Streaming Is Killing the Music Industry. Long Live Streaming. Posted by Nathan S. on 07/29/13 | Filed under Opinion, Sales

Water is wet. Peanut butter is made from peanuts. Rhode Island is neither a road nor an island. Rick Ross has giant man titties. The Fat Guy Who Yells is both fat and yells. Music sales are down. #FactsOnly

The transition from digital sales to stream-only now seems as inevitable as the transition between CD and digital sales. And just in case you had any doubts, here's a depressing/exciting, depending on your perspective, GIF of music consumption in Sweden over the past decade. (Yes, it seems random, but Sweden is randomly on the cutting edge of digital music. That's where both Spotify and SoundCloud originated):


If that GIF isn't loading for you, click here.

That, my friends is exactly why the music industry is, to put it mildly, freaking the fuck out. Just when labels and artists had started to figure out how to get by off digital sales, even with iTunes taking a 30% cut, those digital sales are disappearing into the streaming ether of YouTube/Pandora/Spotify/etc. But is that a good thing? Your answer will place you on one side or the other of the most heated issues in music since we tried to figure out just how big Rihanna's boobs are.

Let's use Atoms for Peace (aka Thom York of Radiohead) and their recent decision to pull their music from Spotify as an easy way to outline both sides of the streaming is going to kill music/streaming is going to keep music alive debate:

"We're off Spotify. It's bad for new music. The reason is that new artists get paid fuck all with this model. It's an equation that just doesn't work. The music is being taken over by [technology companies] and if we don't try to make it fair for new producers and artists then the art will suffer. Make no mistake. These are the same old industry [people] trying to get a stranglehold on the delivery system. The numbers don't add up for Spotify. Small artists and labels can't keep their lights on. It's just not right. People are scared to speak up or not take part as they are told they'll lose invaluable exposure of they don't play ball. Meanwhile, millions of streams get them a few thousand dollars." - Fom a Twitter statement from Yorke and @NigelGodrich, Atoms for Peace producer.

Let me pause for a moment to fill people in on the specifics: Both Pandora and Spotify are currently in a legal battle with labels, publishers and PROs (BMI, ASCAP, etc.) over the percentage they should be paying. Pandora/Spotify argues they should have to pay a royalty rate closer to what satellite and terrestrial radio pays, somewhere in the neighborhood of 15% of revenue, while the PROs argue that's far too low are are looking for closer to 50% of revenue.

That's the incredibly simplified version, but either way, for this discussion the last thing I want to do is get caught up on specifics. Those percentages will add up to big numbers for big companies like Pandora, ASCAP and Universal Music Group, but for the average artist, frankly, it won't matter. Artists, songwriters and producers are either going to be getting a fraction of a penny per stream, or a slightly larger fraction of a penny per stream. Either way, it adds up to the same thing - nobody's making a living off streams. Period.

And that's really the point. I genuinely respect Yorke for taking a stand, and completely understand the frustration artists feel about streams; seeing your song streamed 1 million times on Spotify and then getting a check in the mail for $16.89 has to feel like a kick in the face. But by the same token, for your average artist, ultimately it feels like a waste of time to focus on. Fine, let's say you get Pandora to double their rates. Hell, let's say you get them to increase their rates 10 times! Fine, congrats, you just made $160.89. Good luck paying your bills with that.

To be clear, I'm not saying that artists shouldn't care at all about the rates they're being paid, and shouldn't be fighting for a fair cut. Yes, it's fucked up that Spotify execs are making three figures while you're working a night job to be able to keep making music during the day, but I don't think even a "fair" cut is truly changing a goddamn thing. Yes, in an ideal world artists would be draw a direct line between their music and their bank account, but that ideal world's never existed. Not in 1948 when the first LPs came out, not in 1990 when the CD was king, and not in 2013 when the world's slowly but surely following in Sweden's stream-only footsteps.

Actually, I should revise that. While it may not be an ideal world for artists, it is becoming an ideal world for consumers. The one constant throughout the history of the music industry is that people want the most music possible for the least amount of money possible. Pandora, Spotify and the rest of the streaming world (YouTube often doesn't get brought up in this conversation even though they're by far the leading source of streamed music) are succeeding because they're delivering consumers a product they want. So while artists can look at streams and think, "Spotify is stealing my fans and giving them a cheaper product", a more useful way to look at it is, "Spotify is giving my fans what they want. If I want those fans to remain my fans, I should give them what they want too. How can I give them what they want?"

While it's absolutely a complicated discussion, and I've got some divided feelings, ultimately I fall more on the tech fatalist side. The days when artists could make a good living solely off music sales are over, and they're not coming back. The streaming train has left the proverbial station, and you can either figure out how to jump on board or become the 2013 version of rotary phone manufacturers complaining that cell phones killed their business. The rotary phone makers may be "right", it may not have been "fair", but the reality is that no one wants their product anymore, and reality always win.

But that's not all bad news. While revenue from one source, direct music sales, is down, artists today have more potential revenue streams than ever before. Ok, so you're not going to make a living off selling your album, but you can make a living off album sales, plus streams, plus merch, plus YouTube views, plus licensing, plus shows, plus sponsors (aka Samsung), plus crack sales. That means there's more work to be done than ever before, but it also means there's more opportunity than ever before.

The music industry spent literally years and millions of dollars fighting Napster, and for what? To shut down a site no one was using anyway by the time the lawsuits were settled? Imagine if they had spent all of that time, money and energy building their own technology. Maybe then they wouldn't have been forced to concede to iTunes, and be scrambling to catch up with Spotify, Pandora and the rest.

No matter where you fall on the streaming is killing music/streaming is the future of music debate, streaming is here, and it's only going to get bigger. So whatever you decide to do with your music, I would just urge you to remember the wise words of that modern philosopher, Diddy: "Fuck your dreams, this is reality."

Dreams don't pay your bills, reality pays your bills, so make sure you're living in reality.

*For the record, so people don't think I'm advocating a position for personal gain, the same general trends that are making life harder for artists are also making life harder for site owners. More traffic's going mobile, ad rates are lower on mobile than desktop, and so we're making less. But I can't be hypocritical when it comes to paying my bills. Mobile's here to stay, the percentage of visitors coming to RefinedHype via mobile is only going to get bigger, and I can either fruitlessly try to drive RefinedHype Nation back to their desktops, or adapt to mobile.

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