Is Spotify where music careers go to Spoti-die?

ABIGAIL OAKLEY | STAFF REPORTER | aloakley@butler.edu

How do you listen to music? Odds are, you are one of the 443 million people subscribed to music streaming services. Since streaming is often the most convenient and least costly way to enjoy music, it is no surprise that streaming services have taken off so quickly in the past decade. 

Streaming companies have also had a large impact on the music industry as a whole, making up 83% of national revenue from music purchases. However, streaming is a relatively new format, and the relationship between streaming services, record labels, music artists and listeners is still being developed.

There are many benefits to this developing relationship. Since anyone can upload music to streaming services like Spotify, it can be easier for users to learn about and support new artists. It can also be easier for artists to gain a following. Streaming platforms immediately create a larger pool of potential listeners since anyone on the platform can access the music. 

Mark Harris, adjunct professor of music industry studies and technical facilities coordinator for the Butler College of Communications, said that streaming has made it easier for artists to build an audience.

“The fact that I can produce music and put it on to Apple Music [or] Spotify for nothing, or next to nothing, makes it easier for basically anybody to become their own record label,” Harris said.

With this newfound ability to be independent, many artists are turning away from record labels. However, this creates new problems for artists. Without a large label backing them up, it can be harder for artists to advertise themselves, and they can be susceptible to bad contracts or negotiations. Harris said that artists who are not business savvy can run into these issues. 

“Anyone can now be their own record label, but that doesn’t mean that they should be,” Harris said. “There’s a lot of ways that artists can lose money if they’re not savvy as to how they should be setting up contracts [or] how they should be negotiating the business aspects of handling their music.”

Record labels can certainly benefit artists by providing resources and monetary support, but this new era of streaming has also complicated the relationship between artists and record labels. Business Insider reported that Spotify pays artists approximately $0.0033 per stream. Then, up to 80% of that revenue goes to the record label. This leaves approximately $0.0007 per stream for artists with record labels. 

Similarly, Apple Music pays artists $0.01 per stream. After the record labels take their cut, artists make approximately $0.002 per stream. It can look advantageous to forgo the record label, despite the benefits that they provide.

The fact that some record labels have ownership shares in streaming services makes their relationship with artists more complicated. The low pay per stream does not hurt the record labels as much as it hurts the artists because record labels make more money from their shares than from the pay per stream. Lower pay per stream is advantageous for them since they gain directly from the profits of streaming services. 

Brandon Esteva, a sophomore music industry studies and strategic communication double major, said that record labels can damage artists as well.

“I think it’s more of the record labels that really hurt the artists,” Esteva said. “The label owns the rights to the artist’s music, so they take a cut of that $0.0033 … Artists have less control over their music, and labels are usually a big reason for that.”

Since the average consumer may not be aware of the behind-the-scenes aspects of streaming, streaming services often appear to be supporting artists more substantially — despite the low pay per stream. Erika Wiseman, a sophomore elementary education major, said that she thinks streaming services encourage support for artists.

“It links their merchandise, upcoming concerts, etc.” Wiseman said. “And [it] gives listeners easy access to pretty much their whole discography.”

Streaming services do provide these resources to support artists, but the majority of people will not use them. In 2019, Taylor Swift’s Reputation tour had around 2.28 million attendees, while this album had 55 million streams in its first 24 hours. It may not be shocking that more people listen to her music than attend concerts, but these numbers impact how Swift earns revenue.

Prior to streaming, the music industry operated much differently. According to a Forbes article, the typical royalty rate for physical albums is between nine and 12%. This rate could go up with the success of the artist. It was simpler for artists to gain profit since physical album sales accounted for nearly the entirety of recorded music revenue until the mid-2000s, as stated by the Recording Industry Association of America’s U.S. Sales Database. 

While many might agree that the music industry needs to fix these issues and work towards benefitting artists, paid subscriptions to these services still accounted for 57% of recorded music revenue in 2021.  This means that, despite dissatisfaction with streaming services, over half of recorded music revenue still comes from subscriptions to these services. 

Even with their problems, streaming services are not going away anytime soon. This is likely due to their convenience, low cost and user-based experience. Wiseman uses streaming services because of their simple and effective interfaces.

“It’s really easy to use, and it is sort of tailored to its user,” Wiseman said. “Whatever I like will be available and ready for me to play whenever I open the app.”

An important aspect of that user-based experience is playlists. Spotify routinely pushes playlists as opposed to albums, according to an article by HighVolMusic. 

Companies like McDonald’s and Nike often use playlists as part of their advertising by using playlists with popular music that relates to their brand and posting it on social media. When they use playlists, companies can avoid paying royalties to artists. Instead, companies are advised not to use more than one song from a particular artist so that it does not look like the artist is endorsing that company. However, companies are not required to notify artists, so their songs can still end up on these playlists without their consent or knowledge. 

These issues may lead people to ask: how can artists earn revenue? The most significant sources of revenue are from money directly given to the artist. Purchasing physical albums like CDs or vinyl records, going to concerts and buying merchandise straight from their concerts or websites are the most common ways to do this. 

Switching to streaming services like Tidal, which pays artists $0.01284 per stream or Bandcamp, which requires users to purchase music and gives listeners the option to pay a higher price, can also be better sources of revenue. Artists are also supported by non-monetary methods like posting and sharing about them on social media. This helps artists gain listeners and recognition.

As people continue to catch on to popular streaming service controversies and low pay per stream, artists and subscribers are leaving these platforms in favor of services like Tidal or Bandcamp. Streaming services like Spotify and Apple Music may be forced to change in order to stay in business. There are no clear answers yet. The relationship between streaming services, record labels and artists is complicated. While individuals may not be able to change the entire industry, there are small steps people can take to support the artists they love.