Technology, as anyone with a phone or computer can attest, has made it easier than ever for artists to get their music to their audience. But it’s also created some huge dilemmas when it comes to how talent and their record labels get paid. What’s the net effect?
A new paper from the National Bureau of Economic Research takes a look at the streaming services, sales, and unpaid downloads in order to figure out whether, all told, these services are helping or hurting the music industry.
These streaming services—Spotify, Apple Music, Tidal, and Pandora—represent a compromise of sorts between the music industry and those providing music via the Internet. Instead of buying an entire song or album, users can just pay a flat rate, queuing up the songs that they want to hear whenever they want. Or users can pay nothing, but must endure interruptions from advertisers. Either way, the services cut down on piracy and provide both websites and record labels with some cash. That makes them a better option for the record industry than having music pirated, in which case they would make nothing, but a worse option compared to buying tracks outright. (The royalties per stream are significantly less than what pure sales bring in.) Overall, the Recording Industry Association of America reports that revenue from streaming services grew to nearly $2 billion in 2014 from about $0.5 billion in 2010.