Taylor Swift recently made a lot of headlines for pulling all her music from Spotify, arguing that the streaming service was hurting album sales and essentially driving her into bankruptcy, killing the rest of the music industry, and clubbing a few seals just for the heck of it. It’s a laughable argument, see as how Swift is one of the most commercially successful musicians out there. No amount of streaming can put a dent in her album sales or profits, and whining that it does only makes her sound greedy and elitist. (It should also be noted her music still remains on other sites like Rdio, which further deflates her reasoning.) Spotify, for its part, issued a rebuttal, naturally picking and choosing which statistics would make it sound the best. They may have paid out $2 billion in royalties, but many artists will rightly point out that they still earn far less from streaming than from album sales.
There are plenty of people who have very vocal opinions on both sides of the issue, and I’m certainly no expert when it comes to the music industry. But while I can’t speak for the artists or the streaming services, I can speak for myself as a consumer. And from my standpoint, it appears Spotify, Rdio, Pandora, and the rest offer way more pros than cons for consumers and for the music industry in general.
Fact #1: Art isn’t always about the money.
Let’s get one thing straight right off the bat. Being an artist (musician, writer, actor, painter, etc.) doesn’t automatically mean you’re going to be rich and famous. In fact, it’s almost always the opposite and has been for centuries. Many of history’s greatest artists lived miserable lives and died penniless: Van Gogh, Rembrandt, Beethoven, Schubert, Mozart, Wagner, Paul Gauguin, Henri de Toulouse-Latrec, Edgar Allan Poe, Herman Melville, Oscar Wilde, and countless others. You wanna be a great musician? Go for it. You wanna be rich beyond your wildest dreams? Fine. But the two are mutually exclusive.
Fact #2: Video didn’t kill the radio star.
The radio industry freaked out when television came along, as popular radio programs moved to the new visual medium. Yet radio adapted and survived. The movie and television industries freaked out when the VCR came along, fearing that piracy would destroy it. The issue went all the way to the Supreme Court, which ruled that recording a TV show didn’t amount to copyright infringement. Thirty years later TV and movie studios are doing better than ever. Recording studios flipped out as cassette tapes and then CDs and then the Internet could be used to copy and distribute music illegally. The RIAA pushed Congress to pass the Digital Millenium Copyright Act, crippled CDs and music downloads with DRM copy protection, destroyed Napster, and even went so far as to sue individuals who had downloaded pirated music. Yet while piracy does still exist, companies like Apple and Amazon now sell DRM-free digital music without any negative effect on the music industry. In fact, the recording industry today is arguing for the same thing it argued against fifteen years ago. If downloading music was going to be the death of the record studios, why are they now begging consumers to buy their music from iTunes? Because times have changed and the industry has adjusted. And the times are changing again as technology marches ahead unimpeded. Media companies must once again adapt or die.
In cases where companies have adapted, new opportunities have opened up for consumers. Blockbuster Video failed to adjust, opening the door for Netflix to rent movies by mail and then stream them over the Internet. When the movie studios tried to cut them off, they turned to streaming TV shows and then to creating their own original content. The radio industry, initially fearing that the Internet would doom them forever, eventually embraced the World Wide Web as a way to extend and enhance their on-air properties. For example, one of the nation’s largest radio conglomerates, ClearChannel, recently rebranded itself as iHeartMedia, further integrating its stations with the iHeartRadio streaming app.
Meanwhile, the newspaper industry hasn’t fared nearly as well. Ensconced in 200+ years of traditional journalism, newspapers have found themselves on the outside looking in as people no longer feel the need to pay for a paper copy of the news when they can get the same information for free on the Internet. Papers have of course established an online presence to compete, but they still hold fast to the traditional subscription model, even when such subscriptions and website paywalls fail to work as expected.
The bottom line is this: Spotify and other streaming services aren’t going to kill the music industry any more than CDs or iTunes did. But the industry will have to adjust.
Fact #3: Streaming services benefit smaller bands far more than they hurt them.
A lot of lesser-known bands will make the argument that they can’t make a living when consumers stream their music instead of buying it, and that’s true to an extent. Streaming pays far less per stream than does buying a track or album off iTunes. However, Spotify and other streaming services do provide one critical function to a band’s success: discovery. How many bands will get signed to a record contract? And of those, how many will get radio airplay and other promotion? Only a tiny fraction of a tiny fraction of bands out there will make it big. Taylor Swift is an anomaly, a highly successful musician who has become a household name and icon in both country and pop music. But just because she’s more successful than most artists, that doesn’t mean she’s more talented. There are thousands upon thousands of excellent musicians that will never make it to radio, let alone win a slew of awards. Services like Spotify, Rdio, and Pandora level the playing field in many ways, giving lesser-known artists a way to get their music heard and helping consumers find music they never would’ve known about otherwise. Many of the bands I love were discovered through these apps, and in many cases I’ve eventually bought their albums, EPs, and remixes because I do still value ownership.
Certainly the economics of the music industry have changed dramatically in the last 20 years. It used to be that the only way you could get your music out there was to get a record contract and hope for enough radio plays and album sales that you could make a second album. Today, bands can self-fund their albums through Kickstarter or Indiegogo, record their own music, sell it online through Amazon and iTunes, and promote it heavily through social media, all without ever going through a record label. Is it harder to do that? Absolutely. Is it a necessity in many cases? Absolutely.
So yes, while streaming pays far less than buying, it’s still a critical factor for bands looking to build a fanbase. You’re probably not going to get rich because of Spotify, but again, if you’re only in it for the money, you’re almost certainly bound to fail.
Fact #4: The economic value of music isn’t static.
If I wanted to buy a vinyl record album in the 1970s, the cost was about $5, which is the equivalent of about $15 today. In the ’80s, a cassette tape cost about $10. In the ’90s, a CD was usually $12-15. Today a new album on Amazon or iTunes costs about $10-13. Why is the cost of music relatively the same over 40 years? Because the record industry says so. Even though downloadable music requires far less overhead than CDs or cassettes, consumers are used to paying X amount for an album, so that’s what they continue to cost. But there’s no real reason that has to be the case. The free market says that the economic value of a particular good or service is whatever the consumer says it is. When demand goes down because prices are too high, prices fall to compensate. When demand rises, prices will go up.
Music, for the most part, is a fungible commodity. If Taylor Swift’s newest album isn’t available on Spotify, there’s plenty of other stuff I can listen to. If I’m a big fan, though, I’ll tend to place a higher value on the album and be willing to pay a higher price for it. The assumption that everyone from the casual listener to the most ardent fan should pay the same set amount for the privilege of listening to her album is completely ridiculous. There are plenty of other fish in the sea, so to speak.
The reason people are willing to pay $10 a month for Spotify or Rdio is because they’ve determined that to be a good value for the service they provide. But even then, the math doesn’t always add up. While Spotify is the most successful streaming service worldwide, it’s never been profitable. If it raised its subscription price to the point where it could pay all its necessary royalties and overhead costs and still turn a profit, users would rebel and close their accounts, which is exactly what happened when Netflix raised their rates by 60% in 2011. The market had determined the value of Netflix’s services to be a certain amount; when it raised prices above that, demand fell sharply. It was only when Netflix began offering more exclusive content did the perceived value rise until it met the price point. And then subscribers began coming back in droves.
The record companies want to keep essentially the same distribution model with the same prices that they’ve always had, but the free market is saying otherwise. Consumers will pay what they perceive to be a fair value for their music, one way or another. If you want them to pay more, you’ll have to offer more value.
Conclusion.
I’m not trying to say that Spotify, Rdio, or Pandora are completely blameless or perfect in any way. Certainly, they have to be able to work with the record labels if either party wants to continue to be successful. However, as a consumer who listens to (and buys) a lot of music, I’d greatly prefer a world with music streaming to a world without it. Maybe that makes me selfish, although the free market would say I’m actually acting rationally. Maybe that makes me naïve, although history seems to say otherwise. Maybe that makes me insensitive to the plight of struggling artists, but art has never been about financial gain anyway.
Taylor Swift and other artists are free to pull their music from Spotify if they don’t like it. There’s certainly nothing stopping them from doing so. But as a consumer, I’m free to listen to something else. If she doesn’t like that, fine. But at least for now, everybody has a choice.
Previously:
Is ‘Blue Like Jazz’ the anti-‘Courageous’?
The first video I ever saw on MTV
Derek Webb’s ‘Stockholm Syndrome’: Conflict and controversy