,

just enabled them to listen to the music live. Music has never been so abundant as it ever has been

before, yet many consumers do not realize the impact of what music streaming services have

caused onto widely known artists. As music streaming services are the more popular used method

of music consumption in todays era, it also causes a new issue over how exactly artists are paid;

single-digital download revenue falling 13%, and better exposure for new artists among these

different services. (Thompson,2015).

Impact on the Music industry and artists

In 2011, the music industry seemed to be close to its end as recession, increase in piracy,

and Dropping CD sales became a jarring problem for profit in the industry. Despite the end of

the industry seeming impossible to fix, in 2016 the industry was saved by profits in music

streaming services- nearly $1.6 billion dollars adding to the revenue, the greatest shift onto the
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industry since digital downloads were announced in 2003 (Ellis-Petersen,2016). Through the

creation of streaming music, people have become more willing to purchase music than ever

before, leading to piracy falling to 34% in 2009-2011, and dropping every year according to

accumulated data in a report published by TorrentFreak.com (Van der Sar, 2011). Spotify is one

of the most widely used music streaming services, approximately 140 million users according to

Information is Beautiful infographic, offering unlimited music on demand for both the

subscription based service and the ad-tier service. Though each individual artist the pay rollout

varies widely, the average numbers were calculated in an infographic complied of all the

different streaming

services (Information is

Beautiful, 2017)

according to signed and

unsigned artists. In

summary, Napster pays

unsigned artists the most

with $0.0167 per play, and YouTube, the lowest, with an average of $0.0006 per play.

Additionally, signed artists under a label are shown to be paid slightly more, with Napsters

highest being $0.0190 per play, and the lowest, YouTube, being $0.0007. In each column of the

infographic, there is a total number of views needed to earn minimum wage, which on average,

means each artist needs to have at least 80k views per song to earn $1,472 for standard living

(Information is Beautiful, 2017).

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Music Streaming: New exposure for artists

Although top artists do not find themselves very satisfied with streaming services

payment methods, younger or more new artists find the services to be very helpful with

networking and exposure for their new music, such as YouTube and Spotify having Discoverable

pages based on algorithms of listened to music (Pasick, 2015). Based on your own preferences

and popular playlists on Spotify, the algorithms can compute a discoverable page to help

increase awareness of other artists and newer ones, a new method that was much harder to do in

the non-technological era. Through these new ways of discovering music suitable to an

individuals taste, it has never been this easy to find this many artists in this short amount of

time.

Music Industry

Statistics based on music

streaming growth

Music streaming

services have been deemed a

very convenient method to

listen to music, and just in the year 2017 alone, Americans topped music streams to be

approximately 184.3 billion in the first six months according to Nielsen report data (Dunn,

2017). Music streaming has become the lead source of revenue for the music industry in 2015,

increasing its gross since 2009 and gaining its best percentage since 1998, accounting for 51% of

$7.7 billion-dollar revenue in 2016. (Rolling Stone, 2017). Jamie Oborne, manager of the 1975,
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said, Streaming was responsible for a music industry renaissance, financially rewarding not

just labels but also musicians (Ellis-Petersen, 2016). Although this number was very high, CEO

and chairman Cary Sherman stated that the 2016s revenue would have been much higher if not

for YouTube, which offers video music streaming for free with ads (Rolling Stone, 2017).

YouTubes payout method is much more different than typical streaming services such as

Spotify, Pandora, or Tidal are arranged. As chairman Cary Sherman stated in RIAAs report, A

platform like YouTube wrongly exploits legal loopholes to pay creators at rates well below the

true value of music while other digital servicesincluding many new and small innovators

cannot. It may be the same song requested by the user, on the same device, but the payouts differ

enormously because of an unfair and out-of-date legal regime." (RIAA, 2017). In a report in

Digital Music News, an artist that wanted to remain confidential released information of how

much money they earn per 1,000,000 views. The artist stated for a video that was 1,048,305

views had earned approximately $64.40. By dividing both numbers, we are left with $0.0000616

per view, much lower than Spotifys or Pandoras pay (Resnikoff, 2017). It has become apparent

that artists are not paid very well on certain music streaming platforms, but could also be paid

better on others.

Artist Impact and Response to Royalties

Spotify claims to have paid artists 70% of their revenue, as much as 3 billion dollars in

royalties, and Pandora being 2 billion dollars according to XAPP Media reports (Kinsella, 2016).

Despite streaming services paying huge number of sums, it does not always end up in the artists

hands straight away. It is a long confusing process of where the money exactly ends up, and most

of the time the artist will not be getting paid what they believe they deserve because of labels that

push artists into exploitative record deals (Constine, 2015). The process of payment through
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these services go from payment to the Labels, Agents/Publisher, Songwriters, then finally to the

artist/band (Constine, 2015). It may seem daunting for the musicians, and when each learns

about these royalty payment methods, they feel as if though this method is not fair to musicians.

Consequently, artists began to grow irritated with streaming services paying methods,

such as Spotifys payment methods with royalties. Taylor Swift, a popular pop and country artist,

took down her album from Spotify because of unfair royalty payments stating to Rolling Stone,

Im not willing to contribute my lifes work to an experiment that I dont feel fairly

compensates the writers, producers, artists, and creators (Knopper, 2015). Along with famous

Artist, Bob Seger, who also removed his music from all streaming services stating, The record

business is 50 percent of what it was 10 years ago, so theyre trying to cut costs. (Knopper,

2015). By both artists along with many others taking down their albums, it began to cause the

concept of music streaming to become a bit uneasy for majority musicians with not wanting to be

underpaid as well. But, most of the time these platforms for music streaming are not the ones

responsible for distribution of the money, it is ultimately up to the labels.

An artist who grew tired of unfair payout methods through labels was Jay Z, a popular

rapper, pitched Tidal as a streaming service for artists to take back the music industry from

companies that make money from advertisements or hardware By bringing in other artists he

found influential such as Daft Punk, Kanye West, Rihanna, he was able to create this platform by

having famous artist to help lay out his vision (Heath, 2016). Tidal also claims to pay artists

much higher royalties than Spotify, by paying $0.0125 per play, and focusing on exclusive deals

for fresh music (Heath, 2016). For musicians who do not feel as if though they earn enough from

music streaming services such as Spotify or Pandora, one should consider using Tidal, as it is a
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heavily based platform for artists by artists and does not require as many plays to receive

minimum wage such as YouTube or Spotify.

Conclusion

Despite many artists feeling underpaid from many of music streaming service networks,

there has never been as much of a demand and payment for music as there is now. Music

streaming services undoubtfully had a huge role onto saving the music industry from falling

apart, decreasing piracy, and changing the way how we purchase music. Although the number is

still not as high as it was when it was first introduced, there is no doubt that as every year goes

by music streaming brings fourth more revenue and profit than it previously had- or rather lost.

To improve the method of payment to artists, there would most certainly need to be a huge

change bring fourth, which is already in the process of being made from more and more

musicians speaking out. Musicians feeling underpaid may seem inevitable, but if any artist

would want to be paid more, one should consider better streaming service alternatives, or hosting

more world tours to publicize their name, like new artists trying to regain attention. Streaming

services have provided not only assistance onto the industry, but has helped revolutionize the

way we hear music today, and for many years to come.

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