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Streaming services like Spotify and Apple Music have saved the music industry. They are also tearing it apart.
My colleague Ben Sisario says that musicians complaining about the streaming economy can turn millions of clicks on their songs into pennies for them. Last week, a group of musicians protested outside of the Spotify office over changes to how they are paid for from streaming.
Ben talked to me about why streaming music is such a disappointment for many musicians. The challenges reflect a bigger question: What happens when the promise of making a living online from music, writing, or building apps doesn’t match reality?
Shira: How has streaming changed the music industry?
Ben: That is the salvation of the industry. Thanks in large part to Spotify and other subscriptions, the streaming has given the industry something it never had before: steady monthly revenue.
To over-simplify, the big winners are streaming services and major record companies. The losers are 99% of the artists who are not in Beyoncé’s level of popularity. And they are angry about not sharing the success of the music industry.
If so many people pay for music, why isn’t that money dripping?
There is a complicated and unclear formula that defines how a monthly subscription to Spotify or Apple Music reaches artists. After those services cut, about $ 7 becomes a sum divided in many ways – for record labels, musicians, music publishers, artists, and others.
The more people listen to the music, the less valuable each song is because it cuts the cake into smaller and smaller slices. I’ve seen financial reports from some pretty well-known independent musicians that show they’re making a pretty good living off of streaming. But usually, unless the musicians have a blockbuster number of movies, they don’t make much money.
Who is to blame for this?
The streaming services and record labels are both responsible.
Spotify pays a large portion of its sales to record labels, and then distributes the money to musicians. The music industry has not had a great track record of paying artists fairly.
But Spotify has also failed to fulfill its stated mission of “giving a million creative artists the opportunity to live on their art”. It may have around seven million artists on its platform, and Spotify figures show that only about 13,000 of them made $ 50,000 or more in payments last year. How could that number go to one million?
Do many musicians always feel exploited and underpaid?
Yes, but the streaming pattern has exacerbated the split between superstars and others. The refutation of the musicians’ complaints is also an excuse. Economic inequality has been around for a long time, but it still needs to be tackled.
What is the solution? Can streaming work for everyone?
There is a discussion about changing the payment system to a “user-centric model” that will allocate payments based on what people listen to. If I only listened to Herbie Hancock on Spotify, my subscription fees would have belonged to him only, after the service cut. Proponents say the system will be fairer, especially for artists of the right genres. But there are studies that say it’s not that simple. And I wonder if it’s too late to change.
Is there a company that does it the other way around?
There’s a smaller music service, Bandcamp, that musicians tend to like. It allows artists to limit the frequency of their music streaming and receive a relatively small commission on song download sales, t-shirts, and the like. That is proof that Spotify is not the only way to do it.
I also want to see what Square can do with Tidal, the streaming service they bought last month. It wouldn’t change the economics of the value of a streaming song, but Square is deeply integrated with things like selling merchandise. It can come up with new ways to help artists make more money or connect and market with fans.
Where Big Technology is being tested
In China, emerging tech companies are doing something that may feel impossible. They are challenging the kings of technology.
The Wall Street Journal recently reported that a 5-year-old Chinese e-commerce site, Pinduoduo, has become the country’s most widely used shopping site. Last year, more people bought on Pinduoduo – a mix of Costco, a video game, QVC, and Amazon – than made a purchase on Alibaba, the Chinese version of Amazon.
By the way, do you want to feel small and mediocre? Chinese shoppers spend more than $ 2 trillion a year buying online – and nearly half of all retail sales in the country. Americans spent about $ 800 million on e-commerce by 2020, or about 14% of retail sales.
One of the big questions about technology is whether current American tech giants like Google, Facebook, and Amazon are around forever. In China, the answer is probably no. (But we’ll see.)
In recent years, ByteDance, app maker Douyin and international version TikTok, has also challenged China’s omnipotent Tencent.
I don’t want to go overboard. Alibaba and Tencent are still incredibly powerful, and it’s hard to imagine that changing. ByteDance and Pinduoduo may have a hard time getting famous and making money. It is also difficult to know if China has a glimpse of what could happen to tech powers elsewhere in the world. China is unusual.
But it’s fascinating to see tech superpowers face off against newcomers of new ideas.
Before we go …
Online hatred is a precursor to real-world violence: My colleague, Davey Alba, said hate speech against Asians has spiked in the fringes of the Internet. Researchers told Davey that the increase in online vitriol against ethnic groups indicates an increased risk of violence against them.
A novel but potentially abusive way to engage more people online: Rest of World has written about loans for people who can’t afford smartphones, but they come with a benefit. Pop-up messages take up the phone screen to push people to make payments, and the phone can lock in if people miss out too much.
TikTok is the opposite of reading but … Video TikTok is selling a lot of books. My colleague Elizabeth A. Harris has written about “BookTok”, or short videos of book titles, capturing time-lapse videos they are reading or crying after an emotional ending. “I wish I could send them all the chocolates!” an author told Elizabeth.
This is a cat following a viral video of another cat.
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