IS STREAMING DAMAGING THE MUSIC INDUSTRY?
Updated: Oct 30
If you consider the cost of marketing to gain one conversion (one sale or stream), your return on investment on a stream is negative so you run at a loss, whereas your return on investment on a sale is positive and therefore you can make a profit.
Sales from traditional marketing methods, where conversion is based on people walking into a store to make a purchase, are down and that model was primarily executed by major labels. Even the indies using that model relied on majors for pressing, distribution and marketing, so it was exclusively major label run.
On the other hand, independent artists and labels today are running modern digital marketing campaigns which are moving cassette, vinyl, CD, merch and digital sales even while their music is available seemingly for free on streaming services. Those sales leave room for upsells and bundle deals etc which are excellent marketing methods to increase sales and income.
These independent sales are not recorded by the major labels and are therefore not reported and do not contribute to the annual industry statistics. Yes sales are lower than before but nowhere near as low as the reports lead people to believe.
Spotify and the like are hurting the music industry as they are causing artists to chase the visible numbers commonly referred to as vanity metrics. To increase those numbers, small artists are spending money on poor marketing methods and playlist placements that ultimately have a negative ROI.
This has lead to the majority of modern music artists spending money on education, tools, production, distribution, marketing and PR without a return, only a loss.
From my perspective, the streaming services have a hugely negative impact on the music industry and will continue to do so as long as the value they aim to provide is only to the subscriber and not the artist, who without, there would be no subscribers.
The big artists are not as negatively affected by this as their numbers are astronomical and the major labels who hold shares in the streaming platforms ensure their artists are pushed up the ranks as it is their staff who curate big playlists. Basically the system is rigged in favour of the big artists but they also have large enough fanbases to make it work even if the system wasn’t set up as it is.
With a sales model, an artist holds their own fanbase/customer list and only needs hundreds or a couple thousand fans to purchase a few pounds/dollars worth of music every month to have a sustainable business.
With a streaming model, an artist has zero control over communication with their fanbase and therefore can’t actively generate repeat streams without spending more than they make back on a stream, plus, that audience size needs to be multiplied by thousands in order to have the same kind of income generation.
While streaming platforms are excellent for music consumers and new music discovery, the numbers are not exciting from a business perspective.
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