Gutting the Music Industry One Stream at a Time

When iTunes launched 10 years ago, it became the model for buying and legally downloading music. Soon services like Spotify came along and changed the game from a purchasing model to a licensing model. How has this changed the industry? For consumers it’s great, but for the music industry it’s meant tons of competition at the bottom, a vanishing middle, and more corporate domination at the top.

Streaming services like Spotify give artists the ability to make their music available all over the world. But this convenience has two costs—the dollars paid and the watering down of creativity.

Follow the Money

The exact dollar figures artists make from downloads and streams vary greatly, but with numbers from Time, The New Economy, How Stuff Works, and Spotify itself, we compiled a rough outline.

To keep this example simple we’ll look at a yearly music budget of $120. That’s the cost of one year’s premium membership to Spotify. Remember, all of these numbers are averages/estimations based on info gathered from the sites listed above as well as other research. We compared what consumers get for $120 and what the artist gets.


As you can see, independent artists make more per song than signed artists because they don’t have to split revenue with the record labels. The flipside is independent artists don’t have label money to promote their albums which makes selling those albums much more difficult; so much so, they often make less total money despite their per song/album advantage.

You will also notice, while Spotify is a great deal for consumers, it is not good for artists. In order for a signed artist to make as much money on Spotify as they would by selling a platinum album, they would need about two billion streams. At an average length of four minutes per song, it would take 383,562 people streaming nothing but that artist’s music nonstop for an entire year to reach the two billion mark.

This also shows how, as streaming became more popular, the record industry started losing tons of money in album sales which leads to the watering down of creativity mentioned earlier.

Watering Down the Stream

Big music labels are combatting their losses in sales revenue by investing in fewer and fewer risky projects. Instead they dump money into a proven, money-making formula and then perfect it. The most obvious example of this is Disney. They keep cranking out pop stars like they’re making them in a factory: Brittany Spears, Miley Cyrus, The Jonas Brothers, Selina Gomez, Demi Lovato, I’m sure there are more on the way.

The Disney machine introduces these “artists” to their audience through their youth-focused Disney Channel. Often the children watching the shows become comfortable with the “actors” and “actresses” before even hearing them sing. When the album comes out, the kids raised on Disney buy it, not necessarily because they like it, but more out of a feeling that they’re supporting a friend—or they just don’t want to be the only kid in their class without the album.

Some people want to claim they really connect to the music, but even if that’s true, it makes you wonder if they would really “connect to the music” if it was coming from the forty-year-old veteran songwriter who actually experienced the emotions in the song instead of the cute familiar face that’s too young to have really experienced the complex emotions of an adult relationship.

With all the money from record companies going into proven, money-making, formulaic pop music, mid-level and beginning artists are getting less and less. This has led to a rise in independent music. The advancement of technology makes getting music to listeners easier for beginning and/or independent bands, but the monetary return is almost non-existent.

Mid-level bands flock to niche labels where they will at least be big in their genre, but the crossover hit almost never happens. When you look at the top of the Billboard charts you see virtually nothing but pop or R&B. Guess which two genres have a lot of record studio money behind them?

Then there’s Macklemore, the independent rap star who somehow climbed to the top of the charts. Every rule needs an exception.

We’re seeing the same phenomenon in the movie industry. Studios invest almost exclusively in action blockbusters or kid-centric movies because they are proven to make money. But, we have seen a huge surge in independent films in the past decade and a half, while there have been fewer and fewer mid-level movies.

Shouting Over a Million Voices

Along with creating a corporate aversion to risk, advances in technology have hurt creativity in another way. By giving every artist the opportunity to share their music with the world, Spotify has essentially handed everyone a microphone. Now let’s all sing different songs all at once and see if anyone can actually hear a melody. Sure, more artists have more opportunity, but they also have more competition. Plus, with cheap digital recording software and auto tune technology, the term artist has grown ridiculously loose.

When music was harder to record, it took a lot longer and mistakes were much more costly. This meant you had to be able to go into the studio prepared to play or sing your song with virtually no mistakes. That level of perfection required hours upon hours of rehearsal along with steady work – musical or otherwise – to earn the funding to pay for the gear and recording materials to get the sound just right. That tedious rehearsal did more than give good musicians their chops — it also weeded out the people who lacked the passion to endure the mundane practice routine.

Now people can cut an album on Garage Band in a drunken afternoon. Granted, the quality of that album will likely be terrible, but that won’t stop them from adding it to the millions of songs on iTunes and Spotify—adding one more voice to the noise.

People have more access to great music now than they ever have before and artists still make tons of great music. Unfortunately, there is also more terrible music than ever before available through the same channels. The burden of the mundane task has flipped from the artist to the listener.

Today you can find music just as good as at any time in history, but you’ll have to put forth the time and effort to find it. Your new favorite song is no longer delivered to your radio or record store, because it can never get popular enough out of the gate.

The new distribution model has fractioned everything into niche markets—very few of which are large enough to push independent artists over the tipping point into the mainstream. And, with the new revenue model created by the distribution model, being independent is almost the only way an artist can make money from their work. The end result is that your potential new favorite song now resides on a server next to millions of songs you hate and, in all fairness, probably another couple hundred you might love if you ever had a chance to hear them.

Feed Your Ears Carefully

With very few people willing to put forth the effort to sift through the drivel, more people start to treat music like fashion. They just want to be told what’s good, what’s hip, what’s hot, what’s in, and what’s not. They let televised paint-by-numbers karaoke contests like American Idol and The Voice show them what’s popular and assume what’s popular must be good. As more people let themselves be told what to listen to, the record labels’ money-making formula is reinforced and they take fewer and fewer risks on new and interesting artists.

The ability to stream music is a powerful tool, but you must use it responsibly. I love using Spotify, but I also take the time to find what I like. Good music is still out there. This is a call for you to seek it out. Take the time to find out what really moves you, not just in a physical sense, but in an emotional sense too. Go find a song you’ve never heard before that makes you cry. Find one that makes you smile. It’s okay if it’s by an artist you’ve never heard of. In fact, that might make it better. Remember, music is not fashion.

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With over five years writing about the internet industry, John has developed a deep knowledge of internet providers and technology. Prior to writing professionally, John graduated with a degree in strategic communication from the University of Utah. His education and experience make his writing easy to understand, even when covering complex topics. John’s work has been cited by, PCMag, The Washington Post, Los Angeles Times, and more.

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