By Vanessa Kang
Apple Music: the new music streaming service dubbed as the saviour of the music industry, where declining physical CD sales is the norm.
Other popular music streaming services like Spotify, Tidal and Rhapsody, among many others, have been in the industry far longer, with Spotify starting in 2008. These platforms however, have often received flak for killing off the music industry, by paying low royalties to artists for their work.
Streaming music gives people access to a large database of songs either for free while being exposed to advertisements like Spotify, or for a free trial period after which, they have the option of subscribing for a minimal fee.
At around $9.90 per month for a subscription to any streaming service, you get full access to their collection of music, amounting to some 30 million songs available on larger platforms like Spotify and Apple Music. These streaming companies then pay royalties to rights holders based on how many times a song, artist or album is streamed, and the money earned from royalties is then subdivided to pay record labels and musicians.
Streaming has therefore led to the decline of physical CD sales as people no longer see the need to purchase CDs, and for the first time ever, digital music has matched physical sales, amounting to 46 per cent of the music industry.
The business model for music streaming is simple and frankly a steal, considering how a song on iTunes costs at least $1.28 here in the Singapore store.
Artists therefore think that streaming kills off the music industry, with people like Taylor Swift making a splash. Her most recent deed was of course writing an open letter to Apple to address its payment policy. Apple initially refused to pay royalties during the trial period of Apple Music. This came after the much-criticised move of withdrawing her entire back catalog of songs from Spotify in 2014.
Swift is, however, not the only artist to voice her displeasure. Thom Yorke, lead singer of popular band Radiohead, together with music producer Nigel Godrich have followed in her footsteps and removed their album AMOK and The Eraser from Spotify. Country superstar Jason Aldean has also removed his best selling album Old Boots, New Dirt off the streaming platform.
Their rationale for doing so is simple: artists are not being fully compensated for their work. Some may argue that they earn enough and are making a mountain out of a molehill, but let us take a look at some statistics.
According to The Guardian, artists are only paid one-tenth of a per cent on Spotify, which is equivalent to USD$0.0011, while Rhapsody and Tidal pay USD$0.0019 and USD$0.007 respectively for every song that is streamed. While Rhapsody and Tidal may pay artists more, they also have a smaller number of listeners.
Rhapsody only has 2.5 million paid subscribers while Tidal has 540,000 subscribers as compared to Spotify’s 15 million paid subscribers, making the difference in streaming rates insignificant.
The amount earned from streaming pales in comparison to iTunes, where 70 per cent of profit goes to the artist for every song bought, which is USD$0.69 cents for a song that cost USD$0.99.
An example to show how this business model is flawed will be Avicii’s Wake Me Up. It was the most streamed song on Spotify and has over 168 million streams in the United States alone, but it only earned him roughly US$4000, and that is why artists are complaining.
However, while the decline in physical sales may affect how much an artist makes, the bulk of their revenue still comes from touring. In Forbes list of the highest paid celebrities of 2015, singer Katy Perry was the highest paid musician, earning an eye-popping US$135 million. That amount mainly came from her Prismatic World Tour, the fourth best selling tour in the world last year, which saw Perry play 127 shows in 27 countries, despite having only sold 1.6 million physical copies since its release in 2013.
Perry also earned US$20 per head on merchandise, and tickets were on average priced at US$250. This was reflected during her pit stop here in Singapore, which saw her tickets sell at $328 for a top-tier seat.
So while there have been many complaints about the unfair payment policy of music streaming services, earning a paltry sum via streaming is definitely better than not earning a single cent through piracy sites like Torrent, where people download music for free.
Playing live shows is also where most musicians earn their keep and one alternative to solve the disparity between streaming and musicians is for them to work together. Musicians can work with streaming platforms and tap onto their wide user base to raise awareness of their albums and use that awareness to make a living by playing live. That is the only way the music industry can survive, by working together, and not by pointing the finger.