My greatest passions are music discovery, curation, and streaming. Below is an article I wrote to educate people on how streaming is changing the way we listen to music and why it’s going to save the music business. You can read the full article on TuneCore.
[Editors Note: By Kami Knake - founder of Bands Under the Radar music podcast, blog and record label. With over 15 years experience, she currently consults for digital music start-ups and independent artists.]
There’s a lot of buzz these days around music streaming subscription services and how they will impact the music business. It seems like every other week some famous artist is ranting about how much they hate Spotify, the world’s biggest music subscription service, complaining about their low royalty rates. To put it frankly, their vision is short-sighted. Below is my attempt to shed some light on this controversial subject.
1. Subscription Services Promote Artists’ Catalog Increasing Revenue All Around
There’s billions of dollars to be made in the music streaming market reports MarketWatch. Apple, Google, and Amazon’s recent moves into streaming are expected to provide a revenue boost to labels and create fresh opportunities in the music industry. It’s been a whirlwind year for music streaming with Amazon launching Prime Music in June, Songza being scooped up by Google in July and Apple buying Dr. Dre’s Beats Music for a whopping $3 billion in August.
Further proof that streaming is a big priority, all three major labels have dedicated divisions for curating and promoting music playlists on Spotify: UMG has Digster, Sony has Filtr, WMG has PlaylistMe, and WEA, WMG’s distribution and artists services arm, bought Playlists.net last week.
The strategy is to market music through playlists and ultimately increase their catalog’s Spotify streams. By attracting followers to playlists based on themes and genres, they can then use those playlists to “seed” new tracks as they are released. Think of this kind of marketing as a new form of radio promo where the tastemakers are the playlist curators and where anyone can be a curator. Labels, distributors, artists, celebrities, brands, TV shows, music fans, etc, are all examples of curators on Spotify attracting followers to their playlists.
A song on a curated playlist may be how Spotify users discover you for the first time, but because they can consume your music affordably, some will listen to every song in your catalog allowing them to become a fan of you as an artist, rather than having to cherry-pick which singles to purchase. Many people wouldn’t have taken the opportunity to listen your music in the first place if they had to purchase the music first before getting a chance to hear it. For example, U.S. independent artist Ron Pope added his music catalog to Spotify in 2010 which generated over 57 million plays in a little over 2 years and paid him $334,636 (As of Feb. 2014). Pope was getting millions of streams on Spotify in Sweden most months, and as a result was offered a respectable guarantee to play a festival there. In countries where Spotify is really popular such as Sweden and Norway, hardly anyone is buying music and almost all revenue comes form streaming. This is why some artists can make 5-10 times more money on Spotify in these countries than in the U.S..
Let’s look at the numbers. Spotify has over 40 million users worldwide with 10 million of those users paying a monthly subscription fee. Over 3 million of those paying subscribers are in the U.S. alone. Spotify launched in Sweden and Norway in October of 2008, but didn’t launch in the U.S. in July 2011. The population in Sweden is about 10 million people, Norway is 5.1 million, and in the U.S. about 319 million people! Just imagine the amount of money Spotify and other streaming services will generate for artists and labels once streaming becomes the norm in the U.S. and other highly populated countries around the world. We are talking billions of dollars folks! And Spotify is still a relatively small service when compared to YouTube who have 1B users and iTunes who now have about 800 million accounts. As Spotify and other streaming services continue to grow so will its artist payouts.
To acknowledge the elephant in the room, yes we all know that artists make a lot more money right away when fans purchase mp3s, but think of streaming as a dividend that pays you every time someone listens to your music. You will be surprised how quickly this money adds up as more people become paying subscribers. Everyday we are getting closer and closer to the tipping point where streaming revenue will surpass digital downloads and CD sales. After that happens, the sky’s the limit!
Read the rest of this article (the other 9 reasons) on TuneCore.