Lucas Milne

November 28th, 2024

Steven Maye

The effect of streaming services on the music industry

Throughout the years, the music industry has gone through quite the transition of the

years. Whether it be the Golden Age of music, the gangster-rap-dominated 90’s, or the popstar

era of the early 2000’s, music has been constantly evolving. And with it, technology has

expanded and developed. In the early years, people who listened to and enjoyed music could

only appreciate it through the medium of vinyl, music boxes, 8-track tapes, cassettes, and the

walkman. However, in the 2000’s the website called iTunes was invented and revolutionized the

music industry. It was the first website to allow users to pay for their music on a digital platform.

For the first time, users could access almost every piece of music in history, and could choose

between purchasing an entire album, or singular songs. These songs could also be burned onto a

CD, if they wanted. With the development of more advanced technology, the music industry was

bombarded by new streaming services. With so many old ways to digest music, users generally

wanted a fresh experience that was faster and easier, as opposed to “ancient” methods that used

to be used. But the question remains, just how profound was the impact of streaming services on

the music industry? And was it for the better or the worse?

To begin, digital sales on streaming services saw a massive boost, heavily outweighing

the sales of physical media. An article by website “ScienceDirect,” concluded that since the

development of Spotify, Apple Music, and other large streaming services, digital sales have

skyrocketed. The website also found that users are much more likely to listen to music digitally,

rather than a secondary method (8-Track Tape, Vinyl, Walkman etc.) The website also claims
that these “streaming services cannibalize demand from other channels,” meaning that music

listeners are spending less time and money on alternative methods of enjoying music (Wlomert,

Papies). The article also found that there are negatives and positives to the age of streaming

services, and that it may be too early to judge the full impact. It “is unclear whether streaming

services are beneficial or harmful for the industry” at this point in time (Wlomert, Papies). The

article explains how many voices and naysayers view streaming services as not a viable option

for the future of the music industry, but whether one believes in the nature and practicality of

streaming services or not, it is undeniable that these services have been revolutionary, and has set

the music industry up for success for the next millennia. To sidebar, there are many data analysts

who have found that free music services have less of an effect on the economy of the music

service industry compared to the paid services that significantly boost the profitability of the

industry. Despite the fact that free music services have a negative impact on profits, the large

profit boost from paid services cancels out the net loss that comes from these free services. All in

all, the rise of streaming services has profoundly affected the financial aspect of the music

industry, leaving a profound mark on sales as a whole.

Secondly, music artists are being compensated unfairly, causing them to turn away from

the reliability of streaming services. In the article “Fairness and Attractiveness of Contract

between Artists and Music Streaming Platforms” by Cassandra Picasse, it is speculated that the

“royalties” method is inaccurate when it comes to overall earnings. The article compares the

earnings from Spotify, Tidal, and Apple Music. The article also reported that music sales in the

United States saw a “$7.7 Billion revenue” in 2016, due to the rise of streaming services,

specifically the activities of Spotify, Tidal, and Apple Music. It also represented “51% of

business in the United States” (Picasse). With this information, it would be safe to say that the
general public has resorted to the use of more technologically advanced ways to listen to music,

rather than going through the process of having to physically buy their musical media. To put a

fine point on it, streaming services provide people with a much easier resource to enjoy music

than any other option available. However, despite all of this information, Spotify in 2016,

recorded a “net loss of $194 million,” simply because artists would rather resort to the service

called Tidal, rather than being making less money using Spotify. Tidal has proven to be the more

profitable resource for artists than any other streaming service because of the return on

investment. The amount of money made by each stream (playing 30 seconds of a song or more is

equal to one stream) also pays slightly better than the money allotted by Spotify or Apple Music,

making it much more appealing to artists that want to earn. With this information in mind, it is

easy to see the impact that streaming services have on artists. The problem with big corporations

contributing more than half of the music industry’s revenue is that they are exploitative.

Companies that know that the general population will continue to purchase whatever they are

selling, so they hike up the prices each year knowing that the people will adjust, not the

company.

Additionally, artists are starting to recognize the patterns that streaming service

companies use to exploit them. For example, in 2023, an artist known as “James Blake” removed

all of his music from Spotify due to a discrepancy with the amount he was being paid. He

refused to be associated with a company that would not pay him the accurate amount per stream,

and created his own service called “Vault,” a service that allows artists to make more money for

their music than any other service to date. The problem for Spotify, and other companies as well,

is that this may be the beginning of an age where large companies begin to lose all of their

clientele, thus bankrupting them. A domino effect may be beginning, and major companies will
begin to feel the effect if these services do not begin to compensate their artists properly. The

revenue that these companies make; more than half of the revenue of the music industry, will be

cannibalized, thus forcing a major restructuring of the foundation of the industry as a whole.

Another point to consider is the rising prices in our economy. Since the COVID-19 pandemic in

2019, prices around the world have skyrocketed. Many household items, groceries, clothing, and

miscellaneous items now cost significantly more than they did pre-pandemic. And with the rise

of inflation, there is no telling whether the price of music streaming sites will ever remain

stagnant. Through the years, Spotify’s prices have remained virtually unchanged, but in 2024,

they raised their individual prices from around $11 to nearly $13 a month, a small amount, but

one which may have disastrous implications for the future of the music industry. With the future

of our economic stability in mind, it is not far-fetched to conclude that music services will

continue to raise their prices, but at the cost of driving artists away, and turning away customers

to third-party resources (Soundcloud, Deezer, etc.)

Finally, the convenience of streaming services makes the use of Cd’s, Walkman’s,

8-Track Tapes and other methods of listening to music obsolete. While there are still many

enthusiasts who collect and admire physical media, streaming services are dominating the world,

and are forcing the digitization of many musical works, including ancient works of music. The

accessibility of nearly every piece of music in history has made collecting old media practically

obsolete and pointless. Since people are always striving to collect what are considered “ancient

artifacts” by today's standards, this has also inspired people to do whatever they can to get their

hands on every vinyl, CD, or physical music media they deem to be out of date. This is backed

up by the fact that in the 90’s, there was a decline in sales of CD-ROMS, and many scrambled to

use other methods of purchasing music. Is it not a similar situation today? The people are very
much divided in this area. On one hand, just a little under half the listeners prefer to stream

music at their will in their time and place, but on the other hand, the older generation who grew

up with older artists such as Etta James, Duke Ellington, and Ella Fitzgerald long to be taken

back to the time where they could enjoy their favorite music at their own will, rather than letting

a streaming service dictate that for them. In summation, there is a discrepancy between the older

generation and the new ones, and it is affecting the music industry in a major way. The

well-being of the economic output from the music industry relies on the people that control these

services, so it is up to them to decide what is the best for us, at the end of the day. A depressing,

but true fact.

Bibliography

Works Cited

Sarpong, David, et al. “‘Vinyl Never Say Die’: The Re-Incarnation, Adoption and

Diffusion of Retro-Technologies.” Technological Forecasting & Social Change, vol. 103,

Feb. 2016, pp. 109–18. EBSCOhost,.

https://doi-org.ezproxy.capilanou.ca/10.1016/j.techfore.2015.10.012.

Works Cited

Papies, Dominik. “On-demand streaming services and music industry revenues — Insights from

Spotify's market entry.” ScienceDirect.com, 2nd June 2016,

https://www-sciencedirect-com.ezproxy.capilanou.ca/science/article/pii/S0167811615001226?via%

3Dihub. Accessed 13th November 2024.

https://www-sciencedirect-com.ezproxy.capilanou.ca/science/article/pii/S0167811615001226?via%

3Dihub#s0090

Works Cited
Picasse, Cassandra. “Fairness and Attractiveness of Contract between Artists and Music

Streaming Platforms.” PMWorldJournal.com, May 2018,

https://research-ebsco-com.ezproxy.capilanou.ca/c/upvpl6/viewer/pdf/hsfe3b46kf. Accessed 18th

November 2024. Hsfe3b46kf