Taylor Swift took a big stand against the rising music streaming services recently, when she pulled her entire discography from Spotify just days after the release of her fifth studio album, 1989. Her reasoning was that art should be paid for, and that streaming services are scamming the artists from earning a fair wage for their creativity.
However, despite Swift’s popularity, it was estimated in some reports that pulling from Spotify would lose her a cool $6 million, along with a loss of her place in one of the few growing segments of the music industry.
The debatable business models of these online services can arguably be blamed on the record labels and services equally, and Swift’s stand highlights how the services are affecting the industry— both monetarily and technologically.
When it comes to online music streaming services, the verdict is still out, but there’s no doubt that their rise in popularity is changing the way consumers listen to music, with some even saying that streaming could pull the music industry out of its downward spiral. Nielsen’s Soundscan reported that during the first six months of 2014, revenue from streaming sites rose by 52 percent, while CD sales fell by 20 percent and digital downloads were down 13 percent. Numerous big media entities are joining the race— YouTube and Amazon each recently announced their own streaming services, while Apple spent $3 billion to buy Beats Electronics and its streaming service which is heavily tipped to be rolled into iTunes early next year, and YouTube’s parent company, Google, recently took control of Songza, another radio-based platform similar to Pandora.
Pandora Media, with more than 77 million users, is a radio-based model, where users can create a station based off of a song, genre, or artist. Spotify is on-demand, where users can create playlists and listen to entire albums. The Pandora paradigm works well for users looking for new music, but its smaller library will guarantee repeats throughout the day. Spotify gives users more control over what they’re listening to, so they’re not skipping over the songs, but with a much larger library, many of the songs Spotify offers won’t get played.
Unlike traditional radio, streaming sites like Pandora and Spotify can keep a much more detailed history of every time a song is played— information that dictates the royalties it pays. David Kelln, a British Columbia-based audio engineer, commented, “I like the idea that what I actually listen to is where the royalty money goes, because each play can be logged.”
Pandora pays about 50 percent of its revenue in royalties, while Spotify is closer to 70 percent, according to Quartz News. How much of that actually goes to the artist depends on the contract between each musician and the label.
“The way I would love to see it done is that content is available to any internet streaming broadcaster at a set royalty rate. Then the competition is between those who provide a good service with an interface I can navigate easily,” said Kelln.
The other big question related to streaming services is audio quality, and whether users are willing to pay more for a high-resolution streaming service (if the site provides it). Pandora’s upgraded service, Pandora One, offers a higher resolution of audio with a monthly subscription (compared to its free version), but there are exclusive high-res audio sites, like Tidal (www.tidalhifi.com), which streams hi-res audio files for a subscription fee of roughly $20 a month.
“The technology of audio streaming is no big deal at all,” argued Tony Faulkner, owner of London, UK-based Green Room Productions. “Netflix can stream 4K video with surround audio, so audio is a walk in the park. The problem is that the main commercial companies couldn’t care less about sound quality—it’s nowhere on their agenda at all. They are only interested in the bottom line of their business model.”
“To me, streaming is just radio reinvented, where music is not presented in a linear way. It just differs on the way you interact with it and the way you get it on your listening device,” said Paulo Mendes, a sound engineer and audio systems consultant in Lisbon, Portugal.
Regardless of the listening device or the quality of the audio, one thing is certain—music streaming is growing, and the industry has to adapt. “Artists are now faced with a dilemma. They can either stop making music, which is obviously absurd, or they need to reinvent the way their work is paid and controlled,” said Mendes. “I don’t have an answer, but if this reinvention fails to see the light, I guess that a recorded song, despite its record media, will become just a lure to live show ticket sales.”