Opponents of music streaming like Taylor Swift denounce the low royalties of music streaming. But look at Tidal. Despite boasting higher royalty rates to artists, Tidal quickly became a huge flop. As music industry analyst Bob Lefsetz notes, the sad truth is that consumers simply don't care enough about artists' incomes to pay a premium for "high-fidelity" platforms like Tidal.
The meager royalties of streaming services do raise concerns about fairness and ethics (side note: check out Spotify CEO Daniel Ek's article to gain a better understanding of these payouts). However, I believe that releasing music on these platforms offers some incredibly valuable benefits to artists — both well-known and rising ones — that will enable them to build their musical brands and even help boost sales in the long run.
So, here are the reasons why all artists should embrace music streaming services, whether it's Spotify, Pandora, Apple Music, SoundCloud, YouTube Music, Rhapsody, Deezer, or the next big music streaming startup.
1. The CD industry is dead, and digital album sales are dying.
It's important for artists to understand that music streaming is already king. In 2015, CD sales were down 10 percent. iTunes download sales dove at least 13% in 2014, and digital album sales are also already on their decline. While this trend has been a recurring theme in the music business, it's time for executives and artists to both accept and take advantage of this shift in media landscape.
Meanwhile, streaming music sales are on the rise. In the first half of 2015, streaming nearly doubled in popularity, as it generated 135.2 billion streams over the past year. Unless artists have the level of star power of artists like Adele, streaming is the place to be for them reach the greatest listening audience, especially millennials.
2. Data, data, and more data.
With music streaming, artists gain access to valuable statistics that wouldn't be available to them by just selling CDs and digital downloads. For example, on Spotify, artists gain the ability see which tracks on their album are being listened to the most. And on Pandora's Artist Marketing Platform (AMP), an artists can see how many "station adds," or the number of times listeners choose their artist or song title, they get on Pandora's radio, amongst other useful insights.
The success of Drake and Future's What a Time to Be Alive mixtape — which was exclusively released on Apple Music in its first week — illustrates the dominance of hip-hop in particular on music streaming services. Executives note that "hip-hop’s younger, mobile-connected audience [is] leading a shift away from downloads." And while R&B and hip-hop albums made up an impressive 26% of all streams during the first eight months of 2015, I believe that other genres will soon follow this listening trend.
With the data provided by streaming services, artists are able to not only track the performance of their albums, but also analyze the audience that listens to their songs.
3. Streaming allows artists to boost engagement with their fans.
Here's an example of how, with the help of social media, one of my favorite bands Foster the People increases engagement with their fans and promotes their music via Spotify.
As I explained in my article on discovering music on Spotify, artists can post their own Artist Playlists on their Spotify profiles. As a listener myself, I particularly appreciate artists who do this, as it shows that they value any connection they can make with their fans, even if it just means that listeners are able to follow their playlists. Giving listeners a peek into what kind of music influences their favorite artist's music, this feature is a real treat.
Also, artists can let their followers to see what song they're listening to in real-time with Spotify's Friend Feed feature (also discussed in my previous article), which I believe adds another more human dimension to my favorite artists.
4. People love sharing music online.
It's pretty clear that sharing music via music streaming services with a link is significantly easier than burning a song on a CD and physically handing it to them (although the latter will certainly feel more personal).
Streaming services like Spotify and SoundCloud allowing listeners to share songs via a URL and embed codes, as I often do on my blog. In this way, making music available via streaming increases the chances of word-of-mouth advertising, aka free advertising.
Plus Facebook's Music Stories feature — which allows Facebook users to share 30-second clips directly on their mobile and desktop news feeds — is still in its early days, which means there's much room for growth in its capabilities.
The graph above was taken from Spotify's case study on the anatomy of this hit. As you can see, the appearance of European hit "Waves" on curated playlists, rather than the search function, propelled the song's success in the US. And what is most interesting is that the song started to gain popularity on Spotify three months before even airing on on the radio.
6. Music streaming plays count towards spots on the music charts in the UK.
In February 2015, the official UK singles chart announced that it would count 100 streams on sites like Spotify.
I wouldn't be surprised if the US charts decide to follow in their footsteps.
7. Increased promotional capabilities.
In November 2015, Spotify partnered with music ticketing and calendar service Songkick. Together, they made it easier than ever for listeners to view concerts personalized to their taste and purchase tickets seamlessly through Spotify's Concerts feature and the Songkick app. This is a game-changing feature, as concert tours are the main source of artists' income in the end.
I predict that in 2016, new capabilities like the ability to sell merchandise via streaming services will be available to artists.
8. Streaming makes an artist's music incredibly accessible.
Bob Lefsetz recently criticized Adele for withholding her latest, best-selling album 25 from Spotify and Apple Music, which is exactly what Taylor Swift did. And I agree.
The more you allow the public to listen to your music, the better. If available through multiple channels, an artist's music will — by definition — gain more exposure. We've entered a new digital era where innovations like the cloud and streaming services enable the world to easily access their information and media . The conviction that artists must go against the grain, in my opinion, is just a decision to be behind the times.
Ultimately,
The Bottom Line: As streaming services are increasingly becoming the hub of music consumption for listeners, they should also be the hub of music sales for artists.
With streaming, consumers gain increased music listening, discovery and experience capabilities, while artists gain the data and features that are now necessary to heighten their reach, and ultimately, their revenues.