The age-old question has always existentially confronted millennials: Apple Music or Spotify?
Over the past few years, streaming services have completely conquered the contemporary music industry. Gone are the days of iTunes, downloading bootleg MP3s and buying CDs. The choice at this point, seems like a two-horse race between Apple Music and Spotify Premium.
Although at times it seems like a constant war between the two customer bases, both services are a dream for the consumer. For $4.99 a month (if you’re a college student), you get to stream an unlimited amount of music at your leisure, including the ability to listen to your music offline. And if you have Spotify Premium, you also get Hulu Plus for free.
A win-win situation, right? Wrong.
The rise of the streaming industry has been less than kind to artists, especially independent artists, transforming the business into one that heavily favors record labels.
CNBC researched exactly what Spotify pays artists when someone streams their song.
“Here's the math: Spotify pays about $0.006 to $0.0084 per stream to the holder of music rights. And the holder can be split among the record label, producers, artists, and songwriters,” writes CNBC contributor Kabir Sehgal.
More research from CNBC found that popstar Taylor Swift made between $280,000 and $390,000 for her mega-hit record “Shake it Off,” which had 46.3 million streams when the study was conducted. Another study done by Adweek magazine shows 1 million streams amounts to about $7,000.
During the height of the MP3 and CD era, it wasn’t at all uncommon to see a hit album accrue anywhere from 500,000 to 750,000 sales in its first week alone. Now, since everyone can stream an album without actually purchasing it, the true nature of that metric is cloudy. For reference, streaming titan Drake’s 2018 album “Scorpion” sold 160,000 pure album sales in its first week.
The hostility of the industry, driven by the rise of streaming giants, has only gotten worse. According to the Recorded Music Association of America (RIAA) in 2018, 67.3% of the U.S. record industry’s total $9.8 billion retail revenues — a $6.6 billion sum —was paid out to labels and artists, meaning streaming services held 32.7% of the profits. The profits of artists have declined since 2016, when they made 1.1% more. Now, 1.1% may seem minimal, but that amounts to about $76 million.
The predicament for artists becomes even more troublesome when we consider the motives of the streaming services themselves.
Last March, Spotify, YouTube and Google legally objected to rising royalty rates for songwriters on streaming platforms in the United States.
As a result, the music industry has become financially hostile to new artists on the come up, making success in the business thoroughly tied to record labels.
Yes, the emergence of the internet has opened numerous avenues for independent artists to share their work. But without the financial support, marketing power and industry connections of a major label, the streaming-driven world of the music industry is a cold one.