I’ve recently been following a topic on my classmates’ blog posts about the effect of music streaming on the music industry. The initial post believed that music sales in the form of physical media (i.e. CDs, vinyls, etc.) is crumbling as digital downloads and streaming apps like Spotify and Songza meet consumer demand today. My classmate Will then heatedly responds, arguing that while physical media sales are declining, this doesn’t necessarily hurt artists as it is merely a shift in revenue streams from CDs to royalties paid by streaming companies. In my opinion, music streaming is hindering physical music media sales, and despite music streaming’s attempt to compensate artists, our music developers are not getting very much help.
Spotify director Sean Parker and anti-piracy campaigner and ex-Metallica drummer Lars Ulrich joining forces against piracy. Photo by Kevin Mazur from WireImage.
After taking a closer look at relevant articles, I discovered that music streaming companies’ “huge royalty payments” to artists are only “huge” in proportion to the profit margin of these companies. For the hard cash going to every artist in need of funds, these royalties are hardly sufficient to keep the bands moving. Damon Krukowski, an alt-guitarist for Galaxie 500, revealed that 6000 streams on Spotify netted his band a measly $1.05 to split. Of course, only the most popular artists will benefit, where millions of streams bring real cash to their pockets. To me, this means the music industry will lose most of its non-mainstream artists, alienating the large segment of customers who aren’t really keen for auto-tuned pop. Ultimately, a significant portion of income for music is cast off, and less money is entering the industry overall. The low profitability of music-streaming also puts into question if music-streaming can last long enough to adequately fight piracy. Within a few years, Spotify might file for bankruptcy and the Pirate Bay will continue to reign.
In short, music streaming will never provide income to artists the way records and radio sales did, even as a complete replacement. For that reason, I think Will should know that one can’t blame HMV for complaining.