History
15 years ago, a man by the name of Daniel Ek began working on a platform where users could pay a monthly fee and be given access to a library full of music. This was a relatively new concept in the music industry, with the current main form of music being services such as iTunes where users would pay a certain fee for individual songs and or albums, equating to an upward price of $10+ per album and $1.79 (NZD) per song. Crazy right? Ek’s concept was to remove this ‘pay to play’ system and present a subscription-based service where users would be given access to millions of songs with the cost of a small monthly fee. Now, all they needed was a name for this new system; the company combined the two words “Spot” and “Identify” to form the name of Spotify.
while paying its artists a sufficient salary from this, which you would expect right? An infographic released by informationisbeautiful.net displayed data showing artists can expect to earn approximately $0.0016 per stream. Now that is quite a small number, but when you consider that the song Driver’s License made approximately $1,407,276(NZD) from 879 million listens on Spotify, pairing that with the listens from other streaming platforms, that adds up to be quite a sufficient amount now pairing that with the sales of physical format music as well as merchandise and tickets to gigs at bars and venues.
This new model of music listening became known as streaming which became a common occurrence in the media industry on how users interact with media, proceeding the music purchasing platforms as well as the physical music format as a whole, or did it?
How much can artists expect to earn? The service offers 70 million songs as well as over 2.6 million podcasts all for free, but with the price of $14.99 a month, it will enable you to download tracks, eliminate ads between tracks as well as granting you unlimited skips on your tracks. This leads to an investigation into how the service can afford to be so cheap
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Because of streaming services, it has given artists the privilege of being able to release their music under their own right without a record label, meaning a lot of the time you earn 100% of the profits. Before this it was more difficult for smaller artists to strive because of the record labels and how you needed to appeal to a record label who would invest in your music, paying for recording as well as distributing. In turn earning them a cut out of their music, also known as a royalty rate. This led to artists sometimes being pushed by their record labels to release music more consistently, putting artists under
pressure and affecting their creative freedom. In turn, this creates a different system where the distributor becomes the holder of your music, meaning that different distributors can charge you different fees under different agreements. Some distributors will charge you an upfront fee of a smaller sum of money per year, giving you access to release as much music as you please on your Spotify page, with the possible consequence being that they essentially own the rights to your music, meaning they can take your music away from you as you please. Many opt to pay the larger sum of money to give them security over their music, meaning they keep all royalties with the safety in knowing it is theirs to keep.