Will Streaming Save the Music Industry?

While indie labels and big name record companies like Sony scramble to recoup profits after the age of digital downloads and piracy decimated profits, the bulk of music fans opted for streaming services like Pandora, Apple Music, and Spotify.

According to Billboard.com, in 2015 digital streaming literally doubled in the United States, and the same trend can be seen worldwide.

So does more streaming mean more profits for music producers?

Well, not exactly.

Many of these services pay a poor pittance to artists. A site like YouTube.com pays about a dollar per one thousand views. Sites like Spotify and Pandora may pay a penny per ten thousand views. Yes, a penny. Fans are consuming much more media, but real profits seem elusive.

Let’s break this down:

Releasing a Single on iTunes

Today if a musician releases her single via iTunes, she usually charges 99 cents. If 10,000 music fans purchase the digital download, then the indie musician might earn thousands of dollars, even after everyone gets a cut.

Top earning artists like Adele or Jay-Z actually receive less of a cut than indie artists, sometimes around ten percent of the total profit. Because major label artists are selling millions of additional products and supplement their income with endorsements and concerts, their profits are usually astronomical when compared to the everyday indie musician, even at the lower rates.

Releasing a Music Video on YouTube

YouTube is the go-to place for music discovery. We’ve seen artists like OK Go and Justin Bieber gain fame from viral videos.

Let’s say an artist creates an original music video. If the video receives 10,000 hits on YouTube, the musician will receive $10, or maybe $20 if they have a deal with Google, who owns YouTube. Considering that high quality music videos usually costs thousands of dollars, indie musicians that want to go the music video route may need to opt for homemade videos until their YouTube subscriber rate grows.

Streaming a Single:

Let’s take that same single from iTunes. If the single is played 10,000 times on a streaming service like Spotify or Pandora, the musician earns between one to ten cents, total. How can a musician earn money when he is literally paid in micropennies?

Some artists have attempted to maximize streaming profits by producing an incredible volume of songs. Indie musician, Matt Farley, has released over 14,000 tunes, many of them “Happy Birthday” songs with different names. He earned tens of thousands of dollars each year with tunes “inspired” by keywords and trending news stories. While this may be extreme, other musicians have found that writing lots of music like “relaxing piano music” or “dance tunes for kids” churns a profit that makes streaming a viable source of income.

The Takeaway

Musicians need to combine income sources. Digital downloads, concert tickets, and yes, even t-shirts and music merch, needs to be a part of a successful marketing strategy that includes streaming music and video.

Streaming will not save the music industry in terms of monetary gain, but it does provide innovative artists a unique way to reach thousands, even millions, of fans. New technology in our homes, cars, and wearable devices will further integrate music without daily lives, meaning that fans have many more opportunities to hear new music as they go about their day.

Music streaming, whether through Spotify or videos on YouTube, is here to stay. But it only takes a little ingenuity and a lot of perseverance to make streaming work for you. Your tracks need to be mastered for streaming.