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Music streaming services

Media streaming is an incredibly dynamic and shifting environment. More than 10 years ago, one of the first bands to achive prominence using social media – the Arctic Monkeys – arrived seemingly out of nowhere as a result of their direct interactions with fans on the MySpace platform. Myspace is now all but dead but replaced with other competing platforms like facebook and latterly Tik-Tok.

Whilst multimedia streaming is an important avenue for the discovery of new musical content, dedicated music streaming platforms continue to enjoy a strong audience with over half a billion subscribers in 2021.

Share of music streaming subscribers worldwide, H2 2021, by company
Source: MIDiA Research; Music Industry Blog

The loudness wars

As a consumer and producer of modern music, the single most important impact of the move from physical media to streaming has been the enhanced quality of audio. This may seem odd as, for the most part, these services stream lossy audio formats to the consumer. However, these same streaming services have strictly enforced limits on loudness and dynamic range (usually around -14 LUFS; loudness units at full scale), meaning that very loud records, like the unlistenable Death Magnetic (Metallica, around -3 LUFS), are automatically turned down. This can be described as the ending of the “loudness wars” that characterised the latter period of the dominance of compact disc as the primary distribution platform.

As a result, there is an incentive for mixing and mastering engineers to provide quieter recordings that are punchier, with far more dynamic range than before, resulting in a more pleasant listening experience. Such is the drive for higher fidelity music that artists such as Steven Wilson are remastering their back-catalogues and streaming the more dynamic remasters.

With any luck, the stragglers of the streaming world, e.g. soundcloud, will start to incorporate similar loudness limits on their services and end the loudness wars for good.

Democratisation of music distribution

Another critical trend relates to the accessibility by unsigned artists and bands to international markets. Before the advent of streaming services, generally speaking an artist would have to have some form of recording deal with a label and a distribution deal(s) for the sale of physical products. Are music labels now irrelevant? Potentially. In a relatively niche genre like metal, there is little incentive to enter such a contract and even high-profile acts like Periphery distribute thier own music. At the time of writing, it’s entirely possible for a bedroom musician to record their music and release it free (on services like Soundcloud) or, for around £0.75 per track, release side-by-side alongside major labels internationally on a range of services (Spotify, Youtube Music, Amazon, etc).

Other trends have a direct impact upon income streams to both streaming platfoms and music producers. Two key trends are:

Market maturation

Many markets are reaching the point of saturation, i.e. the number of new potential subscribers is beginning to dwindle, and this means that growth in revenues has started to diminish. In a recent study by the IFPI, streaming accounts for around 85% of all recording revenues. Given this background, in order to maintain, or in some cases achieve, profitability; these services have started to offer additional services – e.g. sales of concert tickets on artists’ spotify pages. In this specific case, it could be said, from the point of the consumer, to offer convenience. Whilst this convenience may lead to greater attendance at gigs, from the point of the music producer, the insertion of more “middlemen” taking their cut of income between artists and audience is a dissapointing development and will tend to net-out any potential gains from the artist perspective.

Further squeezing of artists’ income.

Athough related to market saturation, it is the case that the profit motivation of streaming services has led to artists recieving increasingly smaller shares of streaming revenue with platforms such as Apple Music recently renegotiating payouts to rights-holders. The range of payouts also varies wildly, as shown in the chart below. A more pessimistic economist might look at this chart and predict the start of a “race to the bottom” in terms of artists’ payouts; particularly as artists can choose to only distribute though the higher-paying services but they are unlikely to – as there are effectively no additional costs for distrubuting to the other platforms – and consumers can easily switch to cheaper or free (ad-supported) platforms.

Weighted Average Per-Stream Payout Rate, by Platform, USD
Source: Digital Music NewsThe Trichordist, Soundcharts

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