Is Spotify Good Or Bad For The Music Industry?

Since the advent of Spotify, there have been ongoing debates over whether or not the streaming service pays due to the morality of a real music lover. According to a developing study entitled “Streaming Reaches Flood Stage: Does Spotify Stimulate or Depress Music Sales?” by economist Joel Waldfogel of the University of Minnesota and Luis Aguiar of the Institute for Prospective Technological Studies in Seville, Spain, Spotify may not have as much of a negative effect on the music industry as some might assume. However, we think most music-lovers would naturally begin to argue differently.

The study finds that streaming services negate the pirating conundrum, leading fans to choose paying for a stream of unlimited music over illegally stealing the music. On the other hand, this leads to a negative impact on individual track sales because fans would rather play a song over and over again for a small fee, than to purchase it once. The net gain of the positive and negative effects appear to even out for the music industry, as fewer people buy songs, while more are opting into a service that pays into the overall industry.

According to the researchers, “Given the current industry’s revenue from track sales ($0.82 per sale) and the average payment received per stream ($0.007 per stream), our sales displacement estimates show that the losses from displaced sales are roughly outweighed by the gains in streaming revenue. In other words, our analysis shows that interactive streaming appears to be revenue-neutral for the recorded music industry.”

From a music-lover’s standpoint, the argument can go both ways: streaming services might increase exposure for up and coming artists, potentially leading to more permanent purchases, like records, concert tickets, or other merchandise; or it bashes the pride of the artists who spend x amount of time and y amount of money to express themselves creatively, all to be compensated $0.007 per play. 

Just because the net gain might even out for the overall music industry, does this make streaming unlimited music morally acceptable? Not necessarily for our beloved, under-paid artists. Go see live music.