Spotify recently turned 10 and Alan Cross who is a broadcaster with 102.1 the Edge and Q107, and a commentator for Global News, has broken down, if Spotify is good or bad for the music scene as a whole. While Spotify is not the only streaming service, it is now a dominant force in the music streaming space. Its reach extends to 65 countries with nearly 200 million users each month and allows for an access to 40 million songs.
Spotify has also been in the news recently for allowing artists to directly upload tracks on Spotify for free. They also launched a bundle with HULU for 5$ to boost subscriptions. Apart from that, the COO of Universal Music publishing was also frustrated with Spotify for cracking direct deals with artists.
After a crazy few months, let’s look at how Spotify turning 10 has impacted the music industry.
The Positives –
– Spotify has made It possible to have instant access to any song within their palms. Music lovers and creators have only imagined of ease of access to music but, Spotify has created it.
– The freemium model of Spotify also allows for easy access for music despite the occasional ad. But, if you negate that, the freemium model still caters to your musical needs.
– With the monthly $ 9.99 subscription, users can download all the music they like for listening. The only difference is they rent this music instead of owning it, with continuous access.
– Music piracy has dropped by 38% due to convenient streaming services provided by Spotify.
– About 75% of Label revenues are now coming in from streaming. This has resulted in an overall growth of musical revenue.
– The discoverability of music has improved greatly. Users can now not only access music from genres and different eras but also experience songs culturally.
– Spotify also provides data to artists, managers, labels, promoters, and agents on how users are consuming music across the globe.
– More and more artists have emerged as they do not need to rely on CD sales anymore. For example – the most streamed song on Spotify is Ed Sheeran’s ‘The Shape of You. Perhaps what is most interesting is that music streaming made Drake a worldwide superstar.
– Ipo’s are reaping profits from Spotify in the stock market who has a market cap over US$26.
The Negatives –
– The ease in music streaming and access to music via Spotify has reduced the roles of record labels in music distribution as they have always been the cultural gatekeepers that regulated the access for music over decades.
– Artists who usually made a good living on royalties from CD sales have seen a drop in their incomes with the rise in streaming. Hence, the only other way is for musician groups like Eagles to go out on the road again.
– Playlists are now the new albums. Users chose to listen to playlists rather than complete albums. However, with changing listening patterns, this was inevitable.
– Music is now free, and hence users can skip a track in the first 5 seconds if they don’t like it. Due to this, musicians are changing the way they make music with shorter intros and with the chorus in the beginning.
– Spotify still seems to be losing money because of its current licensing agreements. However, their market cap is about the US $10 billion higher than all global music revenues which means how and where the streaming market takes us. While currently, 70% of the Spotify revenue is going to royalties, Spotify’s expenses will go up with revenues.
While Spotify has its positives and negatives, the way people consume music was going to change with the evolution of technology and the advancement of the social network. So, looking at it from a consumption perspective, it is definitely going amazingly well for all Spotify users. However, with ongoing changes in the market, we are yet to see, how this impacts record labels and artists in entirety. Do share your thoughts with us below.