Jeremy Darrow

Some musicians are at-odds with streaming services. They feel that the lost revenue is irreplaceable, that Spotify and the rest are an existential threat. Others have chosen to embrace streaming as a tool to reach new fans, to use it as the best distribution service ever. They view the lost revenue as a cost of doing business and, rather than lamenting it’s loss, find ways to maximize the benefits to themselves.

Since the cat of music-streaming is already out of the bag, this is certainly the way to go for  the foreseeable future.

But let’s look one step further down the road. Many musicians have given up making money from streaming. They are willing to give their music away in order to make money in other ways. Tech developers and their business partners, on the other hand, are still planning to make money on this somehow. But they’re not. Oft-villainized Spotify has yet to turn a profit, and while it’s heading in the right direction it still needs more users to sign-up for its paid service, versus the free service that 75% of its users seem to be happy with. If you ask me, $10 a month is a great deal for their service, but what do I know? I still like to buy physical copies of records in record stores.

So, fans of music want it for free. Musicians, whether they like it or not, are going along with it. The tech/business people have also complied, but they’ve offered a sweet deal for just a little money, hoping users will get on board and support their business model. Spotify CEO Daniel Ek has equated the monthly fee to “…less than two beers.”, it is a bargain, but casual music consumers are pretty clearly saying “No thanks, we just want it for free.”.

Likewise, musicians are hoping that fans will choose to support their business models in other ways, like attending shows, buying merchandise or through subscription services and streamed concerts. Many bands are able to make this work. Meanwhile, the streaming services don’t have much else to sell. Who wants to buy a Spotify T-shirt or pay to hear Daniel Ek speak? Tidal might be able to sell T-shirts and hats because Jay-Z , but is the streaming service going to be a loss-leader for a new line of clothing? Probably not. (But maybe it will, Jay-Z is really smart.) Google has the upper hand here, since YouTube is a vastly more popular streaming service and the big G has monetized the heck out of every user by scanning our emails for marketing data (something Spotify will probably never be able to do). 

Where does this leave us? Spotify, Tidal, etc. may become profitable some day, but maybe not. YouTube seems to have it in the bag. If Google chooses to charge for YTs new streaming service it might help the case for paying for music streaming, but maybe not. It’s all up in the air right now. Musicians, who are hard at work finding ways to get the most out of having their music available for free are actually in a good position. The tech/business world is scrambling to find the best way to deliver our music, which is OUR ADVERTISING, to fans for free. Or, at least almost free. Whether or not there is actual money to be made for them in delivering ‘free’ music for a small fee remains to be seen.