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Streaming services like Spotify and Apple Music saved the music industry. They’re tearing it apart too.
My colleague Ben Sisario says musicians are complaining about the streaming economy that can turn millions of clicks on their songs into pennies for them. Last week a group of musicians protested outside the Spotify offices about changes in the way they are paid through streaming.
Ben spoke to me about why streaming music has been a disappointment for a lot of musicians. The challenges reflect a bigger question: what if the promise to live off music, writing, or creating apps online doesn’t match reality?
Shira: How has streaming changed the music industry?
Ben: It was the industry’s salvation. Largely thanks to Spotify and other subscriptions, streaming offered the industry something it had never had before: regular monthly income.
To put it simply, the big winners are the streaming services and the big record labels. The losers are 99 percent of the artists who are not on Beyoncé’s level of awareness. And they are angry that they are not part of the success of the music industry.
If more people are paying for music, why isn’t the money falling?
There is a complicated and opaque formula that determines how the $ 10 monthly Spotify or Apple Music subscription finds its way to artists. After these services are cut, about $ 7 will go into a pot of money that will be divided up in a variety of ways – for record labels, songwriters, music publishers, artists, and others.
The more people listen to music, the less each song is worth because it cuts the cake into smaller and smaller slices. I’ve seen financial reports from some pretty popular independent musicians that suggest they make a pretty good living from streaming. But often musicians don’t do much unless they have blockbuster numbers.
Who is to blame
The streaming services and the record labels are both responsible.
Spotify pays a large chunk of its sales to the record labels, and then it’s up to those labels to distribute the money to the musicians. The music industry doesn’t have a great track record of paying artists fairly.
But Spotify is nowhere near its stated mission of “giving a million creative artists the opportunity to live from their art”. It likely has around seven million artists on its platform, and Spotify’s numbers show that only about 13,000 of them generated payments of $ 50,000 or more in the past year. How can that number possibly get to a million?
Haven’t many musicians always felt exploited and underpaid?
Yes, but the streaming model has widened the gap between superstars and everyone else. It is also a fallacy to reject complaints from musicians. Economic inequality has been around for a long time, but it still needs to be addressed.
What is the solution? Can streaming ever work for everyone?
There is talk of moving payment systems to a “user-centric model” that assigns payments based on what people hear. If I just listen to Herbie Hancock on Spotify, my subscription fee will only go to him after the service is cut. Proponents say this system would be fairer, especially towards artists in niche genres. But there are studies that say it’s not that simple. And I wonder if it’s too late to change
Do companies do it differently?
There is a smaller music service, Bandcamp, that musicians like to enjoy. This allows artists to limit the frequency of streaming their music and receive a relatively low commission for selling song downloads, t-shirts and the like. It’s proof that Spotify isn’t the only way to do this.
I’m also interested to see what Square could do with Tidal, the streaming service it bought last month. It won’t change the economics of what a streaming song is worth, but Square is deeply integrated into things like selling merchandise. It could find new ways to help artists make more money or connect with fans and market them.
Where big tech is challenged
In China, emerging tech companies are doing something that can feel impossible. You challenge the tech kings.
The Wall Street Journal recently reported that a five-year-old Chinese e-commerce website, Pinduoduo, became the most-used shopping website in the country. Last year, more people shopped at Pinduoduo – a combination of Costco, a video game, QVC, and Amazon – than at Alibaba, China’s version of Amazon.
By the way, do you want to feel small and insignificant? Chinese shoppers spend more than $ 2 trillion online shopping each year – and that’s nearly half of all retail sales in the country. Americans spent about $ 800 billion on e-commerce in 2020, which is about 14 percent of retail sales.
One of the big questions about technology is whether America’s current tech giants like Google, Facebook, and Amazon will stay powerful forever. In China, the answer may not be. (But we will see.)
In recent years, ByteDance, the company that makes the Douyin app and its international version, TikTok, has also challenged China’s almighty Tencent.
I don’t want to go overboard. Alibaba and Tencent remain immensely powerful, and it’s hard to imagine that this will change. ByteDance and Pinduoduo could struggle to stay popular and make money. It’s also difficult to know if China is giving any insight into what might happen to tech powers in other parts of the world. China is unusual.
However, it is fascinating to see how tech superpowers face newcomers who bring in new ideas.
Before we go …
Online hatred as a precursor to real violence: Anti-Asian hate speech has increased on the fringes of the internet, reported my colleague Davey Alba. The researchers told Davey that increases in online vitriol against ethnic groups put them at increased risk of violence against them.
A novel, but potentially abusive way to get more people online: The rest of the world wrote about loans for people who otherwise couldn’t afford smartphones, but come with a catch. Pop-up messages take over the phone screen to get users to make payments and the phone may lock if too many people are missing.
TikTok is the opposite of reading books, but … TikTok videos sell a lot of books. My colleague Elizabeth A. Harris wrote about BookTok, or short videos of people recommending titles, recording time-lapse videos of themselves reading or crying after an emotionally overwhelming ending. “I wish I could send you all of the chocolates!” One writer told Elizabeth.
Here’s a cat grooving another cat to a viral video.
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