by Michael Lowrey
Andrew Flowers of Fivethirtyeight.com provides an update on the impact of streaming music services on the music industry:
The debate over the economic impact of streaming is still being hashed out. The biggest flashpoint occurred last year, when pop megastar Taylor Swift decided to pull her catalogue from Spotify. Swift, writing in The Wall Street Journal, claimed streaming had “shrunk the numbers of paid album sales drastically.” In response, Spotify CEO Daniel Ek pointed out that the company had paid $2 billion in royalties since 2008, and claimed streaming was promoting music sales overall.
But perhaps the Swift-Spotify spat is much ado about nothing. While streaming is profoundly changing how music is consumed, services like Spotify could be neither cannibalizing nor boosting music sales. That is the conclusion of published, but not-yet peer-reviewed, research by two economists, Joel Waldfogel and Luis Aguiar.
For their analysis, Waldfogel and Aguiar took Spotify at its word, and used the median per-stream point ($0.007) to estimate any new revenue generated through streaming. They found that revenue roughly offsets the revenue lost from any drop in sales. In other words, they think Spotify has had a revenue-neutral impact on the music industry, though whether Spotify has cut into artists’ earnings is a different question not directly addressed in this paper.
Note that just because industry revenue is the same, that doesn’t mean that the move to streaming services is revenue neutral for all artists. David Lowery, the singer and guitarist for the bands Cracker (which had some hits), and Camper Van Beethoven (which has more of a cult following), says that Spotify has been good for his revenue stream from Cracker but that Camper Van Beethoven is a loser from the shift.