SPOTIFY and streaming music - a lifeline or a guillotine for the industry?

I recently listened to a podcast from Freakonomics (which is one of my favourite podcasts’ BTW) that focused on streaming music and interviewed the founder of Spotify; Daniel Ek. I wanted to share some interesting facts about music streaming and provide my thoughts on the future of music.

To read or hear a sample of the podcast please follow this link: http://freakonomics.com/podcast/spotify/

For the record I do use Apple Music streaming services and have since they launched it in 2015. I pay $10 a month to stream all the music I want. Prior to that I bought a lot of my music on-line through Apple’s iTunes since I had sold most of my CD’s back in 2013.…and prior to that I was a rock star “wanna be” child that grew up in the 80’s and 90’s where I bought tapes and CD’s and read all the lyrics, observed who wrote the songs and poured over the cool pictures of my favorite band members.

• Spotify’s most-streamed artist in 2018 was Drake, with 8.2 billion streams. Assuming a typical streaming royalty rate of 0.4 cents per play, that’s nearly $33 million going to Drake’s camp. But the pyramid is sharp, and things fall off really fast once you go beneath the top. Alan Krueger cites an industry survey which found that just 28 percent of artists earned money from streaming in 2018, with the median amount just $100

• Ek co-founded the company in 2006, at age 23. It went public in 2018 and its market cap is now around $25 billion. For a company that doesn’t really make anything — other than making the connection between a beloved product and people who want to consume that product.

• The 100 million subscribers to Spotify generate 90 percent of the company’s revenue.

• For Spotify to stream copyright music Sony, Universal, and Warner were given 70 percent of streaming revenues and an equity stake in the company. The big record labels — Sony, Universal, and Warner — were reportedly each given between 4 and 6 percent of Spotify’s shares, with a consortium of independent labels getting another 1 percent. When Spotify went public, in 2018, these stakes would be worth billions. The labels would also get to keep drawing down 70 percent of Spotify’s revenues, and distributing it to their artists according to their own royalty formulas.

• This is how Ek defines the Spotify mission: To inspire human creativity by enabling a million artists to be able to live off of their art.

I watched a youtube video a few years back where this gentlemen predicted exactly what is taking place with the streaming of music – “music will flow like water from a tap and we will have it wherever and whenever we want it.” This is exactly what has taken place with the Spotify and Apple music streaming services and we now value music like water. We take water for granted just like we do our music. Even though water is the most valuable resource we need to keep us humans alive it is one of the cheapest things on earth. Music and all it’s creativity has essentially been “devalued” by creating an endless supply of it. The quality over quantity in music has shifted and there is an over supply of mediocre three minute sound bites that society either keeps craving like a hungry dog or gets overwhelmed and stops listening. The current production and distribution of music is cheaper than ever but the creation of music has essentially remained the same with respect to lyrics, melody and rhythm. In reality it has become even harder to create something fresh and new due to the oversupply and the “get in and get out” nature of the business now.

Current music also holds no attention span with our ears – just like water we turn it off and on as we like and hence the music is adapting to our 3.4 second attention spans. Intro’s don’t exist anymore, an album is now a 3 to 6 song EP, there is no pre-chorus and a song has almost become a 2:45 minute pure ear candy chorus to keep society listening. I do question what we will call classic music or “classic rock” 25 years from now as I am not sure any music currently made has the ingredients to be timeless.

The way in which humans access and create music has evolved so much in the past 10 years but I think a key element that the industry is missing is WE as humans have NOT evolved like the technology. We still crave emotion, connectivity, substance, authenticity, story, dynamics and passion in our music and I am not sure if streaming is the distribution mechanism to maintain these ingredients.

I have always been one for evolving, developing and growing, especially for myself as a music creator. I want to support the streaming of music as the “new strategy” but I am very much questioning its ability to make music better at the core of its principles. I think 10 years from now we will definetly have MORE music and MORE people will be listening to it but whether that music will be better is very much “to be determined”.

Stay in tune and stay in touch,

Kent