5 reasons why music streaming services are good for artists

One of the biggest controversies surrounding the music industry is whether music streaming services are good or bad for artists. Here are 5 reasons why music streaming services are good for artists.

1. It's where people listen

This one is simple. Whether you believe streaming services are good or not, it's where fans are listening to music. You can't fight this. Streaming services are growing exponentially in popularity and are becoming the primary music consumption source for music consumers. It's important to understand and accept that streaming services are here to stay and adapt. This gives artists the easiest access to get their music to the fans and also gives fans the best access to music.

2. The answer to pirating music

Look. Whether you like it or not, people who want to get music for free are going to. Streaming services offer a solution to pirating music that pays the artists. If people are pirating music, the artist gets paid 0.

The subscription model is leading to more payment for music by consumers, many of whom appear to be shifting from pirate services to a licensed music environment that pays artists and rights holders. - IFPI

3. Easy distribution

Since iTunes launched in 2002, the music industry has changed drastically. Major labels are no longer the gatekeepers of distribution and pushing out Top 40 music. Distribution used to be extremely expensive, but because artists rely less on labels to produce physical copies of their work, it's become easier than ever to distribute their music. This also means that it's easier than ever for people to get music.

4. Getting people to pay for music again

I've said it before. The money for music doesn't come from the streaming services. It comes from the consumer. Without paying consumers, streaming services won't have revenue to dish out to rights holders. Streaming services work on artists' behalf to convert consumers back to paying customers for music. The only thing that's changed is the model by which people pay. People are able to rent music now and artists are compensated on more of a "pay as you go" plan rather than forcing people to purchase ownership of music. Remember, one single stream of a song to one person one time should provide a very different payment structure than someone purchasing a song to listen to as many times as they want.

According to IFPI (International Federation of the Phonographic Industry), recorded music revenue peaked at $38bn worldwide in 1999, collapsed down to $16 billion (2011), edged up somewhat the year after, only to fall back down again to $15bn in 2013.

Subscription services, part of an increasingly diverse mix of industry revenue streams, are going from strength to strength. Revenues from music subscription services — including free-to-consumer and paid-for tiers — grew by 51.3 percent in 2013, exceeding US$1 billion for the first time and growing consistently across all major markets. - IFPI

Streaming services offer a solution to get people to pay for music again and have been seeing growth in paid subscriptions up 40% in 2013 from 2012.

The number of paying subscribers to subscription services rose to 28 million in 2013, up 40 percent on 2012 and up from only eight million in 2010. - IFPI

For the argument about artists being paid fairly, it's important to look at a few things:

  1. The main two types of royalties: a) Royalties paid to the labels and performers for the song recording b) Royalties paid to the publishers and songwriters for the song performance
  2. There is ongoing litigation around the fair rate of compensation that should be paid towards each of the types of royalties. The current system may not be perfect, but the number one thing to take into consideration is:
  3. how revenue is split between labels, publishers, artists, songwriters, and other rights holders in the pie. Techdirt recently published an article that explains how much of the revenue is distributed to each party.

Here is a great infographic from Vox on how royalties are split up:

5. Analytics

Information is the basis for all decisions. The ability to have such great access to the digital environment allows artists to gain insight into how people interact with their music like never before. Everything is trackable now and streaming services are making big efforts to help artists analyze their music to make better informed decisions around production and promotion.

Do you think music streaming services are good for artists? Let us know your thoughts in the comments