Spotify: Is it Hurting the Music Industry?

Technology has not only made it easier to listen to your favorite songs, but it also allows artists to easily get their music to their audience. Spotify is an online music streaming service that lets users listen to music for free with ads, or they can opt to pay a monthly fee and listen to whatever they want without interruptions.

Spotify-iPhone-560x373Online music streaming is very popular among consumers, however some artists, such as Taylor Swift, do not like this. Swift recently stated her opinion of Spotify in an interview and said: “I’m always up for trying something. And I tried it and I didn’t like the way it felt. I think there should be an inherent value placed on art.” Swift believes that free music streaming services are one of the main causes of shrinking record sales, and that value is not being placed on the music that artists are creating.

141113-Taylor-Swift-SpotifyDespite Swift’s claims that Spotify is hurting the music industry, recent research shows that music streaming services are actually “revenue-neutral” for the recorded music industry. According to a CNBC article, this means that “streaming does disrupt traditional music sales but revenue derived from the recent growth in streaming evens out what is lost in sales.”

One celebrity that thinks highly of Spotify is Ed Sheeran. Recently in a Spotify blog post, Sheeran said:  “Chuffed to hear that ‘Thinking Out Loud’ has had half a billion plays on Spotify. Being the first artist to hit that milestone is amazing. Thanks to all the people who use this as a wedding song, soundtrack to a date, and as a way to woo someone into a netflix-and-chill situation.”

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So, how much is Spotify paying these artists and record labels to be able to play their music? According to Spotify, rights holders receive an average “per stream” payout between $0.006 and $0.0084. This doesn’t sound like much, but this means that Ed Sheeran’s ‘Thinking Out Loud’ would have made between $3 million and $4.2 million. That is a lot of money to make off of just one song.

In conclusion, music artists themselves are not hurting from online music streaming. As you can see, big artists such as Ed Sheeran are making millions by having their music on this platform. Spotify however brings almost no financial gain to the music industry itself, but it does however prevent losses. By giving consumers the option of free music streaming, less people are going online and illegally downloading pirated music. I believe Spotify to be a win-win situation for consumers and the music industry.

6 thoughts on “Spotify: Is it Hurting the Music Industry?

  1. Hannah-
    As a frequent user of Spotify, I have always wondered how artists feel about it so I found your article very interesting. I love how you wrote this is in a simplistic, yet detailed way. Your use of statistics and quotes is great as well. You also answered the question in your title by the end of the article so the reader is not left unsure. Great post!

  2. I really enjoyed reading your article; It was engaging and included quotes, statistics, and integrated links. I would have to disagree with your viewpoint though; I definitely think that Spotify is hurting the music industry, or at least lesser-known artists. The streaming service drives sales away from paid downloads on services like Amazon and iTunes, and rarely benefits artists that are not already at the top 1% of the music industry. I read in another article recently that small artists that put their music on Spotify have to get around 190,000 streams per month to reach minimum monthly wage, and while this is easy for the musicians already at the top, independent artists definitely suffer. Do you think that smaller artists will follow Taylor Swift and quit music streaming services, or do you think that they will take their chances, even if it means less paid downloads and record sales?
    Overall, great job on your article!

    • Hey Zsofia! Thanks for your comment. I do agree with you that Spotify does hurt the music industry in some ways, however record sales were already at very low records before before streaming began. Many people could simply go to the internet and find free downloads. I think Spotify is great for the reason that people can listen to music free with ads or pay $5-$10 a month and get all the music they want. This means that artists don’t completely lose money to people downloading their music illegally offline. To answer your second question about smaller artists leaving Spotify, no I do not think smaller artists are going to leave. If they leave the platform, they would miss out on the chance of making some money off their music. Also, by being on Spotify, they can have some hope that people will hear their music and possibly become more well-known.

  3. I really enjoyed your article! You had a really good use of multimedia and I loved your use of embedded quotes. One of the things with spotify, and other instant streaming sites, I’ve heard a lot about is effect on actual quality of music. I recently read an article about Neil Young removing his music from spotify because “I don’t need my music to be devalued by the worst quality in the history of broadcasting or any other form of distribution,” he said, adding: “I don’t feel right allowing this to be sold to my fans. It’s bad for my music.” (http://variety.com/2015/digital/news/two-weeks-later-neil-young-finally-removes-his-music-from-spotify-1201550338/)

  4. I liked how you described both sides of the issue. I would have liked to see some more comparisons between revenue before Spotify and after Spotify. How much money would Ed Sheeran have made on “Thinking Out Loud” without Spotify? It is interesting to hear Taylor Swift’s reasoning behind how she does not support Spotify, when it is clear she just does not think that is not the most profitable way for her. How much money does Spotify make a year after paying out all of the artists? It is also interesting to see the only issue that people have with the new way to stream music is the idea of how the money is being distributed. You made a good point explaining how it prevents illegal downloads on the internet, as well.

  5. In response to your question: “How much money does Spotify make a year after paying out all of the artists?,” Spotify and other music streaming sites are actually not very profitable after all the artists are paid. This is one of Spotify’s main issues. Spotify is however looking to expand in a way that will make the company more profitable. Spotify’s rumored next move is to expand into YouTube-style online video. By competing with YouTube and other online video websites, more money will be brought in through advertisements.

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