The Value of Streaming Services
    • THURSDAY, AUGUST 02, 2012

    • Posted by: Joe Puglisi

    Music lovers have an affinity for certain universally-held generalizations, like "The CD is a dead format" "artists don't make any money from Spotify," and "Nickelback sucks." But those who pay attention to the hard numbers will always notice they tend paint a more complicated picture than a simply effective or ineffective medium. Martin Mills, the chairman of the almighty Beggars Group -- responsible for labels like Matador, 4AD, Rough Trade, and XL, and artist from Adele to The XX -- recently told The Telegraph that some of the group's artists "make more [money] from streams than downloads of tracks or any other format," a significant departure from the popular perception of payouts. This is an interesting perspective on an important issue for artists and consumers alike: how the heck do you make money in this crazy digital landscape?

    Some numbers: digital sales have finally toppled physical sales in both the US (in 2011) and the UK (this June). Spotify paid $180 million in royalties to musicians last year, and is on track to double that figure this year. 15 million people use Spotify, and four million of them are premium subscribers. Although the payouts are the subject of much consternation, especially with smaller acts, it's hard to deny Spotify (and services like it) are growing in influence, and eventually must be embraced.

    Mills refers to the streaming medium as a "friction-less landscape," inspiring consumers to experiment with back-catalogue and new genres in ways unimaginable in the physical realm. This is a good way to understand the value of a service like Spotify to artists and consumers alike -- in an industry where the money is shrinking and yet the product is as abundant as ever, the key to success will be visibility. And streaming services provide that access, in a way that can still add value to the artist's recordings.

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